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Pre-Social
Security Period |
Traditional Sources of Economic
Security
All peoples throughout all of human history have faced the uncertainties
brought on by unemployment, illness, disability, death and old age.
In the realm of economics, these inevitable facets of life are said
to be threats to one's economic security.
For the ancient Greeks economic security took the form of amphorae
of olive oil. Olive oil was very nutritious and could be stored
for relatively long periods. To provide for themselves in times
of need the Greeks stockpiled olive oil and this was their form
of economic security.
In medieval Europe, the feudal system was the basis of economic
security, with the feudal lord responsible for the economic survival
of the serfs working on the estate. The feudal lord had economic
security as long as there was a steady supply of serfs to work the
estate, and the serfs had economic security only so long as they
were fit enough to provide their labor. During the Middle Ages the
idea of charity as a formal economic arrangement also appeared for
the first time.
Family members and relatives have always felt some degree of responsibility
to one another, and to the extent that the family had resources
to draw upon, this was often a source of economic security, especially
for the aged or infirm. And land itself was an important form of
economic security for those who owned it or who lived on farms.
These then are the traditional sources of economic security: assets;
labor; family; and charity.
The Rise of Formal Systems of Economic
Security
As societies grew in economic and social complexity, and as isolated
farms gave way to cities and villages, Europe witnessed the development
of formal organizations of various types that sought to protect
the economic security of their members. Probably the earliest of
these organizations were guilds formed during the Middle
Ages by merchants or craftsmen. Individuals who had a common trade
or business banded together into mutual aid societies, or guilds.
These guilds regulated production and employment and they also provided
a range of benefits to their members including financial help in
times of poverty or illness and contributions to help defray the
expenses when a member died.
Out of the tradition of the guilds emerged the friendly societies.
These organizations began appearing in England in the 16th century.
Again organized around a common trade or business, the friendly
societies would evolve into what we now call fraternal organizations
and were the forerunners of modern trade unions.
In addition to the types of economic security provided by the guilds,
the fraternal organizations and some trade unions would begin the
practice of providing actuarially-based life insurance to their
members. The friendly societies and the fraternal organizations
would grow dramatically following the Industrial Revolution. By
the beginning of the 19th century one of out every nine Englishmen
belonged to one of these organizations.
Among early U.S. fraternal organizations that we are familiar with
even into the present day were: the Freemasons (which came to America
in 1730); the Odd Fellows (1819); Benevolent and Protective Order
of Elks (1868); Loyal Order of Moose (1888); and the Fraternal Order
of Eagles (1898).
The English "Poor Laws"
As the state began to assume responsibility for economic security,
the English began the development of a series of "Poor Laws"
adopted to provide help to the poor, as the problem of economic
security was seen primarily as a problem afflicting the poor.
The English Poor Law of 1601 was the first systematic codification
of English ideas about the responsibility of the state to provide
for the welfare of its citizens. It provided for taxation to fund
relief activities; it distinguished between the "deserving"
and the "undeserving" poor; relief was local and community
controlled; and almshouses were eventually established to house
those on relief. The law was at once both generous and harsh. Generous
in that it acknowledged the government's duty to provide for the
welfare of the poor, but harsh in that it viewed the poor as highly
undesirable characters and treated them accordingly.
There were a series of changes and "reforms" of the "Poor
Laws" over the years, but this essential structure was the
tradition the pilgrims brought with them when they journeyed to
the New World.
Economic Security in America
When the English-speaking colonists arrived in the New World they
brought with them the ideas and customs they knew in England, including
the "Poor Laws." The first colonial poor laws were fashioned
after those of the Poor Law of 1601. They featured local taxation
to support the destitute; they discriminated between the "worthy"
and the "unworthy" poor; and all relief was a local responsibility.
No public institutions for the poor or standardized eligibility
criteria would exist for nearly a century. It was up to local town
elders to decide who was worthy of support and how that support
would be provided.
As colonial America grew more complex, diverse and mobile, the
localized systems of poor relief were strained. The result was some
limited movement to state financing and the creation of almshouses
and poorhouses to "contain" the problem. For much of the
18th and 19th centuries most poverty relief was provided in the
almshouses and poorhouses. Relief was made as unpleasant as possible
in order to "discourage" dependency. Those receiving relief
could lose their personal property, the right to vote, the right
to move, and in some cases were required to wear a large "P"
on their clothing to announce their status.
Support outside the institutions was called "outdoor relief"
and was looked upon with distrust by most citizens. It was felt
that "outdoor relief" made things too easy on the poor
who should be discouraged from the habit of poverty in every way
possible. Nevertheless, since it was expensive to build and operate
the poorhouses, and since it was relatively easy to dispense
cash or in-kind support, some outdoor relief did emerge. Even so,
prevailing American attitudes toward poverty relief were always
skeptical and the role of government was kept to the minimum. So
much so that by as late as 1915 at most only 25% of the money spent
on outdoor relief was from public funds.
Old Age in Colonial America
Although the need for economic security affects all ages and classes
of society, one particularly acute aspect of this need is the problem
of old age and the possibility of retirement after a long life of
labor. Retirement, a feature of life we now take so much for granted,
was not always readily available, and it was a struggle to develop
adequate systems of retirement.
One of the first people to propose a scheme for retirement security
that is recognizable as a forerunner of modern social insurance
was Revolutionary War figure Thomas Paine. His last great pamphlet,
published in the winter of 1795, was a controversial call for the
establishment of a public system of economic security for the new
nation. Entitled, Agrarian Justice,
it called for the creation of a system whereby those inheriting
property would pay a 10% inheritance tax to create a special fund
out of which a one-time stipend of 15 pounds sterling would be paid
to each citizen upon attaining age 21, to give them a start in life,
and annual benefits of 10 pounds sterling to be paid to every person
age 50 and older, to guard against poverty in old-age.
Civil War Pensions: America's First
"Social Security" Program
Although Social Security did not really arrive in America until
1935, there was one important precursor, that offered something
we could recognize as a social security program, to one special
segment of the American population. Following the Civil War, there
were hundreds of thousands of widows and orphans, and hundreds of
thousands of disabled veterans. In fact, immediately following the
Civil War a much higher proportion of the population was disabled
or survivors of deceased breadwinners than at any time in America's
history. This led to the development of a generous pension program,
with interesting similarities to later developments in Social Security.
(The first national pension program for soldiers was actually passed
in early 1776, prior even to the signing of the Declaration of Independence.
Throughout America's ante-bellum period pensions of limited types
were paid to veterans of America's various wars. But it was with
the creation of Civil War pensions that a full-fledged pension system
developed in America for the first time.)
The Civil War Pension program began shortly after the start of
the War, with the first legislation in 1862 providing for benefits
linked to disabilities "incurred as a direct consequence of
. . .military duty." Widows and orphans could receive pensions
equal in amount to that which would have been payable to their deceased
solider if he had been disabled. In 1890 the link with service-connected
disability was broken, and any disabled Civil War veteran qualified
for benefits. In 1906, old-age was made a sufficient qualification
for benefits. So that by 1910, Civil War veterans and their survivors
enjoyed a program of disability, survivors and old-age benefits
similar in some ways to the later Social Security programs. By 1910,
over 90% of the remaining Civil War veterans were receiving benefits
under this program, although they constituted barely .6% of the
total U.S. population of that era. Civil War pensions were also
an asset that attracted young wives to elderly veterans whose pensions
they could inherit as the widow of a war veteran. Indeed, there
were still surviving widows of Civil War veterans receiving Civil
War pensions as late as 1999!
In the aggregate, military pensions were an important source of
economic security in the early years of the nation. In 1893, for
example, the $165 million spent on military pensions was the largest
single expenditure ever made by the federal government. In 1894
military pensions accounted for 37% of the entire federal budget.
(The Civil War pension system was not without
its critics.)
But these figures based on the federal budget exaggerate the role
of military pensions in providing overall economic security since
the federal government's share of the economy was much smaller in
earlier times. Also, there were features of the system which meant
that many veterans did not receive any benefits. For example, former
Confederate soldiers and their families were barred from receiving
Civil War pensions. So in 1910 the per capita average military pension
expenditure for residents of Ohio was $3.36 and for Indiana it was
$3.90. By contrast, the per capita average for the Southern states
was less than 50 cents (it was 17 cents in South Carolina).
Despite the fact that America had a "social security"
program in the form of Civil War pensions since 1862, this precedent
did not extend itself to the general society. The expansion of these
types of benefit programs to the general population, under Social
Security, would have to await additional social and historical developments.
The Company Pension
Prior to the rise of company pension plans, paternalistic companies
sometimes "graduated" older workers to token jobs at reduced
pay. A few paid some form of retirement stipend—but only if the
company was so inclined, since there were no rights to any kind
of retirement benefit. Most older workers were simply dismissed
when their productive years were behind them.
One of the first formal company pension plans for industrial workers
was introduced in 1882 by the Alfred Dolge Company, a builder of
pianos and organs. Dolge withheld 1% of each workers’ pay and placed
it into a pension fund, to which the company added 6% interest each
year. Dolge viewed providing for older workers as being a business
cost like any other, arguing that just as his company had to provide
for the depreciation of its machinery, he should also "provide
for the depreciation of his employees." Despite Mr. Dolge’s
progressive ideas and his best intentions, the plan proved largely
unsuccessful since it required a worker to spend many years in continuous
employment with the company, and labor mobility, then as now, meant
that relatively few workers spend their whole working career with
one company. Not only was the Dolge Plan one of the first formal
company pension systems in industrial America, it was also one of
the first to disappear when the company went out of business a few
years later.
The biggest problem with company-provided pensions was that the percentage of workers anticipating
an employment-related pension from their company or their union
was tiny. Indeed, in 1900 there were a total
of five companies in the United States (including Dolge) offering
their industrial workers company-sponsored pensions. As late as 1932, only about 15% of the laborforce had any kind of potential employment-related pension. And because the pensions were often granted or withheld at the option of the employer, most of these workers would never see a retirement pension. Indeed, only about 5% of the elderly were in fact receiving retirement pensions in 1932.
So the company
pension was an option not available to most Americans during the
time prior to the advent of Social Security.
The March of Coxey's Army
The Great Depression of the 1930s was not the only one in America's
history. In fact, it was the third depression of the modern era,
following previous economic collapses in the 1840s and again in
the 1890s. During the depression of the 1890s unemployment was widespread
and many Americans came to the realization that in an industrialized
society the threat to economic security represented by unemployment
could strike anyone--even those able and willing to work. Protest
movements arose--the most quixotic and notable being that of "Coxey's
Army."
Jacob Coxey was an unsuccessful Ohio politician and industrialist
who, in 1894, called on the unemployed from all over the country
to join him in an "army" marching on Washington. Ten
of thousands of unemployed workers started marches, but by the
time Coxey and his group finally made it to Washington only
about 500 hard-core believers remained. Coxey himself was promptly
arrested for walking on the grass of the Capitol Building and
the protest fizzled out. Coxey later became an advocate of public
works as a remedy for unemployment and ran for president as
the Farmer-Labor party candidate in 1932 and 1936. (Coxey was
also an ardent proponent of the free-silver monetary policy
and an opponent of the gold standard. Perhaps to demonstrate
his earnestness on monetary issues he even named his son Legal
Tender Coxey!) |
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Although his march failed, Coxey's Army was a harbinger of an issue
that would rise to prominence as unemployment insurance would become
a key element in the future Social Security Act. (Ohio would continue
to play an important role in the development of unemployment insurance
as its state program was one of two looked to as models for the new
federal program--the other being the program in operation in Wisconsin.)
State Old-Age Pensions
Following the outbreak of the Great Depression, poverty among the
elderly grew dramatically. The best estimates are that in 1934 over
half of the elderly in America lacked sufficient income to be self-supporting.
Despite this, state welfare pensions for the elderly were practically
non-existent before 1930. A spurt of pension legislation was passed
in the years immediately prior to passage of the Social Security
Act, so that 30 states had some form of old-age pension program
by 1935. However, these programs were generally inadequate and ineffective.
Only about 3% of the elderly were actually receiving benefits under
these states plans, and the average benefit amount was about 65
cents a day.
There were many reasons for the low participation in state-run
pension systems. Many elderly were reluctant to "go on welfare."
Restrictive eligibility criteria kept many poor seniors from qualifying.
Some jurisdictions, while having state programs on the books, failed
to actually implement them. Many of the state-passed pension laws
provided for counties within the state to opt to participate in
the pension program. As a result, in 1929 of the six states with
operating pension laws on the books only 53 of the 264 counties
eligible to adopt a pension plan actually did so. After 1929, the
States began enacting laws without county options. By 1932 seventeen
states had old age pension laws, although none were in the south,
and 87% of the money available under these laws were expended in
only three states (California, Massachusetts and New York).
America Changes
Despite all of the institutional strategies adopted in early America
to assure some measure of economic security, huge changes would
sweep through America which would, in time, undermine the existing
institutions. Four important demographic changes happened in America
beginning in the mid-1880s that rendered the traditional systems
of economic security increasingly unworkable:
- The Industrial Revolution
- The urbanization of America
- The disappearance of the "extended"
family
- A marked increase in life expectancy
The Industrial Revolution transformed the majority of working people
from self-employed agricultural workers into wage earners working
for large industrial concerns. In an agricultural society, prosperity
could be easily seen to be linked to one's labor, and anyone willing
to work could usually provide at least a bare subsistence for themselves
and their family. But when economic income is primarily from wages,
one's economic security can be threatened by factors outside one's
control--such as recessions, layoffs, failed businesses, etc.
Along with the shift from an agricultural to an industrial society,
Americans moved from farms and small rural communities to large
cities--that's where the industrial jobs were. In 1890, only 28%
of the population lived in cities, by 1930 this percentage had exactly
doubled, to 56%.
The year 1920 was a historical
tipping-point. In that year, for the first time in our nation's
history, more people were living in cities than on farms. |
This trend toward urbanization also contributed to another significant
shift in American society, the disappearance of the extended family
and the rapid rise of the nuclear family. Today we tend to assume
that "the family" consists of parents and children--the
so-called nuclear family. For most of our history, we lived in "extended
families" that included children, parents, grandparents and
other relatives. The advantage of the extended family was that when
a family member became too old or infirm to work, the other family
members assumed responsibility for their support. But when the able-bodied
left the farms to seek employment in the cities, often the parents
or grandparents stayed behind. And when new immigrants first arrived
in our land, it was often the breadwinner who first made the passage
and only later could he bring the family over.
And finally, another significant change happened in the early decades
of this century. Thanks primarily to better health care and sanitation,
and the development of effective public health programs, Americans
began to live significantly longer. In three short decades, 1900-1930,
average life spans increased by 10 years. This was the most rapid
increase in life spans in recorded human history. The result was
a rapid growth in the number of aged persons, to 7.8 million by
1935.
The net result of this complex set of demographic and social changes
was that America was older, more urban and more industrial, and
fewer of its people lived on the land in extended families. The
traditional strategies for the provision of economic security were
becoming increasingly fragile.
The Stock Market Crash & The
Great Depression
When the New York Stock Exchange opened on the morning of October
24, 1929, nervous traders sensed something ominous in the trading
patterns. By 11:00 a.m. the market had started to plunge. Shortly
after noon a group of powerful bankers met secretly at J.P. Morgan
& Co. next door to the Exchange and pledged to spend $240 million
of their own funds to stabilize the market. This strategy worked
for a few days, but the panic broke out again the following Tuesday,
when the market crashed again, and nothing could be done to stop
it.
Before three months had passed, the Stock Market lost 40% of its
value; $26 billion of wealth disappeared. Great American corporations
suffered huge financial losses. AT&T lost one-third of its value,
General Electric lost half of its, and RCA's stock fell by three-fourths
within a matter of months. (It would take 25 years for the stock
market to return to its pre-crash level following the 1929 crash.)
As America slipped into economic depression following the Crash
of 1929, unemployment exceeded 25%; about
10,000 banks failed; the Gross National Product declined from
$105 billion in 1929 to only $55 billion in 1932. Compared to pre-Depression
levels, net new business investment was a minus $5.8 billion in
1932. Wages paid to workers declined from $50 billion in 1929 to
only $30 billion in 1932.
Radical Calls
to Action
The decade of the 1930s found America facing the worst economic
crisis in its modern history. Millions of people were unemployed,
two million adult men ("hobos") wandered aimlessly around
the country, banks and businesses failed and the majority of the
elderly in America lived in dependency. These circumstances led
to many calls for change.
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This classic
photo of a Depression-era family captured the anguish of the
times. Photo by Dorothea Lange for the Resettlement
Administration-1936. |
Every Man a King:
Huey Long was Governor
of Louisiana from 1928 to 1932 and was elected to the U.S. Senate
in 1930. A nominal Democrat, Huey Long was a radical populist.
He wanted the government to confiscate the wealth of the nation's
rich and privileged. He called his program Share Our Wealth.
It called upon the federal government to guarantee every family
in the nation an annual income of $5,000, so they could have
the necessities of life, including a home, a job, a radio and
an automobile. He also proposed limiting private fortunes to
$50 million, legacies to $5 million, and annual incomes to $1
million. Everyone over age 60 would receive an old-age pension.
His slogan was "Every Man A King."
The Share Our Wealth program immediately became a movement.
Clubs were formed in every state in the nation. By 1935 the
movement claimed 27,000 local clubs with 7.7 million members. |
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The Townsend
Movement:
Francis E. Townsend was a lean, bespectacled
doctor from Long Beach, California. In 1933 he found himself unemployed
at age 66 with no savings and no prospects. This experience galvanized
him to become the self-proclaimed champion of the cause of the elderly.
He devised a plan known as the Townsend Old Age Revolving Pension
Plan, or Townsend Plan for short.
The basic idea of the Townsend
Plan was that the government would provide a pension of
$200 per month to every citizen age 60 and older. The pensions
would be funded by a 2% national sales tax. There were three
eligibility requirements:
- the person had to be retired;
- "their past life is free from habitual criminality;"
- the money had to be spent within the U.S. by the pensioner
within 30 days of receipt.
Dr. Townsend published his plan in a local
Long Beach newspaper in early 1933 and within about two
years there were 7,000 Townsend Clubs around the country
with more than 2.2 million members actively working to make
the Townsend Plan the nation's old-age pension system. |
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Following the passage of
the Social Security Act in 1935, most of these alternative
pension schemes disappeared as quickly as they had arisen.
The Townsend Plan, however, hung around at least until the
passage of the 1950 Amendments to the Social Security program,
which made benefits much more generous and finally took the
last of the steam out of the Townsend movement. But as late
as November 1949, in the House of Representatives 179 members
signed a discharge petition to force a floor vote on the Townsend
Plan--barely 39 members short of the number needed to force
the House to consider the final version of the Townsend Plan
as a replacement for the Social Security system. |
Fire & Brimstone:
Another influence on Depression-era
public policy was the Union for Social Justice movement led
by a radio preacher by the name of Father
Charles E. Coughlin. Father Coughlin had a weekly radio
program with 35-40 million listeners which he used to mix a
little religion with a lot of politics. His enemies, in addition
to the devil himself, were Roosevelt, international bankers,
communists, and labor unions, and he was not shy in describing
them in interchangeable terms. At the height of his popularity,
Father Coughlin had a greater share of the weekly broadcast
audience than Howard Stern, Rush Limbaugh, Paul Harvey and Larry
King combined.
Although Father Coughlin's main effort was to pillory his enemies,
he did have a broad program of social reforms that included
a deliberate inflation of the currency and the nationalization
of all banks. He was also an anti-Semite and isolationist whose
views were so extreme that the Catholic Church finally censured
him and forced him to cease his political activities. In 1936,
Coughlin, along with Townsend and the remnants of Huey Long's
Share the Wealth Movement, would join to form a third party
to contest the presidential election in the hopes of preventing
President Roosevelt from being re-elected. |
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A Writer &
his EPIC:
Upton Sinclair was a famous novelist and
social crusader from California , and an avowed Socialist, who
in 1933 was asked by a dissident group of Los Angeles Democrats
to help them draft a platform proposal for dealing with the state's
economic problems. They were so impressed by Sinclair's plan--which
he christened the End Poverty in California, or EPIC plan--that
they persuaded him to change his registration to Democratic and
to run for the party's nomination for governor in 1934.
Sinclair's EPIC scheme
was a 12-point program to remake the Californian economy. It
involved the issuance of scrip currency, the creation of large
state-run bartering enterprises, a tax on idle land and floating
a large state bond for $300 million. Point 10 of the plan was
a proposal to give pensions of $50 a month to all needy persons
over 60 who had lived in California for at least three years.
There was a state pension plan in operation in California at
the time, but its benefits were very low, and the eligibility
requirements were so severe that most elderly Californians could
not qualify. (This was true of many of the state pension programs
around the country.) Sinclair's pension proposal was very popular
because in one fell swoop it reduced the minimum age for pensions
by 10 years, almost doubled their value, and eliminated restrictive
eligibility requirements. |
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Sinclair's EPIC program, and especially its pension proposal, had
a great appeal in Depression-weary California. Sinclair and his
supporters organized EPIC clubs, published newsletters, formed ad
hoc organizations and found a large chorus of supporters with unlimited
enthusiasm for his ideas. In short order, Upton Sinclair's EPIC
movement captured the Democratic party and Sinclair became the Democratic
nominee for governor in the election of 1934. The party's platform
became the EPIC program, including the pension plan.
When the votes were counted, Upton Sinclair got 37% of the vote,
the Republican candidate got 48% and a third-party progressive candidate
took another 13%. Had it been a two-man race, Upton Sinclair might
have become Governor of California and the EPIC pension plan might
well have become the California model.
Ham & Eggs:
During the 1930s California was a virtual hot-house for new pension
schemes, and one of the most creative (and dubious) of the pension
schemes of the 1930s went by the unlikely moniker of "Ham &
Eggs." Ham & Eggs was the brainstorm of a self-promoting
huckster in-aptly named Robert Noble. The scheme was based on a
call for the state government to issue special currency called "scrip"
that would be paid each week to every unemployed Californian age
50 and older. Questions about the validity of the economics did
not dampen the enthusiasm of the movement's supporters, nor even
did the numerous scandals, financial and otherwise, involving the
movement's leaders. The eventual form of the plan called for the
state to issue "$30 every Thursday," which became the
rallying cry of the movement. The simplicity of the movement was
expressed in a bit of doggerel from the organization's newsletter
the National Ham and Eggs:
"Let's stay away from politics
Regardless of who hollers
Let's not be fooled by childish tricks
LET'S GET OUR THIRTY DOLLARS" |
The Ham & Eggs movement had more than 300,000 members--and
many more supporters. In 1938 the successful Democratic candidate
for governor, Culbert Olsen, openly supported the plan and a proposition
was placed on the ballot to adopt the Ham & Eggs plan as California
state policy. The proposition was narrowly defeated by a vote of
1,143,670 in favor to 1,398,999 against.
The Ham & Eggs movement was based on dubious economics, it
was founded and run by a succession of characters of questionable
integrity, it suffered from internecine rivalries and frequent scandals,
and yet, at the peak of its influence in 1938, more than a million
Californians, including the state's Governor, believed that it was
the solution to the problem of income security for the aged. That
such a poor candidate for a public policy would be so widely embraced
is strong evidence of how hungry the public was for action to address
the problem of income security for the elderly.
Bigelow Plan:
In Ohio, Reverend Herbert S. Bigelow initiated a proposed State
amendment to guarantee an income of $50 a month ($80 for married
couples living together) to those over sixty years of age who were
without gainful employment. This particular plan was to be financed
partly out of an increased tax on real estate (2% hike on land valued
at more than $20,000 an acre), and partly out of an income tax equal
to one-fourth the federal income tax paid by individuals and corporations.
The Bigelow pension plan garnered nearly half a million voters before
it was defeated. As some experts of the time calculated, the plan
would cost more than the existing state budget for two years.
General Welfare Federation of America:
A woman in South Carolina scrawls a note to a man in Washington
whom she addresses as "Dear Mr. President." "I'm
72 years old and have no one to take care of me." Another letter
comes to the White House from Virginia. "I'm a 60 year-old
widow greatly in need of medical aid, food and fuel, I pray that
you would have pity on me." Letters such as these came by the
thousands from old folks across the country to the President, to
Mrs. Roosevelt, to almost every one in Washington whose name was
familiar to them.
Typical
Letter to President Roosevelt, Appealing for Old-Age Pensions
It isn't any wonder then, why the elderly looked to the various
organizations that sprang up around the country offering salvation
in some form of an old-age pension plan. One such organization was
the General Welfare Federation of America. Headquartered in Washington,
DC, and founded by Arthur L. Johnson, who denounced the newly established
Social Security Act as a "great American fraud." He was
just as severe in attacking other organizations such as the Townsend,
Ham-and-Eggs, and Bigelow plans as "crackpot" pension
schemes.
Mr. Johnson's plan, like most of the others, wiped out the elaborate
system of employment records kept under the present Social Security
Act. Instead, it provided for a pension to every citizen on or after
reaching the age of 60, with the simple stipulation that they not
engage in gainful employment, that they spend their pension for
American goods and services, and that they not maintain able-bodied
male dependents between the ages of 30 and 60.
The pension would be fixed at not less than $30 a month and not
more than $60 a month. The actual amount would be determined by
dividing the total funds available by the total number of annuitants.
The funds would be derived from a gross income tax of 2 percent
on individuals and corporations, with exceptions to protect charitable,
religious, cooperative and similar organizations. The proponents
of the this plan did manage did get it introduced in the House of
Representatives, however, the bill died in committee in 1939 before
ever reaching a House vote.
Technocracy:
Out of America's fascination with technology came another eccentric
"reform" movement known as Technocracy. Founded in 1918
by a California patent attorney it would briefly flare as a serious
intellectual movement centered around Columbia University; although
as a mass-movement its real center was California where it claimed
half a million members in 1934. Technocracy counted among its admirers
such men as the novelist H.G. Wells, the author Theodore Dreiser
and the economist Thorstein Veblen.
Technocracy held that all politics and all economic arrangements
based on the "Price System" (i.e., based on traditional
economic theory) were antiquated and that the only hope of building
a successful modern world was to let engineers and other technology
experts run the country on engineering principles. Technocracy's
rallying cry was "production for use," which was meant
as a contrast to production for profit in the capitalist system.
Production for use became a slogan for many of the radical-left
movements of the era. Upton Sinclair, among others, affirmed his
belief in "production for use" and the Technocrats briefly
made common cause with Sinclair, and even Huey Long, in California.
But the Technocrats were not of the political left, as they held
every political and economic system, from the left to the right,
to be unsound.
The Technocrats believed that the solution to
all problems of economic security were the same, the rigorous
application of engineering principles in a system freed from
the Price System. They conceived of retirement as being made
possible at age 45 for everyone due to the vast prosperity the
new age of Technocracy would usher in. Rejecting all forms of
traditional political science, the Technocrats refused to even
use standard geographical maps because their boundaries were
political, so they would refer to states only by their geographical
coordinates. Names, too, were suspect for some reason so members
of the movement in California were designated only by numbers.
A speaker at one California rally was introduced only as 1x1809x56!
Oddly enough, alone among this collection of radical movements
of the 1930s, the Technocracy movement survives, if not quite
thrives, into the present day. |
|
Sign on outskirts of
Depression-era town proclaims regular Monday meeting of
the local branch of Technocracy. Note the use of the ancient
Chinese Yin/Yang symbol as a Technocracy emblem. Library
of Congress photo. |
|
The classic 1941 Frank Capra
film "Meet John Doe," staring Gary Cooper and Barbara
Stanwyck, depicts this period of quixotic mass movements through
the story of a fictional "John Doe" who represents
an amalgam of many of the ideas of these various movements. |
The Establishment Response
If America was to avoid the siren songs of the "radical calls
to action," responsible political leaders would need to offer
some persuasive alternatives. As the Depression grew, three general
approaches emerged: do nothing; rely on voluntary charity; and expand
welfare benefits for those hardest hit by the Depression.
The Do Nothing Response
It seemed to many politicians and leading public figures that the
Depression was just another dip in the economic cycle and that it
would right itself soon enough. These voices counseled a restrained
response, or no response at all. In the early aftermath of the stock
market crash such views were especially common.
This view that nothing very much was wrong and nothing very much
needed to be done, began to fade quickly as the Depression deepened.
Even so, it held considerable sway in the early years after The
Crash.
President Hoover's
"Volunteerism"
President Hoover had a distinguished
career before becoming president. He made a name for himself in
international relief efforts before and after World War I. He helped
feed millions of starving people, through the efforts of voluntary
partnerships of government, business and private giving. He knew
this kind of "volunteerism" worked, on a massive scale,
and he saw no reason why it should not work to solve the problems
of the Depression. So although he engaged in some limited federal
relief efforts, his main response to the Depression was to advocate
voluntary efforts, which never materialized.
The main problem with this strategy was that America was able to
help rebuild Europe in the aftermath of World War I because America's
economy was basically sound. In the Depression the total wealth
of the nation was cut in half during the first three years after
The Crash. This made voluntary charity a difficult ideal to achieve.
Expand Welfare
Even before the Depression hit, the States had been forced to deal
with the problems of economic security in a wage-based, industrial
economy. Workers Compensation programs were established at the state
level before Social Security, and there were state welfare programs
for the elderly in place before Social Security. Prior to Social
Security, the main strategy for providing economic security to the
elderly, in the face of the demographic changes discussed above,
was to provide various forms of old-age "pensions." These
were welfare programs, eligibility for which was based on proof
of financial need. By 1934, most states had such "pension"
plans. Even at the state level, however, these plans were inadequate.
Some had restrictive eligibility criteria which resulted in many
of the elderly being unable to qualify. The most generous plan paid
a maximum of $1 per day.
In the Congress, the consensus of conventional wisdom was for more
old-age assistance like that available in the states.
The "New" Alternative
With the coming to office of President Roosevelt in 1932, and the
introduction of his economic security proposal based on social insurance
rather than welfare assistance, the debate changed. It was no longer
a choice between radical changes and old approaches that no longer
seemed to work. The "new" idea of social insurance, which
was already widespread in Europe, would become an innovative alternative.
Social insurance, as conceived by President Roosevelt, would address
the permanent problem of economic security for the elderly by creating
a work-related, contributory system in which workers would provide
for their own future economic security through taxes paid while
employed. Thus it was an alternative both to reliance on welfare
and to radical changes in our capitalist system. In the context
of its time, it can be seen as a moderately conservative, yet activist,
response to the challenges of the Depression.
The Social Insurance Movement
Bismarck
|
The Social Security program that would eventually
be adopted in late 1935 relied for its core principles on the
concept of "social insurance." Social insurance was
a respectable and serious intellectual tradition that began
in Europe in the 19th century and was an expression of a European
social welfare tradition. It was first adopted in Germany in
1889 at the urging of the famous Chancellor, Otto
von Bismarck. Indeed, by the time America adopted social
insurance in 1935, there were 34 nations
already operating some form of social insurance program(about
20 of these were contributory programs like Social Security).
Philosophically, social insurance emphasized government-sponsored
efforts to provide for the economic security of its citizens.
The tradition of social insurance would come to be seen as the
reasonable, practical alternative to the radical calls to action
represented by Townsend, Long, Sinclair and the others. |
Although the definition of social insurance can vary considerably
in its particulars, its basic features are: the insurance principle
under which a group of persons are "insured" in some way
against a defined risk, and a social element which usually
means that the program is shaped in part by broader social objectives,
rather than being shaped solely by the self-interest of the individual
participants. Social insurance coverage can be provided for a number
of different types of insured conditions, from disability and death
to old-age or unemployment. We may find it obvious to think of death,
disability or unemployment as conditions causing loss of income
and which can be ameliorated by pooling of risk. It is at first
a little odd to think of old-age or retirement in these same terms.
But that is precisely how the early social insurance theorists conceived
of retirement, as producing a loss of income due to cessation of
work activity.
One of the first American books on social insurance was by a Columbia
University economics professor named Henry Seager. Seager explained
the principle of old-age security based on social insurance in his
1910 book, "Social Insurance, A Program of Social Reform":
"As changing economic conditions are rendering the dependence
of old people on their descendants for support increasingly precarious,
so, on the other hand, new obstacles are arising to providing for
old age through voluntary saving. . . The proper method of safeguarding
old age is clearly through some plan of insurance. . . for every
wage earner to attempt to save enough by himself to provide for
his old age is needlessly costly. The intelligent course is for
him to combine with other wage earners to accumulate a common fund
out of which old-age annuities may be paid to those who live long
enough to need it."
One of the earliest American advocates of a plan
that could be recognized as modern social insurance was Theodore
Roosevelt. In 1912, Roosevelt addressed
the convention of the Progressive Party and made a strong statement
on behalf of social insurance:
"We must protect the crushable elements
at the base of our present industrial structure...it is abnormal
for any industry to throw back upon the community the human
wreckage due to its wear and tear, and the hazards of sickness,
accident, invalidism, involuntary unemployment, and old age
should be provided for through insurance." TR would
succeed in having a plank adopted in the Progressive
Party platform that stated: "We pledge ourselves
to work unceasingly in state and nation for: . . .The protection
of home life against the hazards of sickness, irregular employment,
and old age through the adoption of a system of social insurance
adapted to American use." |
|
The Threshold of Change
So as 1934 dawned the nation was deep in the throes of the Depression.
Confidence in the old institutions was shaken. Social changes that
started with the Industrial Revolution had long ago passed the point
of no return. The traditional sources of economic security: assets;
labor; family; and charity, had all failed in one degree or another.
Radical proposals for action were springing like weeds from the
soil of the nation's discontent. President Franklin Roosevelt would
choose the social insurance approach as the "cornerstone"
of his attempts to deal with the problem of economic security.
|
The Social
Security Act--Passage and Development |
The Committee
on Economic Security (CES)
On June 8, 1934, President Franklin D. Roosevelt, in
a message to the Congress, announced his intention to provide
a program for Social Security. Subsequently, the
President created by Executive Order the Committee on Economic Security,
which was composed of five top cabinet-level
officials. The committee was instructed to study the entire
problem of economic insecurity and to make recommendations that
would serve as the basis for legislative consideration by the Congress.
The CES assembled a small staff of experts borrowed from other
federal agencies and immediately set to work. In November 1934 the
CES sponsored the first-ever national town-hall
forum on Social Security. The CES did a comprehensive study
of the whole issue of economic security in America, along with an
analysis of the European experience with these perennial problems.
Their full report was the first comprehensive attempt at this kind
of analysis in many decades and it stood as a landmark study for
many years. In slightly more than six months, the CES developed
a Report to the Congress and drafted a detailed legislative proposal.
"Security
was attained in the earlier days through the interdependence
of members of families upon each other and of the families
within a small community upon each other. The complexities
of great communities and of organized industry make less real
these simple means of security. Therefore, we are compelled
to employ the active interest of the Nation as a whole through
government in order to encourage a greater security for each
individual who composes it . . . This seeking for a greater
measure of welfare and happiness does not indicate a change
in values. It is rather a return to values lost in the course
of our economic development and expansion . . ."
Franklin D. Roosevelt: Message
of the President to Congress, June 8, 1934. |
The Social Security
Act
In early January 1935, the CES made its report to the President,
and on January 17 the President introduced the report to both Houses
of Congress for simultaneous consideration. Hearings were held in
the House Ways & Means Committee and the Senate Finance Committee
during January and February. Some provisions made it through the
Committees in close votes, but the bill passed both houses overwhelmingly
in the floor votes. After a Conference which lasted throughout July,
the bill was finally passed and sent to
President Roosevelt for his signature.
The Social Security Act was signed into law by President
Roosevelt on August 14, 1935. In addition to several provisions
for general welfare, the new Act created a social insurance program
designed to pay retired workers age 65 or older a continuing income
after retirement. (Full Text of
President Roosevelt's Statement At Bill Signing Ceremony.)
"We can never insure
one hundred percent of the population against one hundred
percent of the hazards and vicissitudes of life, but we have
tried to frame a law which will give some measure of protection
to the average citizen and to his family against the loss
of a job and against poverty-ridden old age."--
President Roosevelt upon signing
Social Security Act |
Major Provisions
Of The Act
The Social Security Act did not quite achieve all the aspirations
its supporters had hoped by way of providing a "comprehensive
package of protection" against the "hazards and vicissitudes
of life." Certain features of that package, notably disability
coverage and medical benefits, would have to await future developments.
But it did provide a wide range of programs to meet the nation's
needs. In addition to the program we know think of as Social Security,
it included unemployment insurance, old-age assistance, aid to dependent
children and grants to the states to provide various forms
of medical care.
(Full text of 1935 Act)
The two major provisions relating to the elderly were Title I-
Grants to States for Old-Age Assistance, which supported state welfare
programs for the aged, and Title II-Federal Old-Age Benefits. It
was Title II that was the new social insurance program we now think
of as Social Security. In the original Act benefits were to be paid
only to the primary worker when he/she retired at age 65. Benefits
were to be based on payroll tax contributions that the worker made
during his/her working life. Taxes would first be collected in 1937
and monthly benefits would begin in 1942. (Under amendments passed
in 1939, payments were advanced to 1940.)
The significance of the new social insurance program was that it
sought to address the long-range problem of economic security for
the aged through a contributory system in which the workers themselves
contributed to their own future retirement benefit by making regular
payments into a joint fund. It was thus distinct from the welfare
benefits provided under Title I of the Act and from the various
state "old-age pensions." As President Roosevelt conceived
of the Act, Title I was to be a temporary "relief" program
that would eventually disappear as more people were able to obtain
retirement income through the contributory system. The new social
insurance system was also a very moderate alternative to the radical
calls to action that were so common in the America of the 1930s.
The Social Security
Board
Another provision of the Act established a Social
Security Board (SSB) comprised of three members appointed by
the President, with the chairman reporting directly to the President.
The original members were John G. Winant, Chairman; Arthur J.
Altmeyer; and Vincent M. Miles. (Winant was a former three-time
Republican Governor of New Hampshire; Miles was a Democratic
Party official in Arkansas; and Altmeyer was a civil servant
working in Labor Department.)
During the first year, SSB was faced with the tasks of providing
employers, employees and the public with information on how
earnings were to be reported, what benefits were available and
how they were to be provided. In addition, sites for field installations
had to be chosen and personnel to staff these offices had to
be selected and trained. |
|
First
meeting of the Social Security Board, September 14, 1935.
Left to right: Arthur J. Altmeyer, John G. Winant (Chairman),
and Vincent M. Miles. |
|
Operation of the new program was hampered for several months when
the budget bill for the Act was killed by a
Senate filibuster at the end of August 1935. The new Social Security
Board had to borrow money from other federal agencies to operate until
January 1936 when the Congress reconvened and passed an appropriation
to fund the programs and operations under the Social Security Act.
The Social Security Board begin as an independent agency of the
federal government. In 1939 it became part
of the cabinet-level Federal Security Agency, and in 1946 the SSB
was abolished and replaced by the current Social Security Administration.
Early Work-
Social Security Numbers
The monumental first task was the need to register employers and
workers by January 1, 1937, when workers would begin acquiring credits
toward old-age insurance benefits. Since the new Social Security
Board did not have the resources available to accomplish this, they
contracted with the Post Office Department
to distribute the applications. The first application forms
were distributed in late November 1936. The numbers were assigned
in the local post offices. There is no record of who received the
first Social Security number (SSN).
Over 30 million SSN cards were issued through this early procedure,
with the help of the post offices. By June 30, 1937, the SSB had established
151 field offices, with the first office opening
on October 14, 1936, in Austin, Texas. From that point on, the
Board's local office took over the task of assigning SSNs.
Trust Funds
After Social Security numbers were assigned, the first Federal
Insurance Contributions Act (FICA) taxes were collected, beginning
in January 1937. Special Trust Funds were created for these dedicated
revenues. Benefits were then paid from the money in the Social Security
Trust Funds. Over the years, more than
$8.7 trillion has been paid into the Trust Funds, and more than
$7.4 trillion has been paid out in benefits. The remainder is
currently on reserve in the Trust Funds and will be used to pay
future benefits.
First Payments
From 1937 until 1940, Social Security paid benefits in the form
of a single, lump-sum payment. The purpose of these one-time payments
was to provide some "payback" to those people who contributed
to the program but would not participate long enough to be vested
for monthly benefits. Under the 1935 law, monthly benefits were
to begin in 1942, with the period 1937-1942 used both to build up
the Trust Funds and to provide a minimum period for participation
in order to qualify for monthly benefits.
The earliest reported applicant for a lump-sum
benefit was a retired Cleveland motorman named Ernest
Ackerman, who retired one day after the Social Security
program began. During his one day of participation in the program,
a nickel was withheld from Mr. Ackerman's pay for Social Security,
and, upon retiring, he received a lump-sum payment of 17 cents.
The average lump-sum payment during this period was $58.06.
The smallest payment ever made was for 5 cents! |
|
Ernest
Ackerman |
|
"Long before the economic
blight of the depression descended on the Nation, millions of
our people were living in wastelands of want and fear. Men and
women too old and infirm to work either depended on those who
had but little to share, or spent their remaining years within
the walls of a poorhouse . . .The Social Security Act offers
to all our citizens a workable and working method of meeting
urgent present needs and of forestalling future need . . . One
word of warning, however. In our efforts to provide security
for all of the American people, let us not allow ourselves to
be misled by those who advocate short cuts to Utopia or fantastic
financial schemes. We have come a long way. But we still have
a long way to go. There is still today a frontier that remains
unconquered--an America unclaimed. This is the great, the nationwide
frontier of insecurity, of human want and fear. This is the
frontier--the America--we have set ourselves to reclaim."
-- President Franklin Roosevelt August
14, 1938, Radio address on the third anniversary of the Social
Security Act |
1939 Amendments
"It
is impossible under any social insurance system to provide
ideal security for every individual. The practical objective
is to pay benefits that provide a minimum degree of social
security—as a basis upon which the worker, through his own
efforts, will have a better chance to provide adequately for
his individual security." -- From the Report of the
Social Security Board recommending the changes which were
embodied in the 1939 Amendments. |
The original Act provided only retirement benefits, and only to
the worker. The 1939 Amendments made a fundamental change in the
Social Security program. The Amendments added two new categories
of benefits: payments to the spouse and minor children of a retired
worker (so-called dependents benefits) and survivors benefits paid
to the family in the event of the premature death of a covered worker.
This change transformed Social Security from a retirement program
for workers into a family-based economic security program.
The 1939 Amendments also increased benefit amounts and accelerated
the start of monthly benefit payments to 1940.
Monthly Benefits
|
In 1950 all Social
Security beneficiaries received a general "cost-of-living"
increase--for the first time since benefits began in 1940.
Ida May Fuller is seen here receiving her first increased
benefit check on October 3, 1950. |
|
Payment of monthly Social Security benefits
began in January 1940, and were authorized not only for aged
retired workers but for their aged wives or widows, children
under age 18, and surviving aged parents.
On January 31, 1940, the first monthly retirement check was
issued to Ida May Fuller of
Ludlow, Vermont, in the amount of $22.54. Miss Fuller, a Legal
Secretary, retired in November 1939. She started collecting
benefits in January 1940 at age 65 and lived to be 100 years
old, dying in 1975.
(Examining the first
batch of checks)
Ida May Fuller worked for three years
under the Social Security program. The accumulated taxes
on her salary during those three years was a total of
$24.75. Her initial monthly check was $22.54. During her
lifetime she collected a total of $22,888.92 in Social
Security benefits. |
|
The Atlantic Charter
In mid-August, 1941, Winston Churchill
and Franklin Roosevelt met secretly aboard a warship off the coast
of Newfoundland in the North Atlantic. On the sixth anniversary
of the Social Security Act, they announced a joint-declaration known
as the Atlantic Charter. The 383-word Charter
was an expression of "certain common principles in the national
policies of their respective countries on which they base their
hopes for a better future for the world." This brief charter
would be the founding document of the United Nations and among its
eight principles was a call for social insurance. Former Social
Security Board Chairman John Winant was then serving as the U.S.
Ambassador to Great Britain. Although Winant did not attend the
Conference, the social insurance provision was a suggestion he made
from London which was instantly accepted by Churchill and FDR.
Although social insurance began in Germany in the 19th century,
in the years following World War II the United States was the leading
model for nations around the world who were interested in designing
Social Security systems. This movement toward the internationalization
of Social Security can be symbolically fixed with the issuance of
the Atlantic Charter in 1941.
1950 Amendments
From 1940 until 1950 virtually no changes were made in the Social
Security program. Payment amounts were fixed, and no major legislation
was enacted. There was a significant administrative change in 1946,
however, when the three-person Social
Security Board was abolished and replaced by the Social Security
Administration, headed by a single Commissioner.
Because the program was still in its infancy, and because it was
financed by low levels of payroll taxation, the absolute value of
Social Security's retirement benefits were very low. In fact, until
1951, the average value of the welfare benefits received under the
old-age assistance provisions of the Act were higher than the retirement
benefits received under Social Security. And there were more elderly
Americans receiving old-age assistance than were receiving Social
Security.
Because of these shortcomings in the program, in
1950 major amendments were enacted. These amendments increased
benefits for existing beneficiaries for the first time (see The
Story of COLAs), and they dramatically increased the value of the
program to future beneficiaries. By February 1951 there were more
Social Security retirees than welfare pensioners, and by August
of that year, the average Social Security retirement benefit exceeded
the average old-age assistance grant for the first time.
The Story of
COLAs
Most people are aware that there are annual increases in Social
Security benefits to offset the corrosive effects of inflation on
fixed incomes. These increases, now known as Cost of Living Allowances
(COLAs), are such an accepted feature of the program that it is
difficult to imagine a time when there were no COLAs. But in fact,
when Ida May Fuller received her first $22.54 benefit payment in
January of 1940, this would be the same amount she would receive
each month for the next 10 years. For Ida May Fuller, and the millions
of other Social Security beneficiaries like her, the amount of that
first benefit check was the amount they could expect to receive
for life. It was not until the 1950 Amendments that Congress first
legislated an increase in benefits. Current beneficiaries had their
payments recomputed and Ida May Fuller, for example, saw her monthly
check increase from $22.54 to $41.30.
These recomputations were effective for September 1950 and appeared
for the first time in the October 1950 checks. A second increase
was legislated for September 1952. Together these two increases
almost doubled the value of Social Security benefits for existing
beneficiaries. From that point on, benefits were increased only
when Congress enacted special legislation for that purpose.
In 1972 legislation the law was changed
to provide, beginning in 1975, for automatic annual cost-of-living
allowances (i.e., COLAs) based on the annual increase in consumer
prices. No longer do beneficiaries have to await a special act of
Congress to receive a benefit increase and no longer does inflation
drain value from Social Security benefits.
Social
Security Benefit Increases 1950-2005 |
EFFECTIVE
DATE |
PERCENT
INCREASE |
9/50
9/52
9/54
1/59 |
77.0
12.5
13.0
7.0 |
1/65
2/68 |
7.0
13.0 |
1/70
1/71
9/72
3/74*
6/74
6/75
6/76
6/77
6/78
6/79 |
15.0
10.0
20.0
7.0*
11.0
8.0
6.4
5.9
6.5
9.9 |
6/80
6/81
6/82
12/83
12/84
12/85
12/86
12/87
12/88
12/89 |
14.3
11.2
7.4
3.5
3.5
3.1
1.3
4.2
4.0
4.7 |
12/90
12/91
12/92
12/93
12/94
12/95
12/96
12/97
12/98
12/99
12/00
12/01
12/02
12/03
12/04
12/05
12/06
12/07
12/08
|
5.4
3.7
3.0
2.6
2.8
2.6
2.9
2.1
1.3
2.5**
3.5
2.6
1.4
2.1
2.7
4.1
3.3
2.3
5.8 |
* The increase
in 3/74 was a special, limited-duration increase. It was effective
for only 3/74-5/74. In June 1974 all payment levels reverted
to their 2/74 level and the 11% increase was permanently applied
on this base.
** The COLA for December 1999 was originally determined as
2.4 percent based on CPIs published by the Bureau of Labor
Statistics. Pursuant to Public Law 106-554, however, this
COLA is effectively now 2.5 percent. |
Disability
The Social Security Amendments of 1954 initiated a disability insurance
program which provided the public with additional coverage against
economic insecurity. At first, there was a disability "freeze",
(here being signed by President Eisenhower)
of a worker's Social Security record during the years when they
were unable to work. (First application
for disability freeze being filed.) While this measure offered
no cash benefits, it did prevent such periods of disability from
reducing or wiping out retirement and survivor benefits. On August
1, 1956, the Social Security Act was amended to provide benefits
to disabled workers aged 50-64 and disabled adult children. In September
1960 President Eisenhower signed a law amending the disability rules
to permit payment of benefits to disabled workers of any age and
to their dependents. By 1960, 559,000 people
were receiving disability benefits, with the average benefit
amount being around $80 per month.
Medicare &
Other Changes
The decade of the 1960s brought major changes to the Social Security
program. Under the Amendments of 1961,
the age at which men are first eligible for old-age insurance was
lowered to 62, with benefits actuarially reduced (women previously
were given this option in 1956). This created an additional workload
for the Agency as more beneficiaries entered the rolls. The number
of people receiving disability benefits more than doubled from 1961
to 1969, increasing from 742,000 to 1.7 million.
The most significant administrative change involved the signing
of the Medicare bill on July 30, 1965, by President Lyndon Johnson In the presence
of former President Truman, who received the first Medicare card
at the ceremony, Lady Bird Johnson, Vice-President Hubert Humphrey,
and Mrs. Truman. With the signing of this bill, SSA became responsible
for administering a new social insurance program that extended health
coverage to almost all Americans aged 65
or older. Nearly 20 million beneficiaries enrolled in Medicare
in the first 3 years of the program.
President Johnson Regarding
Medicare:
"Thirty years ago, the American people made a basic decision
that the later years of life should not be years of despondency
and drift. The result was enactment of our Social Security
program. . . . Since World War II, there has been increasing
awareness of the fact that the full value of Social Security
would not be realized unless provision were made to deal with
the problem of costs of illnesses among our older citizens.
. . . Compassion and reason dictate that this logical extension
of our proven Social Security system will supply the prudent,
feasible, and dignified way to free the aged from the fear
of financial hardship in the event of illness." -January 7, 1965 |
SSI
In the 1970s, SSA became responsible for a new program, Supplemental
Security Income (SSI). In the original 1935 Social Security Act,
programs were introduced for needy aged and blind individuals and,
in 1950, needy disabled individuals were added. These three programs
were known as the "adult categories" and were administered
by State and local governments with partial Federal funding. Over
the years, the State programs became more complex and inconsistent,
with as many as 1,350 administrative agencies involved and payments
varying more than 300% from State to State.
In 1969, President Nixon identified
a need to reform these and related welfare programs to "bring
reason, order, and purpose into a tangle of overlapping programs."
In 1971, Secretary of Health, Education and Welfare, Elliot
Richardson, proposed that SSA assume responsibility for the
"adult categories." In the Social Security Amendments
of 1972, Congress federalized the "adult categories" by
creating the SSI program and assigned responsibility for it to SSA.
SSA was chosen to administer the new program because of its reputation
for successful administration of the existing social insurance programs.
SSA's nationwide network of field offices and large-scale data processing
and record-keeping operations also made it the logical choice to
perform the major task of converting over 3 million people from
State welfare programs to SSI.
The 1972 & 1977 Amendments
In 1972 two important sets of amendments were enacted. These amendments
created the SSI program and introduced automatic Cost-of-Living-Adjustments
(COLAs).
The bill creating the SSI program also contained important provisions
for increasing Social Security benefits for certain categories of
beneficiaries (primarily aged widows and widowers). It also provided:
a minimum retirement benefit; an adjustment to the benefit formula
governing early retirement at age 62 for men, in order to make it
consistent with that for women; extension of Medicare to those who
have received disability benefits for at least two years and to
those with Chronic Renal Disease; liberalized the Retirement Test;
and provided for Delayed Retirement Credits to increase the benefits
of those who delayed retirement past age 65.
The separate bill creating automatic COLAs also
provided for automatic increases in the earnings subject to
Social Security taxes and an automatic adjustment in the wage-base
used in calculating benefits. This second adjustment was put
in the law as a sort of companion to the COLA. The COLA adjusts
for increases in prices, whereas the wage-base adjustment
corrects for increases in wages. The purpose of the COLA
was to maintain the purchasing power of benefits already awarded.
The purpose of the automatic adjustment in the wage base was
to maintain the relative value of Social Security benefits for
future applicants. Unfortunately, the procedure for adjusting
for price and wage increases contained a flaw which resulted
in future benefit levels soaring out of control. Indeed, it
became apparent that if the trends of the mid-1970s continued,
future Social Security beneficiaries could end up receiving
more in their monthly retirement benefit than their gross salaries
while working. This problem was corrected in the 1977 Amendments.
However, the correction led to the appearance of what came to
be known informally as "The Notch." |
The Notch spawned a political protest movement of aggrieved
"Notch Babies" who believe they have been the victims
of unfair treatment. |
The main purpose of the 1977 Amendments
was to address the financing of the program. Shortly after passage
of the 1972 legislation, it became apparent that Social Security
faced a funding shortfall, both in the short-term and in the long-term.
The short-term problem was caused by the bad economy, and the long-term
problem by the demographics associated with the baby boom. By their
1975 report the Trustees said the Trust Funds would be exhausted
by 1979. This financing shortfall was addressed by the 1977 Social
Security Amendments. These amendments raised the payroll tax slightly
(from 6.45% to the current 7.65%), increased the wage base; reduced
benefits slightly; and "decoupled" the wage adjustment
from the COLA adjustment. These fixes restored the long-term balance
of the program for the next 50 years (but not the full 75 years
used by the actuaries). It was hoped the amendments would prevent
an expected short-term financing problem in the early 1980s. This
hope would prove elusive as the major amendments in 1983 would be
needed to avoid the short-term problem, and to address the remaining
long-range program deficit.
Disability In The 1980s
The Social Security Amendments of 1980 made many changes in the
disability program. Most of these changes focused on various work
incentive provisions for both Social Security and SSI disability
benefits.
The 1980 Amendments also required SSA to conduct periodic reviews
of current disability beneficiaries to certify their continuing
eligibility. This was to become a massive workload for SSA and one
that was highly controversial. By 1983, the reviews had been halted,
and in 1984, Congress passed the Disability Benefits Reform Act
modifying several aspects of the disability program.
The 1983 Amendments
In the early 1980s the Social Security program faced a serious
short-term financing crisis. President Reagan appointed a blue-ribbon
panel, known as the Greenspan Commission,
to study the financing issues and make recommendations for legislative
changes. The final bill, signed into law
in 1983, made numerous changes in the Social Security and Medicare
programs, including the taxation of Social Security benefits, the
first coverage of Federal employees under Social Security and an
increase in the retirement age in the next century. (Summary
of the provisions of the '83 Amendments)
Program Growth
From its modest beginnings, Social Security has grown to become
an essential facet of modern life. One in seven Americans receives
a Social Security benefit, and more than 90 percent of all workers
are in jobs covered by Social Security. From 1940, when slightly
more than 222,000 people received monthly Social Security benefits,
until today, when over 44 million people receive such benefits,
Social Security has grown steadily. The SSI program has grown as
well from its inception in 1974.
Social
Security |
SSI
|
Year
|
Beneficiaries
|
Dollars
(b) |
Year
|
Beneficiaries
(c) |
Dollars
(d) |
1937
|
53,236
(a) |
$1,278,000
|
1974
|
3,996,064
|
$5,096,813,000
|
1938
|
213,670
(a) |
$10,478,000
|
1975
|
4,314,275
|
$5,716,072,000
|
1939
|
174,839
(a) |
$13,896,000
|
1980
|
4,142,017
|
$7,714,640,000
|
1940
|
222,488
|
$35,000,000
|
1985
|
4,138,021 |
$10,749,938,000
|
1950
|
3,477,243
|
$961,000,000
|
1990
|
4,817,127
|
$16,132,959,000
|
1960
|
14,844,589
|
$11,245,000,000
|
1991 |
5,118,470 |
$17,95,639,000 |
1970
|
26,228,629
|
$31,863,000,000
|
1992 |
5,566,189 |
$21,682,410,000 |
1980
|
35,584,955
|
$120,511,000,000
|
1993 |
5,984,330 |
$23,991,153,000 |
1990
|
39,832,125
|
$247,796,000,000
|
1994 |
6,295,786 |
$25,291,087,000 |
1995
|
43,387,259
|
$332,553,000,000
|
1995
|
6,514,134
|
$27,037,280,000
|
1996
|
43,736,836
|
$347,088,000,000
|
1996
|
6,613,718
|
$28,252,474,000
|
1997
|
43,971,086
|
$361,970,000,000
|
1997
|
6,494,985
|
$28,370,568,000
|
1998
|
44,245,731
|
$374,990,000,000
|
1998
|
6,566,069
|
$29,408,208,000
|
1999
|
44,595,624
|
$385,768,000,000
|
1999
|
6,556,634
|
$30,106,132,000
|
2000
|
45,414,794 |
$407,644,000,000 |
2000
|
6,601,686 |
$30,671,699,000 |
2001
|
45,877,506 |
$431,949,000,000 |
2001
|
6,688,489 |
$32,165,856,000 |
2002 |
46,444,317 |
$453,746,000,000 |
2002 |
6,787,857 |
$33,718,999,000 |
2003 |
47,038,486 |
$470,778,000,000 |
2003 |
6,902,364 |
$34,693,278,000 |
2004 |
47,687,693 |
$493,263,000,000 |
2004 |
6,987,845 |
$36,065,358,000 |
2005 |
48,434,436 |
$520,767,000,000 |
2005 |
7,113,879 |
$37,236,000,000 |
2006 |
49,122,831 |
$541,619,000,000 |
2006 |
7,235,565 |
$41,312,000,000 |
a. Recipients
of one-time lump-sum payments. |
b. Benefit
payments only. |
c. Recipients
of Federally-administered payments only. |
d. Includes
both Federal payment and Federally-administered State supppmentation
payments. |
Independence For SSA
The Social Security Board (SSB) began its life in 1935 as one of
the federal government's "independent agencies." This
means that it was not part of a larger cabinet-level organization.
In 1939 this status changed when the SSB became part of the new
cabinet-level Federal Security Agency. Ultimately, the Social Security
Board became the Social Security Administration and it would finally
become an operating component of the Department of Health &
Human Services. (See SSA Organizational History.)
Throughout the 1980s and 1990s, there was growing bipartisan support
for removing SSA from under its departmental umbrella and establishing
it as an independent agency. Finally, in 1994 the Social Security
Independence and Program Improvements Act of 1994 (P.L. 103-296)
was passed unanimously by Congress and, in a ceremony in the Rose
Garden of the White House, on August 14, 1994, President
Bill Clinton signed the act into law.
Legislative Changes in 1996 &
1997
Contract With America Advancement Act of 1996 (P.L. 104-121).
This bill, signed by the President on March 29, 1996, made a change
in the basic philosophy of the disability program. Beginning on
that date, new applicants for Social Security or SSI disability
benefits could no longer be eligible for benefits if drug addiction
or alcoholism is a material factor to their disability. Unless they
can qualify on some other medical basis, they cannot receive disability
benefits. Individuals in this category already receiving benefits,
are to have their benefits terminated as of January 1, 1997. Previous
policy has been that if a person has a medical condition that prevents
them from working, this qualifies them as disabled for Social Security
and SSI purposes--regardless of the cause of the disability. Another
significant provision of this law doubled the earnings limit exemption
amount for retired Social Security beneficiaries, on a gradual schedule
from 1996 to 2002. In 2002, the exempt amount will be $30,000 per
year in earnings, compared to $14,760 under previous law.
The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996.
This "welfare reform" legislation, signed
by the President on 8/22/96, ended the categorical entitlement
to AFDC (Aid to Families with Dependent Children) that was part
of the original 1935 Social Security Act by implementing time-limited
benefits along with a work requirement. The law also terminated
SSI eligibility for most non-citizens. Previously, lawfully admitted
aliens could receive SSI if they met the other factors of entitlement.
As of the date of enactment, no new non-citizens could be added
to the benefit rolls and all existing non-citizen beneficiaries
would eventually be removed from the rolls (unless they met one
of the exceptions in the law.) Also effective upon enactment were
provisions eliminating the "comparable severity standard"
and reference to "maladaptive behavior" in the determination
of disability for children to receive SSI. Also, children currently
receiving benefits under the old standards were to be reviewed and
removed from the rolls if they could not qualify under the new standards.
Omnibus Consolidated Rescissions and Appropriations Act of 1996.
Requires that all federal payments (including Social Security and
SSI) be made by electronic funds transfer (no more paper checks)
effective January 1, 1999, unless a waiver is granted by the Secretary
of the Treasury.
The Department of Defense Appropriations Act, 1997
This massive omnibus spending bill contained SSA's budget as well
as numerous legislative changes relating to the SSI program and
to issues involved in fighting fraudulent documents in connection
with obtaining Social Security numbers. The major SSI provision
makes sponsorship agreements legally enforceable for the first time.
In the area of identification-related documents, the law requires
the establishment of federal standards for state-issued birth certificates
and requires SSA to develop a prototype counterfeit-resistant Social
Security card.
The Balanced Budget Act of 1997
This bill passed the House on 7/30/97 by a vote of 346 to 85, and
passed the Senate the next day on a vote of 85 to 15. This law restored
SSI eligibility to certain cohorts of non- citizens whose eligibility
otherwise would be terminated under the "welfare reform"
of 1996. It also extended for up to one year the period for redetermining
the eligibility of certain aliens who may ultimately not be eligible
for continued benefits.
The Social Security Advisory Board
From the very beginning, the Social Security program has had the
services of periodic Advisory Councils composed primarily of non-government
members whose function was to represent the public at large in advising
government officials on Social Security policy. The first such Advisory
Council was convened in 1934 in support of the work of the Committee
on Economic Security. Over the years, the Advisory Councils have
been very influential in setting the agenda for changes in Social
Security. The Councils were especially influential in shaping the
pivotal 1939 and 1950 amendments. Eventually, the tradition of periodic
Social Security Advisory Councils was made a standard provision
of the law, with a requirement that such a Council be appointed
every four years. This law stayed in effect until 1994, when it
was repealed as part of the legislation which made SSA an independent
agency. The 1994-1996 Advisory Council
was thus the final Council, signaling the end of a long tradition
in Social Security. Under that 1994 law, the Councils are abolished
and a permanent 7-member Advisory Board
was formed to serve many of the same functions.
Work Incentives
On December 17, 1999 the President signed the "Ticket
to Work and Work Incentives Improvement Act of 1999"--one
of the most significant changes in disability policy in the last
20 years. This law creates a Ticket to Work and Self-Sufficiency
Program which will provide disability beneficiaries with a ticket
they may use to obtain vocational rehabilitation services, employment
services, and other support services from an employment network
of their choice. In addition to allowing beneficiaries to purchase
vocational services, the law provides incentive payments to providers
for successful rehabilitation in which the beneficiary returns to
work. The new provisions also provide a number of safeguards to
the beneficiaries to protect their benefits and health Taken together,
the Ticket to Work initiative seeks to shift the emphasis in the
disability program away from mere maintenance of benefits more toward
rehabilitating the disabled and assisting them in returning to productive
work.
Repeal of the Retirement
Earnings Test (RET)
On April 7, 2000 "The
Senior Citizens' Freedom to Work Act of 2000" was signed
into law, eliminating the Retirement Earnings Test (RET) for those
beneficiaries at or above Normal Retirement Age (NRA). (The RET
still applies to those beneficiaries below NRA.)
The legislation began its swift march through
Congress on March 1, 2000 when the full House of Representatives passed H.R. 5 by a vote
of 422 to 0. The Senate, on March 22, 2000
then passed the bill by a vote of
100-0 (with a technical amendment). On March
28, 2000 The House agreed to the Senate amendment by a vote of 419-0
and cleared the measure for transmission to the President.
This was a historic change in the Social
Security retirement program. From the beginning of Social Security
in 1935, retirement benefits have been conditional on the requirement
that the beneficiary be substantially retired. This requirement
was carried out by the provisions of the RET. The
RET has changed considerably over the years.
The requirement was first scaled-back in the 1950 Amendments, which
exempted workers age 75 and older from the RET. The exempt age was
reduced to 72 in 1954, and to age 70 and older in 1977. With the
new legislation, starting at the NRA, Social Security retirement
benefits will be paid to beneficiaries who are still working. Effectively,
for those who have reached full retirement age, this repeals the
requirement that the beneficiary be substantially retired in order
to receive full Social Security retirement benefits.
Social Security Reform in
the George W. Bush Administration
In his Inaugural
Address, President George W. Bush announced
his intentions to reform Social Security and Medicare. Throughout
the early months of his presidency the President made many speeches
and addresses in which this was a major recurring theme. In his
first speech to a
joint-session of Congress in February 2001,
the President announced his intention to appoint a Presidential
Commission to recommend ways to address Social Security reform.
The President stated the Commission would operate under three broad
principles:
- It must preserve the benefits of all current
retirees and those nearing retirement.
- It must return Social Security to sound
financial footing.
- And it must offer personal savings accounts
to younger workers who want them.
On May 2, 2001 the President
announced the appointment of his Social Security Commission, the "President's
Commission to Strengthen Social Security." The Commission issued
its final report
in December 2001.
At the beginning of his second term, President
Bush made it clear that Social Security reform would be a top
priority of his Administration.
|
Bibliography for
the Pre-Social Security Period |
To assist students and other researchers we have
grouped the reference sources into three categories: Classic Sources,
which are the earliest published works and which are likely to be
out-of-print and available only in larger libraries; Academic Treatments,
which is meant to indicate a more scholarly approach to the subjects,
and may be more suitable for advanced students and in-depth researchers;
and Popular Accounts, which are works that seem suitable for a broad
general audience. These categories are arbitrary, imprecise, and flexible.
They are intended as a rough guide only and should not be taken too
literally. |
Classic Sources:
Armstrong, Barbara, "Insuring the Essentials," Macmillan
Co., 1932. A scholarly review of the state
of social insurance efforts as they stood in the early 1930s, by one
of the principal designers of Social Security's old age insurance
program.
Epstein, Abraham, "Insecurity: A Challenge to America,"
Third Revised Edition, Harrison Smith and Robert Haas, 1936. A
classic study of social insurance, with one of the first published
critiques of the recently passed Social Security Act by a critic who
believed the Act did not go far enough in addressing the need for
social insurance programs.
Rubinow, I. M., "Social Insurance: With Special Reference to
American Conditions," Henry Holt, 1913.
Rubinow, I. M., "The Quest for Security," Henry Holt, 1934.
Rubinow's two books were the most influential
on early thinking regarding social insurance. President Roosevelt,
in particular, was an admirer of Rubinow's work.
Seager, Henry, "Social
Insurance: A Program of Social Reform," Macmillan Co., 1910. Believed
to be the first American work on social insurance.
Academic Treatments:
Chambers, Clarke, "Seedtime of Reform: American Social Service
and Social Action 1918-1933," University of Minnesota Press,
1963. In-depth discussion of events in the
period leading up to the creation of Social Security.
Katz, Michael B., "In The Shadow of the Poorhouse: A Social History
of Welfare in America," Tenth Anniversary Edition, Basic Books,
1996. An outline of the development of American
social policy from the earliest days.
Lubove, Roy, "The Struggles for Social
Security: 1929-1935," Harvard University Press, 1968.
Mitchell, Daniel J.B., "Pensions
Politics and the Elderly: Historic Social Movements and Their Lessons
for Our Aging Society," M.E. Sharpe, 2000. A discussion of the Townsend Plan, the Ham and Eggs movement,
and other alternative pension movements in California.
Skocpol, Theda, "Protecting Soldiers and Mothers," Harvard
University Press (Belknap), 1992. Source for information on Civil War pensions, Mothers pensions,
and early workmen's compensation efforts.
Schlesinger, Jr., Arthur M., three
volumes: "The Crisis of the Old Order," "The Politics
of Upheaval" and "The Coming of the New Deal." Houghton-Mifflin,
The American Heritage Library, 1988. This
is the classic history of this period.
Weaver, Carolyn, "The Crisis in Social
Security: Economic and Political Origins," Duke Press Policy
Studies, 1982. Contains an account of historical
developments from prior to 1900 through the Social Security amendments
of the early 1970s.
Popular Accounts:
Brinkley, Alan, "Voices of Protest: Huey Long, Father Coughlin
and The Great Depression," Vintage Press, 1983. A
good overview of Long and Coughlin.
Kennedy, David M., "Freedom From Fear: The American People in
Depression and War, 1929-1945." Oxford University Press, 1999.
The early chapters in this book contain
a good summary of the period right before the Depression through the
passage of Social Security.
McElvaine, Robert S., "The Depression
and New Deal: A History in Documents." Oxford University Press,
2000. This books has lots of photos and
short essays and is easy to read.
Mitchell, Greg, "The Campaign of the
Century," Random House, 1992. This is the most comprehensive account of Upton Sinclair's
EPIC Plan.
Watkins, T. H., "The Great Depression:
America in the 1930s," Back Bay Books, 1993. Lots
of photos and short essays.
Watkins, T. H., "The Hungry Years: A Narrative History of the
Great Depression in America," Henry Holt, 1999. A
more in-depth account of this period. |
Bibliography of
the Social Security Act and its Development |
Classic Sources:
Cohen, Wilbur, and Haber, William, (eds.) "Readings in Social
Security," Prentice-Hall, 1948. A collection of essays by a wide variety of authors on the
history, philosophy and major policy issues in the development of
Social Security.
Cohen, Wilbur, and Haber, William, (eds.) "Social Security: Programs,
Problems, and Policies," Richard D. Irwin, 1960. Similar
to their earlier book, with a bit more emphasis on policy issues,
and bringing the discussion current through the passage of the 1960
amendments.
Frase, Robert and McKinley, Charles, "Launching Social Security:
A Capture and Record Account 1935-1937," University of Wisconsin
Press, 1970. A detailed academic exercise
in which two political scientists recount the implementation of the
new Social Security program in its first years. Primarily an administrative
history.
Perkins, Frances, "The Roosevelt I Knew," Viking Press,
1946. Memoir of Miss Perkins' role in the
Roosevelt Administration, with a chapter on the development of the
Social Security Act.
Social Security Board, "Social
Security in America," Social Security Board, 1937. Summary
of the research developed by the Committee on Economic Security that
underlay the Social Security Act.
Academic Treatments:
Achenbaum, Andrew, "Social Security: Visions and Revisions,"
Cambridge University Press, 1986. Review of the political and policy development of the Social
Security Act, up through the 1983 amendments.
Berkowitz, Edward D., "Disabled Policy: America's Programs for
the Handicapped" Cambridge University Press, 1987.
A review of workmen's compensation and the disability benefits program
of the Social Security Act.
Berkowitz, Edward D., (ed.) "Social Security After Fifty,"
Greenwood Press, 1987. Proceedings of an
academic conference held at George Washington University in 1986.
Berkowitz, Edward D., "America's Welfare State: From Roosevelt
to Reagan," Johns Hopkins University Press, 1991.
A review of developments in Social Security, welfare reform and health
insurance since the passage of the Social Security Act.
Berkowitz, Edward D., "Mr. Social Security:
The Life of Wilbur Cohen," University Press of Kansas, 1995.
A biography of one of the important pioneers of Social Security and
an account of the historical developments in which he participated,
with a special emphasis on the development of the Medicare program.
Derthick, Martha, "Policymaking for
Social Security," Brookings Press, 1979. A political scientist surveys the political and administrative
development of the Social Security program up through the early 1970s.
Derthick, Martha, "Agency Under Stress:
The Social Security Administration in American Government," Brookings
Press, 1990. A political scientist reviews
the administration of the disability and SSI programs.
Nash, Gerald; Pugach, Noel; and Tomasson,
Richard (eds.), "Social Security: The First Half Century,"
University of New Mexico Press, 1988. Proceedings
of an academic conference held at the University of New Mexico in
1985.
Tynes, Sheryl, "Turning Points in Social
Security: From 'Cruel Hoax' to 'Sacred Entitlement'," Stanford
University Press, 1996. A critical history
of the development of Social Security up through the early 1980s.
Weaver, Carolyn, "The Crisis in Social
Security: Economic and Political Origins," Duke Press Policy
Studies, 1982. Contains an account of historical
developments from prior to 1900 through the Social Security amendments
of the early 1970s.
Popular Accounts:
Altmeyer, Arthur, "The Formative Years of Social Security,"
University of Wisconsin Press, 1968. Chronicle of the development of Social Security from 1934-1954
from a major figure in this history.
Ball, Robert, "Insuring the Essentials: Bob Ball on Social Security,"
Century Foundation Press, 2000. A collection
of historical and policy essays by a former Commissioner of Social
Security.
Bellush, Bernard, "He Walked Alone: A Biography of John Gilbert
Winant," Mouton, 1968. Biography of the first Chairman of the Social Security Board.
Coll, Blanche, "Safety Net: Welfare and Social Security 1929-1979,"
Rutgers University Press, 1995.
A readable history of the welfare provisions of the Social Security
Act.
Davis, Kenneth, "FDR: The New Deal Years,"
Random House, 1986. Contains an extended chapter on the development of the Social
Security Act.
Eliot, Thomas, "Recollections of the
New Deal," Northeastern University Press., 1992. Memoir
of the lawyer who helped draft the legislative language for the Social
Security Act in 1935.
Light, Paul, "Artful Work: The Politics
of Social Security Reform," Random House, 1985. And "Still
Artful Work: The Continuing Politics of Social Security Reform,"
McGraw-Hill, 1995. A history of the Greenspan Commission and the development
of the 1983 amendments.
Myers, Robert J., "Within the System:
My Half Century in Social Security," Actex Publications, 1992.
An autobiography of the Social Security actuary who started with the
Committee on Economic Security in 1934 and eventually became SSA's
Chief Actuary.
Schlabach, Theron, "Edwin Witte: Cautious
Reformer," State Historical Society of Wisconsin, 1969.
Interesting biography of a key figure in the creation of the Social
Security program.
Witte, Edwin, "The Development of the
Social Security Act," University of Wisconsin Press, 1963. A
contemporary memorandum on the behind-the-scenes development of the
Social Security Act. |
Larry DeWitt
SSA Historian's Office
Updated March 2003 |
|