At 67, Social Security alive and well

Social Security turned 67 last Wednesday. Far from being ready for retirement, this vital program is working more effectively now than ever, and it will keep on working for future generations of Americans.

Social Security was born in the midst of the Great Depression, when the largest generation ever of elderly Americans faced devastating poverty. Only a handful of companies provided any kind of pension in the '30s. Most people kept working until they died. But with unemployment hovering at 25 percent, there were no jobs for older adults and, in an increasingly mobile, industrialized society, few had extended families to turn to. In response to the growing crisis, states began adopting "old-age relief" programs, but most paid only a meager $15 to $30 per month.

A special committee chaired by Labor Secretary Frances Perkins, the country's first woman Cabinet member, proposed a national social insurance program as the long-term solution to poverty among the elderly. President Franklin Roosevelt signed the Social Security Act into law on Aug. 14, 1935, establishing two great social insurance programs -- unemployment insurance and the program we now call Social Security.

Social Security's concept is simple. Everyone regularly pays a small amount while they are working. When they are no longer able to work, they or their family members receive a monthly income. Social Security benefits are based in part on the amount paid in, but are adjusted for family size and income. By covering the whole population, the program can bear the risk of paying benefits to the young children of workers who die after only a few years in the work force or of retired workers and their widows who live to any age.In 1936 and 1937, 35 million Americans signed up for Social Security numbers. In January 1940, Ida May Fuller, a retired legal secretary in Vermont, received the first check of $22.54.

The Social Security Act has been amended frequently. Initially the program covered only workers themselves, and only those in commerce and industry. In 1939, Congress added dependent family members and survivors of deceased workers and in the '50s added disabled workers. Over the years, the program has expanded to cover most working Americans. Benefit and tax levels have increased along with rising incomes. In 1972, Congress approved automatic cost-of-living adjustments to benefits.

Social Security proved to be an astounding success. Poverty among seniors, which was estimated at 50 percent in the '30s, has dropped to under 10 percent. American workers no longer need to fear they or their families will be left destitute. Today 46 million Americans -- one of every six -- receive Social Security benefits, including more than 3 million children.

Despite its success, Social Security has always had opponents. Some believe that individual effort and private charity should do the job without the help of government. During the '90s proposals to "privatize" Social Security became increasingly popular, as the booming stock market fueled fantasies that everyone could get rich and the looming retirement of the baby boomers raised fears that the system couldn't handle the strain. Private investment interests, which could make billions of dollars in commissions if enabled to invest Social Security's vast resources, have been happy to feed the widely held misperception that Social Security is in trouble.

The latest checkup shows Social Security is still in excellent health. In 1983, Congress adopted a package of reforms to prepare for the retirement of the baby boomers, including raising taxes above the level needed to pay current benefits in order to build up the trust fund sufficiently to cover the expected future bulge in demand.

The reports of the Social Security trustees confirm the trust fund will continue to grow for the next 15 years, then be spent down as baby boomers retire, precisely as was planned. Every realistic projection shows that in 40 years Social Security will pay higher retirement benefits to today's young workers than their grandparents are receiving now.

Through all the ups and downs of the past 67 years, Social Security has guaranteed all Americans a foundation of economic security that only a lucky few individuals could achieve on their own. Today, our country as a whole is made stronger because we work together through Social Security.

All of us benefit knowing a guaranteed basic income is there for children whose parents die, disabled workers and all seniors -- whether their former employer is flourishing or in bankruptcy court. Social Security is far from ready for retirement. Let's pass it along to our children and grandchildren.

Marilyn Watkins, Ph.D., is a national expert on Social Security and the Economic Security Policy Director at the Economic Opportunity Institute based in Seattle (www.EOIonline.org).

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