The beginnings of ‘old age insurance,’ or Social Security

Not everyone will find this to be interesting, but being a “retired” person, this article from the McCook Daily Gazette, August 28, 1941, issue caught my eye. Most of my readers will catch the significance of the year and the fact that the United States was a mere 101 days from the devastating attack on Pearl Harbor. I’m not going to share the whole article but rather the salient points of how a newly formed “pension” was applied in the beginning.

“The special Senate committee on old age pensions today recommended drastic changes in the present old-age insurance system to provide minimum pensions of $30 a month to all citizens over 60 years of age, who are not gainfully employed.”

“The committee, headed by Senator Sheridan Downey, D., Calif., proposed that the present employer-employee payroll tax be increased to six per cent to finance its play which, it was estimated, would cost $3,240,000,000 annually.”

“The majority would broaden the present pension system by including virtually all categories of workers now excluded from participation-self-employed persons, farmers and farm workers, and federal, state and municipal employees.”

“It would also make pensions payable five years in advance of the presently scheduled time and allow the $30 minimum monthly payment to everyone, regardless of the size of previous earnings. The pension in the present system varies with the amount of earnings prior to the beginning of pension payments.”

“The committee asked repeal of the present provision of the law requiring that an individual be paid not less than $50 in any three-months period. As the statute now stands, it pointed out, many persons are contributing to the security fund, but are not eligible for pensions because of their failure to earn the $200 minimum annually.”

“The group also asked that wives’ and widows’ insurance benefits be increased from one-half to three-quarters, respectively, of the husbands’ primary insurance benefit to an amount equal to such primary benefit.”

Now, the committee recommended these items but as we all know, change comes slowly down the Federal pipeline. It is interesting to note that the $30 a month minimum is equivalent to slightly over $600 a month in purchasing power today. Originally the Social Security Act of 1935 was the Economic Security Act and only paid benefits to the primary worker. In 1939, survivors’ benefits were added for the retiree’s spouse and children. The 1935 act also established the first national unemployment compensation program, federal aid to states for health and welfare programs and the Aid to Dependent Children program.

Strangely enough, even though women were not prevalent in the workforce in the 1930’s, the first person to claim and receive monthly benefits was a woman, Ida May Fuller. Miss Fuller, who had worked as a Legal Secretary, had worked under the new Social Security Program for three years prior to retiring in November of 1939. She had contributed matching funds of $24.75 during those three years. In January of 1940, having turned 65, she began receiving her monthly check of $22.54. Living to the age of 100, she received in Social Security payments $22,888.92 or an average of under $60 per month. Not a bad investment.

That may no longer be true for the average long term contributor to Social Security but it is still the best stop-gap deterrent for low income workers in the long run. In 1941 when the $30 benefit was proposed, the estimated budgeted expenditure was $3.24 billion. The most recent figure I found for today was over $1.0 trillion, a growth that has exceeded the purchasing power growth of the dollar in those 81 years.

Winter weather affects our volunteer hours at the SWNGS library so you always want to check our Facebook page for announcements. We are located at 322 Norris Ave., Rooms 2-7 on the second floor. There is an elevator for your convenience.