Policy: Entitlements

Disability Insurance is inadvertently making America's economy 'less dynamic and less flexible'

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Beltway Confidential,Opinion,Michael Barone,West Virginia,Entitlements,Robert Samuelson

Robert Samuelson has a characteristically thoughtful and data-packed column Sunday on how Americans have become less geographically mobile. We have liked to think of ourselves as having lots of get-up-and-go, but significantly fewer Americans have been getting up and going this century as compared to previous decades. As Samuelson notes, fewer young as well as fewer old people, and fewer renters as well as fewer homeowners, are moving from one state to another. Weak job growth and businesses' reluctance to hire are one reason, Samuelson concludes. But there's also a psychological factor: “It may reflect a world dominated more by fear than by hope.”

Let me add one more factor to the mix: the vast increase in the number of recipients of disability insurance, which I wrote about in a Washington Examiner column in November 2012, drawing on my American Enterprise Institute colleague Nicholas Eberstadt's book A Nation of Takers: America's Entitlement Epidemic. The Disability Insurance (DI) rolls historically increased from 460,000 in 1960 to 8,600,000 in 2010; the percentage of those 18 to 64 on DI rose from 0.65 percent to 5.60 percent. The state with the highest DI rate in 2011 was West Virginia, at 9.0 percent of those 18 to 64, followed by Arkansas (8.2 percent), Kentucky (8.1 percent) and Alabama (8.1 percent). Note that all four states voted heavily for Mitt Romney--a stark refutation of his comment that the 47 percent receiving federal payments would vote against him.

What I see in these numbers is that disability insurance is in effect allowing people with ailments, minor as well as major, and probably many people with no ailments at all, to retire in place. They don't have to leave communities where they may be comfortable: Gallup tells us that only 28 percent of West Virginians would like to move out of state, lower than the national average of 33 percent and far below Illinois's 50 percent.

In past times of economic distress many West Virginians, nonetheless, did leave the state, in search of employment elsewhere. West Virginia's population in the U.S. Census reached a peak of 2,006,000 in 1950, after a decade of intensive coal mining during wartime and immediately thereafter. It declined to 1,744,000 in 1970, as other fuels replaced coal, increased to 1,950,000 in 1980, as the 1970s energy crises boosted demand for coal, dropped to 1,793,000 in 1990, then inched back up to 1,808,000 in 2000 and 1,853,000 in 2010.

During almost all of the post-World War II years there has been net outmigration from West Virginia to other states — up U.S. 19 to Akron, Ohio, and U.S. 23 to Detroit (including my paternal grandmother) when the auto and tire factories were booming; down I-77 to the Carolinas in the last four decades. But outmigration has obviously slowed to a trickle, perhaps because West Virginians who wanted to go elsewhere went long ago; and those who remained, and their descendants, love the state’s mountain scenery, its country culture and the familiarity of the communities and relatives who remain. DI helps them stay.

Benefits top out at about $13,000 a year, but apparently that’s enough to get by in low-cost communities. Disability Insurance does provide a basic standard of living for those who are generally disabled. But it seems also to have become, to some currently unknowable extent, an effective subsidy for geographic non-migration. And has thus contributed to our economy becoming, as Samuelson writes, “less dynamic and less flexible.”

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