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Making Disability Work

Author: Peter R. Orszag, Adjunct Senior Fellow
December 9, 2010
New York Times

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One of the gravest dangers posed by the weak economy is that the unemployed will become discouraged and give up looking for work, perhaps permanently as their skills atrophy. This would be harmful not only to the workers and their families, but also to the economy as a whole, as those people would no longer contribute to economic growth. The longer the labor market remains sluggish, the more pronounced this risk becomes.

Unfortunately, at this point more than six million people have been unemployed for six months or longer. More than one million have already given up looking for work because they believe no job is available. And a drastic rise in applications for disability insurance suggests we may be headed for more long-lasting trouble. The number of disability applications has reached more than 750,000 a quarter, according to the Social Security Administration, an increase of more than 50 percent from four years ago.

The disability insurance program provides crucial support for people who can no longer work because of a disability. But once someone begins receiving benefits, the likelihood that he will re-enter the work force is almost nonexistent; recipients become permanently dependent on the program.

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