disability insurance

America's new work ethic?

July 30, 2012: 12:23 PM ET

New welfare rules and booming disability insurance rolls reveal a bias toward aid checks over paychecks.

By Nina Easton, senior editor-at-large

FORTUNE -- Welfare reform was enacted on a bipartisan recognition that work is healthier than a government check -- for poor adults, and for their children. In the 1996 signing ceremony, President Clinton didn't dwell on dollars spent; instead, he talked of humans "trapped" in decades of dependency. Then he quoted Robert F. Kennedy: "We need [work] as individuals. We need to sense it in our fellow citizens, and we need it as a society and as a people."

That we, as a nation, are losing that thread can be seen in a host of troubling numbers: The rise in households on government assistance and the decline in wages as a share of national income, to name just two. But recently, and most vividly, it showed up in little-noticed news surrounding two aid programs: federal disability insurance and welfare.

The first is buried in the pages of a new Congressional Budget Office study warning that Social Security Disability Insurance -- facing a six-fold explosion in recipients since its 1970 inception -- will go bankrupt unless taxes are raised or benefits cut.

MORE: Splitting big banks: Why J.P. Morgan should go first

A program meant to support people who can't work because of a chronic illness or disability now sends checks to 4.5% of working-age adults, up from an initial 1.3%, and is on its way to climbing past 5%.

Are we, as a nation, sicker or more disabled? Neither, but jobs are harder to find, and disability insurance is easier to get. A historic high of 2.9 million people applied in 2010 (8.3 million are on the rolls, along with 2 million dependents), prompting even the cautious CBO economists, who highlight demographic reasons behind rising rolls, to acknowledge that "when jobs are plentiful people choose to work" and "when they're scarce, disability insurance looks more appealing." More

  • Don't let illness derail your retirement

    Even the best plan can be drained dry by getting sick. Here's how to protect yourself with disability insurance.

    By Janice Revell, contributor

    FORTUNE – Let's say you're a diligent retirement planner, the type who maxes out his 401(k) and IRA. Odds are, however, that you devote little thought to protecting the value of your human capital -- that is, your ability to earn and save money. Ignore it at MORE

    Jun 26, 2012 5:00 AM ET
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