Social Security Act

Context

By the early twentieth century, the United States was the only developed western country without a national system of social insurance. Many called for change when a 1911 fire at the Triangle Shirtwaist Factory killed 146 garment workers in New York City. Following the incident, Senator Franklin D. Roosevelt created the New York State Factory Investigating Commission to report on working conditions in the city; the commission's director was Frances Perkins, who later became President Roosevelt's secretary of labor, the country's first female cabinet member.

Unemployment was the gravest problem facing Roosevelt's administration, and many people proposed solutions. A few states—most notably Wisconsin—had their own unemployment insurance programs. Private pension plans, administered by employers, were few and often underfunded. Politicians and citizens proposed more radical solutions. Senator Huey Long, formerly governor of Louisiana, fueled a growing industry of “Share Our Wealth” clubs; according to his vision, every American family would receive an annual income of $5,000, and persons over the age of sixty would receive a pension. The California dentist Francis Townsend proposed that each person over sixty receive a government pension of $200 per month. After his concept was published in 1933, some 7,000 Townsend clubs sprang up across the country to support his plan. The novelist Upton Sinclair ran for governor of California in 1934 on a platform of ending poverty, including a $50-per-month pension to all needy people over age sixty. The National Union for Social Justice, led by Father Charles Coughlin, a radically anti-Communist priest, proposed a broad-based program of reforms. Finally, Democratic Senator Robert Wagner of New York and Democratic Representative David Lewis of Maryland introduced the Wagner-Lewis Bill in February of 1934, calling for national unemployment insurance.

As the chorus for change grew louder, Roosevelt initiated his own plan for addressing not only unemployment but the plight of the elderly as well. On June 29, 1934, he appointed the Committee on Economic Security (CES), consisting of Secretary of Labor Perkins, Secretary of the Treasury Henry Morgenthau, Attorney General Homer Cummings, Secretary of Agriculture Henry Wallace, and chief of the Federal Emergency Relief Administration Harry Hopkins to draft legislation. From the beginning, Roosevelt wanted to ensure that the old-age pension and unemployment assistance system would provide insurance, not a dole. He was equally committed to ensuring that every American would be protected throughout the duration of his or her lifetime. As a result of these mandates, the CES faced a number of daunting challenges, such as financing the program and ensuring that a federally administrated system of social insurance would hold up under Supreme Court scrutiny.

The result was the Social Security Act of 1935, a product of massive compromise and political wrangling. Unlike European social insurance programs, America's Social Security system is financed by both employer and employee contributions. The program consists of a purely federal retirement income component as well as a joint federal and state system of unemployment insurance. Finally, the Social Security Act provides for direct federal aid (in the form of state grants) for public health services, assistance for the blind and disabled, and child welfare. Although criticized by those on the left and right, the Social Security Act redefines the nature of government, extending the role of the federal sector to provide citizens with a base level of economic stability.