America Before Social Security

America changed drastically by the end of World War I in 1918. From a primary agricultural society, America became urbanized and industrialized. By the time the Great Depression hit, more Americans depended on wages more than ever before.

Between 1929 and 1932, national income dropped by 43%. By 1932, unemployment reached 34% for the nonagricultural workforce. 34%!

By the mid-1930’s, millions of American saw their lifetime savings wiped out.

At the height of the Depression, many American seniors were in extreme poverty. One-third to one half of seniors depended on family or friends for financial support.

Relief organizations at the time were mainly financed by charity and local funds and could not even begin to respond to the widespread hardship brought on by the Depression.

By 1934, even though many states provided a small pension for their seniors – an average of $19.74 a month – states were forced to cut these benefits to spread cash to other programs.

The conditions were so desperate that the American public demanded a national plan to deal with this serious issue. Several proposals for some form of social insurance were floated.

In June 1934, President Franklin Roosevelt issued an executive order establishing a Cabinet-level Committee on Economic Security to be chaired by Labor Secretary Frances Perkins, who was tasked with developing long-term proposals to prevent economic insecurity.

Among other things, the committee developed a proposal for compulsory, contributory insurance for seniors, which became part of the Social Security Act that Roosevelt signed into law in 1935.