DISABILITY NATION

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Posted on 27th March 2013 by Administrator in Economy |Politics |Social Issues

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Mike Shedlock with a blistering indictment of the fraud going on in the SSDI program. It will go broke in five years based on the current trends. The government will then raid the regular SSI fund, thereby shortening its eventual bankrupty by 5 years. The states with the biggest percentage is fascinating. It seems there is a lot of white trash People of Wal-Mart types with bad backs and depression.

 Unwilling to Work; 25% in Hale County AL Collect Disability, 14 Million Nationwide; A Simple Solution

A NPR report “Unfit For Work” notes the startling rise in those on disability. Here are some interesting facts from the article.

  • Every month 14 million Americans receive a disability check.
  • In 1961 the leading cause of disability was heart disease and strokes, totaling 25.7% of cases. Back pain was 8.3% of cases.
  • In 2011 the leading cause of disability was a hard to disprove back pain, totaling 33.8% of cases. The second leading cause was an equally difficult to disprove “mental illness” at 19.2%. Strokes and heart disease fell to 10.6%.
  • In West Virginia, a whopping 9% of the population collects disability checks. In Arkansas, 8.2% are on disability, and in Alabama and Kentucky, 8.1% collect disability. In Alaska, Hawaii, and Utah, the figure is 2.9%.
  • In Hale County Alabama 1 in 4 receive disability checks.
  • One thing nearly every case in Hale County Alabama has in common is Dr. Perry Timberlake who defines disability in a rather creative way.
  • Those on Supplemental Security Income, a program for children and adults who are both poor and disabled is nearly seven times larger than 30 years ago.
  • Once people go onto disability, they almost never go back to work. Fewer than 1 percent of those who were on the federal program for disabled workers at the beginning of 2011 have returned to the workforce.

Percentage of Population On Disability by State

 

Children on Disability

 

How Easy is it to Get Disability?

Hale county’s Dr. Timberlake asks a simple question to all his patients. “What grade did you finish?” If you claim “back pain” and do not have a degree, Timberlake believes you are disabled.

The Disability Deal

Getting disability seems easy enough in some states, and especially easy in Hale County Alabama. But is disability better than minimum wage? The answer is yes. NPR author Chana Joffe-Walt explains:

People who leave the workforce and go on disability qualify for Medicare, the government health care program that also covers the elderly. They also get disability payments from the government of about $13,000 a year. This isn’t great. But if your alternative is a minimum wage job that will pay you at most $15,000 a year, and probably does not include health insurance, disability may be a better option.

Going on disability means you will not work, you will not get a raise, you will not get whatever meaning people get from work. Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life. That’s the deal. And it’s a deal 14 million Americans have signed up for.

Disability has become a de facto welfare program for people without a lot of education or job skills.

Parents Force Kids to Underachieve

Joffe-Walt explains the special plight of kids.

When you are an adult applying for disability you have to prove you cannot function in a “work-like setting.” When you are a kid, a disability can be anything that prevents you from progressing in school.

Jahleel’s mom wants him to do well in school. But her livelihood depends on Jahleel struggling in school. This tension only increases as kids get older. One mother told me her teenage son wanted to work, but she didn’t want him to get a job because if he did, the family would lose its disability check.

Kids should be encouraged to go to school. Kids should want to do well in school. Parents should want their kids to do well in school. Kids should be confident their parents can provide for them regardless of how they do in school. Kids should become more and more independent as they grow older and hopefully be able to support themselves at around age 18.

The disability program stands in opposition to every one of these aims.

Clinton Ends Welfare As We Know It

In 1996 Bill Clinton signed a welfare reform act, that he proclaimed to be the “End of Welfare As We Know It”. It was. People moved off welfare on to even easier to get disability programs.

Part of Clinton’s welfare reform plan pushed states to get people on welfare into jobs, partly by making states pay a much larger share of welfare costs.

The incentive “worked” using the term loosely. Welfare rolls shrank but disability rolls soared.

Welfare Costs States Money Disability Doesn’t

A person on welfare costs a state money. That same resident on disability doesn’t cost the state a cent, because the federal government covers the entire bill for people on disability. So states can save money by shifting people from welfare to disability. And the Public Consulting Group is glad to help.

PCG is a private company that states pay to comb their welfare rolls and move as many people as possible onto disability. “What we’re offering is to work to identify those folks who have the highest likelihood of meeting disability criteria,” Pat Coakley, who runs PCG’s Social Security Advocacy Management team, told me.

The company has an office in eastern Washington state that’s basically a call center, full of headsetted women in cubicles who make calls all day long to potentially disabled Americans, trying to help them discover and document their disabilities:

“The high blood pressure, how long have you been taking medications for that?” one PCG employee asked over the phone the day I visited the company. “Can you think of anything else that’s been bothering you and disabling you and preventing you from working?”

The PCG agents help the potentially disabled fill out the Social Security disability application over the phone. And by help, I mean the agents actually do the filling out.

There’s a reason PCG goes to all this trouble. The company gets paid by the state every time it moves someone off of welfare and onto disability. In recent contract negotiations with Missouri, PCG asked for $2,300 per person. For Missouri, that’s a deal — every time someone goes on disability, it means Missouri no longer has to send them cash payments every month. For the nation as a whole, it means one more person added to the disability rolls.

Disability Fraud

Who is making the case for the other side? Who is defending the government’s decision to deny disability?

Nobody.

And that in a nutshell explains soaring disability roles and massive fraud.

Disability fraud also makes a joke out of reported unemployment numbers. If you have a disability, you are no longer in the workforce.

Not in Labor Force With a Disability

 

I would love to show data pre-recession. Unfortunately, the data only goes back to mid-2008. We can see however, that nearly 23 million Americans are not in the labor force because of “disabilities”.

I suggest “fraud” is more like it.

Curious BLS Numbers

Here’s the curious thing: 14 million collect disability, but the BLS says 22.726 million are not in the labor force (not working), because of disabilities.

What are the other 8.726 million doing? Is the BLS inflating disability numbers making the unemployment rate absurdly low, or are states doing that poor a job getting people off welfare and on to federal government disability programs? Some of both?

Regardless, we need to stop this madness.

Simple Solution

One easy way to eliminate some of the fraud would be to put someone in charge of making a case for the other side. No, we do not need new Federal programs. All we need do is “Un-end Welfare as We Know It“.

If states had any incentive to stop disability fraud, we would not have so much of it. Make states responsible for a large portion of disability claims just as they are for welfare, and the number of people collecting disability will collapse.

I have written many times about disability fraud, its relation to the unemployment rate, and its relation to expiring unemployment benefits. Inquiring minds may wish to consider some Disability Fraud Examples.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

Read more at http://globaleconomicanalysis.blogspot.com/#XRdE3Bvvs3EYYfu4.99

FEBRUARY 2008 vs FEBRUARY 2013

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Posted on 11th March 2013 by Administrator in Economy |Politics |Social Issues

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Mike Shedlock has provided a chart that says it all. Here were the closing levels on the Dow Jones on the last day of February in 2008 and 2013:

Dow Jones – February 29, 2008 – 12,266

Dow Jones – February 28, 2013 – 14,054

This is a 14.6% increase in 5 years. Not great, but still a positive return. Meanwhile, the working age population has risen by 12 million, there are 2.3 million less employed Americans, there are 5.3 million less full-time employed Americans, 9.8 million Americans supposedly left the workforce by their own choice, there are 20.3 million more Americans on food stamps, the median household net worth has declined by 30%, and real wages are lower than they were in 2008. These FACTS certainly mean that the stock market should be hitting all-time highs. Right? Who is winning? You or them?

Year Population Labor Force Not in LF Employed FT Employed PT Employed Unemploy. SNAP
2008 232,809 152,503 80,306 144,550 119,452 25,098 7,953 26,316
2009 234,913 153,804 81,109 140,105 112,947 27,158 13,699 28,223
2010 236,998 153,194 83,804 137,203 109,100 28,103 15,991 33,490
2011 238,851 152,635 86,216 138,093 110,731 27,361 14,542 40,302
2012 242,435 154,114 88,322 140,684 112,587 28,096 13,430 44,709
2013 244,828 154,727 90,100 142,228 114,191 28,037 12,500 46,609
Change 12,019 2,224 9,794 -2,322 -5,261 2,939 4,547 20,293
OC 9,915 923 8,991 2,123 1,244 879 -1,199 18,386

Read more at http://globaleconomicanalysis.blogspot.com/#ZAsC1kKDRyvsBb6q.99

SOME MORE FACTS ABOUT THE FANTASTIC JOBS RECOVERY

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Posted on 9th March 2013 by Administrator in Economy |Politics |Social Issues

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Mike Shedlock puts a huge pin in the MSM/Government Jobs Recovery storyline bubble. The economy lost 276,000 full-time jobs and gained 446,000 part-time jobs in February. Does that sound like a recovery? It sounds like deperation to me. It sounds like Obamacare to me. I work for the largest employer in Philadelphia and I’ve seen first hand that they are panicked by Obamacare. It is so complicated they are paralyzed with fear of doing something wrong and incurring huge penalties. Obamacare is stopping companies from hiring employees and it is making others convert fulltime workers into part-time workers. But pay no attention to the facts. Buys stocks and “invest” in a few houses. 

Spoiling the “Great Employment News”

This article originally appeared on MarketWatch under the title Jobs numbers are far worse than they look.

I selected my title from a humorous comment on MarketWatch by reader “Homer Price” who writes “Mike, What are you doing ? Trying to spoil the GREAT EMPLOYMENT news. Just wait until next year when the Unaffordable Care Act kicks in. THE BEST IS YET TO COME ……………………….. ”

There are other interesting comments as well. Inquiring minds may wish to take a look. Now for my article …

Economists were surprised by the massive “beat” in today’s reported job numbers. The unemployment rate dropped .2 to 7.7% and the economy allegedly added 236,000 jobs.

Is that what really happened? No not really.

According to the household survey (on which the unemployment rate is based) the economy added a healthy 170,000 jobs. However, a whopping 446,000 of those jobs were part-time jobs. Simply put, the economy shed 276,000 full-time jobs.

The BLS labeled those 446,000 part-time jobs as “voluntary”. I am not so sure.

A Gallup Survey yesterday on Jobs show the percentage of workers working part time but wanting full-time work was 10.1% in February, an increase from 9.6% in January, and the highest rate measured since January 2012.

                       

Gallup notes “Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer. In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time. Although part-time work is clearly better than no work at all, these are not the types of good jobs that millions of Americans are still searching for.”

Obamacare Effect

Obamacare is in play. Recall that under Obamacare, the definition of full-time employment is 30 hours. The BLS cutoff is 34 hours. At 30 hours, companies have to pay medical benefits so they have been slashing the number of hours people work. This reduced the number of hours people worked and provided an incentive for many to take on an extra job.

We can see the effect in actual BLS data.

Multiple Jobholders as a Percent of Employed

After declining for years, the percent of those working two or more jobs is again on the rise.

Multiple Jobholders

In the past month there was a surge of 679,000 in the number of people working multiple jobs. The seasonally-adjusted increase, as shown above, was 340,000.

One can look at the data two ways.

  1. The economy is getting better and more jobs are available
  2. People are working more jobs because their hours were cut and they need a second job

Evidence suggests more of the latter than the former.

Expect Downward Revision in Establishment Survey

The reported 236,000 surge in the establishment survey is not real. It will be revised away.

This is why: In the household survey one is either working or not, thus multiple jobs do not distort the reported unemployment rate (although there are many other distortions such as the participation rate and declining labor force).

The establishment survey, however, is distorted by people working multiple jobs. A surge in multiple-job workers would artificially hike the baseline number. I expect revisions later, probably huge downward revisions.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

Read more at http://globaleconomicanalysis.blogspot.com/2013/03/spoiling-great-employment-news.html#frwKOgZDyg8gsAZc.99

 

IT WON’T COST A DIME

19 comments

Posted on 13th February 2013 by Administrator in Economy |Politics |Social Issues

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Since I didn’t watch Obama’s speech last night, I can’t make an assessment. Mike Shedlock does a fantastic job pointing out the blatant lies, misinformation, and utter contempt for the truth in the Savior’s vacuous self serving speech. All is Well!!! Trust Obama. He knows what is best for you. Let’s do it for the children.

Hot Air and No Substance; Obama’s Plan to Destroy Jobs “Won’t Cost a Dime”

When it comes to political lies that cannot and will not be met “It won’t cost a dime” is right at the top of list. Not unexpectedly, that was central thesis of numerous Fantasyland projections in Obama’s State of the Union Address Tuesday Evening.

Here are a few ideas from his state of the union address and my comments on them.

On Health Care Quality

In reference to health care costs, the president claims “medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital – they should be based on the quality of care that our seniors receive.”

Mish says good luck with charging healthcare based on quality, because quality is impossible to define.

On Closing Loopholes

Obama says we can hit deficit targets and “save hundreds of billions of dollars by getting rid of tax loopholes and deductions”.

Mathematically speaking, one cannot save a dime by closing loopholes. Closing loopholes may be more fair, but that has nothing to do with “saving money”. Rather, closing loopholes simply spreads costs around in a different fashion.

On Tax Code Changes

Obama says “The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring.”

I certainly agree with that, and a flat tax with no deductions would do just that.

Would Obama be willing to implement a flat tax structure and close “loopholes” like the mortgage interest rate deduction?

Of course not. The Real Estate industry would scream bloody murder. Obama is not really interested in closing loopholes per se, just the selected ones that he wants.

Hot Air and No Substance

Obama says “The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next.”

I certainly agree with that.

The solution is to get rid of the Fed, end fractional reserve lending, and implement a balanced budget. Unfortunately, the president did not mention any of those action items. He is all hot air and no substance.

It Won’t Cost a Dime

Obama wants “Congress to help create a network of fifteen [manufacturing] hubs and guarantee that the next revolution in manufacturing is Made in America. He says “nothing I’m proposing tonight should increase our deficit by a single dime.”

That certainly would be excellent news (if only it was true). In reality, new manufacturing hubs in one city will come at the expense of existing manufacturing somewhere else unless more money is thrown at the problem.

Yet, if more money is thrown at the problem, why should anyone expect results different from Obama’s disastrous entry in various clean energy schemes that went bankrupt?

Climate Change Nonsense

Obama says “For the sake of our children and our future, we must do more to combat climate change.”

I suggest that if we want to do something for the sake of our kids, we should eliminate the deficit, get rid of the Fed, and back the dollar with gold.

Regardless of whether or not anyone believes the hype over global warming, the notion that governments will do anything sensible about it is complete nonsense. Certainly every cap-and-trade proposal to date has been preposterous.

Obama speech got downright scary when he said “If Congress won’t act soon to protect future generations, I will. I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”

And somehow that will “not cost a dime”.

“The states with the best ideas to create jobs and lower energy bills by constructing more efficient buildings will receive federal support to help make it happen.”

Apparently, federal support to construct more buildings will “not cost a dime” either.

“Fix-It-First”

President Obama proposes a “Fix-It-First program to put people to work as soon as possible on our most urgent repairs, like the nearly 70,000 structurally deficient bridges across the country.”

Supposedly that will not “cost a dime either”. Wait a second on that. His next sentence was “And to make sure taxpayers don’t shoulder the whole burden, I’m also proposing a Partnership to Rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children”.

I have a simple question: What part of the burden will taxpayers shoulder?

This “partnership” sounds suspiciously like a plea for tax hikes with the money going to overpaid public union workers.

If the president really wanted to insure we rebuild America at a reasonable cost, he would scrap Davis-Bacon and all prevailing wage laws, implement national Right-to-Work laws, and end collective bargaining of public union workers.

Instead, the president appears willing to tax the rest of the county to death to help the unions who elected him.

Still More Tax Hikes

The tax hikes don’t stop with “Fix-It-First” either. Obama says “Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates.”

If that does not add to the deficit, then it must be achieved by tax hikes.

Preschool

The president’s free money ideas roll on and on. Obama proposes “working with states to make high-quality preschool available to every child in America”. Supposedly that pays for itself.

Job Destruction

The surest way to destroy jobs is for government to mandate businesses pay labor costs in excess of a natural rate. Yet, Obama pledges to do just that. Specifically, Obama wants to “raise the federal minimum wage to $9.00 an hour”. 

He claims “This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.”

Minimum Wage Seen and Unseen

The president ignores the “unseen” effect of those who do not get a job because companies choose to hire a software or hardware robot instead on overpriced human.

The problem is not a minimum wage, but rather how much the dollar buys. If Congress did not debase the dollar with massive deficits, the dollar would buy much more than it does.

The irony is Obama complains of “Factory towns decimated from years of plants packing up. Inescapable pockets of poverty, urban and rural, where young adults are still fighting for their first job.”

The US lost jobs because US wages were too high. Manufacturing is now returning, but to robots, not humans.

The president concluded “Thank you, God bless you, and God bless the United States of America.”

I conclude the president’s entire speech was one proposal after another that will destroy jobs, add to the deficit, and increase taxes.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

Read more at http://globaleconomicanalysis.blogspot.com/2013/02/hot-air-and-no-substance-obamas-plans.html#DLu2BrriEiml1guY.99

DUMBASSES ABOUND

5 comments

Posted on 28th January 2013 by Administrator in Economy |Politics |Social Issues

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Some ideas are so stupid, only a “highly educated” person could believe them. Mish heaps scorn and ridicule upon one of these Ivy League douchebags.

 

“Libertarian Turned Keynesian” Responds

In response to How to Debate Paul Krugman: “Ask Questions Like a Child”, a self-proclaimed “Libertarian Turned Keynesian”, a graduate of Columbia University, writes …

Hello Mish

I want you to publish this rebuttal to your post.
You can use my first name if you’d like with Libertarian-turned-Keynsian in brackets.

Let’s say there are 8 million healthy, unemployed people in US.

The Treasury can simply print 4 million pieces of IOU claiming that the holder of this piece of paper is entitled to a free massage or a free cleaning services or free haircut or free baby-sitting or free moving (basically any service worth $50 with negligible raw material) from another unemployed person and simply distribute it to unemployed people.

What happens? On Day 1, the 4 million who got the coupons tender their coupons and receive services (increase in daily GDP 4 million * 50 == 200 Million).

On Day 2, the opposite happens and this goes on quite a while. Now, lets say the economy improves and 2 Million get employed. Now essentially we have 1 Million extra coupons (inflation). Treasury will tax the lucky/rich people who have a job and a coupon and essentially retire them.

Or, let’s say the economy deteriorates and 2 more more million get unemployed. Now there are few coupons and some may be willing to do the job for 3/4th of a coupon (deflation). Now essentially Treasury can print extra 1 million and distribute them.

Notes:

1) We need flexible money supply.
2) Having gold standard is stupid. What does amount of gold supply have to do with anything?
3) We increased GDP by simply printing pieces of paper.

Bonus:

Let’s say someone comes with a brilliant idea that one unemployed can actually perform two jobs a day. Now instantly the capacity doubled and Treasury can print double the amount of IOUs.

So Ridiculous I Hardly Know Where to Start

I did not post the first name of “Libertarian Turned Keynesian” on purpose. His name was unusual enough that he could be found.

The above response is clearly absurd. I reply only because it is precisely the kind of “something for nothing” silliness that is frequently taught in higher education.

  1. Any person with a modicum of common sense, at any education level beyond 7th grade, should understand what happens to demand as soon as free money stopped.
  2. Any person with a modicum of common sense, at any education level beyond 7th grade, should understand costs of goods and services would soar if free money was handed out in any significant amount.
  3. Any college graduate should understand the difference between nominal GDP and “real” inflation adjusted GDP.
  4. Any college graduate should understand what happened in Zimbabwe and Weimar Germany.
  5. Any person with any amount of common sense should understand it’s what you get for your money, not how much you have, that matters.

Ignoring the typos, clearly the writer has absolutely zero sense of the difference between nominal GDP and wealth. In nominal terms (using the number of Zimbabwe dollars in circulation as “wealth”), Zimbabwe was economically the strongest country in the world.

Unfortunately, they cannot teach common sense in schools. Instead they teach Keynesian claptrap. Then economically illiterate graduates write me things similar to the above. This kind of thing happens all the time, frequently with emails ending in “.EDU”.

Addendum: Spare the Monetarists?

Reader Ayal asks “You target your attacks at Keynes and Keynesians, but why do you spare the Monetarists?”

The simple answer is I don’t. Bernanke is primarily a monetarist with some Keynesian tendencies as well.  QE is 100% monetarism and I attack that all the time.

Countless times I have pointed out that Japan tried both monetary and fiscal stimulus and failed. One can also search my blog for Greg Mankiw, the high priest of monetarism to see what I have to say.

If I had to pick one article in that search reference to read, it would undoubtedly be Modern Day Fairy Tale of 3 Economic Wizards (Except It’s True)

Comment

It’s quite shocking  what comes out of our education system. Of course, what comes out is hugely influenced by economically illiterate teachers at the highest levels in education.

Addendum 2: Not a Hoax

Several people suggested the email was a hoax. 

It’s not. I have additional correspondence with this person thanking me for not using his name. And a Google check of his name with numerous references ties back to Columbia.

Mike “Mish” Shedlock
 http://globaleconomicanalysis.blogspot.com

Read more at http://globaleconomicanalysis.blogspot.com/#bhi3yBrBGz5EXBDe.99

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