Learn About The History Of The U.S. Social Security System

Social Security is not a mere retirement program as it serves as the foundation of economic stability for millions of Americans, from disabled persons to retirees, and the families of the disabled, retired, and deceased workers. Workers pay taxes that are collected into a trust fund, which then flows back and provides benefits to eligible individuals. Through the program, you can support your loved ones when you die, and sustain your needs using the monthly benefits provided.

With that, there is doubt that having an effective social security system is truly essential as it ensures that you have at least a basic income in disability or look forward to a decent and dignified life once you retire. But, have you ever wondered how this program all started? Look no further as we’ll be looking back on the history, and the earliest challenges, amendments, and expansions in the U.S. Social Security System across the years.

The Beginning

The first idea about the establishment of social security was seen in 1932 during politician and entrepreneur Dudley J. Leblanc’s failed gubernatorial campaign in Louisiana, wherein he proposed to get a regular sum paid for the elderly. Though he lost Oscar K. Allen, his plank about the monthly stipend became popular among voters and was used by Huey Long in his national propaganda.

However, it was in 1933 when the idea was more popularized through the “Townsend Plan” proposed by Dr. Francis E. Townsend. The program envisioned all Americans aged sixty years and over who had been citizens of the U.S. for at least five years to a $200 monthly pension. It came at the perfect time during the Great Depression and rapidly enrolled millions of supporters as it was geared towards alleviating the miserable economic situation of old folks in the country.

Though the “Townsend Plan” was never enacted into law, it helped direct the public’s attention to the pension issues faced by the nation and aided in stirring up momentum for the government to act on these problems.

The Enactment

In 1934, President Franklin D. Roosevelt established an economic security committee to oversee the idea. Things didn’t go smoothly, though, as social security became a controversial topic when it was proposed. The opposition cited that its establishment would result in a reduced labor force, while its proponents insisted the opposite effect, claiming it would bring more employment to younger generations as old workers would be able to retire. Others argued that it was a form of socialism, then some believed that retirement benefits should be sourced on contributions made by individuals themselves through years of working.

President Roosevelt signed the Social Security Act on August 14, 1935

Nevertheless, after studying all aspects and recommendations, the U.S. Congress enacted the “Social Security Act” on August 14, 1935, as part of the New Deal. It signaled the establishment of a permanent old-age pension system in the country that would provide elderly benefits backed up by employer and employee contributions.

With the passage of the act, Pres. Roosevelt became the first U.S. president to support federal assistance for the old American people. Yet, widespread debates happened to question the legality of the act, which were then quashed by two Supreme Court rulings in 1937 affirming its constitutionality.

In the same year, the U.S. government released a pamphlet tackling the function of the Social Security Act, declaring that the act aims to ensure basic income to individuals who cannot earn and to stabilize the income of millions of American wage earners starting from their working years to their old age.

The first social security payment was made by Ernest Ackerman, a motorman from Cleveland who then retired after the program began. Five cents was deducted from his salary and then procured a 17-cent lump-sum payout from Social Security. In 1940, the first monthly benefit was issued to Ida May Fuller on January 31, 1940. The Vermont-based woman got her first check for $22.54.

The Change

As the economic situation, gender roles, and minority position changes over the years, Social Security was amended across the years for it to adapt and move towards universal coverage. Through that, Social Security was able to embrace equality while providing adequate protection to eligible individuals. Today, the act provides benefits to retirees, the disabled, the unemployed, or a lump-sum payout at death, limiting the effects of old age, unemployment, poverty, and the burdens of being widowed or being fatherless children in modern American life.