Social Security
Administration

Social Security in 1955

AS THE FISCAL YEAR ended, the twentieth anniversary of the Social Security Act was drawing near. Appropriately, this year's report takes stock of the achievements of the past 12 months against a background of two decades of progress.

The last year has been one of the most significant, in many respects, in bringing the old-age and survivors insurance program within sight of its goal. As a result of the 1954 amendments, signed by President Eisenhower on September 1, about 9 out of 10 of the Nation's jobs are now within the coverage provisions of the contributory plan to maintain income after retirement or death. Nine-tenths of the young mothers and children in the country have survivorship protection that would assure them of monthly benefits if the breadwinner were to die today.

The basic social insurance program has made long strides since it first provided old-age benefits for industrial and commercial workers. The expanded program of broad coverage, protecting against the risk of wage loss resulting from the death as well as from the old age of the worker, is still far from mature. No one has yet been under the program for a full working lifetime nor will the beneficiary rolls reach their full growth until practically everyone who works for a living has had an opportunity to gain protection. Significantly, however, the 1954 amendments, by achieving almost universal coverage and other desirable modifications of old-age and survivors insurance, provide the assurance of future protection for all segments of the economy.

When the Social Security Act was formulated 20 years ago, there was clear recognition of the continuing need for public assistance as well as social insurance. The Committee on Economic Security, in

suggesting a dual attack on the insecurity of old age, stated: "An oldage insurance program could be expected in time to carry the major, but never the entire, load. . . . Assistance programs have a definite place, even in the long-time planning for old-age security."

...

Since February 1951, the social insurance program can be said to be carrying "the major load." In that month, the number of aged drawing old-age and survivors insurance benefits passed 2.8 million, exceeding slightly for the first time the number on old-age assistance. At the beginning of the 1955 fiscal year, the 5.1 million aged beneficiaries receiving insurance benefits was almost double the assistance load. At the close of the fiscal year, 6.1 million aged persons drew insurance benefits and 2.5 million assistance payments, a ratio approaching 21⁄2 to 1.

The number of recipients of old-age assistance has declined since the autumn of 1950, ranging between 2.5 million and 2.6 million in the past 2 years. In relation to our growing aged population, the decline has been impressive. And increasingly as the old-age and survivors insurance program has reached more of the aged group, the public assistance program has served as a backstop for individuals whose insurance benefits are inadequate for their needs, either because of low benefits due to low or irregularly covered wages or because of special needs such as medical care.

The growth of insurance protection for the aged over the past 20 years and the increasingly supplementary character of public assistance is illustrated in chart 1. In December 1934, only about 5 percent of the aged received payments under the social insurance and related programs then in existence-public employees' retirement systems and veterans' pension and compensation programs. Another 5 percent received public assistance including work relief. Just over one-fourth were earners or the wives of earners. Perhaps 1 out of every 2 persons aged 65 and over was mainly or wholly dependent on relatives and friends for support.

In contrast, at the end of 1954 all but 15 percent of the aged had income from employment, social insurance and related programs, and/or public assistance. Social insurance has made the major contribution in improving the income situation of the aged. Almost half the aged population in December 1954 was actually receiving payments under social insurance and related programs. Old-age and survivors insurance alone was then paying benefits to some 5.3 million while an additional 1.4 million aged workers (of whom from 300,000 to 400,000 had aged wives) were insured and could have received benefits if they had retired. Together these groups aggregated 7 million or one-half of all aged. Public assistance provided the principal support for more than 2 million aged persons and supplemented old-age and survivors insurance payments for another half million.

Chart 1.-ESTIMATED PERCENT OF AGED PERSONS WITH MONEY INCOME FROM EMPLOYIMENT, SOCIAL INSURANCE, AND PUBLIC ASSISTANCE, DECEMBER OF SELECTED YEARS,

1934-54

EMPLOYMENT

SOCIAL INSURANCE, PUBLIC ASSISTANCE 3 RELATED PROGRAMS 2

1 Includes persons with casual employment whose main support was from other sources.

* Old-age and survivors insurance, railroad and public employees' retirement, and veterans' pension and compensation programs.

Excludes persons supported by public institutions. Includes persons on work relief projects in the 1930's.

In December 1954, the proportion of persons with some earnings from employment was at about the same level as 20 years earlier, a decline from the significantly higher levels of the war years.

The effect of the 1954 amendments in greatly strengthening the gains of the last two decades will be evident even within the next few years. By 1960, the proportion of the aged population who either are receiving insurance benefits or could receive benefits on retirement from gainful employment will have risen from one-half to about two-thirds.

Provisions to improve the economic security of children have also been greatly strengthened in the past 20 years. Because the original Social Security Act did not include survivors insurance, the full bur

den of income support for children in need due to the death of the father was placed on the program of aid to dependent children.

Assistance payments under the Federal-State program were first made by the States in February 1936. By the end of that year, some 285,000 needy children deprived of support by reason of the parent's death, absence, or incapacity were receiving these payments and an additional 119,000 were receiving payments under State and local programs. Five years after the adoption of the Social Security Act all but a few States were administering their aid to dependent children programs with Federal financial participation. Of the case load of 854,000 children in August 1940, fewer than 5 percent were receiving payments financed exclusively by State and local funds.

Survivor benefits under the old-age and survivors insurance program were first payable in 1940 and were awarded to some 50,000 child survivors during the first year. Insured status for survivor benefits could be acquired after relatively short periods of covered employment. Hence the insurance program quickly assumed the major role in caring for the Nation's fatherless children—a diminishing group dropping from about 2.8 million at the end of 1934 to about 1.9 million 20 years later.

In December 1954, just over one million children were receiving benefits under old-age and survivors insurance because of the death of the father and another 40,000 because of the death of the mother. Some 240,000 needy children received aid to dependent children because of the father's death. With the drop in the total number of orphans and with social insurance payments reaching an increasing proportion of them, fatherless children have made up a decreasing part of the caseload of the aid to dependent children program. Of the total caseload of 1.6 million children at the end of 1954, about 85 percent had been deprived of normal support, not by death of the father but because of the continued absence from home or the incapacity of either parent.

Altogether, about 3.3 million children received financial support in December 1954 under a public income-maintenance program-including programs of the Veterans Administration but not including children in families receiving unemployment or disability insurance.

Many of the children receiving income support under public programs, as well as hundreds of thousands of others, have benefited under the Social Security Act provisions for services for maternal and child health, child welfare, and crippled children. The contributions of these programs over the last 20 years in improving the well-being of children and in saving the lives of infants and their mothers have been immeasurably great. Had the mortality rates of two decades ago not been improved, 24,000 mothers would lose their lives in child birth this year-twelve times as many lost lives as the 2,000 which are expected under present-day rates.

In carrying forward the gains for the Nation's younger generation, the Children's Bureau gave special attention in 1955 to the problems of four particular groups of children. A coordinated approach to problems of delinquent children was facilitated by the creation, early in the fiscal year, of a Division of Juvenile Delinquency Service. The other groups which received Bureau emphasis were children of migratory workers, mentally retarded children, and children in unprotected adoptions.

Other programs of the Social Security Administration-not all of which are 20 years old-made further contributions during the year to family security. The Federal-State program of aid to the permanently and totally disabled, established under the 1950 amendments, was aiding 236,800 persons in 43 States at the end of the fiscal year. The increase of more than 10 percent over the number of recipients in June 1954 reflected the relatively recent introduction of the program in some of these States. Aid to the blind, included in the original Social Security Act, went to 104,000 persons in June 1955, about 3,000 more than a year earlier.

The program of Federal credit unions, too, has a role in increasing family security. Credit unions promote systematic savings and use the funds thus accumulated for consumer loans at reasonable rates of interest. During the fiscal year 1955-marked by the twenty-first birthday of the program of federally chartered credit unions-the continued growth of these credit unions brought their aggregate assets above $1 billion.

Program Administration in 1955

Implementation of the 1954 amendments was accomplished smoothly and speedily. Over 62 million old-age and survivors insurance benefit checks were recomputed at new rates and released in October, the month following the signing of the amendments. For the Bureau of Old-Age and Survivors Insurance, the first half of the fiscal year saw emphasis on public information activities and on preparation for the new coverage and other provisions which became effective on January 1, 1955.

The 1954 amendments to preserve rights to old-age and survivors insurance benefits in the event of disability resulted in a new and major work load. A Medical Advisory Committee was established to advise on the medical policies and standards needed in implementing the new provisions. By the end of the fiscal year, agreements for the administration of the disability freeze had been negotiated in almost all States, and a total of 143,000 freeze applications had been taken. The increase in benefit amounts resulting from the disability freeze provisions was about to come into effect as the fiscal year closed, and much work had been done toward completing determinations of disability