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Workers Stuck in Disability Stunt Economic Recovery

Wall Street Journal (04/07/13) Leslie Scism; Jon Hilsenrath

The U.S. work force participation rate has declined to the lowest level seen since 1979, and many of the “missing” workers are receiving federal disability benefits. If those workers don’t return to the work force, they could cost the economy tens of billions of dollars annually in lost wages and tax revenues.

Michael Feroli, chief U.S. economist for J.P. Morgan, estimates that since the recession, the worker exodus to the federal disability program accounts for as much as 25% of the decline in work force participation rates, which could have far-reaching economic consequences. Experts say many of the people in the program are unlikely to leave it, because there is little incentive for them to do so. As of March, 8.9 million Americans were participating in the federal disability program, or 5.4% of the civilian work force ages 25 to 64, up from 1.7% of the work force in 1970.