For nearly seven decades, Americans age 65 or older have been able to count on a monthly check from the federal government--a Social Security check. It's not a king's ransom, but it beats the economic misery of average Americans during the Great Depression. Wiped Out--Then Laid Off The Depression that ravaged the United States in the early 1930s was no picnic for any worker, but a combination of factors made it especially hard on older Americans. For one thing, older workers had stashed their life savings in banks or invested in the stock market. And most of those assets evaporated practically overnight when thousands of banks failed and the stock market crashed. With their savings gone, these workers needed every paycheck. But once businesses started going under, there were fewer jobs to go around--and no one was looking to hire old hands. While the general unemployment rate in 1932 was 25 percent, the rate of men 65 and older looking for work was a shocking 54 percent. Grandma's Not in Kansas Anymore But the most significant social change was that many older Americans didn't have an advantage their parents had--they no longer lived on a farm with an extended family. Unlike factories, farm families accommodated changes in the capacity of their workers. If Grandma wasn't strong enough to help with the harvest, she could spin the wool into yarn and knit warm socks. Grandma's life might be dreary, but no one was going to drag her rocker--with Grandma still in it--to the side of the road and leave her there. So when rural folks started moving off farms to work in factories and shops, older workers became especially vulnerable. Instead of living on self-sustaining farms that offered at least some food and a place to sleep, workers traded their sweat for pay envelopes and used the cash to buy food and pay rent. A few weeks without a pay envelope, and a family could be hungry and homeless. Knitting a Safety Net As part of the package of New Deal reforms that aimed to protect destitute Americans, the federal government began to design a program in 1934 to pay a small monthly benefit to people 65 and older. It was not such a radical idea. By 1935, 24 states had already set up "old-age pension" systems. Many professionals, such as teachers and railway workers, had been paying into their own pension systems for decades. "We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life," Franklin D. Roosevelt said when he signed the Social Security Act into law in 1935. "But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age." Under this new program, workers in "commerce and industry" would receive a monthly check after they retired at age 65. For the first few years of the program, only about half the jobs in the economy were included and only the worker was covered. It would be several more years before benefits would be paid to workers' spouses and survivors. They've Got Your Number From the beginning, Social Security was funded by a payroll tax. In the late 1930s, both employers and employees paid 1 percent on the first $3,000 of annual earnings. The program was designed to be self-supporting. In fact, for most of the years that Social Security taxes have been deducted from paychecks, the amount of money going into the program has exceeded the amount of money being paid out. But how to keep track of all these workers? Each one had to be registered and issued a Social Security number. Local post offices stepped in to handle this job, delivering applications to every household in 1936 and issuing over 35 million Social Security cards by the end of 1937. People who retired in the first couple of years of the program got back what they paid in, plus a little extra, in a lump sum. The average lump was pretty small--less than $60--and at least one worker got a check for a nickel. In 1940, the first monthly benefit checks went out. Ida May Fuller of Vermont received the first one, for $22.54. (She lived to be 100 and collected more than $22,000 in benefits.) In the 1950s and '60s, Social Security was expanded to offer benefits to people with disabilities and to pay for the medical care of older Americans through the Medicare program. Today, more than 47 million Americans receive a Social Security check.
click here to return to the library