1940: Social Security

Old Age and Survivors Insurance.

The inauguration on Jan. 1, 1940, of benefit payments under the Old Age and Survivors Insurance plan of the Social Security Act marked the most important social security event of the year. This program, as amended in 1939, pays benefits not only to covered workers upon their attainment of age 65, but grants protection also to aged wives and surviving widows and orphans. Retired workers at 65 are entitled to a 'primary' benefit equal to 40 per cent of the first $50 and 10 per cent of the balance up to $250 monthly of the average wages earned since 1937. To the above sum is added 1 per cent for each year with earnings of at least $200. Thus a worker who averaged $100 monthly in the four years 1937-1940 became entitled upon retirement on Jan. 1, 1941, to $26 for each month as long as he lives.

A retired worker with a wife aged 65 and over is entitled to 50 per cent more of the primary benefit. Another addition of 50 per cent of the primary benefit is allowed for a dependent child under 16, or 18, if attending school. A widow of an annuitant is entitled to three-fourths of her husband's primary annuity. Widows under 65 are not entitled to benefits unless they have dependent children to care for. In the latter case they are entitled to three-fourths of the primary annuity for themselves and 50 per cent of the primary benefit for each minor dependent child. Dependent parents 65 years of age and over, wholly dependent upon the deceased insured, are entitled to 50 per cent of the primary benefit for each parent when there are no other survivors. When no dependents or survivors are eligible for benefits, a lump sum of six times the primary annuity is paid.

The minimum benefit is $10 monthly while the maximum is limited to either double the primary insurance benefit, 80 per cent of average wages, or $85, whichever is the lowest. Retirement benefits are paid to insured workers who earned at least $50 in each of one-half of the calendar quarters elapsing between the end of 1936 and the time of his death or retirement. Benefits to orphans and widows are paid in behalf of any individual who earned wages of $50 in six of the twelve quarters immediately preceding his death. Earnings of $15 or more per month stop all benefits during that period.

As of Nov. 30, 1940, the system paid monthly annuities to 204,000 persons at a cost of about $3,750,000 that month. About 18,000 were added to the rolls that month. Monthly annuities averaged $22 for single male workers, $36 for couples, $35 for a widow with one eligible child and $48 for a widow with two eligible children. Up to Sept. 1, 1940, total benefits under the program amounted to $41,809,000. The reserves were $1,893,000,000.

Railroad Retirement Act.

On Sept. 30, 1940, the national retirement system for railroad workers had 147,123 pensioners and annuitants on its rolls. It spent $10,069,473 during that month. Since 1937 this system spent $338,154,000 in benefits and collected $412,869,000 in taxes.

Public Assistance.

In August 1940, 2,007,537 aged, representing 25.3 per cent of the population 65 years and over, were in receipt of aid under the Federal-state assistance programs. That month $40,399,949, or an average of $20.12 per person, was spent on this aid. In the first eight months of 1940, assistance to the aged amounted to $314,603,570 as compared with $284,607,293 during the same period in 1939. The average state grant in August ranged from $7.22 in Arkansas to $37.93 in California.

Federal-state programs to aid dependent children were not operative in August 1940, except in Alaska, Connecticut, Illinois, Iowa, Kentucky, Mississippi, Nevada, South Dakota and Texas. The Federally-approved programs that month assisted 820,484 children in 339,508 families, disbursing a total of $10,929,667. With a national average of $32.19 per family, the state averages varied from $11.45 in Arkansas to $57.55 in Massachusetts.

Assistance to the blind was provided under Federal-state plans during August 1940 in 43 jurisdictions, not including Alaska, Delaware, Illinois, Kentucky, Missouri, Nevada, Pennsylvania and Texas. In that month, 48,136 persons received assistance amounting to $1,132,627. While the country average grant was $23.53, the state averages ranged from $8.02 in Mississippi to $48.05 in California.

Unemployment Insurance.

All states and territories paid benefits to the unemployed in 1940, spending $459,499,000 for this purpose during the first ten months of the year. Although these payments increased 16.6 per cent over the comparable expenditures of 1939, by Nov. 1, 1940 the 51 jurisdictions had expended a total of $1,283,878,000 for benefits and had on hand a reserve of $1,799,000,000 on Sept. 1, 1940. In 34 jurisdictions unemployed workers during 1939 received an average of $84.24.

The Federal system of unemployment insurance for railroad workers during September 1940 spent $1,026,485 for benefits. From its inauguration in July 1939 through September 1940 this plan expended $17,530,400 in benefits.