An Approach to Social Security

There is a vast difference between this principle of keying these costs to the payroll, thus making them a part of the cost of production, and the principle underlying certain popular movements to-day of paying gratuities to the unemployed and the aged out of general governmental funds in return for what has been vaguely termed 'service to society.' Under the plan incorporated in the Social Security Act there is a mathematical, a functional relationship between a man's earnings and the benefits he receives. Thus there are definite limits which can be determined. But in the case of gratuities out of the general treasury there is no such definite relationship, and, therefore, no limit to the amount of benefits that can be obtained. It should likewise be noted that a system of benefits keyed to payroll rewards continued employment, because under such a system a steady worker obtains more benefits than the intermittent and casual worker.

The Social Security Act, in respect to both public assistance and unemployment compensation, excludes the Social Security Board from any function in relation to the selection, term of office, or compensation of state personnel.


So much for an outline of the major provisions of the Social Security Act. With the exception of the Federal old-age benefits provisions, which do not go into effect until 1937, what has been accomplished so far (May 14, 1936) under this programme?

In spite of the failure of an appropriation of funds by Congress until February of this year, the Social Security Board, in cooperation with state governments, has succeeded in providing for unemployment compensation which will protect more than 40 per cent of the compensable workers of the whole country; assistance to the needy aged affecting approximately 630,000 individuals; aid to dependent children affecting approximately 147,000 individuals; and aid to the blind affecting approximately 19,000 individuals.

The Social Security Board has thus far approved the unemployment compensation laws of nine states and the District of Columbia. In Wisconsin, New York, California, New Hampshire, Massachusetts, Oregon, Alabama, Washington, Indiana, and the District of Columbia, employees will be protected against destitution or dependence on charity during periods of unemployment by receipt of regular cash payments which in practically all states will amount to 50 per cent of their full-time weekly wages. Each worker will be eligible to receive these payments for from eight to sixteen weeks in a year, or even more under certain conditions depending on the individual state laws. The Federal Government has expended approximately three quarters of a million dollars to cover the cost of administration of state unemployment compensation systems.

The Social Security Board has approved plans for old-age assistance in thirty-two states and has under consideration four additional state plans recently submitted. Under the state plans already approved, the Federal Government is contributing toward the payments for old-age assistance to more than 630,000 persons. Expenditures made by the Federal Government for this purpose during February and March 1936 amounted to over five million dollars, and it is estimated that sixteen million dollars of Federal funds will be expended in April, May, and June.

The Social Security Board has approved eighteen state plans for aid to dependent children, and has under consideration the plans of eight other states recently submitted. The Federal Government has contributed over $700,000 to assist states with approved plans in providing maintenance in their own homes for children who have been deprived of parental support. Approximately 147,000 children have thus been given the advantage of home life.

The plans of nineteen states for aid to the blind have been approved by the Social Security Board and four other state plans recently submitted are under consideration. In February and March, the Federal Government expended $421,000 to assist the states with approved plans for aid to the blind, and it is estimated that $700,000 will be expended for this purpose in April, May, and June.

For the fiscal year ending June 30, 1937, an appropriation just passed by the House of Representatives calls for $450,000,000 for the Social Security programme. This amount will include funds for general administration; grants-in-aid for old-age assistance, dependent children, and the needy blind; unemployment compensation; wage records for old-age benefits; and $265,000,000 for the old-age reserve account set up in the Treasury Department.

The approximate number of persons to be covered by the provisions of the Social Security Act when all states have enacted cooperating legislation will be:—

Under unemployment compensation—18,000,000
Under public assistance—1,678,000

It is estimated that the federally administered old-age benefits will affect 26,000,000 persons.

In executing the will of Congress through the present Social Security Act we shall, of course, be attempting to build with tools that are not yet perfect. The passage of the Act marks a first step toward social security. The obligation to study and recommend improved means of accomplishing the objectives is expressed in the Act as follows:—

The Board shall perform the duties imposed upon it by this Act and shall also have the duty of studying and making recommendations as to the most effective methods of providing economic security through social insurance, and as to legislation and matters of administrative policy concerning old-age pensions, unemployment compensation, accident compensation, and related subjects.

A major task will be the working out of the most efficient method of keeping the necessary minimum of records. In addition, the Board will have much to learn about the techniques of at least three types of administrative relationships.

One of these is the important relationship between the Federal and the state governments. The need for cooperative action between the two agencies is clear. The geographic location of the state governments, close to the industries within their borders, enables state officials to see at first hand important facts which would be telescoped into insignificance if viewed from a distant Washington. On the other hand, there are certain features of the local terrain whose importance is clear only when they are seen in relationship to other areas, and these can be brought out only by the type of reconnaissance work that can be done from a central point.

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