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The Social Security Program of the United States

Published online by Cambridge University Press:  02 September 2013

Joseph P. Harris
Joseph P. Harris
Affiliation:
Committee on Public Administration, Social Science Research Council
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Extract

The Federal Social Security Act, which may be regarded as the central core of the social security program, is an omnibus act, containing the following features: (1) a national, compulsory oldage insurance plan, covering all employees except certain exempted groups; (2) two measures designed to stimulate the states to enact state unemployment compensation laws, namely, (a) a uniform nation-wide tax upon employers, against which a credit is allowable for contributions made to approved state unemployment compensation plans, and (b) subsidies to the states to cover the administrative costs of unemployment compensation; and (3) grants-in-aid to the states for old-age assistance, pensions for the blind, aid to dependent children, child welfare, maternal and child health, vocational rehabilitation, and public health activities. It is estimated that each of the two forms of social insurance will apply to about 25,000,000 wage-earners, and, when the maximum rates become effective in 1949, will involve annual contributions of nearly $3,000,000,000. This amount is approximately equal to the normal annual expenditure of the federal government prior to 1930. In addition, the grants-in-aid to the states were estimated by the actuaries of the President's Committee on Economic Security to reach a total of a half-billion dollars annually within a few years.

History of the Federal Act

When, in a message to Congress on June 8, 1934, the President indicated that he would submit a program of social insurance for consideration at the following session, the Wagner-Lewis unemployment insurance bill and the Dill-Connery old-age assistance bill were pending. Shortly afterwards, the President, by executive order, created the Committee on Economic Security, consisting of the Secretaries of Labor (chairman), Treasury, and Agriculture, the Attorney-General, and the Federal Emergency Relief Administrator. This committee appointed Professor Edwin E. Witte, of the University of Wisconsin, as executive director, and proceeded to build up a staff of actuaries and experts to study the whole problem of economic insecurity, and to prepare recommendations.

Type
Research Article
Information
American Political Science Review , Volume 30 , Issue 3 , June 1936 , pp. 455 - 493
Copyright
Copyright © American Political Science Association 1936

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References

1 Senate Finance Committee, Report on the Social Security Bill, 74th Congress, 1st Session, Report No. 628, May 13, 1935, pp. 26–27Google Scholar.

2 Senate Finance Commettee, Hearings on S. 1130, 74th Congress, 1st Session (Washington, 1935), p. 250Google Scholar.

3 See Douglas, Paul H., Social Security in the United States (New York, 1936)Google Scholar, Chap. 4, and Witte, E. E., “An Historical Account of Unemployment Insurance in the Social Security Act,” Law and Contemporary Problems, Jan., 1936, pp. 157–169Google Scholar.

4 See United States House of Representatives, Committee on Ways and Means, 74th Congress, 1st Session, Hearings on H. R. 4120, and Senate Finance Committee, Hearings on 8. 1130 (Washington, 1935)Google Scholar.

5 H. R. 7260.

6 This plan called for free federal old-age pensions of $200 a month without any means test, to be paid to all persons over sixty years of age.

7 This bill, which had been reported out favorably by the House Committee on Labor, provided for federal unemployemnt benefits, equal to full wages, to be paid to any unemployed person for as long as he remained unemployed. Partial employment was to be compensated, and persons whose wages failed to come up to a minimum standard fixed by the Secretary of Labor were to receive benefits sufficient to bring their wages up to the prescribed minimum. No provision whatever was made for financing this extraordinary scheme of benefits. They were simply to be paid out of the federal treasury.

8 See particularly the remarks of Mr.Marcantonio, , Congressional Record, 74th Congress, p. 6174Google Scholar, and the debate on the Lundeen bill when offered as an amendment, ibid., pp. 6173–75.

9 Congressional Record, loc. cit., p. 6169.

10 Ibid., p. 6175.

11 Ibid., pp. 6173, 6176, 6178, and 6181.

12 Ibid., pp. 6176, 6178, and 6262.

13 Ibid., p. 6290.

14 See the testimony of President William Green before the Senate Finance Committee, op. cit., p. 146; also The American Federationist.

15 See Witte, Edwin E., “Major Issues in Unemployment Compensation,” Social Service Review, March, 1935Google Scholar.

16 See the summary of state laws below.

17 Senate Finance Committee, Report on the Social Security Bill, op. cit., p. 27.

18 See particularly the series of monographs of the Industrial Relations Counselors on unemployment compensation abroad; Hill, and Lubin, , The British Attack on Unemployment (Washington, 1934)Google Scholar; and the Royal Commission on Unemployment Insurance, Final Report, Cmd. 4185 (London, 1932)Google Scholar.

19 See SirBeveridge, William, Unemployment; A Problem of Industry (London, 1929)Google Scholar, passim.

20 The Unemployed (1929), Chap. 7.

21 See Industrial Relations Counselors, An Historical Basis for Unemployment Insurance (Minneapolis, 1934)Google Scholar.

22 Quoted in Report of the Royal Commission on Unemployment Insurance (1932), p. 12Google Scholar.

23 From Report to the President of the Committee on Economic Security (1935), p. 63Google Scholar.

24 See Witte, E. E., “Balance of Power,” State Government, May, 1935Google Scholar.

25 See the Report of the Advisory Council, Senate Finance Committee, Hearings, op. cit., p. 226; Report of the Technical Board, ibid., p. 329; a statement in favor of the grant-in-aid plan by Frank P. Graham, ibid., p. 335; and the testimony of William Green, ibid., p. 115 et seq.

26 At this writing (March, 1936), all state laws except that of Utah have been approved.

27 See Report to the President of the Committee on Economic Security, p. 20.

28 See particularly the testimony of Paul Kellogg, editor of The Survey, and William Green, president of the American Federation of Labor. Senate Financ e Committee, Hearings, op. cit.

29 The states, in chronological order, are: Wisconsin, 1932 (special session), Chap. 20; Washington, 1935, Chap. 145; Utah, 1935, Chap. 38; New York, 1935, Chap. 468; California, 1935, Chap. 352; New Hampshire, 1935, Chaps. 99, 142; District of Columbia, 1935, 74th Cong., Public No. 319; Alabama, 1935 (special session), Chap. 447; Oregon, 1935 (special session), House Bill No. 71. (Since the above was written, two additional states—Indiana and Mississippi—have enacted legislation.)

30 Alabama, District of Columbia, New Hampshire, New York, Wisconsin, and Oregon.

31 Massachusetts (4 weeks), Washington (6 weeks), California (4 weeks in 12 months during 1938–39; thereafter 3 weeks in 12 months).

32 Utah (2 weeks).

33 Alabama, District of Columbia, Massachusetts, New Hampshire, New York, and Utah.

34 Alabama, California, Massachusetts, New Hampshire, Oregon, and Washington.

35 Alabama, District of Columbia, Massachusetts, New Hampshire, and Washington.

36 Report to the President of the Committee on Economic Security (1935), p. 68Google Scholar, table 13.

37 Ibid., p. 24.

38 For detailed statistics on state old-age pensions in 1934, see Parker, Florence E., “Experience under State Old-Age Pension Acts in 1934,” Monthly Labor Review, Aug., 1935Google Scholar.

39 Such studies were made in Wisconsin (1915), New York (1929), and Connecticut (1932).

40 Committee on Economic Security, Report, op. cit., p. 24.

41 These figures are taken from special studies of the staff of the Committee on Economic Security.

42 See Senate Finance Committee, Hearings, op. cit., p. 250.

43 This figure and following statistics on the operation of state old-age assistance laws are taken from Florence E. Parker, op. cit.

44 Abstract of Labor Statistics of the United Kingdom.

45 From a forthcoming volume by Professor Mabel Newcomer on grants-in-aid in Great Britain.

46 See above.

47 See Ohio State Government Survey, directed by Colonel C. O. Sherrill, section on Division of Aid for the Aged (1935) (mimeographed); and Statistical Analysis of Old-Age Pensions in the State of Indiana (November, 1934), by the Indianapolis Chamber of Commerce (mimeographed).

48 Latimer, Murray W., Industrial Pension Systems (New York, 1933)Google Scholar.

49 See above.

50 See a Public Policy Pamphlet of the University of Chicago on the Townsend old-age pension plan, February, 1936.

51 See Senate Finance Committee, Hearings, op. cit., p. 250.

52 Senate Finance Committee, Report on the Social Security Bill, op. cit., p. 8.

53 In the Social Security Act, there is no direct connection between taxes levied for this purpose and the benefits paid to employees who have retired. The taxes are paid into the Treasury, and out of the Treasury appropriations are made to an old-age benefit fund, from which benefits are paid.

54 See Linton, M. A., “The Quest for Security in Old Age,” Proceedings of the Academy of Political Science, June, 1935, pp. 101–117Google Scholar.

55 Senate Finance Committee, Report on the Social Security Bill, op. cit., p. 9.

56 See particularly the article by Epstein, Abraham, “Our Social Insecurity,” Harper's Magazine, November, 1935Google Scholar.

57 The text of the amendment is to be found in the Congressional Record, op. cit., p. 9912, and the debate is reported in the following pages.

58 Social Security Act, Title IV.

59 Only Georgia and South Carolina have not enacted a mothers' pension law.

60 See the testimony of Miss Katherine Lenroot, chief of the Children's Bureau, Senate Finance Committee, Hearings on S. 1130, p. 337et seq.Google Scholar See also Miss Lenroot's testimony before the Ways and Means Committee, Hearings on H. R. 4120, p. 337 et seq.

61 For example, thirty-five counties in Ohio and twenty-one counties in Illinois were granting less than $10 per month per family in 1933. See staff report, Committee on Economic Security, Security for Children (unpublished).

62 See the testimony of Miss Katherine Lenroot, op. cit.

63 P. 38.

64 Ibid., p. 39.

65 “Public Provisions for the Blind in 1934,” Monthly Labor Review, Sept., 1935, pp. 584–601Google Scholar.

66 Senate Finance Committee, Report on ike Social Security Bill, op. cit., p. 27. This estimate is based upon a coverage of all employers having four or more employees. The act was later changed to include only employers of eight or more, which would reduce this estimate.

67 Ibid., p. 26.

68 Senate Finance Committee, Hearings, op. cit., p. 250.

69 These maximum rates are not reached until 1949, and the contribution for oldage insurance applies to only the first $3,000 annually of the wages of any employee.

70 See, for example, the testimony of President William Green of the American Federation of Labor before the Senate Finance Committee, op. cit., p. 181.

71 This is, of course, true of many industries. See particularly the testimony of Mr. John C. Gall before a subcommittee of the Ways and Means Committee, 73rd Congress, 2nd Session. Hearings on the Wagner-Lewis Unemployment Compensation Bill (H.R. 7659), p. 313.

72 Bureau of the Census, Financial Statistics of States and Local Governments, 1932. It is apparent that new welfare activities, involving large outlays, such as old-age assistance, cannot be financed by the general property tax.

73 See Statistical Abstract of the United Kingdom, 77th Number.

74 See Llaslo Ecker-R, “Revenues for Relief,” State Government, Nov., 1934.

75 See Levin, Moulton, and Warburton, , America's Capacity to Consume (Washington, 1934)Google Scholar, passim.

76 See above.

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