Author:Karen Hodges, Academy for College & Career Exploration, Baltimore City Public School System
This lesson takes students through the origins and evolution of Social Security legislation. The history of the social welfare movement, New Deal bills, and alternative proposals during the Great Depression will all be explored. Students will gain an understanding of how Social Security works, and why changing American demographics threaten the system's viability. They will debate privatization proposals and discuss the social values at stake in the fate of Social Security.
Era 8: The Great Depression and World War II (1929-1945)
Standard 2: How the New Deal addressed the Great Depression,
transformed American federalism, and initiated the
Historical Thinking Standards:
Standard 2: Historical Comprehension
A. Reconstruct the literal meaning of a historical passage.
B. Identify the central question(s) the historical narrative
D. Evidence historical perspectives.
F. Utilize visual and mathematical data presented in charts, tables,
pie and bar graphs, flow charts, Venn diagrams, and other
G. Draw upon visual, literary, and musical sources.
Standard 3: Historical Analysis and Interpretation
B. Compare and contrast differing sets of ideas, values,
personalities, behaviors, and institutions.
D. Consider multiple perspectives.
I. Evaluate major debates among historians.
J. Hypothesize the influence of the past.(
Standard 5: Historical Issues-Analysis and Decision-Making
A. Identify issues and problems in the past.
E. Formulate a position or course of action on an issue.
The Social Security Act signed by Franklin Roosevelt on August 14, 1935,
contained four major provisions:
- Title I - Old-Age Assistance - this direct relief program for the elderly granted money to states who used existing programs to distribute funds to the destitute elderly;
- Title II - Old-Age Insurance - a federal contributory pension program, and what we now call "Social Security," where individuals surrendered a portion of their income to the government which, combined with matching funds paid by employers, resulted in a monthly pension based on the amount of those earnings when the worker retired (originally excluded were workers in agricultural and domestic service);
- Title III - Unemployment Compensation - a joint federal-state program that used employee payroll deductions and employer contributions to fund the program which was administered by the states;
- Title IV - Aid to Dependent Children - a joint federal-state program that provided direct relief to families with children who did not have adequate financial support, many of them being women who were abandoned by their husbands during the Depression;
- Other provisions include: support for maternal health programs, aid to the blind and disabled, support for states to provide a variety of public health programs, and some provisions added to help in the administration of the programs.1
Creating an unprecedented bureaucracy and providing a complex and sophisticated program of social insurance, the Social Security Act remains one of the most enduring and controversial actions of Franklin Roosevelt's New Deal.
Roosevelt's desire to provide "cradle to grave" protection for American citizens through programs like Social Security derived from several sources. Like many liberals in the 1930s Roosevelt believed, at least in part, in the concept of economic maturity - the idea that the economy had expanded as far as possible and that no new frontiers existed to reinvigorate markets. Technology, among other factors, had created an economy where high unemployment would be the norm, not the exception. In order to compensate for this imbalance and maintain a decent standard of living, economic maturity proponents believed the economy would need support and investment from the federal government to be viable.2 In general, sustained movements for old-age pensions by dissidents like Huey Long and Francis Townsend had widespread support. Huey Long's "Share Our Wealth" program advocated for a radical redistribution of income with every family guaranteed a basic annual income and elderly pensions as well as a number of other social programs.3 Francis Townsend's plan aimed to remove the elderly from the workforce by offering a pension to every person over the age of 60. In exchange, each retiree agreed not to work and had to spend his or her check within the month. Although politically popular, Townsend's plan only shifted spending from the young to the elderly due to the high taxes required of the workforce to pay for the program.4 Historically, calls for government-supported pensions reached back to Theodore Roosevelt's Progressivism.5 The popularity of a comprehensive social insurance plan combined with the impact of the Great Depression and the presence of an overwhelmingly Democratic Congress in 1935 helped encouraged Roosevelt to support social insurance legislation proposed by the Committee on Economic Security, which had commenced work the year before and made passage of such sweeping changes feasible.
Although unemployment insurance and old-age pensions enjoyed popularity, few models existed. Internationally, Germany's Otto Von Bismarck had in the late-19th century instituted an old-age pension plan in order to nullify more radical movements in his country.6 In the United States, twelve states had old-age pensions by the mid-1930s, but most were unable to fulfill pension commitments because the programs were underfunded. Even private pensions provided by employers served few workers. Most people in the 1930s worked until death, or until they were physically unable, and lived out their days in charity-run old-age homes when they had exhausted personal and familial resources. Although some state and local relief programs did exist for the elderly, most people resisted the "dole" as humiliating. To compound the problem, by 1930 eight percent of the population was over the age of 65. The number of elderly, thanks to better nutrition and medical advances, had doubled since 1920.7
Thus, Roosevelt proposed a comprehensive program of social insurance through a combination of legislation including the Social Security Act and the Emergency Relief Appropriations Bill of 1935. The "Big Bill," as the ERA was dubbed, re-energized work relief programs like the Civilian Conservation Corps and Public Works Administration and began massive new initiatives like the Works Progress Administration, National Youth Administration and the Resettlement Administration. With these programs and the Social Security Act Roosevelt hoped to replace the initial direct relief programs he had instituted with work relief, and to support the unemployable with new programs not financed by tax revenue.8
To conceptualize his new plan of social insurance, Roosevelt had assembled the Committee on Economic Security in 1934, comprised of Secretary of Labor Frances Perkins, Secretary of Treasury Henry Morgenthau, Secretary of Agriculture Henry Wallace, Attorney General Homer Cummings, Administrator of FERA Harry Hopkins, and Professor Edwin White.9 Roosevelt charged this committee with recommending a plan for social insurance. Throughout the process, Roosevelt, conscious of the states' rights traditions of the Democratic Party and the reality that a federal insurance program could be found unconstitutional, restrained the committee to social insurance programs that required as little federal control as possible. Accordingly, three elements of the Social Security bill contained a federal-state partnership: old-age relief, unemployment insurance and aid to families with children. The two relief programs gave federal money to state agencies for distribution, while unemployment insurance became self-supporting through a tax on employee payroll and businesses. States could either participate in the federal unemployment program or establish their own version. The incentive to establish a state version of the program stemmed from a tax-offset provision whereby states who did not establish their own programs lost tax revenue to the federal government in order to fund the federal program.10 Old-age insurance, however, could not be formulated solely as a state plan due to worker mobility. In addition, Roosevelt insisted that any social insurance program follow a private insurance model, requiring payments from recipients and linking benefits to contributions. His tendency toward fiscal conservatism rejected a flat rate pension or income-redistribution plan as both un-American and potentially unconstitutional.11 In the end, Roosevelt's insistence on a contributory pension plan established a conservative and bureaucratically complex program in comparison with those plans proposed by more radical advocates like Townsend or Long.12
In January 1935, the Committee on Economic Security presented its report to the President and then to Congress. Vehement debate over the old-age insurance program, in particular, followed the report, though its ultimate passage appeared imminent. Critics of the old-age pensions from the right charged that the compulsory payroll deductions (the "contribution") would further cripple the economy by depleting much-needed spending power and creating a deflationary affect. In addition, critics charged that provisions of the old-age pension legislation stripped individual freedom and made obsolete the idea of individual responsibility and limited government. Critics from the left charged that old-age insurance fell far short of the need and excluded such significant parts of the workforce as agricultural and domestic workers.13 To some extent Roosevelt sympathized with criticisms from both ends of the spectrum. He considered it risky to further tie up money by withholding pension contributions and wished that the program covered more workers more comprehensively. Ultimately, however, Roosevelt understood the limitations of legislation that could pass in Congress and did not want to push beyond what would be approved. He also considered the long-term benefits of secure retirement to outstrip the possible negative short-term economic effects.14
The original old-age insurance program slated the initial collection of revenue through payroll deductions to begin in 1937, with the first pension payments to retirees to begin in 1942. In 1939 that original date for payment accelerated to 1940, primarily to stem the rising popularity of Townsend's alternative to Roosevelt's Social Security. Later, the addition of a survivor's benefit gave a worker's Social Security pension to his heirs.15 From 1940 to 1950, pension amounts set on the day of retirement continued for an individual's lifetime with no adjustment for the rising cost of living. This changed in 1950 when Congress instituted COLAs (Cost of Living Adjustments) to pension amounts. Initially, each percentage increase needed Congressional approval, but eventually an automatic annual COLA was instituted at 3%. Introducing these adjustments greatly expanded Social Security, broadening both its impact and its cost.16
Debates over Social Security sometimes figure as prominently in the modern political realm as they did in 1935. With the aging of the post World War II Baby Boom population, retirees receiving pensions will soon outnumber workers contributing to Social Security. Although scholars disagree as to when the "Social Security Trust Fund" (an amount built up over the years to forestall the inevitable deficit) will run dry, it clearly will run out under current circumstances, and there are a variety of opinions as to how to deal with this eventuality. In addition, many fiscal conservatives and smaller government advocates want to disengage the federal government from the business of insurance by proposing that the income normally applied to Social Security be returned for private investment in the stock market. The proponents of private accounts argue that the average revenue on Social Security funds could be improved for individuals because the stock market generally produces a higher rate of return. Critics of privatization charge that the unpredictability of the stock market makes such investment unwise and that privatization would bankrupt Social Security much more quickly.
DeWitt, Larry, "A Brief History of Social Security." Available online at
http://www.ssa.gov/history/briefhistory3.html Accessed June 28, 2005.
This comprehensive essay on the genesis of Social Security anchors the excellent
website maintained by the Social Security Administration.
Gordon, Linda. "Men, Women, and the Assumptions of American Social Provision." In
Colin Gordon, Editor. Major Problems in American History 1920-1945. Boston:
Houghton Mifflin Company, 1999: 329-335.
This essay gives a "gendered" reading of Social Security legislation. Gordon argues that
the relief created in 1935 specifically for women, Aid To Families with Children, differed
substantially from unemployment insurance and old-age pensions because of
assumptions about the nature of the work of men and women. Programs aimed towards
men, unemployment insurance and old-age pensions, were considered social insurance
absent of means-testing. Programs aimed at womenwere considered social work where
decisions about aid stemmed from individual casework. This dichotomy existed because
men and women shared the idea that women did not "serve" society in the same way as
men and thus should not be given "entitlements" but instead should receive need-based
Segrue, Katherine Liapis. "Social Security." In The Encyclopedia of American History.
New York: Facts On File, 2003: 328-330.
This short article delineates clearly the elements of the Social Security bill and provides
a history of the changes made to Social Security since its inception.
Kennedy, David. Freedom From Fear: The American People in Depression and War, 1929-1945. New York: Oxford University Press, 1999.
Kennedy provides an excellent overview of the creation of Social Security, placing it
within the context of the omnibus bill in which it was passed.
Rosenof, Theodore. "Understanding the Crash." In Colin Gordon, Editor. Major
Problems in American History 1920-1945. Boston: Houghton Mifflin Company,
Rosenof's article provides an interesting perspective on the economic problems of the
- Katherine Liapis Segrue, "Social Security," Encyclopedia of American History (New York: Facts on File, 2003),
- Theodore Rosenof, "Understanding the Crash," in Major Problems in American History 1920-1945 (Boston:
Houghton Mifflin Company, 1999), 194.
- David Kennedy, Freedom From Fear: The American People in Depression and War (New York: Oxford
University Press, 1999), 266.
- Ibid., 225.
- Larry DeWitt, "A Brief History of Social Security," online at http://ssa.gov/history/briefhistory3.html.
- Kennedy, Freedom From Fear, 261.
- Ibid., 250.
- De Witt, "A Brief History."
- Kennedy, Freedom From Fear, 265.
- Ibid., 266.
- DeWitt, "A Brief History."
- Segrue, "Social Security," 329.
- Kennedy, Freedom From Fear, 267.
- Segrue, "Social Security," 329.
- DeWitt, “A Brief History.”
Annuity: A contract that guarantees a series of payments in exchange for a lump sum investment.
Contribution: An unconditional transfer of cash to an entity.
Insurance: A system under which individuals, in exchange for payment of a sum of money, are guaranteed compensation for losses resulting from certain perils.
Pension: Regular periodic payments to a person who has met requirements of retirement under a pension plan.
Voluntary: Actions taken exercising free will, without compulsion, and without legal obligation.
Primary Source Annotation:
Mrs. Zoller’s Letter Petitioning the President, July 13, 1933
This letter to Franklin Roosevelt urging him to provide for old-age pensions to support
elderly like the author’s 82 year-old mother is representative of many such petitions.
The flyer at the bottom of the page is from Roosevelt’s 1932 campaign materials,
implicitly suggesting that he needs to fulfill the promise he made to the electorate.
Photograph of Al Capone’s Soup Kitchen
This photograph of a soup kitchen illustrates the level of desperation of many
Americans without a job or means of support. Soup kitchens like this one run by
gangster Al Capone became a key source of survival for many unemployed.
Photograph of Idle Men
This photograph of idle men, standing around the street holding broomsticks, illustrates
the hopeless mood of the unemployed. Clearly these men would like to be occupied if
they could be.
Franklin Roosevelt’s Message to Congress, January 17, 1935
FDR’s January 17, 1935, message to Congress gives the purpose and the provisions of
his social insurance program.
Excerpt from Social Security Board’s pamphlet, “Why Social Security”
This section explaining what Social Security is and why it is necessary is the
culminating section of a 32-page booklet produced in 1937 to explain the new program.
Excerpt from Social Security Board Comic Book
This comic book published by the Social Security Administration in 1956 tried to
educate Americans about the importance of having a Social Security number and the
eligibility of survivors to receive the Social Security of their deceased spouses.
“Social Security” Under the New Deal, The Nation, September 4, 1935 by Abraham
This article, published soon after the original introduction and passage of Social
Security, criticizes the New Deal legislation as not having gone far enough to provide
relief and security.
The Republican Opposition by Thomas H. Reed and Doris Reed, Survey Graphic,
May 1, 1940
This article outlines the presidential election-year Republican opposition to the New
Deal programs dealt with by subject. Excerpted here are the Republican objections to
the New Deals programs on relief, unemployment compensation, and old-age pensions.
Excerpt from 1964 History of Social Security
These images from a 1964 history of Social Security published by the Social Security
Administration, illustrates the impact of Social Security as it evolved and served more
and more beneficiaries.
Photograph of Early Accounting Practices, Baltimore, MD circa 1936
This photograph showing the early accounting practices suggests the huge bureaucracy
required to support the program and the significant number of jobs the Social Security
program created in the federal government.
Photograph of Early Cardpunch Operators
This photograph showing early cardpunch operators also illustrates the bureaucracy
and number of jobs, especially for women that were created by Social Security.
Photograph of Cardfiles
This photograph from the 1930s of the Candler building also illustrates the large
bureaucracy created by Social Security.
Photograph of Men Signing up for Unemployment Insurance
This photograph, taken after the passage of the Social Security Act, shows many men
lined up to take advantage of new benefits for the unemployed.
“Does Social Security Really Face an $11 Trillion Deficit? By FactCheck.org
This article from the respected, non-partisan website of the Annenberg Public Policy
Center at the University of Pennsylvania, argues that President Bush has implied that
the Social Security debt will increase more quickly than the facts reveal.
“Privatizing Social Security A Big Boost for the Poor” by Michael Tanner, Cato
This article published on the conservative Cato institute’s webpage on Social Security
Choice does a detailed analysis of privatizing social security and concludes that private
accounts will yield a higher rate of return to individuals than the current system.
“Why Social Security is Not in Crisis” by Bernard Wasow, The Century
Foundation, November 15, 2004
Excerpts from this article by the politically more liberal Century Foundation argue that
Social Security is not currently in crisis but that privatization could potentially create a