How Does the Unemployment Rate Affect the Social Security Program?

Unemployment and Social Security

The unemployment rate across the country and in specific states fluctuates widely, based on a number of economic factors. Recessions, lower consumer spending and confidence, and other situations affect how many jobs are available and how many employees are terminated or hired.

Higher unemployment can affect social systems. It can also create a domino effect, where the impact of unemployment on one sector can affect a variety of industries, programs and organizations.

What Does Climbing Unemployment Mean for Social Security?

In 2007 and 2008, the United States and much of the world experienced a significant economic downturn. Considered one of the worst economic events since the Great Depression of the 1930s, the economic situation saw a significant increase in unemployment rates. Recovery has been slow, and the impact of the economic events of 2007 and beyond can still be felt in 2016.

For Social Security, higher unemployment has meant:

1) More applications.

Across the country, applications for Title II and Title XVI disability increased 27% between 2007 and 2011. Disabled workers may be more likely to be fired when unemployment increases. Employers may be looking to reduce costs, and one way to do this is by working with employees who can work longer and perform more tasks. In addition, employers may be less willing to support workers with disabilities when economic times become difficult. People struggling to find work may turn to benefits for economic support.

2) Declining allowance rates.

Allowance rates, or the percent of first Title II and Title XVI disability applicants approved, dropped to 33% from 35% between 2007 and 2011, as the number of applications increased.

3) More pressure on the Social Security system.

More applications mean more processing, which can mean an increase in staff or pressure on staff. If more benefits are paid, the costs of running the program increase even more. Costs for the SSA increased by $26 million between 2007 and 2011 for larger processing volumes alone.

Social programs are generally paid by some form of taxation, and some Social Security programs are paid for by payroll taxes specifically. When fewer people work, the amount of taxes paid declines. The amount of payroll taxes also drops overall, meaning the Social Security system has less money flowing in at a time when more people are seeking benefits.

4) More concerns over fraud.

The Social Security Administration becomes concerned with fraudulent applications and with ensuring eligibility of applicants. The Social Security Administration states they do not change their standards when unemployment rates increase, but a number of investigative reports following 2007 and into 2013 indicate that the administration may launch initiatives to prevent fraud.

If you have a legitimate claim for SSI, SSDI or other benefits, you should be able to secure them regardless if the economy is suffering and unemployment is high. If you face unreasonable delays, difficulties proving your claim, denial letters or other issues, legal representation may be able to help you present the strongest case possible to prove your disability and eligibility for benefits.

If you’d like legal support, contact the law office of Lisa M. Ritacco for a consultation. Lisa M. Ritacco has been supporting injured workers in Pennsylvania, Rhode Island, Maryland and surrounding states for more than seven years. She focuses on workers compensation, SSDI, SSI benefits.