September 22, 2013

Maine mills’ decline coincides with spike on disability rolls

Former papermakers are part of a national shift: using the program for long-term unemployment relief.

By MICHAEL A. FLETCHER The Washington Post

MILLINOCKET - The huge mills along the Penobscot River roared virtually nonstop for more than a century, turning the dense Maine forests into paper and lifting the thousands of men who did the hot and often backbreaking work into the middle class.

DISABILITY
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The Great Northern Paper plant in East Millinocket continues to operate, but at a greatly diminished capacity compared to the Maine paper industry’s heyday. Some of the job losses have contributed to a rise in disability claims in the area.

Photos for The Washington Post by Carl D. Walsh

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Eugene LaPorte worked at the Great Northern mill in East Millinocket for 38 years before being laid off in 2011. Since then, LaPorte, who has a number of health issues, has been among an increasing number of disability recipients.

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But the mills have struggled in recent years, shedding thousands of jobs. Now this area, whose good-paying jobs provided an economic foothold for generations of blue-collar workers, has become a place where an unusually large share of the unemployed are seeking economic shelter on federal disability rolls.

Between 2000 and 2012, the number of people in Penobscot County receiving Social Security disability benefits skyrocketed, rising from 4,475 to 7,955 -- or nearly one in 12 of the county's adults between the ages of 18 and 64, according to Social Security statistics.

The fast expansion of disability here is part of a national trend that has seen the number of former workers receiving benefits soar from just over 5 million to 8.8 million between 2000 and 2012.

Another 2.1 million dependent children and spouses also receive benefits.

The crush of new recipients is putting unsustainable financial pressure on the program.

Federal officials project that the program will exhaust its trust fund by 2016 -- 20 years before the trust fund that supports Social Security's old age benefits is projected to run dry.

The growth of the disability rolls has accelerated since the recession hit in 2007. As the labor market tightened, workers with disabilities whom employers previously accommodated on the job -- painful hips, mental disorders, weak hearts -- were often the first to go. Finding new work often proved difficult, causing many to turn to the disability rolls for support.

The migration of so many people from work to the disability rolls is raising concern among lawmakers in Congress that the program is being stretched beyond its original intent of providing a safety net for former workers whose medical problems make them unable to work.

The week before last, the Government Accountability Office found that the program made $1.3 billion in potentially improper payments to people who had jobs when they were supposedly disabled. The allegedly improper payments represent less than 1 percent of disability payments.

While fraud remains a concern, policymakers say the program's biggest vulnerability is the subjective criteria that create a large gray area for applicants.

A worker with physical impairments that are difficult to document precisely, like a bad back, can tolerate the condition while on the job but claim it as a reason to go on disability if he falls out of work for a prolonged period.

Many recipients first go on unemployment, which can last a few months or even more than year. Disability, in contrast, can pay out benefits for decades. The vast majority of recipients never return to work.

"The disability program is increasingly becoming a long-term unemployment program," said Richard Burkhauser, a Cornell University professor who co-wrote a book on disability policy and has testified before Congress about the program. "We see a lot of it now because of the effects of the recession."

The program, which is mostly funded by the Social Security payroll tax, paid out $135 billion in 2012, and it has spent more money than it has collected in payroll taxes every year since 2009, according to the Congressional Budget Office.

People on disability can receive Medicare after two years, regardless of age, which adds another $80 billion to the program's tab.

The trust fund has teetered financially as recently as the early 1990s, and Congress solved the problem by transferring money from the fund supporting Social Security retirement benefits.

(Continued on page 2)

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Additional Photos

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The paper mill in Millinocket, which opened in 1900, now sits closed as the private equity firm Cate Street Capital tries to revive its operation. Great Northern at one time employed 4,500 workers in the area. Now it is down to about 400 employees working at the mill in East Millinocket.

  


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