This commentary originally appeared in Forbes on July 1, 2015.
West Virginia is the home of one of the nation’s highest-paid disability-insurance lawyers. This single attorney won federal disability benefits for some 1,800 people from 2006 to 2010 at a total cost to the U.S. treasury of about $2.5 billion.
With this in mind, it’s likely not a coincidence that West Virginia also has the highest percentage of adults ages 24 to 64 on federal disability, an astounding 15 percent of the population.
Utah and North Dakota are at the other end of the spectrum, where only 3 percent of the adult prime working age population is on disability.
There are several reasons proffered for the growth in Social Security Disability Insurance (SSDI) rolls over the past 30 years, from the aging of the American workforce, to the recent, deep recession, to abuse of an overgenerous system.
Once a worker goes on disability, they are far more likely to “graduate” to Social Security retirement or die than with only 6.5 percent going back to work with their benefits suspended.
The percentage of working age Americans on disability more than doubled from 1980 to 2011. And, as with many federal programs, the funds to pay for it are running dry with insolvency expected in 2016.
As Congress and presidential candidates discuss disability insurance reform, they would be well-served to examine a little-explored link between the state lawsuit climates and the rate of adults on SSDI.
Every two years, the U.S. Chamber of Commerce partners with a national public opinion firm to survey the lawsuit climate in each state. This extensive survey looks at factors such as tort and contract litigation, venue, class action suits, damages, discovery, and judicial performance. And, while the legal system the Chamber measures is separate from the federal SSDI system, which maintains its own cadre of judges, lawyers, and doctors, the two systems do share state boundaries. This allows for an interesting test: do states with bad lawsuit climates, dubbed “judicial hellholes” by the U.S. Chamber of Commerce, match up with states that have high disability rates? The answer, as shown by the chart below, is a strong “yes.”
In addition to West Virginia, Mississippi and Louisiana also have high disability rates and poor lawsuit climates. A toxic lawsuit climate discourages job growth and, as working age adults find it difficult to secure a good job, it may lead them to consider lawyering up to get federal SSDI benefits. Further, if a state is already suffering from a general culture of litigiousness, it may weaken social opprobrium directed at otherwise able-bodied workers who, in past generations, might have been derided as freeloaders for going out on disability.
Congress must reform SSDI or see the program run out of money. But the states have their role too. Lawsuit reform may have an unintended side benefit: increasing the availability of workers needed for healthy economic growth by putting downward pressure on workers seeking to exit the workforce on the federal dime.
Chuck DeVore is Vice President of Policy at the Texas Public Policy Foundation. He served as a California State Assemblyman. He is a lieutenant colonel in the U.S. Army (retired) Reserve.