Social Security PosterSocial Security Administration: Special Collections
The Great Depression made it clear that hard work alone couldn't guarantee financial security, and most people expected the government to help them out.
"The pressure for relief to the elderly did not come so much from the old people as it came from their children. Their children needed help... Sometimes people seemed to feel that it was greedy old people who wanted something for themselves, but it was much more their children, who wished to be relieved of the burden. The law said that children must support their parents, their grandparents, their children, their grandchildren, their brothers and sisters. Those laws were sometimes enforced very brutally." (University of California/Berkeley Oral Histories Project, Helen Valeska Bary)
As the depression wore on, private charities and benevolent societies couldn't keep up with the demands for assistance, and the people they would otherwise have helped had to rely on public welfare instead. Local governments couldn't care for the exploding numbers of poor people on their welfare rolls and turned to the states for help in meeting their obligations. The states couldn't operate with deficit budgets or issue new money to pay their obligations, but the federal government could, so the states began to look to the federal government for help.
A 1937 Social Security pamphlet said,
"Old people, like children, have lost much of their economic value to a household. Most American families no longer live in houses where one can build on a room or a wing to shelter aging parents and aunts and uncles and cousins. They no longer have gardens, sewing rooms, and big kitchens where old people can help make the family's living. Old people were not dependent upon their relatives when there was need in a household for work they could do. They have become dependent since their room and their board cost money, while they have little to give in return. Now they need money of their own to keep the dignity and independence they had when their share in work was the equivalent in money." (Social Security, 1937)
The Committee on Economic Security reported to President Roosevelt in 1935 that one-third to one-half of the 7.5 million people age 65 or older in the country were dependent on either public assistance or help from their families, and that only a relatively small percentage of that group were receiving any help from the government. (Committee on Economic Security,1935).
By 1935, a majority of legislators agreed that a federal program for old-age pensions and welfare was required, to help the individuals in need, to stimulate the depressed economy by getting cash into the hands of citizens, and to "retire" older workers without impoverishing them in order to make their jobs available to younger people.
Social Security Provides Reliable Income
There were numerous plans proposed to provide assistance to the elderly. Some of the best-known included:
- Dr. Francis E. Townsend's Townsend Plan would provide $2,400 a year ($200 a month) to everyone age 60 or older, financed by a 2% sales tax.
- Huey Long proposed a plan to guarantee $5,000 a year to every family, with an unspecified pension to everyone age 60 and older.
- Upton Sinclair proposed a plan called End Poverty in California (EPIC) to provide $600 a year ($50 a month) to those age 60 and older who were needy, financed by income and inheritance taxes and a tax on idle land.
- The "Ham and Egg $30 every Thursday Plan", organized by Roy Owens, Lawrence and Willis Allen, and Robert Noble, would give $1,560 a year to every unemployed person in California age 50 or older.
The cost of many of these plans would have been enormous. In contrast, the 1935 Social Security Act as it was finally written seemed relatively modest. The "Old Age Insurance" (OAI) program we call "Social Security" today was created as Title II of the Social Security Act. It established a pool of funds that workers would pay into while they were working, which they could draw upon to support themselves in retirement. The government would not pay for it. Instead, it would be funded out of contributions of both workers and employers. To keep the cost of the program down, the initial Social Security law limited the program to workers in commerce and industry other than railroads. However amendments to the law in subsequent years have added more and more groups to the program until it is now nearly universal. (Social Security Act, 1935)