1942: Social Security

Although recommendations for extension and improvement of the national social security program had been made in the budget message of President Roosevelt on Jan. 7, 1942, no fundamental changes in the Social Security Act were effected during 1942. The law was amended in October 1942, however, to continue during 1943 the contribution of one per cent of wages required of employers and of workers for old age and survivors insurance. Prior to this change, the tax was to be increased to 2 per cent of wages for each.

At the end of 1942, the major social security programs were as follows:

Federal Plan of Old Age and Survivors' Insurance.

Under this system, insured workers, upon reaching the age of 65, receive 'primary' benefits of 40 per cent of the first $50 of the average monthly wage earned after 1936, plus 10 per cent of the balance up to $250 monthly. One per cent of the primary benefit is added for each year of minimum earnings after 1936. A wife past 65 years of age is entitled to 50 per cent of her husband's primary benefit. A dependent child of a retired or deceased worker under the age of 16, or 18 if regularly attending school, is entitled to a similar benefit. Widows who are either aged 65 and over or have dependent children under the ages specified above are entitled to 75 per cent of the deceased husbands' monthly primary benefit. Wholly dependent parents of a worker who leaves no other survivors are each entitled to 50 per cent of the primary benefit. When no eligible dependent survives, six times the primary annuity is paid as a funeral benefit. Wages up to $14.99 a month in insured employment may be earned while receiving benefits.

On July 1, 1942, a total of 529,876 monthly benefits were paid to all classes of beneficiaries, 237,459 going to primary beneficiaries, 68,760 to aged wives of such beneficiaries, 147,674 to children, 21,694 to aged widows of insured workers, 51,789 to younger widows with dependent children, and 2,500 to aged parents. These current payments amounted to $9,554,886 during the month of June 1942. In that month, the average primary benefit then current was $22.87. Aged wives received an average of $12.19; children, $12.21; aged widows, $20.17; younger widows, $19.53, and parents, $12.99.

Contributions by workers and employers during the fiscal year ended June 30, 1942, amounted to $895,619,000, an increase of $205,064,000 over the previous fiscal year. Total collections since the system started reached $3,429,977,000 by the end of June 1942, of which $210,000,000 were disbursed in benefits. With interest added, the assets totalled $3,227,200,000.

Railroad Retirement Act.

Under the national retirement system for railroad workers, 157,450 grants to pensioners and annuitants were in force at the end of July 1942. The payments for that month amounted to $10,900,000. Up to the end of July, a total of $865,737,000 was received and $556,960,000 expended under this program, leaving assets of $308,777,000.

Public Assistance.

Recipients of public assistance numbered 3,270,204 in July 1942. During that month, 2,251,954 needy aged persons received $49,642,704; 78,689 blind persons received $2,056,096, and 939,561 dependent children in 390,592 families received $13,257,044. Ranging from $8.29 in Arkansas to $36.46 in California, the average national old age pension grant amounted to $22.04. Aid to dependent children averaged $33.94 per family and aid to the blind averaged $26.13 in July. In the same month, 566,000 cases received $13,647,000 in general relief, a national average of $24.11 per case.

Unemployment Insurance.

Benefits under the Federal-state unemployment insurance program totalled $345,707,730 in 1941, a reduction of $174,238,184 from the 1940 payments. The average annual payment of $101.74 per worker in 1941 was $1.59 above the 1940 average. In 24 jurisdictions, benefits for a week of total unemployment averaged less than $10.00 in 1941, while in 10 jurisdictions they averaged less than $8.00. Fully 46.7 per cent of the beneficiaries exhausted their benefits while still unemployed, these proportions ranging from 19.7 to 95 per cent. The benefit expenditures of 1941 represented 34.2 cents of every dollar collected during the year.

In July 1942, an estimated total of 863,000 different individuals received $32,625,149 in unemployment insurance benefits. Since the inauguration of their laws, and until July 30, 1942, the states had deposited $4,769,233,000 in the trust fund maintained by the Federal Government and $190,252,000 in interest were credited to their accounts. By the end of July 1942, a total of $1,942,330,000 had been expended for benefits while $2,943,011,000 were available for the payment of benefits.

Placements made by the United States Employment Service during July 1942, numbered 1,006,269, an increase of 60 per cent over the placements of July 1941. In April 1942, the employment service, federalized in December 1941 was transferred from the Federal Security Agency to the War Manpower Commission.

Railroad Unemployment Insurance.

The Federal railroad unemployment insurance system provided benefits of $154,000 in 7,500 payments during July 1942, 13,000 fewer than in July 1941. Since its inception, this system distributed $41,596,000 in benefits and had $266,338,000 in reserves by the end of July 1942.

1941: Social Security

Until Dec. 19, 1941, when the President converted the Federal-state employment services into a national program, the year 1941 had witnessed the fewest national developments in social security since the adoption of the Social Security Act in 1935.

The major social security programs of the United States at the beginning of 1942 were as follows:

Federal Plan of Old Age and Survivors Insurance.

This system pays 'primary' benefits at 40 per cent of the first $50 of the average monthly wage earned after 1936, plus 10 per cent of the balance up to $250 monthly to persons reaching age 65. One per cent of the primary benefit is added for each year of minimum earnings after 1936. A wife past 65 years of age is entitled to 50 per cent of her husband's primary benefit. A dependent child of a retired or deceased worker under the age of 16, or 18 if regularly attending school, is entitled to a similar benefit. Widows who are either aged 65 and over or have dependent children under the ages specified above are entitled to 75 per cent of the deceased husband's monthly primary benefit. Wholly dependent parents of a worker who leaves no other survivors are each entitled to 50 per cent of the primary benefit. When no eligible dependent survives, six times the primary annuity is paid as a funeral benefit. Retired beneficiaries may earn outside up to $14.99 per month.

Altogether 465,663 monthly awards were made by the end of November under this system. Of these, 224,178 were given to primary beneficiaries, 61,725 to wives of beneficiaries, 117,699 to children, 14,134 to widows past the age of 65, 46,059 to younger widows with dependent children and 1,868 grants were given to parents.

In the month of November, the amount of payments in force was $8,476,025. The average monthly primary benefit in September was $22.69. The average wife's benefit was $12.09; aged couples thus received a national average of $34.78 monthly. The average widow's benefit was $20.26 while a child's benefit averaged $12.17 and a parent's, $12.94.

By Oct. 1, a total of $2,742,065,000 was collected in Federal old age insurance taxes. The benefits up to that time amounted to $122,900,000. Including interest, the old age insurance trust fund totaled $2,575,417,000 at the beginning of October.

Railroad Retirement Act.

The Railroad Retirement System had 154,847 pensioners and annuitants of various types on Sept. 30, 1941. The amount in force in September was $9,862,086. The total amount received under this Act up to Oct. 1, 1941, was $647,877,000. Benefit payments up to October amounted to $450,926,000. At the end of September the fund's balance was $196,951,000.

Public Assistance.

The number of recipients of public assistance throughout the United States were as follows in September: 2,204,189 old age assistance beneficiaries received a total of $46,174,595; 383,796 families with 926,149 children received aid-to-dependent-children amounting to $12,562,222; 74,892 blind persons received aid-to-the-blind amounting to $1,909,998. The average national old age assistance payment in September was $20.95. It ranged from $7.63 in Arkansas to $36.45 in California. The national average payment under aid - to - dependent - children amounted to $32.73 per family the same month. The average national monthly blind pension was $25.50. General relief in September amounted to $18,547,000, granted to 817,000 cases, or an average of $22.70 monthly.

Unemployment Insurance.

The Federal-state unemployment insurance funds paid out $519,945,914 in benefits during 1940, approximately $90,000,000 more than in 1939. The average in 1940 was $100.15 per worker as contrasted with an average of $84.24 in 1939. The average benefit for a week of total unemployment was less than $10 in 30 jurisdictions and below $7 in 7 of them. The proportion of beneficiaries who exhausted their benefits while still unemployed ranged from 30.2 per cent to 78.7 per cent in 25 jurisdictions. In 1940 the benefit expenditures represented 60.8 cents of every dollar collected during the year.

In September 1941, there were 2,170,455 unemployment compensation claims throughout the country. A total of $22,941,874 was paid in benefits that month. This represented a decline of 13.4 per cent from August and 37.3 per cent from September 1940. The total collections in taxes since these laws came into operation amounted to $3,883,249,000 by the end of September. The total benefits paid out amounted to $1,618,853,000 by the same date.

In September 1941, 545,676 persons were placed in jobs which was a 7.1 per cent increase from the previous month. The President nationalized the Federal-state employment services on Dec. 19.

Railroad Unemployment Insurance.

The railroad unemployment insurance system paid in September 1941, $561,828 to 25,659 persons. This contrasted with $991,712 to 66,336 beneficiaries in September 1940. Altogether this fund has paid out nearly $34,000,000 since its inception. See also UNEMPLOYMENT INSURANCE.

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.

1939: Social Security

The year 1939 brought great and fundamental changes in the American social security program. The amendments of the Social Security Act, adopted by Congress in 1939, marked not only the first changes in the Act since it was adopted in 1935 but also introduced a most significant new approach to the entire problem of old age insurance. Indeed, the changes introduced in the old age insurance program of the Act have not only reversed the principles upon which the earlier program was founded, but are of supreme social importance. (See also LABOR LEGISLATION; SOCIAL SERVICE, PUBLIC.)

Old Age and Survivors Insurance.

The 1935 Act limited the monthly old age insurance benefits to covered workers themselves. It took no consideration of either wives, widows or other dependents of the insured. The amount was based upon the total wages previously earned, and monthly payments were not to begin before 1942. Until then only lump-sum benefits were to be paid to persons who attained the age of 65 or to estates of deceased insured. The new old age and survivors insurance plan, however, extends protection not only to the covered workers themselves but also to their aged wives, aged widows, younger widows who have minor children to support, and in some cases to their dependent parents. Instead of 1942 all benefits fell due Jan. 1, 1940.

The new benefit formula properly favors the oldest and the lowest paid workers. Instead of being based on a percentage of the total wages earned, the monthly benefit to a retired worker is now computed as follows: For the first $30 of average wages earned since the beginning of the system the monthly annuity is equal to 40 per cent. For the balance of average wages up to $250 monthly the benefit is equal to 10 per cent. One per cent of the sum of these two amounts is added for each year elapsing since the beginning of 1937 in which earnings totaled at least $200.

For example, a worker retiring at age 65 in 1940 who averaged $100 monthly in the three years ended Jan. 1, 1940, is entitled to 40 per cent, or $20, on the first $30 of his earnings and to 10 per cent, or $5, on the balance, making a total benefit of $25 monthly. To this sum is added one per cent for each of the three years of coverage, or 75 cents. His monthly annuity, to be paid for the rest of his life, is thus $25.75.

Wives', Widows' and Orphans' Benefits.

The above sum, known as a 'primary' annuity, is increased by 50 per cent, or to $38.63 monthly in the case cited, if the insured worker has a wife 65 years of age and over living with him. In addition, 50 per cent of the primary benefit is allowed for a dependent child under 16, or 18 if attending school. Should he die first, his widow, if she is 65 and over, is entitled to three-fourths of his primary annuity, or to a monthly sum of $19.31. Widows under age 65 are not entitled to have any benefits until they reach 65 unless they have dependent children to care for. In that case they are entitled to the following benefits: three-fourths of the primary annuity for themselves and 50 per cent of the primary benefit for each minor dependent child. In other words, regardless of her age, the widow whose husband averaged 100 monthly up to 1940 is entitled to a monthly annuity of $32.19 if she has one minor dependent child and to an annuity of $45.06 if she has two minor dependent children.

Other Benefits.

When there are no other survivors, benefits are allowed to dependent parents 65 years of age and over who had been wholly dependent upon the deceased insured. These benefits amount to 50 per cent of the primary benefit for each aged parent. When no dependents or survivors are eligible for benefits a lump-sum benefit of six times the primary annuity is paid to certain claimants.

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.

Eligibility.

All the primary, supplementary and survivors benefits are paid to, or on behalf of, any insured worker 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, or at least in six such quarters. Benefits to orphans and widows are also paid on 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 automatically stop the benefits.

The new law extended the system to employees of banks, savings and loan associations and other institutions not fully owned by the government, to certain classes of maritime labor and to persons working after the age of 65. Certain small groups have been excluded by the new law.

By September 1939, lump-sum payments certified under the 1935 provisions numbered 408,362 and amounted to $22,505,990. The average lump-sum benefit certified in August 1939, amounted to $87.04 while the average paid since 1937 amounted to $55.11. The total assets of the old age insurance fund amounted to $1,727,591,400 by September 1939.

Public Assistance Grants.

In the old age assistance program the most important amendment made in 1939 raised the maximum grant on which the Federal Government will pay its 50 per cent share from $30 to $40 monthly. Congress also raised the federal subsidy for aid to dependent children from one-third to one-half of the grants up to definite maxima, as in the case of the aged and the blind. The age limit for children attending school was raised from 16 to 18. In August 1939, 1,874,651 aged persons received old age assistance amounting to $36,415,257 for the month, or an average of $19.43. During the same month, 721,232 dependent children received Federal-state assistance costing $9,337,801, while 45,214 blind persons received $1,040,180.

Unemployment Insurance.

The most significant changes in unemployment insurance made by Congress in 1939 limited the taxable wages to the first $3,000 earned by an individual in a year and required the merit system for selecting state employees under these laws. The groups included and excluded here are practically the same as in the old age survivors insurance system.

During 1938, the third year of tax collections for unemployment insurance, the 27 states and the District of Columbia which paid benefits under these laws for six months and more disbursed $393,701,657 to unemployed workers. The 2,157,522 beneficiaries of the 17 plans which paid benefits throughout 1938 received an average of $83.89 each. In August 1939, 4,170,406 benefit payments, amounting to $44,491,421 were made in all the states and territories. The amount distributed dropped in the next few months, declining to $26,700,000 in October. The state reserves held by the Federal Government at the end of August, 1939, amounted to $1,410,448,000. See also TAXATION; UNITED STATES: Relief and Security; WORKMEN'S COMPENSATION.

1938: Social Security

The outstanding event in social security in 1938 was the inauguration of unemployment insurance payment in 30 states in addition to Wisconsin, which began such payments in 1936. The social security record in 1938 may be summarized as follows:

Federal Grants-in-Aid to the States.

In August 1938, there were 1,722,317 recipients of old age assistance in 47 states, the District of Columbia, Alaska and Hawaii. Virginia did not begin payments until September. The total spent during the first eight months of the year amounted to $258,084,550. While the average national grant was $19.17 in August, the payments in the different states varied from $5.65 in Mississippi to $32.36 in California. There was also a great disparity in the ratio of assistance recipients to the estimated total population 65 years of age and over, which ranged from 77 per 1,000 in the District of Columbia, 107 in New Jersey and 137 in New York to 486 in Utah and 545 in Oklahoma.

Federally approved aid to dependent children was extended, in August 1938, to 250,909 families embracing 617,902 children in 38 states, the District of Columbia and Hawaii. The total spent on these recipients during the eight months of 1938 amounted to $60,065,674. Although the national average in August amounted to $31.73 per family, the individual state averages varied from $10.76 in Arkansas to $62.91 in Massachusetts. The proportion of recipients per 1,000 estimated population under 16 years of age ranged from 7 in New Hampshire to 44 in Maryland.

During the same month 40,097 blind persons were in receipt of aid under the Social Security Act in 37 states, the District of Columbia and Hawaii. A total of $7,071,722 was spent on these recipients during the first eight months of 1938. As in the case of the aged, and the dependent children, the average pension varied in the different states between $9.06 in Arkansas to $47.95 in California, while the national average for the month was $23.42. The number of blind recipients per 100,000 estimated population ranged from 13 in Michigan and New Jersey to 145 in Maine.

Old Age Insurance System.

Regular monthly annuities are not to be paid under the old age insurance program of the Social Security Act until 1942. Only lump-sum benefits to those reaching 65 years of age and to estates of deceased contributors were paid in 1938. Of the total of 213,327 claims filed from Jan. 1, 1937 to the end of August 1938, 199,435 were certified for an average of $37.75 per claim. By the end of August 1938, $7,037,040 were paid out in lump-sum benefits. The taxes collected for old age insurance by the same date amounted to a total of $835,298,500, and $17,674,000 was earned in interest, leaving a balance of $845,935,000.

Unemployment Insurance.

From January through October 1938, a total of $340,359,393 was expended on unemployment insurance benefits. The average check for total unemployment in 24 states amounted in October to $11.31 and ranged from $5.78 in Mississippi to $13.39 in Michigan. For partial unemployment, the average check paid in 16 states during that month was $5.06, ranging from $5.89 in Tennessee to $7.20 in Utah. The peak of the unemployment insurance benefit expenditures in 1938 was reached in August, when $47,400,000 was distributed. In September the total expenditures decreased to $41,535,000 and in October the total amount spent was only $35,231,000. No figures were available as to the number of workers who have actually been benefited. The Bureau of Unemployment Compensation of the Social Security Board estimated, however, that by the end of October about 3,500,000 unemployed workers had received benefits in the 29 jurisdictions then in the benefit-paying column, which would make the average benefit about $97.25 during the ten-month period.

Other Significant Events.

Criticism of the Social Security Act, especially the reserve system set up for old age insurance, and demand for improvement of the Act, continued during the year. The delays in the payment of unemployment insurance benefits and the meagre benefits provided caused great dissatisfaction in many states. Federal old age assistance grants to Oklahoma and Ohio were temporarily halted during the year because of violations of the state and Federal laws. The Advisory Council, composed of representatives of employers, employees and the public, and appointed in 1937 to study the changes necessary in the old age insurance system, was expected to present a report before the end of the year. A wave of pension panaceas enlivened the Fall elections. A conference at Washington on the subject of health security endorsed in principle a wide program of Federal aid for the promotion of health and health insurance.