Social Security Turns 86, Millions of Working People Lifted Out Of Poverty

Filed under: Features |

America’s Social Security safety net turns 86 this month.

The Social Security Act of 1935 enacted by the 74th United States Congress and signed into law by US President Franklin D. Roosevelt, Aug. 14, 1935

The law created the Social Security program as well as insurance against unemployment. The law was part of Roosevelt’s New Deal domestic program designed to help the United States recover from the Great Depression.

By the 1930s, the United States was the only modern industrial country without any national system of social security.

In the midst of the Great Depression, physician Francis Townsend galvanized support for a proposal to issue direct payments to the elderly. Responding to that movement, Roosevelt organized a committee led by Secretary of Labor Frances Perkins to develop a major social welfare program proposal.

Social Security Act
Roosevelt Signs The Social Security Act: President Roosevelt signs Social Security Act, at approximately 3:30 pm EST on 14 August 1935. Standing with Roosevelt are Rep. Robert Doughton (D-NC); unknown person in shadow; Sen. Robert Wagner (D-NY); Rep. John Dingell (D-MI); Rep. Joshua Twing Brooks (D-PA); the Secretary of Labor, Frances Perkins; Sen. Pat Harrison (D-MS); and Rep. David Lewis (D-MD).

Roosevelt presented the plan in early 1935. He signed the Social Security Act into law on August 14, 1935.

The Supreme Court upheld the constitutionality of the act in two major cases in 1937.

Major Improvement For Working People

The Social Security Act represented a major improvement in the lives of working Americans.

The law established the Social Security program, an old-age program funded by payroll taxes. During the ensuing decades, it has contributed to a dramatic decline in poverty among the elderly. It is considered the most successful federal legislation in American history.

Spending on Social Security became a major part of the federal budget.

The elderly were not only beneficiaries of enactment of social security. The lives of working people were directly affected for the better by the passage of the Social Security Act.

The Social Security Act also established an unemployment insurance program administered by the states. It created the Aid to Dependent Children program, aid to families headed by single mothers. The Social Security Act has been amended several times since 1935. Amendments such as the Social Security Amendments of 1965, established two major healthcare programs: Medicare and Medicaid.

A Product Of Industrialization

The need for Social Security is directly traceable to social changes brought by industrialization.

The industrial revolution transformed work and society. Rapid industrialization and the urbanization in the 20th century created numerous new social problems. Ideas of how society and the government should function changed.

Ford assembly line, Highland Park, Mi., 1913

The so-called Second Industrial Revolution, sometimes called the Technological Revolution, was an era of rapid standardization and industrialization from about 1870 until 1914 and the start of World War I in Europe.

The massive growth of railroad and telegraph lines after 1870 allowed unprecedented movement of people and ideas. This culminated in a new wave of globalization.

New technologies appear. The most significant of these were electrical power and telephones. American railroad mileage tripled between 1860 and 1880. It tripled again by 1920. The railroad was opening new areas to commercial farming. It created a truly national marketplace. It led to a boom in coal mining and steel production.

As work moved from farms to factories, from villages to cities, workers naturally followed.

As industry expanded, cities swelled to keep up with demand for labor. Tenement houses, quickly and poorly built, sprang up. These cramming new migrants from farms and Southern and Eastern European immigrants into tight and unhealthy spaces. Workplaces were even more unsafe.

Depression Changes Everything

Increased mechanization and worker efficiency increased the productivity of factories, undercutting the need for skilled labor. The side effect of this progress was unemployment and great upheavals in commerce and industry. Machines displace many laborers. Factories, ships and other types of equipment become obsolete.

The United States experienced its highest economic growth rate during the last two decades of the Second Industrial Revolution. It wasn’t to last.

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States.

It was the longest, deepest, and most widespread depression of the 20th century and is an example of how intensely and rapidly the global economy can decline.

Between 1929 and 1932, worldwide gross domestic product (GDP) nosedived by approximately 15%. International trade plummeted 50%. By comparison, worldwide GDP declined less than 1% from 2008 to 2009 during the Great Recession. In many countries the effects of the Great Depression lasted until World War II.

Unemployment in the U.S. rose to 23% during the Great Depression. Unemployment among the elderly in the U.S. exceeded 50%.

Prior to the passage of the Social Security Act, there was no national government support of any kind for the unemployed in the U.S.

Social Security: America Lags The Industrialized World

By the 1930s, the United States was the only modern industrial country in which people faced the Depression without a national system of social security.

A handful of states had poorly-funded old-age insurance programs. The federal government had provided pensions to some veterans of the Civil War and other wars. Some states had established voluntary old-age pension systems. Otherwise, the United States had little experience with social insurance programs. For most American workers, retirement was not an option.

In 1934, under Roosevelt’s direction the Committee on Economic Security, chaired by Secretary of Labor Frances Perkins, to develop an old-age pension program, an unemployment insurance system, and a national health care program.

Dropped from the act was the national health care system proposal. The committee developed an unemployment insurance program largely administered by the states. The committee also developed an old-age plan. Roosevelt wanted the old-age plan funded by individual worker contributions.

The Social Security Act became law in August 1935 after a series of contentious congressional hearings. During the congressional debate, the idea of. During the debate Congresses added a provision providing for payments to widows and dependents of Social Security recipients.

Not all workers benefited. Job categories not covered by the act included workers in agricultural labor, domestic service, government employees, and many teachers, nurses, hospital employees, librarians, and social workers.

Unequal Results

As a result,

65% of the African American workforce was excluded from the initial Social Security program as well as 27% of white workers. Many of these workers were covered only later on, when Social Security was expanded in 1950 and 1954.

The program was funded by a new payroll tax, later known as the Federal Insurance Contributions Act tax.

Each state would collect Social Security taxes from employers. Employers and employees would be contributing equally to the tax.

Because the Social Security tax was regressive, and Social Security benefits were based on how much each individual had paid into the system, the program would not contribute to income redistribution in the way that some reformers, including Perkins, had hoped.

In addition to creating the program, the Social Security Act also established a state-administered unemployment insurance system and Aid to Dependent Children, which provided aid to families headed by single mothers.

Compared with the social security systems in Western Europe, the Social Security Act of 1935 was conservative. However, it was the first time the U.S. federal government took responsibility for the economic security of the aged, the temporarily unemployed, dependent children, and the handicapped.

Post Script

The first recorded Social Security payment was to Ernest Ackerman, a Cleveland motorman who retired one day after Social Security began. Five cents was withheld from his pay during that period. He received a lump-sum 17-cent payment.

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938, and 1939, she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, she had received more than she contributed. Fuller lived to be 100, dying in 1975. She collected a total of $22,888.92.

Read More

List your business in the premium web directory for free This website is listed under Human Resources Directory