Social Security Introduced

Social Security, enacted under the Social Security Act of 1935, provided cash benefits for aged people, blind people, and dependent children in need

In 1934, in response to the Great Depression, President Franklin D. Roosevelt created the Committee on Economic Security (CES) to draft the Economic Security Bill, which was renamed the Social Security Act of 1935.2 On August 14, 1935, President Roosevelt signed the act into law3, establishing benefits for:4

  • aged people
  • blind people
  • dependent children in need
  • crippled children
  • maternal and child health
  • child welfare
  • unemployment compensation
  • public health sector development.

In 1936, the Supreme Court took on three cases challenging the constitutionality of the act as the 10th Amendment states that powers not delegated to the federal government are reserved for the states or the people. In 1937, the Supreme Court ruled in favor of the act on all three cases, under the legal precedent of levying taxes for the general welfare.5 The same year, social security numbers (SSNs) were issued, payroll taxes were collected, and the first lump-sum of benefits was distributed.6

Every year that an individual works, they pay Social Security taxes through payroll or self-employment taxes. Social Security benefits (except SSI) are based on lifetime earnings. Higher earnings result in higher benefits, but the benefit formula provides a higher benefit-to-monthly earning ratio for individuals with lower earnings.7

However, in the beginning certain occupations were excluded, such as self-employed professionals, field hands and domestic workers.8

For more information on Social Security, see here.

For the full text of the bill, see here.

Endnotes

  1. https://www.ssa.gov/pubs/EN-05-10024.pdf (page 2)
  2. https://www.ssa.gov/history/tally.html
  3. https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security
  4. https://www.ssa.gov/history/1935table.html
  5. https://www.ssa.gov/history/court.html ; https://www.law.cornell.edu/constitution/tenth_amendment
  6. https://www.ssa.gov/history/briefhistory3.html
  7. https://www.ssa.gov/cola/
  8. https://www.history.com/topics/great-depression/social-security-act