Last week we received the “good news” about the economy. Unsurprisingly, I was a bit skeptical (here). While jobs are being created—321,000 in November alone—long-term unemployment and workplace participation rates remain abysmal. For those who would like to celebrate the recovery, I recommend Binyamin Appelbaum piece on “The Vanishing Male Worker” (NYT). As Appelbaum notes:
Working, in America, is in decline. The share of prime-age men — those 25 to 54 years old — who are not working has more than tripled since the late 1960s, to 16 percent. More recently, since the turn of the century, the share of women without paying jobs has been rising, too. The United States, which had one of the highest employment rates among developed nations as recently as 2000, has fallen toward the bottom of the list.
Many men, in particular, have decided that low-wage work will not improve their lives, in part because deep changes in American society have made it easier for them to live without working. These changes include the availability of federal disability benefits; the decline of marriage, which means fewer men provide for children; and the rise of the Internet, which has reduced the isolation of unemployment.
Welcome to the “New Normal.”
Of course, this can’t go on indefinitely. As the Social Security and Medicare Board of Trustees warn, in their 2014 report:
Social Security’s Disability Insurance (DI) program satisfies neither the Trustees’ long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 62 percent at the beginning of 2014, and the Trustees project trust fund depletion late in 2016, the same year projected in the last Trustees Report. DI costs have exceeded non-interest income since 2005 and the trust fund ratio has declined in every year since peaking in 2003. While legislation is needed to address all of Social Security’s financial imbalances, the need has become most urgent with respect to the program’s disability insurance component. Lawmakers need to act soon to avoid automatic reductions in payments to DI beneficiaries in late 2016.
A question to ponder this weekend: Which political party will embrace legislation to shore up the Social Security Disability Insurance program between now and the next presidential election in 2016?
The answer, alas, is obvious. The New Normal can’t last.