Eighty years ago, on Aug. 14, 1935, President Franklin Delano Roosevelt signed into law the Social Security Act, which formed the basis of the U.S. Social Security system. Implemented as part of FDR’s New Deal, the act set up a system of unemployment compensation and old-age and survivor’s insurance. The law also provided payments for people with disabilities and for needy children. The act was key among the New Deal programs that helped pull the United States out of the Great Depression in the 1930’s. However, of the many laws enacted during the Roosevelt presidency, the Social Security Act has had the greatest long-term impact on the country’s economy. Controversial upon being signed into law, the Social Security Act still faces challenges today.
Many opponents argued that the act would kill jobs. In addition, when the act was originally passed, it provided cash benefits only to retired workers in commerce and industry. By exempting farm and domestic workers, the law excluded two-thirds of the African American labor force from benefits. The act also excluded many women from receiving benefits. In 1939, Congress amended the act to include benefits for wives and dependent children of deceased workers. In 1950, the act began to cover many farm and domestic workers, nonprofessional self-employed workers, and many state and municipal employees. Coverage became nearly universal in 1956, when lawyers and other professional workers came under the system. Congress added disability insurance to the system in 1956 and set up Medicare in 1965.
In 1983, Congress passed legislation that sought to protect the financial health of the Social Security system over the next 75 years. For the first time, Congress reduced future benefits while it raised taxes to boost future revenue. From the mid-1960’s through the mid-1980’s, the taxpaying labor force was enlarged by the entry of the baby boom generation. Baby boomers are the group of people born during a period of high birth rates from 1946 to 1964. As a result, during the late 1900’s, the number of workers paying taxes into the Social Security system grew more rapidly than the number of retirees collecting from the system. As large numbers of baby boom retirees began collecting retirement benefits in the 2010’s, tax revenues began falling below program costs. Retirement age, which had been 65, is expected to reach 67 in 2022. The Social Security Administration estimates that if no further action is taken, trust funds will be exhausted in 2034.
In FDR’s public statement on the day he signed the act into law, he expressed concern for “young people [who] have come to wonder what would be their lot when they came to old age.” Today, many younger workers are concerned that the benefits promised to them under the Social Security Act will no longer be available to them upon their retirement. In recent years, as U.S. government leaders and lawmakers have focused on reducing the country’s deficit, critics of the program have called for a reduction in Social Security benefits as well as an increase in the retirement age.