Political discourse on the “society of widening social gaps” ( kakusa shakai ) in Japan largely focuses on the middle classes. On the one hand, the concept voices the fears of a majority of Japanese citizens of social downgrading and the eventual drop into the new sub-class of “working poor”. Neo-liberal politicians, on the other hand, defend social stratification as the natural and eventually desirable outcome of competition, which allows people to “challenge” their current social status and awards perseverance with upward mobility. Both positions, however, seem somewhat self-centered as they largely neglect those who are already at the fringes of Japanese society and, by the unfortunate circumstance of nature or accident, not able to enter the competition on the same terms as the majority. Disability in Japan, albeit less visible than in Western societies, is not a marginal issue even by numbers: 7.2 million people in Japan have some form of physical, mental or psychological disability (as of 2006). Considering that 87 percent of these live with their family, this multiplies the number of those affected by disability in their living circumstances to a sizable percentage of the total population. How then does this social group experience the kakusa shakai ? Mindful of the social and demographic changes, the Japanese government since 1990 has initiated a flood of social reforms which, among others, also sought to improve the position of disabled persons by contributing to their equal participation in society. The Services and Supports for Persons with Disabilities Act ( Shōgaisha jiritsu shienhō ) of 2005 constitutes the sum of these endeavors so far, but has right from the start earned the criticism of disability organizations and service providers for being too neo-liberalist and heralding the retreat of the welfare state in disability policies. This article discusses the discourse on disability and social inequality focusing on the Disabilities Act, arguing that especially providers of disability services tend to stress the link between disability and social inequality, not only to represent the rights and interests of persons with disabilities, but also in order to fight for their own existence in an increasingly competitive welfare market. Thus, the debate on disability and social inequality is linked with the wider discourse on social inequality, economic competition, and the precariousness of local finances.