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Old Age Assistance: An Overview
The U.S. social welfare structure has been shaped both by long standing traditions and by changing economic and social conditions. In its early history, the United States was an expanding country with a vast frontier and a predominantly agricultural economy. Up to 1870, more than half the Nation’s adult workers were farmers. In the years that followed, however, industry developed rapidly and the economy tended increasingly to be characterized by industrialization, specialization, and urbanization. The result was a Nation of more employees who were dependent on a continuing flow of money income to provide for themselves and their families.
From the earliest colonial times, local villages and towns recognized an obligation to aid the needy when family effort and assistance provided by neighbors and friends were not sufficient. This aid was carried out through the poor relief system and almshouses or workhouses. Gradually, measures were adopted to provide aid on a more organized basis, usually through cash allowances to certain categories among the poor. Mothers’ pension laws, which made it possible for children without paternal support to live at home with their mothers rather than in institutions or foster homes, were adopted in a number of States even before World War I. In the mid-twenties, a few States began to experiment with old-age assistance and aid to the blind.
Meanwhile, both the States and the Federal Government had begun to recognize that certain risks in an increasingly industrialized economy could best be met through a social insurance approach to public welfare. That is, the contributory financing of social insurance programs would ensure that protection was available as a matter of right as contrasted with a public assistance approach whereby only those persons in need would be eligible for benefits.
In the United States, as in most industrial countries, social insurance first began with workers’ compensation. A Federal law covering civilian employees of the Government in hazardous jobs was adopted in 1908, and the first State compensation law to be held constitutional was enacted in 1911. By 1929, workers’ compensation laws were in effect in all but four States. These laws made industry responsible for the costs of compensating workersor their survivors when the worker was injured or killed in connection with his or her job.
Retirement programs for certain groups of State and local government employees—mainly teachers, police officers, and fire fighters—date back to the 19th century. The teachers’ pension plan of New Jersey, which was established in 1896, is probably the oldest retirement plan for government employees. By the early 1900’s, a number of municipalities and local governments had set up retirement plans for police officers and fire fighters. New York State and New York City set up retirement systems for their employees in 1920—the same year that the Civil Service Retirement System was set up for Federal employees.
Another area where the Federal Government accepted an early responsibility was in the provision of benefits and services for persons who served in the Armed Forces. These veterans’ benefits at first consisted mainly of compensation for the war-disabled, widows’ pensions, and land grants. Later, emphasis was placed on service pensions and domiciliary care. Following World War I, provisions were made for a full-scale system of hospital and medical care benefits.
The development of social welfare programs has been strongly pragmatic and incremental. Proposals for change are generally formulated in response to specific problems rather than to a broad national agenda. A second characteristic of U.S. social welfare policy development is its considerable degree of decentralization. Some programs are almost entirely Federal with respect to administration, financing, or both; others involve only the States (with or without participation of local government); still others involve all three levels of government. The important role played by the private sector is another aspect of decentralization in the development of American social welfare programs. The private sector shares a large role in the provision of health and medical care and income maintenance benefits in the form of employment related pensions, group life insurance, and sickness payments.
The 1935 Social Security Act
The severe Depression of the 1930’s made Federal action a necessity, as neither the States and the local communities nor private charities had the financial resources to cope with the growing need among the American people. Beginning in 1932, the Federal Government first made loans, then grants, to States to pay for direct relief and work relief. After that, special Federal emergency relief and public works programs were started. In 1935, President Franklin D. Roosevelt proposed to Congress economic security legislation embodying the recommendations of a specially created Committee on Economic Security. There followed the passage of the Social Security Act, signed into law August 14, 1935.
This law established two social insurance programs on a national scale to help meet the risks of old age and unemployment: a Federal system of old-age benefits for retired workers who had been employed in industry and commerce, and a Federal- State system of unemployment insurance. The choice of old age and unemployment as the risks to be covered by social insurance was a natural development, since the Depression had wiped out much of the lifetime savings of the aged and reduced opportunities for gainful employment.
Source: Social Security Administration, On Line History, https://www.ssa.gov/history/pdf/histdev.pdf