There are probably many reasons why disability claims are going up, but Covid-19 may be one of them.
Even though there are a lot of problems with the economy right now, like high inflation that won't go away and 401ks that are still hurting from the worst stock market drop since 2008, many people say that "Bidenomics" is winning.
The White House has been talking up the fact that 13.2 million jobs have been created during the Biden era and that the unemployment rate dropped to 3.6% in June. Not too bad, huh?
Some people seem to think so, at least.
Matthew Dowd, a former political strategist for George W. Bush and MSNBC, said, "America under President Biden has better employment numbers than America in 1984, when President Reagan ran morning in America ads praising the economy."
The thing about numbers is that they can be wrong. "Lies, damned lies, and statistics," as the British politician Benjamin Disraeli put it, is a phrase that describes this.
If you leave out the pandemic (we'll explain why in a minute), the labor participation rate, which has been going down for decades, is at its lowest point in the last 45 years.
How do these numbers compare to the numbers from the White House, which show that 13 million jobs were added and the unemployment rate was 3.6%? The answer is really easy to figure out.
The number of jobs has grown a lot since early 2020, from 130 million in April 2020 to 156 million in June 2023, according to government data. However, almost all of this growth was due to replacing jobs that were lost during the COVID-19 pandemic (there were 152 million non-farm jobs before lockdowns).
In other words, Biden is taking credit for jobs that are mostly coming back after big parts of the economy were shut down.
But, as has been said, the number of people working is still much smaller than it was before the pandemic.
People are deciding not to work for a lot of different reasons. One reason might be that more families started homeschooling during the pandemic. Lower real pay could also be a reason. Some people might not want to go back to work because they don't want to get vaccinated or wear a mask, which is still required by some companies. There are poverty traps made by the government, which happen when poor workers lose their support benefits when they make more money, which can make them less likely to work. And, of course, more people who are still able to work can retire early.
All of these things probably played a role (big or small) in why people aren't working as much, but we have clear facts on one point that helps us figure out what's going on.
“Disability claims [are] soaring,” economist Peter St. Onge recently tweeted . “A big part of that impressive unemployment rate: if you're living on disability, you're no longer counted.”
Disability claims soaring. A big part of that impressive unemployment rate: if you're living on disability, you're no longer counted. pic.twitter.com/0mByG7xk6a
— Peter St Onge, Ph.D. (@profstonge) July 11, 2023
St. Onge was talking about figures from the Federal Reserve that showed that disability claims, which were flat from 2014 to 2020, started to go through the roof in 2021.
There were 29,851,000 incapacity claims in January 2021. By June 2023, that number had risen to 34,152,000, the fastest gain ever at 15% in 30 months. (Data go back to 2008.)
There are probably a lot of different reasons for the rise in disability claims, but the biggest one might be "long COVID" symptoms, which are COVID symptoms that last or start up a long time after the initial illness.
Torsten Slok, the chief economist and partner at Apollo Global Management, wrote in a note earlier this year, "The bottom line is that long COVID is the reason why the labor force participation rate has not recovered to pre-pandemic levels, even though wages have grown strongly."
Can people with long COVID even get disability pay? Reports say that it is, and that the Biden government has been trying to make it easier.
In 2022, MPR News said, "The Biden administration has already taken some steps to try to protect workers and keep them on the job. It has issued guidance that makes it clear that long-term COVID can be a disability and that relevant laws would apply."
Now, some people might say that it's the government's job to help workers who are seen as ill. But economist Murray Rothbard once said, "It's easy to show how "compassionate" you are if other people have to pay for it."
Whether you agree with the rewards or not, it's clear that "Bidenomics" is just smoke and mirrors when it comes to jobs. Even if it makes the jobless rate look lower, having less people working and more people on disability is not a good thing for the economy.
