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NATIONAL
JOBS FOR ALL COALITION
UNCOMMON
SENSE 28 October 2014
WHAT IS SOCIAL SECURITY?
By Helen
Ginsburg, Professor
of Economics (Emerita), Brooklyn College of the City of New York
and Executive Committee, National Jobs for All Coalition
The program popularly known as Social Security is really Old
Age, Survivors, Disability, and Health Insurance (OASDHI). Social
Security is the largest social program in the United States.
In 2013, over
$800 billion dollars
in benefits were paid to 58 million people.
In 1935, during the Great Depression, Congress passed the Social
Security Act which initiated not only Old Age Insurance but Unemployment
Insurance and several public assistance programs as well. When
he signed the bill for which he and other New Dealers had campaigned
vigorously, President Franklin Roosevelt declared that had no
other bill been passed by Congress, "this session would be
regarded as historic for all time." Before Social Security,
much of the population had neither savings, private insurance
nor public provision for old age, unemployment, disability, or
the loss of a family breadwinner.
From the beginning Old Age Insurance has been financed by a payroll
tax or a percentage of workers’ wages that is shared equally
by employers and employees. (The self-employed pay the combined
tax.) Financing the program with the contributions of workers
and their employers has meant that the beneficiaries of Social
Security feel that they or their breadwinners have contributed
to their benefits rather than that they are getting charity or
welfare. However, because the tax is levied on a portion of workers’
wages, individuals with employment income over the maximum ($117,000
in 2014) pay smaller portions of their earnings than those below
the maximum. Whereas the Social Security tax is regressive, the
benefit is progressive; that is, the benefits of lower-wage workers,
though smaller than higher earners, are a larger proportion of
their former earnings. Social Security is a federal program that
is uniform throughout the 50 states.
Social Security began modestly with a retirement benefit for
workers in some industries. Initially, it excluded such occupations
as agriculture and domestic service in which large proportions
of African Americans and women were employed. Largely owing to what was essentially a pension movement that kept up its advocacyfor a more extensive program, Social Security began to expand and to cover more of the population within a few years of its passage in 1935.
In 1939, survivors of deceased workers—spouses and orphans—were
included, and in the 80 years of its existence Social Security
has grown to include disability and health insurance (Medicare)
and to provide for additional dependents such as disabled children
and divorced spouses. Whereas many workers and their dependents
were excluded from the limited, initial benefits, nearly all workers
and their dependents are now covered.
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