Social Security Act

SOCIAL SECURITY ACT

As the Great Depression (1929–39) in the United States continued in the early 1930s, growing unemployment created widespread fear and insecurity. Between 1929 and 1933 the unemployment rate rose from 3.2 percent to 25.1 percent. Funds from charities and local government were almost completely drained. Many demands were placed on the federal government to design and implement economic and social reforms to help abate social tensions.

One of the groups that arose during this crisis was composed of senior citizens. Led by an elderly California physician by the name of Francis E. Townsend, the "Townsend Plan" involved a government program of monthly checks of $200 to citizens over the age of 60. The only way to stay on the program was to spend all of the money each month. According to Townsend, this requirement would put money in circulation and stimulate the economy. Beginning in 1933, the group formed a network of "Townsend Clubs" with a combined membership of over 5 million, mostly older, Americans who agitated for the reform.

President Franklin D. Roosevelt (1933–45) responded to these and other concerns by appointing the Special Committee on Social Security, chaired by Secretary of Labor Frances Perkins. The committee's recommendations became the foundation for one of the most significant federal social policies in U.S. history, the Social Security Act of 1935. The Social Security Administration provided unemployment insurance, aid to the poor, and pensions for the elderly.

The Social Security System acted as a non-profit insurance company, raising funds through taxes on employers and employees for old age insurance. The size of each pension was based on how much the worker contributed to the fund. Increased earnings resulted in increased pensions. In order to build up the fund, these social security pensions were not to be dispersed before 1942. Originally, this protection did not apply to non-workers who could not contribute to a pension fund. It also did not apply to family members of a deceased pensioner and to farmers and domestic laborers (who were usually poor).

Congress amended the Social Security Act in 1939 to authorize pension payments to survivors of deceased Social Security recipients. In 1965 Medicare was added to provide health care for eligible retirees. In 1989 Social Security covered 38 million people (nearly all the elderly), and it accounted for nearly a quarter of the one trillion-dollar federal budget. In the late 1980s the poverty rate among the elderly was just below that of the general population. In 1998 discussions began about shoring up the social security program. As the 76 million baby boomers reached retirement age, there would be fewer workers paying taxes compared to the number of people drawing benefits. Without revisions, experts predicted, funds would begin to run out early in the twenty-first century.

The Social Security Act included other programs as well. Unemployment insurance was developed to provide some security against joblessness; it was funded by employee and employer taxes. In 1938 minimum wage and child labor laws were implemented, while federal disability insurance was added in 1956. In the 1960s and 1970s government assistance programs grew significantly in response to demands of liberal activists. In 1965 Medicaid was added to help support health care for the poor. In the 1960s and 1970s the food stamp program was developed, which helped the poor buy food. In 1972 the Supplemental Security Income system was enacted to provide assistance for the elderly and disabled poor.

Another arm of the Social Security Act that significantly impacted the country's social structure and created much controversy was Aid to Dependent Children (ADC). Originally, ADC was designed to help widowed mothers who could not adequately support their families. In 1950 Congress amended ADC to provide grants not only to single parents but also to their children. The program was renamed Aid to Families of Dependent Children (AFDC). Additional amendments broadened coverage to include poor, two-parent families. By the late 1980s more than three million families were receiving AFDC benefits. The growth of this program over the years sparked debate about its role in creating an underclass. While most agreed that the program provided many families with temporary assistance, as was its original intent, critics charged that it stigmatized recipients and conveyed in them a sense of hopelessness, and that it in the same time caused resentment among taxpayers. In the 1980s the focus of anti-poverty programs turned to single mothers receiving AFDC. Initially, these programs provided work training and job placement and, as incentives, they also offered childcare assistance and Medicaid for a year after the recipient began to work. In 1988 the Family Support Act required mothers without children under three to work. In the early 1990s President Bill Clinton (1993–) allowed 42 states to change their AFDC programs in any way they saw fit. These states were not required to provide job training; they could impose time limits on adults receiving assistance and they could also withdraw assistance from those who did not comply with certain conditions. Because of these changes critics predicted a potential rise in single, working poor women who were not equipped to adequately support their children.

Over the years the Social Security Act was successful at protecting a large number of individuals from various forms of suffering. However, even though social security programs have grown and expanded to provide for the poor and disadvantaged, still in 1989 about 15 percent of Americans were poor and 37 million Americans had no medical insurance. In the late 1990s conservatives and liberals, as well as special interest groups on both sides, continued to debate the advantages of restricting or expanding social programs into the twenty-first century.

See also: Great Depression, Medicare, Medicaid, Franklin D. Roosevelt, Townsend Clubs, Welfare Policy

FURTHER READING

Albelda, Randy and Chris Tilly. "Once upon a Time: A Brief History of Welfare," Dollars and Sense. Boston: n.p., 1996.

Brinkley, Alan. Voices of Protest: Huey Long, Father Coughlin, and the Great Depression. New York: Random House, 1983.

Nash, Gerald, D. The Crucial Era: The Great Depression and World War II 1929–1945. New York: St. Martin's Press, 1998.

Patterson, James T. "Social Security." The Reader's Companion to American History.

Perkins, Frances. "A Dream Translated to Reality." Public Welfare, n.p., 1993.

Rose, Nancy E. "Work Relief in the 1930s and the Origins of the Social Security Act." Social Service Review. Chicago: The University of Chicago, 1989.

Stevenson, Richard W. "Squaring Off, at Last, on Social Security." The New York Times, November 29, 1998.

the social security system acted as a non-profit insurance company, raising funds through taxes on employers and employees for old age insurance. the size of each pension was based on how much the worker contributed to the fund.