A Short History of Social Security

Curious about the origins of social security retirement? I was. Here is a little of what I have learned.

Social security is not an American invention. It appears that for the most part, types of social insurance first originated in Europe in the late 19th century.

In the late 19^th and going into the 20th century, the first elements of an organized system of social insurances, state sponsored or authored were introduced in many countries. In 1883 Germany introduced one of the first welfare systems for the working class. Great Britain introduced a social insurance system in 1911, Belgium in 1900, the Netherlands in 1901, Austria in 1906, France in 1910, Italy and Spain in 1919, and Hungary in 1928.

The United States did not have an organized welfare system until the Great Depression. By the time the United States adopted social insurance applicable to a large segment of the working population in the form of Federal old-age benefits (known today as Social Security) in 1935, there may have been as many as 20 nations around the world already with such a program in place. The United States looked at the foreign experiences in drafting our social insurance program.

Thus, the United States embarked in 1935 on the road to providing its working population with old-age pensions, following in many respects the social insurance models adopted by (Social Security Administration 2008). Universal coverage of all wage earners and self-employed persons was not achieved at an early date in these countries; the gradual expansion of programs to cover all categories of workers (such as white-collar workers, clerics, and local government officials) was only completed near the end of the 20^th century. At their inception, most European old-age insurance programs covered only blue-collar workers, reflecting their governments' desire for more stability in the labor markets and to fend off the political threat of national socialism and communism. Even today, France, Italy, and Greece have multiple public old-age pension programs, posing a significant obstacle to advancing coherent and unified national pension policies.

Apparently even in the 30’s there was political concern over giving out benefits versus earning the benefits. President Roosevelt and members of the Committee on Economic Security were in agreement that the Social Security should not be compared to government relief payments to the poor. President Roosevelt took strides when describing social security to make a distinction between social insurance and social assistance; we are putting people on 'the dole'. In pushing for social security his description of the program focused on the American tradition of individual responsibility and self-reliance. Whenever he could, he emphasized that the program was not merely giving out benefits; there was an element of earned benefits in the program. Along with the preference for "earned rights," the social security program would be based on worker/employer contributions rather than general revenue financing.

Under the 1935 law Social Security only paid retirement benefits to the primary worker. A 1939 change in the law added survivors benefits and benefits for the retiree's spouse and children. In 1956 disability benefits were added.

In its formative years between 1956 and 1960, therefore, SSDI paid benefits only to workers who were fifty years of age or older.

So who got the first payment? Ernest Ackerman got a payment for 17 cents in January 1937. This was a one-time, lump-sum pay-out which was the only form of benefits paid during the start-up period January 1937 through December 1939.