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The United States Social Security Act of 1935

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Abstract

Several initiatives offering income protection against income loss in the United States

draw their origins from the Social Security Act of 1935. The program on the United States

Social Security offers significant conservation against losing earnings in the event of death,

disability, or retirement of citizens. The Social Security Act of 1935 gave quick insurance

protection against the unemployed population, insurance protection for the aging population,

and several welfare initiatives that were closely assessed by strict means. The Social Security

Act of 1935 was highly catalyzed by the Great Depression, and a number of its provisions

were aimed at bringing relief to the American population affected adversely by the Great

Depression. However, the establishment of the Old-Age Insurance Initiative was not built to

cater for the financial setbacks of that period. Nonetheless, the original act did not give room

for monthly payments until the dawn of 1942. The original Social Security Act clearly

operated under major principles such as benefiting workers who get accidents in their lines of

duty, insurance cover against unemployment, financial assistance for the visually impaired,

assistance for unable mothers and their children, and lastly, aid for the population living with

physical disabilities.
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Introduction

Economic constraints have been a major challenge both in historical moments and

modern times, and there has been a need to make it right. The Social Security Initiative of the

United States is basically a program that was established to prevent cases of United States

citizens from losing their revenues in case of several events. The occasions were in case one

had an accident when executing their daily roles at their workplaces, in case one reached their

retirement age, and last in the event of death. The original Social Security Act became

effective as a legal law on August 14, 1935, and it was established by the committee

appointed by President Franklin Roosevelt to oversee economic matters in 1934 following the

Great Depression in America. The United Social Act of 1935 brought about communal

protection, net income protection to the aged on state levels, financial push to the American

citizens living with disabilities, and also offer assistance to the unemployed groups in the

United States. However, the key objective of the first Social Security Act was to reciprocate

financial well-being to pensionaries aged 65 and above regarding their tax contributions

during their working ages (Davies & Derthick, 1997). It is evident that the Social Security

Act of 1935 also put in place the Social Security Board, which was then renamed to Social

Security Administration to oversee the effectiveness of the original Social Security Act and

what was necessary for bringing it to operation. It can be noted that a significant percentage

of the American population has benefitted financially from the act since its implementation.

However, the Social Security Act has also faced drawbacks and hick-ups throughout its

existence and has created political unrest in the United States for a significant period. This

paper looks into the history of the American Social Security Act, the original design, its

amendments following suggestions by the National Commission on 1983 Social Security

reforms, and future changes which would be ideal for the effectiveness of the act.
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History of The American Social Security Act of 1935

Matters of economic protection have been a major challenge to a staggering world

with a bigger percentage of its population being the old. History records several communities

making efforts to solve this problem through different strategies, but most of them with

unstable economies have ended up depending on wealthier regions for assistance. Following

the dawn of the 17th Century, England put in place slightly weaker laws and policies to cater

for its less fortunate populations. The Pilgrims brought with them these laws to the Modern

world, and finally, colonial governments established laws to take care of the helpless creating

boundaries on who should receive defined categories of assistance and who should not. The

most common form of public aid was outdoor relief which gave people finances so as to stay

out of poor living conditions. Living conditions in most parts of the United States were

disgraceful following the mid of the 19th Century. Nonetheless, staggering economic

situations placed the government in a constant struggle to balance this challenge. The Great

Depression contributed to the enactment of the Social Security Act of 1935 in the U.S.

Reports issued by the Social Security Act Administration Commission stated that there were

four significant changes that led to the prohibition of the original security laws. These four

changes were: Urbanization of American regions, the Great Industrial Revolution, the gradual

disappearance of the extended family set-ups, and the more elongated life expectancies

(Davies & Derthick et al., 1997).

Before the Industrial Revolution, many people practiced agriculture, and this

sustained them through hard times. In addition, these extended families would establish their

settlements collectively on family-owned farms and solved their challenges together as they

grew older. The spread of the Industrial Revolution convinced people to move to the urban

areas in search of jobs; however, many of them were rendered jobless due to constant job lay-

offs and cessation. The American urbanization also saw many families helpless in
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maintaining their living conditions as several of their members had moved to urban centers to

look for formal employment. The life expectancy and sanitary conditions in America

gradually improved alongside the overall living conditions, and this meant that many people

were aging. The Great Depression later left people unemployed and found it challenging to

feed their families. This unfortunate event affected mainly the aged population and impacted

negatively on the states that had passed policies to financially protect the old population.

These already established laws were not that conducive after all because they were poorly

managed, experienced a shortage of funds, and in other cases, ignored by the officials

(Heidenheimer, 2017). The elders who benefited from the original programs received only 65

cents a day. The impacts of the Great Depression were too intense, and this made

governments and other private sectors seek more effective strategies for economical

protection for the citizens. Some plans targeted the overall population, while others aimed at

helping the aged population. Not a single of them was passed as a law but later raised an urge

to care for the elderly and disadvantaged.

Several plans depended on private and government entities and wealthier well-wishers

until Franklin Roosevelt became president. He modified a couple of ideas from Europe’s

rulebook for economic conservation and established his own idea for economic security.

President Roosevelt suggested that people’s earnings be deducted as tax so as to cater for

their future financial needs (Heidenheimer et al., 2017). His idea was recommended that the

working population contributes to the initiative and fund monthly allowances given to the

retired population. President Roosevelt established the Committee on Economic Security

(CEO) purposely to come up with an economic conservation law. The commission led by the

Secretary in charge of labour, Frances Perkins, came up with the Social Security Act intended

to relieve people of their economic worries throughout their lives. The bill issued by the

commission advocated for: Pension program to cater for the elderly, unemployment insurance
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cover financed by employers, medical insurance covers for poor people, financial support for

widows having children, and financial aid for people living with disabilities (Douglas, 2000).

President Roosevelt signed the bill into law on August 14, 1935, and this meant that the

federal government would cater for the economic concerns of its citizens.

On January 1, 1937, President Roosevelt launched the campaign to start tax

deductions on employees by assigning a three-person team. For eligibility, employees

completed a form through their postal office and were later sent a national ID with unique

figures. Within a period of four months, 26million citizens had registered for the program and

are still being used to date to keep a record of people’s incomes and financial privileges.

Original Design of the Act

The Original Social Security Act of the United States was effective under some

conditions, and this was before Franklin Roosevelt came to the presidency. In the dawn of

1862, several American war veterans, their widows, and other orphans were eligible to claim

veteran pensions from the government (Douglas et al., 2000). In 1890, the original act was

rectified to give room for veterans disabled by the civil war disputing how the veterans were

disabled. In 1906, the law was further rectified to cater for the aged population as a principle

in the United States of America. Pension plans issued by companies later surfaced in 1882

when employees of the Alfred Dolge company first received their pensions. Many employing

companies adopted the pension plan, but there were other companies that never gave their

employees even a single cent for their pensions. It is evident that several companies could not

survive the economic constraint even before pension plans became an important factor at that

time (Douglas et al., 2000).

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Amendments of the Social Security Act of 1935

Several revisions have been made to the act since its inception. For example, in the

start, monthly payments were scheduled to begin on January 1, 1942. Individuals who

reached 65 years of old before that date received a huge amount of money. Another

amendment was passed on August 10, 1940, and this was to take the monthly date to January

1, 1940. The other amendment was to make dependents and survivors of retirees eligible for

the program. Another amendment was made in 1950, and this was to make farmers, non-

agricultural self-employed people, and other federal workers eligible for the social security

initiative (Heidenheimer et al., 2017). The revised program also covered federal and state

workers and many other non-employed workers in Puerto Rico and the Virgin Islands.

Several other revisions were made, and which included approving Social Security

privileges to disabled employees and their dependants by President Dwight D. Eisenhower.

The amendment of the Social Security Act of 1965 also covered medical expenses of people

above 65 years of age and above (Davies & Derthick et al., 1997).

Future Reforms Which Would Be Ideal for the Social Security Act

The Social Security Act has brought relief to the people of America, and others have

relied on it as the sole source of earning. However, it still faces some setbacks, which, when

solved, would make the act even more favourable to Americans.

One, raising the age of retirement to around 70-75years of age would reduce the rate

at which retirees claim their pension plans at later ages. Many retirees claiming their pensions

at later ages create a strain in meeting all of their financial needs, and so raising retirement

ages will give more room for the government to meet all of their financial demands later after

retirement. Two, the government can raise the taxes paid by the working population. Raising

payroll tax charges will enable the government to cater for the increasing number of retirees
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each year. Lastly, the government can invest the tax deductions into the stock markets. The

stoke market is a fast-growing entity, and this will ensure economic security for the

increasing rates of retirees.

Economic challenges have been a major problem since historical moments to date,

and there have been efforts to solve this challenge since then. The United States faced

financial setbacks following the Great Depression and suffered long-term loss and shortage of

funds both by the general population and the aged population. However, President Franklin

Roosevelt established the tax deduction tax system and is effective to date in planning for the

elderly population in their financial demands in the future days to come. However, the

original economic security program has undergone several amendments since its inception,

one of which is covering medical expenses of the aged in their retirement periods. Some of

the adjustments that can be made to solve the pitfalls of the act are increasing tax deductions

in the working population and raising retirement ages 70 or 75 years of old.

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References

Davies, G., & Derthick, M. (1997). Race and social welfare policy: The Social Security Act

of 1935. political science Quarterly, 112(2), 217-235.

Douglas, P. H. (2000). Social Security in the United States: An analysis and appraisal of the

federal Social Security Act. Beard Books.

Heidenheimer, A. J. (2017). Education and social security entitlements in Europe and

America. In The development of welfare states in Europe and America (pp. 269-304).

Routledge.