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Disability Ranks Outpace New Jobs In Obama Recovery
By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

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More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery.

The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration.

The disability ranks have outpaced job growth throughout President Obama's recovery. While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits.

In other words, the number of new disability enrollees has climbed 19% faster than the number of jobs created during the sluggish recovery. (Even after accounting for people who left the disability program because they died or aged into retirement, disability ranks have climbed more than 1.1 million in the past three years.)

And the disability ranks will continue to swell. In just the last month, almost 275,000 put in applications for disability benefits. Experts say that more people try to get on disability when jobs are scarce, and changes to eligibility rules enacted back in 1984 have made it far easier to qualify.

In addition, while hiring has been very weak during the recovery, the number of people who have dropped out of the labor force entirely has exploded by 7.3 million since June 2009, an IBD analysis of BLS data show. Some aged into retirement, but most either signed up for disability, stayed in school, moved back in with parents, or just quit looking for a job.

As a result, the "labor force participation rate" — the number of people who have jobs or are actively looking for one compared with the entire working-age population — is now 63.8%, down from 65.7% in June 2009. This participation rate is at the lowest levels in 30 years. In previous recoveries, the participation rate has almost always risen, not fallen.

Other indicators show that the three-year-old economic recovery isn't producing jobs in adequate numbers:

The unemployment rate has been above 8% for 41 consecutive months. In the previous 60 years, the jobless topped 8% in a total of only 39 months.

The number of people with jobs is still nearly 5 million below its pre-recession peak.

The number of long-term unemployed — those out of work 27 weeks or more — is still 5.4 million — almost 1 million higher than when the recovery began, and almost twice the level it ever reached prior to Obama's recovery.

The median length of unemployment is 19.8 weeks. Throughout Obama's recovery, it has averaged 20.6 weeks. Prior to Obama, that number had had never exceeded 10.5 weeks.

The poor recovery has also driven people to sign up for food stamps in record numbers. From June 2009 to April 2012, food stamp enrollment surged 11.3 million, or 32%, according to the Department of Agriculture.

In addition, the soft jobs market has driven median household incomes down more after the recession ended than during the recession itself, according to Sentier Research, which tracks monthly household income.

After adjusting for inflation, median annual household income tumbled 5.3% from June 2009 to May 2012. In contrast, median incomes dropped 2.6% during the 18-month recession, Sentier found.

"The recession was bad enough," said Sentier's Gordon Green, "but what's extraordinary is the even larger decline during this so-called economic recovery."

It shows, Green said, "how much ground we have to make up just to get back to where we were."