The Development of Social Security in America

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The DevelopmenT of Social SecuriTy in america
by Larry DeWitt*
This article examines the historical origins and legislative development of the U.S. Social Security program. Focusing on the contributory social insurance program introduced in title II of the Social Security Act of 1935, the article traces the major amendments to the original program and provides an up-to-date description of the major provisions of the system. The article concludes with a brief overview of the debate over the future of the program, and it provides a summary assessment of the impact and importance of Social Security as a central pillar of the U.S. social welfare system.

Conceptual Foundations and Historical Precedents
This section provides a high-level overview of the historical background and developments leading up to the establishment of the Social Security system in the United States. The Origins of Social Insurance Economic security is a universal human problem, encompassing the ways in which an individual or a family provides for some assurance of income when an individual is either too old or too disabled to work, when a family breadwinner dies, or when a worker faces involuntary unemployment (in more modern times). All societies throughout human history have had to come to terms with this problem in some way. The various strategies for addressing this problem rely on a mix of individual and collective efforts. Some strategies are mostly individual (such as accruing savings and investments); others are more collective (such as relying on help from family, fraternal organizations and unions, religious groups, charities, and social welfare programs); and some strategies are a mix of both (such as the use of various forms of insurance to reduce economic risk). The insurance principle is the strategy of minimizing an individual’s economic risk by contributing to a fund from which benefits can be paid when an insured

individual suffers a loss (such as a fire that destroys the home). This is private insurance. The modern practice of private insurance dates at least back to the seventeenth century with the founding in 1696 of Lloyds of London. In America, Benjamin Franklin founded one of the earliest insurance companies in 1752. Historically, private insurance was mainly a way that the prosperous protected their assets—principally real property. The idea of insuring against common economic “hazards and vicissitudes of life” (to use President Franklin Roosevelt’s phrase) really only arose in the late nineteenth century in the form of social insurance. Social insurance provides a method for addressing the problem of economic security in the context of modern industrial societies. The concept of social insurance is that individuals contribute to a central Selected Abbreviations CES COLA FRA GAO RET SSA SSI Committee on Economic Security cost-of-living adjustment full retirement age General Accounting Office (now known as the Government Accountability Office) retirement earnings test Social Security Administration Supplemental Security Income

* Larry DeWitt is a public historian with the Office of Publications and Logistics Management, Social Security Administration. Note: Contents of this publication are not copyrighted; any items may be reprinted, but citation of the Social Security Bulletin as the source is requested. To view the Bulletin online, visit our Web site at The findings and conclusions presented in the Bulletin are those of the authors and do not necessarily represent the views of the Social Security Administration. Social Security Bulletin, Vol. 70, No. 3, 2010 1

fund managed by governments, and this fund is then as farmers, laborers, or craftsmen, and they lived used to provide income to individuals when they in extended families that provided the main form of become unable to support themselves through their economic security for family members who could not own labors. Social...
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