When Did Social Security Start?

Did you ever wonder when did social security start? Social security is a social insurance program which provides social protection against old age, disability, unemployment, and poverty. It has been amended and changed throughout history, and you’ve most likely heard about the program before. As of 2010, it is the largest expenditure of the US government, taking up a little more than twenty percent of the budget. However, you might wonder about the origins of social security. Where and when did social security start, and how has it evolved?

Social security was signed into law in 1935 during the Great Depression. Franklin Delano Roosevelt signed the Social Security Act on August, 14 1935. It was part of his New Deal plan.

The New Deal was a serious of economic plans that were intended to stimulate the economy, and provide jobs for the many unemployed individuals in the United States. It focused on relief, recovery, and reform for the country.

Social security was an attempt to protect the citizens of the country from the poverty that can occur as a result of old age, disability, or with the loss of a spouse. Although the act was signed in 1935, it actually took about two years for the act to be implemented.

In 1937, the social security tax was finally added to payroll checks. By taxing individuals for social security when they were younger, it provided them with money when they needed it later. As part of the implementation in 1937, over fifty thousand beneficiaries received money for a death benefit.

Original Terms of the Social Security Act

When it was first implemented, the majority of both women and minorities were excluded from receiving either unemployment benefits or old age pensions. Rather, white males were usually the ones that benefited from the act. For example, certain job categories were not covered by social security—such as nurses, teachers, domestic service, and agricultural labor.

Initially the act also did not provide benefits to individuals who did not hold a steady job and who worked intermittently. Considering at the time that minorities and women fell largely into the categories not covered by the act, the act was thus able to exclude them without explicitly stating so.

Constitutional Questions

In 1937, the constitutionality of the act was called into question. In the cases of Steward Machine Company v. Davis and Helvering v. Davis, plaintiffs questioned whether the government had the constitutional right to implement this social security measure.

In the former case, the Supreme Court affirmed the constitutionality of the act. In the latter case, social security was again deemed constitutional, and the court argued that the program was constitutional because it fell under the Senate’s right to issue general taxation.

Amendments

In 1939, the act was amended. There was a feeling throughout the country that the Recession of 1937 could be blamed on the government’s excessive spending, and the social security tax fell under this scope of blame. Further, there was a concern that the reserves of money created by the stipulations of the 1935 act were impacting the economy.

To answer this concern, the amendments shifted social security to shrink the size of the reserves by implemented a “pay as you go” type system for social security. Additionally, a trust fund was introduced under these amendments for surplus funds. These funds can be invested, and they are managed by the Secretary of the Treasury.

In the 1950s, social security was altered once again. Certain workers who were excluded from the original act were finally added in, such as hotel workers, laundry workers, and nonprofit workers. Women were also included. The law also stipulated that people were allowed to retire at the age of 62 instead of 65, although they would receive a twenty five percent reduction in benefits. Furthermore, the tax rate that was taken from paychecks was increased to about four percent, and disability benefits were added to the act.

Although social security continued to evolve over the years, the above gives you just a little taste about when did social security start.