Since its creation seventy years ago, the Social Security system in the United States has grown to cover almost 53 million people with five different types of benefits.1 It is one of the nation’s most successful programs and is responsible, in large part, for reducing the poverty rate among the elderly. In fact, for 25 percent of elderly beneficiaries, Social Security benefits provide 90 percent of their income.2 Although Social Security is now a massive program covering individual workers and their dependents in the event of death, disability, or retirement, Social Security emerged on a much smaller scale. In the beginning, retirement benefits (which constitute the focus of this paper) were available only to a limited number of workers.3 In 1939, four years after the passage of the initial Social Security Act, Congress extended benefits beyond this limited form of social insurance to cover a worker’s dependents and survivors in the event of the worker’s death or retirement. Then and now, an individual’s Social Security retirement payment is an “earned” benefit, indexed on the basis of the worker’s earnings and tax contributions over the course of his or her employment. In contrast, survivors’ and dependents’ benefits are available without regard to the secondary beneficiary’s participation in the workforce and are based solely on a recognized family relationship to the insured wage earner.
In 1939 the typical American family probably stood to benefit from the conception of the “family” that was embraced by the Social Security Act. The predominant family form consisted of an opposite sex couple with the father in the workforce and the mother laboring for the household at home. Today, the picture of the American family has dramatically changed. Increased rates of divorce, decreased rates of childbearing, an increase in the number of dual-earner families, and greater numbers of people living outside of marriage has greatly diversified the picture of the American family. Although in certain ways the Social Security system has never served all families equally, today the inequalities that result from rewarding certain marital choices over others are more acute. In the 1930s, “nontraditional” families (i.e., families that diverge from the two-parent, single-earner model) were likely invisible to policymakers. Today, the fact that eligibility standards for dependents’ and survivors’ benefits remain contingent upon marriage creates incentives for people to follow the traditional family model and disfavors cohabitation and same-sex relationships.
Despite the program’s seeming inability to accommodate new family forms, Social Security has in fact changed since it was first enacted. For example, in the 1970s the Supreme Court responded to de jure distinctions within the Social Security program on the basis of gender and illegitimacy and overturned sections of the Social Security Act that violated equal protection.4 In addition to these judicial changes, Congress has responded to certain trends and has enacted amendments to better accommodate, for example, divorced spouses.5 Although later sections will explore the impact of these changes, this paper will argue that a piecemeal approach to modernizing Social Security has failed to effectively respond to changing societal norms. In turn, the paper will propose some modifications for the program to better serve all American families.
Specifically, this paper will argue that benefits that are contingent on “family eligibility” accommodate traditional families while failing to reach a growing number of American families. These de facto features of the program reveal an implicit (or explicit) preference for the traditional, male-headed, single-earner family. Although this preferential structure is apparent today, the New Deal Era framers’ placement of this bias in the Social Security Act was uncontroversial at the time. Instead, the initial Act was likely modeled on what the majority of American families looked like in the 1930s and the Act probably also reflected a normative conception of what the framers thought the American family should look like.
Ideally, to better equip Social Security to assist all families that face death, disability, or retirement, policymakers would make the program more supportive of all families by decreasing the reliance on marriage as the marker for eligibility. One suggestion for partial reform in terms of marital eligibility is “earnings sharing,” which would equally divide a household’s total earnings between spouses. Another proposal that would significantly impact “the family” is privatization, which might give individuals the freedom to name their own beneficiaries.
Beginning with an overview of the formation of the Social Security Act, Part I will contextualize the passage of the Social Security Act and delineate the significant changes that occurred with amendments to the Act in 1939. Part I will also briefly analyze the Act in light of the way the American family looked in the 1930s. In Part II, I will examine the ways the program has changed in the courts and through the political process since its early years to accommodate the changing American family. Part III will analyze suggestions for policy reform and put forth two suggestions. One proposal will suggest that eligibility should be rewritten to cover members of a “household” in light of the fact that “new” nontraditional families fall short of the ideal family form and thereby receive less from Social Security. A final, more practical, proposal will advocate for moderate legislative changes that would insure currently uncovered parents and children without extending benefits to unmarried partners.
Part I: Creating “Social Security” – How the Act and its Initial Amendments supported “The American Family” in the Depression Era
In 1935, many American families were overwhelmed with the devastating economic consequences of the Great Depression. With unemployment soaring, the Federal government devised a variety of responses to reintroduce some modicum of financial security to Americans who were out of work and facing deep poverty.6 During the Depression, the elderly faced especially dire circumstances. Having spent down their savings, senior citizens were not able to provide for themselves and were forced to rely on charity, their extended families and adult children, or public assistance, which was largely unavailable, for financial support.7 President Roosevelt responded to these desperate economic conditions with a package of programs designed to insure American families against the ravages of poverty.8
The Social Security Act of 1935, developed in response to these economic circumstances, formed the basis for many social programs that are still in place today. The Act did not focus solely on poverty in old age and it did more than simply provide retirement benefits to the elderly. When initially enacted, the Social Security Act created four major programs which provided cash benefits to retired workers as a type of pension (Title II), means-tested cash benefits for poor elderly individuals (Title I), unemployment benefits (Title III and IX), and benefits for poor, single mothers with dependent children (Title IV).9
Old Age Insurance (Title II), the focus of this paper, was designed to “provide lifetime pensions for elderly retired workers… as a matter of right, regardless of individual need.”10 By deducting Social Security taxes from employees’ paychecks and by requiring equal contributions from employers, the 1935 Act imposed a type of “forced savings” on American workers.11 With the Amendments of 1939, this forced savings feature began to function as a “withholding tax that takes money from workers [who are presently in the labor force] and uses that money to pay retirement pensions to the elderly and disabled.”12 This “pay as you go” system “links the present state of employment to [a] future state of dependency.”13 Since Social Security retirement payments are tied to a worker’s own labor and input into the system, to a certain extent, individual beneficiaries pay for their own pensions.14 This contributory feature, entitles qualified beneficiaries (i.e., any covered worker at the statutory age of retirement) to receive Social Security retirement benefits as a matter of right.15
While the passage of the 1935 Act established the plan for distributing these retirement benefits and death benefits (which were then a return on a worker’s contributions to the worker’s estate), the taxation scheme to fund these benefits was not set to begin until two years later in 1937.16 With delayed taxation, states were to begin distributing pension checks to retirees in 1942.17 Although this five-year lapse in time between collecting taxes and disbursing benefits was sensible from a planning and implementation standpoint, the gap between collecting the tax and paying out benefits would lead to the accumulation of an astoundingly large surplus of 46 billion dollars.18 The fact that the federal government was to hold on to this massive sum during a time of great need for immediate payment subjected the program to severe critique.19
Delay surrounding the actual receipt of benefits and concern about the government surplus contributed to lukewarm support and even rabid opposition to Social Security pension benefits leading up to the passage of the Act in 1935. In the 1930s, many politicians advocated for more radical efforts to help people recover immediately from the effects of the Depression. They called for emergency aid to relieve distress and advocated for “recovery [to] precede [more long-range] reform.”20 In addition to these recommendations, which would have placed present exigencies above the need for creating programs to prevent future economic disaster, certain advocates pushed for much more radical social insurance plans. The chief example of this type of proposal was the “Townsend Old Age Revolving Pension Plan.”21 The Townsend plan would have entitled “every citizen of the United States, sixty years of age and over… to receive $200 per month. The only requirement was that the recipient [would have to] spend [that] amount within thirty days.”22 To cover the cost of providing these sizeable “Townsend” pensions, a universal sales tax of 2 percent would have been imposed on all transactions.23 Attracted by the idea of such a large pension, hordes of elderly Americans, dubbed “Towsendites,” became loyal and vocal supporters of the proposal.24
Faced with the demands of their constituents to provide immediate aid or adopt the Townsend proposal, few politicians favored of President Roosevelt’s vision for Social Security retirement benefits. In the end, one of the major reasons for the eventual passage of the Social Security Act of 1935 was likely the fact that Title I, which provided federal aid to bail out state welfare programs for the elderly was placed at the forefront of this omnibus act.25 Despite concerns about the administration of the social insurance plan for retirement benefits (Title II), no politicians wanted to vote against the Act as a whole and place popularly demanded welfare benefits for the elderly in jeopardy.26
Amidst the relatively unenthusiastic enactment of Social Security retirement benefits, lay even deeper doubts about the system’s constitutionality.27 When payroll deductions began in 1937, concern about the program became more acute and the program was challenged in the federal courts.28 In the test case, Helvering v. Davis, a shareholder challenged the constitutionality of the Social Security Act of 1935 and sought to “restrain [Edison Electric Illuminating Company of Boston] from making the payments and deductions called for by the Act.”29 The company’s lawyers argued that paycheck deductions would produce unrest among workers and lead to demands for increased wages.30 Corporations and corporate shareholders would also suffer “irreparable loss.”31 On the constitutional merits, the corporation also argued that the tax constituted a taking in violation of the 5th Amendment and that the Social Security Act violated the 10th Amendment.32 In a broader ideological vein, the company’s counsel also raised the critique that “aid from a paternal government may sap [the] sturdy virtues [of self-reliance and frugality] and breed a race of weaklings.”33
In response to these arguments, the attorneys for the government simply asserted that the Social Security Act exercised the federal government’s Article 1, Section 8 power to appropriate and tax for the general welfare.34 The Supreme Court agreed with the federal government and upheld the Act as a rational assertion of the taxation power.35 The Court also backed this conclusion by describing the calamity of the Depression, the need for a uniform response to neediness in old age, and the great hope that this Act would save “men and women from the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey’s end is near.”36
Even after victory in the Supreme Court, the practical future of Social Security pension benefits remained uncertain. Popular support for additional welfare payments (old-age assistance, Title I) was still strong and in many states, welfare payments often exceeded the pensions that would be available through Social Security retirement benefits (Title II).37 Pressure to speed up payment of benefits, to make the program a viable alternative to welfare, and to address the question of what to do with the massive reserve forced policymakers to consider changes to the 1935 Act.38
The Formation of the 1939 Amendments
To respond to critiques of the program Arthur Altmeyer, the first Chairman of the Social Security Board, initiated a “self-conscious campaign to make the program more politically appealing.”39 He formed a special advisory committee and began to actively defend “old age insurance as an alternative to welfare” that “prevented dependency because it emphasized ‘thrift and self-reliance.’”40 While pushing this rhetoric of abolishing dependency, federal policymakers paradoxically proposed the creation of dependents’ and survivors’ benefits.41 Dependents’ benefits were not a wholly new idea. The need for such benefits was apparent since (proposed but still undistributed) Social Security pensions to a retiree and his wife would often times be lower than the old-age welfare benefits available in many states.42 Moreover, most old age insurance programs in other nations already provided survivors’ benefits.43 Nevertheless, while drafting the 1935 Act, policymakers hesitated to implement a supplementary system of survivors’ insurance because of the fear that increasing its cost would engender greater hostility from Congress and the Supreme Court.44 Unexpectedly, just four years after passing the initial Act, extending benefits on a “family concept” to more individuals and increasing the cost of the program seemed to be the best way to ignite support for Social Security insurance benefits. Creating new classes of family-based beneficiaries would increase the cost of the program but it would also reduce the surplus resulting from the tax on employers and employees. To address concerns about delayed payment, policymakers also proposed speeding up the payment schedule so benefits would be distributed almost immediately.45
These recommendations were enacted in 1939 and did extend benefits to a large, new class of dependents and survivors. The 1939 Amendments to Social Security probably secured the program’s survival by appeasing political foes since it offered higher benefits to a larger class of beneficiaries.46 Nonetheless, by expanding the number of beneficiaries, the Social Security system took a drastic step away from the social insurance principle that each covered worker earned his retirement pension based on the tax he paid in while working. With the 1939 Amendments, new family benefits were extended to retired workers’ dependents and to survivors of workers who died before retirement regardless of whether or not these family members had directly contributed to any part of the pension. By providing benefits to survivors and dependents, paternalism in the Social Security system and a resemblance to welfare actually increased since the federal government stepped in to take the place of the family’s wage earner (i.e., father). Instead of inspiring self-reliance, the availability of benefits without a means test encouraged dependency on the federal dole. To implement this newly family-focused program, the federal government had to make number of (paternalistic?) assumptions about how families functioned.47
First, the effect of adding of dependents’ and survivors’ benefits ensured that married workers and workers with children would get more benefits than a single covered worker.48 Under the 1939 Amendments, all payments to dependents and survivors were still based on a worker’s average monthly wage, which translated into the insured worker’s “primary insurance benefit.”49 An individual worker would receive his primary benefit and his aged wife, dependent children, and any eligible survivors would receive a percentage of that primary benefit.50 For instance, a dependent wife over the age of 65 would receive an extra fifty percent of the primary benefit while her retired spouse received his benefit in full. By virtue of this rule, a couple would receive 150 percent of what a single worker who earned the same average wage would receive. Despite having contributed the same amount in taxes, the married couple received a windfall “at no extra cost” while the single worker essentially subsidized the increased benefits for couples.51 In addition to the benefits provided to wives over the age of 65, children of insured retirees under the age of 18 also qualified for a benefit equivalent to half of the primary insurance benefit.52
In addition to this inherent bias in favor of married couples, the creation of family benefits also exposed generalizations and assumptions about gender roles and the typical American family of the 1930s. For example, a preference for adherence to traditional gender roles was expressed in the structure of survivors’ benefits. Under the 1939 Amendments, widows received 75 percent of their spouse’s primary insurance benefit.53 The practice of giving women only three-quarters of what a single man would have received was justified by the fact that women “needed less than [men].” A member of the Social Security advisory council supported this conclusion by pointing to a women’s presumptive experience with household work. Men needed higher benefits than women because a widow was “used to doing her own housework whereas the single man [had] to go to a restaurant.”54 Survivors’ benefits also ended upon remarriage.55 This illustrates how Congress assumed, and still assumes, that spouses will take responsibility for their partners.
For widowed mothers with children, the 1939 Amendments also contained preferences about how families with absent fathers should operate. Before the establishment of survivors’ benefits, needy widowed mothers with children had to rely on state-run Mother’s Pension programs.56 These programs scrutinized beneficiaries closely and were often administered to deny aid to women of color or women with objectionable morals or lifestyles.57 In contrast to discretionary (and often discriminatory) mother’s pensions, survivors’ benefits uniformly extended coverage to widows of insured workers who were caring for a child under the age of 18.58 There was no requirement of economic need. Any qualified young widow received 75 percent of the worker’s primary insurance benefit and surviving children received 50 percent of the worker’s primary insurance amount.59 For both survivors’ and dependents’ benefits, eligibility was based solely on marriage to a covered worker and without account for actual need.60
By extending coverage to women who would have potentially qualified for Mother’s Pensions, Social Security swallowed up the “worthy and deserving” widows who would have previously received welfare. This eligibility structure ensured that widowed mothers could stay at home and care for their children. Social Security’s eligibility standards also favored widowed mothers over other single mothers who may have never been married, had gotten divorced, or had been deserted by their spouse. In fact, the Social Security Act of 1935 and the 1939 Amendments entirely failed to address divorce.61 Hence, only widows and their children, with their connection to a covered wage earner were transferred on to Social Security. While divorced or otherwise single women receiving mother’s pensions remained subject to a means test and moral evaluations, similarly situated women with insured spouses received guaranteed benefits with no eligibility markers apart from caring for children under the age of 18.62 Although differences in treatment between various classes of beneficiaries were apparent in the 1930s, increasingly disparate treatment between recipients of Social Security dependents’ benefits and welfare recipients raises additional questions about the policies’ coherence today. These inconsistent messages about parenting and work will be addressed in more depth in Section III.
In summary, by basing eligibility for family benefits on marital status, the 1939 Social Security Amendments expressed a preference (perhaps more inadvertent than deliberate) for traditional family structures and rewarded families that followed that norm with a boost in benefits. However, concluding that the only inequalities in the early years of the system were based on marriage would be premature.63 For primarily administrative reasons, relatively few workers were covered under the 1935 Act and the 1939 Amendments.64 Some of the nation’s poorest laborers, farm workers and domestic servants, were not included under the Act because administering a tax on their wages was thought to be too complex.65 This decision carried significant racial and geographic consequences since many agricultural workers and domestic servants were black men and women in the South.66 Despite the minimal coverage for many low-wage workers, the Social Security Act did include, and still retains, a feature that “give[s] relatively larger benefits to workers receiving low wages.”67
Given the foregoing, it is clear that from its outset, the Social Security retirement benefits program favored certain workers and families at the expense of others. What appear today as glaring inequalities or evidence of social engineering were possibly more justified in the 1930s. On the one hand, the hugely daunting task of implementing an administrative system on a national scale required clear rules with simple eligibility guidelines. Perhaps marriage was simply an easy line to draw and participation in industrial labor markets instead of less organized farm or domestic labor was easier for the Social Security Administration to monitor. On the other hand, the picture of the typical American family in the 1930s likely coincided quite closely with the benefits preferences. Regardless of the underlying reasons, it is clear that the policymakers who wrote the 1935 Act and the 1939 Amendments “regarded men as natural labor force participants and women as natural child care providers” and they drafted the laws to reflect this sexual division of labor.68
”The American Family” During the First Years of Social Security’s Implementation
The reality of the American family during the 1930s, while more “traditional” than families today, did not map neatly onto the picture of a two-parent nuclear family, supported by a breadwinner father with a mother tending to the household and children. During the Great Depression, rates of marriage plummeted because it became financially difficult for young couples to form new households. In addition to a decreasing rate of marriage, the average age at first marriage also rose during the 1930s.69 At the same time, rates of divorce declined, in part because of the prohibitive cost of obtaining a divorce.70 Some scholars have also suggested that the economic hardship of the Depression was accompanied by increased family resilience.71 Whether or not hardship actually strengthened family ties, during the Depression and certainly in the following post-War decades, marriage was an expected life step for many Americans. Within marriage, traditional gender roles were typically exalted.
During the 1930s and 1940s relatively few married women worked permanently outside the home. Even though women went to work during the war effort in the 1940s, preferences for traditional (gendered) divisions of labor persisted. For example, federally established daycare centers were only opened with the caveat that they would close at the conclusion of the war.72 Also, although the number of married women in the workforce increased by 50 percent from 1930 to 1940 a substantial part of this increase was probably inspired by economic need and ended at the close of the war.73 Moreover, many of the women who found employment during this period worked in domestic and personal services. None of these women would have been covered under the Social Security Act.
Since ostensibly few working women were earning sufficient wages on their own and most people believed that a woman’s proper place was in the home, the development of survivors’ and dependents’ benefits seems logically consistent. After all, these benefits were extended to a wife even if she never paid taxes out of her paycheck. This coincides with the expectation that a wife would stay at home while her husband worked. Additionally, the availability of dependents’ benefits enabled women to stay at home with children instead of being forced to join the workforce to earn income. Again, this supported the common belief that “helping widows stay home with their children was an idea beyond controversy.”74
This Section has illustrated how Social Security was formed and how it became simultaneously the nation’s most expansive social insurance program and a program that consciously wrote out certain families to favor particular family forms over others. In addition to this marriage-based favoritism, by only reaching families with a secure attachment to the labor force, Social Security largely failed to reach the poorest American families.75 The next Section of this paper will explore how Social Security has changed over time to accommodate the changing picture of the American Family. Instead of focusing on the poor families that do not qualify for Social Security retirement benefits in the first place, the remainder of this paper will focus on the families who are effectively denied full coverage because of their family forms and in spite of their input from taxes and participation in the labor force.