Social Security Act facts for kids

President Franklin D. Roosevelt signs the Social Security Act into law on August 14, 1935.

The Social Security Act of 1935 is a very important law in the United States. It was signed by President Franklin D. Roosevelt on August 14, 1935. This law created the Social Security program. It also started a system to help people who lost their jobs. This law was a big part of Roosevelt's plan called the New Deal.

Before this law, the U.S. did not have a national system to help older people or those without jobs. The Great Depression made life very hard for many families. A doctor named Francis Townsend suggested a plan to give money to older people. President Roosevelt then asked his Secretary of Labor, Frances Perkins, to create a new social welfare program. The Social Security Act became law in 1935. The Supreme Court later agreed that the law was constitutional.

The Social Security program helps older people with regular payments. These payments come from payroll taxes. Over time, this program greatly reduced poverty among older Americans. It also became a major part of the government's budget. The Act also created unemployment insurance (money for people out of work). It also started the Aid to Dependent Children program. This program helped families led by single mothers. Later, the law was changed to add Medicare and Medicaid in 1965. These programs help with healthcare costs.

Why Was This Law Needed?
How the Law Came to Be
Important Parts of the Law
How the Law Changed Over Time
The Supreme Court's Decision
The Impact of Social Security
See also

Why Was This Law Needed?

In the early 1900s, the U.S. changed a lot. More people moved to cities and worked in factories. This created new challenges for society. Many people faced old age or job loss without any help.

By the 1930s, the U.S. was one of the few industrial countries without a national social security system. Some states had small programs for older people, but they were not enough. Most American workers could not afford to retire. In the 1930s, Dr. Francis Townsend gained support for his idea. He wanted the government to give $200 a month to older people.

President Roosevelt wanted a broad system of social security. He imagined help for every citizen "from cradle to grave." This included unemployment help, health insurance, and old-age pensions. However, he also wanted states to have a say. He did not want people to rely only on government handouts. Roosevelt liked Townsend's idea because it would help those who could not work. It would also boost the economy.

How the Law Came to Be

In 1934, President Roosevelt asked a special committee to create a plan. This committee was led by Secretary of Labor Frances Perkins. They worked on programs for old-age pensions, unemployment, and health insurance. The health insurance part was later removed due to opposition.

The committee designed an unemployment insurance program. States would mostly manage this program. They also created an old-age plan. Roosevelt insisted that workers themselves should help pay for it.

In January 1935, Roosevelt proposed the Social Security Act. He presented it as a practical solution. After many discussions in Congress, the Act became law in August 1935. During these talks, the program was expanded. It began to include payments for widows and dependents of workers.

However, some jobs were not covered by the first Act. These included farm workers, domestic helpers, and many government employees. This meant that many African American workers were not included at first. They were covered later when the law was expanded in the 1950s.

The program was funded by a new payroll tax. This tax was collected from employers and employees. Both contributed equally. Roosevelt believed everyone should be part of social security. He said, "Cradle to the grave – from the cradle to the grave they ought to be in a social insurance system."

Compared to other countries, the 1935 Social Security Act was cautious. But it was the first time the U.S. government took responsibility. It aimed to help older people, the unemployed, dependent children, and those with disabilities.

Important Parts of the Law

The Social Security Act has been updated many times. The original law had ten main sections, called "Titles." More Titles were added later.

Title I: Help for Older People: This part gives money to states. It helps them provide support to older individuals.
Title II: The Social Security Fund: This section set up the special account in the Treasury. This account is used to pay for Social Security benefits.
Title III: Unemployment Support: This Title deals with unemployment insurance. It helps people who are temporarily out of work.
Title IV: Aid for Children and Families: This part focuses on the Aid to Families with Dependent Children program. It helps families, especially those led by single mothers.
Title V: Child and Mother Welfare: This section is about the well-being of mothers and children.
Title VI: Public Health Services: This Title supports public health. It helps investigate diseases and sanitation issues.
Title VII: The Social Security Board: This part created the Social Security Board. This board manages the program.
Title VIII: Funding Through Taxes: This section established the payroll tax to fund Social Security. This tax is now known as the Federal Insurance Contributions Act tax.
Title IX: Employer Taxes for Unemployment: This Title created a tax for employers. This tax helped fund the first federal unemployment insurance program.
Title X: Support for Blind People: This section provides support for individuals who are blind.
Title XIV: Aid for Disabled People: This Title provides grants to states. These grants help people who are permanently and totally disabled.
Title XVI: Supplemental Income: This section created Supplemental Security Income (SSI). This program helps older, blind, and disabled people with low incomes.
Title XVIII: Medicare for Seniors: This Title established Medicare. Medicare helps older and disabled people with health insurance.
Title XIX: Medicaid for Medical Help: This section created Medicaid. Medicaid helps states provide medical assistance to low-income individuals and families.
Title XX: Social Services Grants: This Title sets rules for how states receive federal money for social services.
Title XXI: Children's Health Insurance: This section established the CHIP. CHIP helps provide health insurance for children.

How the Law Changed Over Time

The Social Security Act has been updated many times to meet new needs.

1939: More Benefits for Families

The original law only gave benefits to the retired worker. The 1939 changes added two new types of benefits:

Payments for the spouse and children of a retired worker. These are called dependents or family benefits.
Payments to the family if a worker died too soon. These are called survivors benefits.

These changes meant that wives, children, and widows could also receive help.

1950: First Benefit Increases

These changes raised the amount of money people received for the first time. They also made the program cover more people. This included the introduction of a cost-of-living adjustment (COLA). This means benefits can increase with the cost of living.

1954: Expanding Coverage

The 1954 changes brought about 10 million more people into the Social Security system. This included farmers and many self-employed professionals. Benefits increased by 13%. The law also added a "disability freeze." This protected the benefits of workers during times they could not work due to a serious disability.

1965: Creating Medicare and Medicaid

This was a very important change. The 1965 amendments created two major healthcare programs:

Medicare: This helps older and disabled people with their medical costs.
Medicaid: This helps low-income families and individuals get medical care.

The Supreme Court's Decision

The Supreme Court reviewed the Social Security Act. They decided that the law was constitutional and fair.

In a case called Steward Machine Company v. Davis (1937), the Court said the government could use money to help the unemployed during the Great Depression. They ruled that this was for the "general welfare" of the country. Some justices disagreed. They thought the federal government was overstepping its powers.
In another case, Helvering v. Davis (1937), the Court also upheld the program. They said the Social Security tax was a proper use of Congress's power to collect taxes.

Other court cases later helped define how benefits are given. For example, one case ensured fair hearings before benefits could be stopped. Another case made sure that men and women were treated equally for survivor benefits.

The Impact of Social Security

Social Security has had a huge impact on American life.

In 1940, Social Security paid out $35 million in benefits. By 2009, it paid out $650 billion to nearly 51 million Americans.

In the 1950s, older people had the highest poverty rate in the U.S. By 2010, this had changed dramatically. Poverty among the elderly became much less common. This shows how successful Social Security has been in helping older Americans.

Historian Kenneth S. Davis called the Social Security Act "the most important single piece of social legislation in the entirety of American history." It continues to be a vital program today.