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Social Security Act

From Ohio History Central

Since the start of the twentieth century, numerous groups, including the Progressives, had lobbied the United States federal government to implement a national system of health insurance and pensions for the elderly and incapacitated. During the Great Depression, President Franklin Delano Roosevelt made the first concerted effort to enact such a program. During this economic downturn, millions of Americans were unemployed. One segment of the population that fared especially badly was the elderly. To stay in operation, businesses commonly laid off or fired workers. Among the first workers that businesses let go were elderly ones. The elderly also were growing dramatically in number during the first half of the twentieth century as life expectancy grew quickly. In 1925, 5.7 million Americans were sixty-five years of age or older. In just ten years, the number of Americans over sixty-five years of age skyrocketed to 7.8 million. To assist the elderly and other people suffering from the Great Depression, Roosevelt enacted his New Deal. Roosevelt hoped that his New Deal would allow Americans to cope with the Great Depression, would help end the current economic downturn, and would help prevent another depression from occurring in the future.

The Social Security Act probably has had the longest lasting impact of any of Roosevelt's New Deal programs. This legislation, implemented in 1935, collected a percentage of workers' wages to be set aside for the workers' retirement. The benefit formula was originally based on cumulative wages. For example, monthly benefits equaled ½ of 1 percent of the first $3,000 of cumulative wages, plus 1/12th of 1 percent of the next $42,000, plus 1/24th of 1 percent of the next $48,000. The formula changed in 1939 basing retirement benefits on average wages, not accumulative wages. Businesses also had to contribute an amount equal to their employees' contributions. Once workers reached retirement age, they would receive this money back in monthly payments, assisting these people in supporting themselves when they were less employable due to their age. The monthly stipends varied from ten dollars to eighty-five dollars per month. Under the original law, retirement benefits were paid to the primary worker and excluded domestic servants and farm laborers. Eventually the act included benefits for survivors and retiree's spouses and children and employees as well.

In addition to providing a stipend to elderly Americans (old age assistance), the Social Security Act worked in partnership with states to provide unemployment insurance to workers, aid to the disabled, aid to the blind, and aid to families with dependent children. The federal government required individual states to meet standards set in the Social Security Act to qualify for federal funds. Ohio implemented the Ohio Unemployment Compensation Law (1936), along with several other pieces of legislation, to meet federal requirements.

Social Security continues to exist today. Over the years, the Social Security system has undergone much change, but its basic goals remain the same, to provide the elderly, the disabled, the blind, and dependent children with assistance. In the twenty-first century, many Americans question the effectiveness of this program and various proposals have come into existence to modify Social Security.

Find out more about Social Security <a href="">here</a>.

See Also