In these days when everyone is preoccupied with
the dramatic news from the war fronts, and when political crises
in the enemy camp vie for attention with nine billion dollar international
banks, it is gratifying to be asked to speak on the more human,
or perhaps I should say humane, subject of social security which
constitutes one of our chief hopes for a better world. It is yet
more agreeable to be invited to address the Eagles. For here,
I know, social security will not fall on deaf ears. I am well
aware that no audience in America could be more sympathetic to
the cause of social security than this audience.
Long before there was a social security plan in
America, before the term itself had come into use, the Eagles
were "social security conscious." They were the first to agitate
for mothers'-pensions. They put through the first legislation
of the kind in this country. We who have responsibility for administering
the present social security programs have not forgotten that it
was the enthusiasm and drive of the Eagles that caused the enactment
of the first two old-age pension laws--those in Montana and Nevada.
And not many months ago we rejoiced when once again the Eagles
picked up the standard and came out in support of some of the
recommendations the Social Security Board has made to Congress
for amending the Social Security Act. At its meeting in Chicago,
as you know, the Old-age Pension and Social Security Commission
of the Fraternal Order of Eagles recommended the passage of Federal
legislation to give those presently in the armed forces of our
country full credit under the Social Security Act for their time
in military service. It also endorsed the extension of social
security protection to cover all wage and salary earners not now
adequately protected by pension or retirement systems.
I do not think it is necessary to describe in detail
to you the objectives of social security. You know them. And yet
I should like to set those objectives freshly before you that
you may the better judge how far we have advanced towards our
goal--and how much farther we still have to go.
Social security is a plan to assure for every family
at all times the basic necessities of life. It is a plan to provide
for every family an income throughout the whole cycle of family
life--in periods when the breadwinner is earning and in periods
when he is not.
Strange as it may seem to you, there are those who
even after the illusion-shattering experience of the depression--when
there were 28 million people receiving emergency relief--still
hold to the notion that there is no necessity for a program of
social security at all. They insist that by establishing a program
we take the challenge out of life. Security, they say, should
be every individual's own responsibility; each should save out
of his earnings enough to tide himself and his dependents over
periods when no earnings are coming in.
I think you must know that this is merely wishful
thinking. The reality does not admit of such a solution. Most
of the American people do not earn enough to be able to save adequately
for all conceivable periods of stress--unemployment, temporary
and permanent disability (with their accompanying drains for doctors'
bills), old-age, and death of the breadwinners. We try and we
shall always go on trying to save for that rainy day, but most
of us know well that a prolonged period of unemployment, an accident,
a serious operation, can eat up the savings of years of the average
American family and force it to begin at rock bottom again.
No, the problem of spreading earnings over a lifetime
cannot be solved for the Nation as a whole solely on the basis
of individual savings. The solution lies to a great extent in
social insurance. That it does not lie there entirely is due to
the fact that social insurance involves ability to work and to
pay contributions, or premiums. For many this is impossible. There
are those who are already too old to work and those who are too
young and those who are physically handicapped. These many, although
they cannot contribute a percentage of wages, or cannot do so
over a long enough period, must be assured the basic needs of
life. Public assistance is the name of the program we have adopted
to assure an income for the needy aged, the needy blind, and dependent
children.
Social insurance is still so new in this country
that many people are yet not sure exactly how it works. Actually
it works on the same principle as private insurance. That is the
principle of spreading the risk. As Winston Churchill has said,
it brings the magic of averages to the rescue of the millions.
Disaster, to which millions are subject, actually strikes only
a few of us at any given time. If we collect a small premium from
the many who are exposed to the risk, we can build a fund out
of which we can pay benefits to those who at any given time are
suffering from the impact of the risk. Only there is this distinction.
In the case of private insurance the policy holder does all the
paying for the protection he gets; with social insurance it is
different. The person who pays the premium on unemployment insurance
is--in most States--the employer, while in the case of old-age
and survivors insurance the employer and the employee share the
cost, the Federal Government standing by ready to help in case
of need.
How well do our two systems of social insurance
serve to provide for families an income in periods when the breadwinner's
earnings are cut off?
Unemployment insurance, of course, is not the answer
to prolonged mass unemployment; only full employment can be that.
Nor is it a substitute for employment; the only real substitute
for a job is another job. But unemployment insurance does act
as a first line of defense against destitution. When an insured
worker loses his job, his family is not immediately thrown on
its own resources; for some weeks a regular weekly income continues
to come in. That income is much smaller than the wages the worker
earned when employed, but it does help to tide him over until
he gets work again.
Unemployment insurance serves business also, because
it provides income to the customers of business--income with which
to pay the butcher, the grocer, the landlord. Even in wartime,
unemployment insurance helps our economy to function more smoothly.
Although unemployment is practically at rock bottom now there
are many instances where war workers are thrown out of work temporarily.
Let me give you an example. Recently, a cannery
had to lay off over a hundred workers in the midst of the canning
season, because some shipments of vegetables did not arrive. There
were no other jobs in the vicinity for the unemployed men and
woman. If these workers hadn't received unemployment payments,
many undoubtedly would have gone to jobs in other towns. Then
when the cannery was ready to operate at full force again it would
have had the difficult task of finding and bringing in workers
from other communities. Unemployment insurance helped to keep
the cannery workers where they would be needed soon again to put
up food for our armed forces.
We look to unemployment insurance to ease the Nation's
transition from war to peace. In view of the vast labor turnover
that will occur then, we must expect that millions of working
men and women will be without jobs for at least a short period.
Can we feel confident that our present system is good enough and
strong enough to meet that situation? I would like to outline
just a few facts that throw some light on that question.
We have 51 different unemployment compensation systems
in this country, each operating under a different State law. The
total reserves in the unemployment funds of the States now amount
to over five billion dollars. That is a lot of money. It is enough
to pay benefits of $20 a week for 20 weeks to 12,500,000 workers.
But, unfortunately, this does not mean that our minds may be at
ease regarding the protection unemployed workers will get in the
difficult postwar period. Unemployment is likely to be uneven,
for mass unemployment has its roots in national rather than local
or State conditions. This will be particularly true in the postwar
period, for employment conditions then will be largely affected
by the policies of the Federal Government on such things as termination
of war contracts, sale of surplus war materials, disposal of government-owned
war plants, and international trade arrangements.
There has been much talk of unifying and nationalizing
our 51 separate unemployment insurance systems, but it would be
unfortunate if debate on this subject obscured our main objective;
namely, to provide adequate benefits for workers when they are
temporarily unemployed, However, as they stand now, the State
systems have serious deficiencies.
What are some of these weaknesses? In the first
place, benefits are too low. The maximum weekly payments vary
from $15 a week in 22 States, and $16 or $18 a week in 17 States,
to $20 or more in 12 States. In general, these top limits on size
of payments were established in the pre-war days when actual earnings
and the cost of living were much lower than today. In the post-war
period many workers will receive benefits which represent but
a small fraction of their weekly wages and but a small fraction
of the amount needed to maintain themselves and their families.
Second, the benefits are payable for too short a
period of time, and will not continue as long as many of the unemployed
workers will be out of work. In 29 States the maximum period for
which benefits can be drawn is 16 weeks or less. We cannot hope
that such small payments for such brief periods will suffice.
And there are still other weaknesses. There is the
question of coverage. You Eagles are well aware of the inequities
springing from the fact that unemployment insurance covers only
wage and salary earners in private industry and commerce, and
not all of them. Millions for this reason have only their own
meager--or altogether nonexistent--resources to fall back on if
they lose their jobs. Among these are about 3 million workers
employed by small firms who have less than 8 employees and whose
workers, therefore, are not covered under the State law. Merchant
seamen are excluded; so are Federal employees in Army arsenals,
Navy yards and other government establishments.
Our returning veterans are guaranteed protection
against unemployment by provisions in the GI bill. This bill establishes
a system of readjustment allowances, payable at the rate of $20
a week, for a maximum of 52 weeks during the two years after the
veteran is mustered out. In effect, this amounts to a special
system of unemployment insurance for veterans. It is by far the
most liberal system now in existence, and may well prove to be
a stimulus to the liberalization of other systems. One unique
feature is that it provides benefit payments for self-employed
ex-servicemen who earn less at their occupations than $100 per
month. This represents the first attempt in this country to pay
unemployment benefits to the self-employed.
Improvement of our unemployment insurance program
before the war's end is of urgent importance. An adequate program
can be of great help to both workers and business by providing
purchasing power for families whose breadwinner is temporarily
unemployed. It can offset the tendency of people to "hoard" their
income and savings unnecessarily by removing the fear that even
a short period of unemployment would exhaust their resources.
Unemployment insurance can be a powerful constructive force, if
we wish to make it that, in keeping our economy on an even keel.
What is the story with our other system of social
insurance?
You Eagles who were among the first to appreciate
the problem of old age in America and who were so driving a force
in the early legislation will be glad to hear that our Federal
old-age and survivors insurance system is meeting well the test
of time and experience.
As you know, when the Social Security Act was passed
in 1935, no provision as made for the worker's family. Monthly
benefits were payable only in old age and only to the worker himself.
But four years later, in 1939, far-reaching changes were made.
Those changes made the system one of family insurance. Under this
system not only the wage earner but also his wife and young children
receive protection. Under this system, moreover, the family receives
monthly payments not only when the breadwinner is too old to work,
but also when he dies.
Nearly a million monthly benefits are in force.
Monthly payments are now being made at an annual rate of more
than $220,000,000 a year. This means something more than just
that a lot of money is being paid out. Translated into human terms
it means that hundreds of thousands of families have been helped
to remain independent, hundreds of thousands of families have
been kept together, hundreds of thousands of children have escaped
the crushing blow of a broken home and are growing up under the
care of their own mothers.
This is a proud accomplishment. But we must admit
that it is not enough. Given the opportunity, old-age and survivors
insurance would carry us much nearer the goal of social security
for all our people.
Today some 67,000,000 wage and salary earners have
earned credits counting towards benefits under the system. Many
of then will never receive benefits, however, because of failure
to work long enough in jobs that come under the law. Some 20,000,000,
about one-third of our working population, earn their living most
of the time in employment that is excluded. Old-age and survivors
insurance, like unemployment insurance, is at present available
only to those who work for wages or salaries in private industry
or business. Farmers and farm workers are excluded. Domestic workers
in private homes are excluded. Employees of non-profit religious,
educational, and humane organizations, and those who work for
Federal, State, county and local governments are excluded. The
men and women who work for themselves in small businesses or professions
are excluded. All these groups are denied the opportunity of building
old-age and survivors insurance protection for themselves and
their families.
You Eagles have already expressed yourselves as
being in favor of extending social security protection to all
wage and salary earners not now adequately protected by pension
or retirement systems. And in the article which I wrote for the
May issue of your Eagle Magazine I pointed out how very
important it is for all workers, the self-employed as well as
wage and salary earners, to be included under old-age and survivors
insurance. I shall therefore not take up your time with a full
discussion of this. But I should like to point out how very wise
the Eagles' National Social Security Commission was in placing
that word"adequately" before "protected." Their phrase is "wage
and salary earners not now adequately protected by pension or
retirement systems." That is a very important inclusion. As you
perhaps know, and as your Commission certainly knows, many of
the special pension and retirement systems are far from adequate;
yet the fact that groups are covered at all--no matter how inadequately--is
used as valid argument against including them under social security.
The Social Security Board would go somewhat farther
than your Commission has recommended. We believe that all
workers should be included under old-age and survivors insurance,
regardless of what protection they now have; for only by bringing
all groups under the system can all families get basic
and continuing protection. This can be done without jeopardizing
the protection which people already have under special plans.
It is argued by some that adjustments in existing plans would
be difficult if not impossible to make. I would like to point
out, however, that the same problem confronted the private retirement
systems which many industrial and commercial companies had established
before the Social Security Act was passed. In general those private
pension plans ware adjusted satisfactorily, and many more companies
have adopted such plans since the Federal system has been in operation.
The present limitation of old-age and survivors
insurance to wage and salary earners in private industry and commerce
leaves a broad gap in our social security system. There are other
gaps. We have said that the objective of social security is to
assure an income at all times, in all periods when earnings are
cut off. Our present program, however, provides protection against
only three of the great risks which threaten the welfare of American
families--unemployment, old-age, and death. What about periods
when the breadwinner is sick and cannot work? What about permanent
disability which may put a permanent stop to a family's income?
It would be wholly logical to protect workers against
both these risks through social insurance. At present if an insured
person is out of work because he cannot find a job, he gets unemployment
payments. If, however, he is sick and cannot work, he gets no
benefits for the reason that he is not available for work. As
for permanent disability, it differs very little from old age
in its economic effects. In fact, the family of the young or middle
aged man who is permanently disabled is in even a worse situation
than the family of the man who has grown too old to work. We all
know that when a man is old, his heaviest responsibilities towards
his family are, in most cases, already discharged, whereas the
young father who is permanently disabled loses his earning power
at a time when the requirements of his family are at their height.
Moreover, as in the case of the worker who is sick temporarily,
the man who is permanently disabled causes an extra, and often
a very heavy strain on the family purse.
There is another heavy risk against which the Social
Security Board recommends social insurance. It is the cost of
medical and hospital care. All of you have undoubtedly had intimate
experience with these costs and know to your grief how very burdensome
they are. Yet I should like to quote some statistics which will
point up the fact that yours is not an unique experience. More
than one-fifth of our urban families of low incomes spend for
medical and related costs more than $100 every year, and
many have sickness bills of above one-fourth and even one-half
of their entire family income. It is an old adage that sickness
and poverty go together; but such figures give a clue to at least
one of the reasons why they are companion evils.
Social insurance started in practically every other
country not with unemployment or old age but with health insurance.
Recently one of our Board officials, talking with a representative
of a South American country, asked him about old-age insurance
in his homeland. The South American replied, "We are not providing
for old age...because they don't live to be old--they die at 45
or 50."
In this country, fortunately, we do not have such
a situation. Owing to the advance of medical science, and largely
through public health and sanitary measures to safeguard water
and milk supplies and to prevent and control such diseases as
typhoid, diphtheria, tuberculosis, and malaria, the average life
span has been increased. Almost thirds of us do live beyond 65,
and we do have an old-age problem that has to be met through social
insurance. But I could not help thinking the other day when I
read the testimony at the hearings held before the Senate Subcommittee
on Wartime Health and Education that insurance against the costs
of medical and hospital care is even more important for the American
people.
At those hearings Colonel Rowntree, medical director
of the Selective Service System, testified that as many as one-third
of the young men examined for service proved to have mental or
physical defects. He said that the Selective Service physical
examiners had expected to find "a rough, virile, manhood." Instead
they had found that too many of American youth are "soft and flabby."
More than 4,000,000 men were found ineligible for military service.
Colonel Rowntree called the situation "appalling," and said "We
can no longer regard ourselves as a sturdy, healthy nation; the
country is ailing."
What does this mean?
It means that our social progress has not kept pace
with medical progress. We have not extended the benefits of medical
progress to all the people. It is true that we have to
a certain extent raised average physical well-being. But "average"
is a word that covers a multitude of individual differences. There
are many regions in our country today where the chance of survival
is no greater than it was 60 years ago. There are places in our
country today--and this is especially true of rural areas--where
people are almost without access to modern facilities to prevent
and cure sickness. The Selective Service examinations sharply
brought out the medical deficiencies in our rural areas. Whereas
among a large group of 18--and 19--year old registrants about
25 percent were rejected on physical or mental grounds, among
boys classified as farmers the rate of rejection was 40 percent.
This country as a whole has in peacetime adequate
medical facilities and nearly enough doctors. Unfortunately they
are not distributed evenly in relation to the need for services.
Some medical services--hospitals, laboratories, and so on--scarcely
exist outside of the great cities. Physicians, also are concentrated
there. In 1938 strictly rural communities had on the average one
doctor for 1,450 persons--this as compared with counties containing
cities of 50,000 or more people, where there was one doctor per
575 persons.
But the more even spread of services and doctors
would in itself be no solution; the cost of medical and hospital
care would still be prohibitive for the masses or our people.
Many who are within reach of facilities today cannot take advantage
of them. Knowing beforehand what the bills will be like, many
may not even have the courage to face a doctor and find out what
is wrong with them.
There are two ways in which this problem might be
met. Personal medical care might be provided as a public service,
in the same way that education is provided. Under such a method,
everybody in the community would be entitled to call on these
services to the extent he needed them, and the costs would be
met through general taxation. Such a system of public medical
service could naturally require extensive changes in present medical
practice. In countries where medical facilities are lacking and
where there are few doctors, that method would probably offer
the most speedy protection to the greatest number. But here in
the United States it would hardly be considered an acceptable
pattern.
We of the Social Security Board recommend another
plan. We recommend that the serious health problem of this country
be met through social insurance against the costs of medical and
hospital care. Under this plan workers and their families would
be able to get all the care they need because it would have been
paid for beforehand through social security contributions. Each
person would be left free to choose his own doctor. Each doctor
would be left free to accept or reject his own patients. The Board's
recommendation, as you may know, has been violently opposed by
some sections of the medical profession. Most of the opposition
is due to the failure to distinguish between social insurance,
which merely provides a method for spreading the cost of medical
care over a period of time and over a large group, and a system
of State medicine. However, I will not go into all that. I will
merely quote Surgeon General Thomas A. Parran, who at the Senate
Committee hearing said, "There has been too little light and too
much heat in our discussions of the socialization of medicine."
I think that from what I have said to you this afternoon
you will conclude that we have been moving towards the goal of
social security. But I think you will also draw the conclusion
that we still have some distance to go before we have achieved
minimum basic security for all. The Social Security Board is very
happy to learn that the Eagles are shortly going to undertake
a social security information program designed to acquaint all
members with their rights and benefits and responsibilities under
social security. I hope that on your "Social Security Rights"
you will consider also some of the gaps in the program. We have
a firm and solid foundation in the Social Security Act. It has
brought us steadily towards the goal of social security. But new
legislation is in order now. I hope that in your social security
discussions you will consider what legislation will most surely
and rapidly bring us to the goal of social security for all.