Statement of President Franklin D. Roosevelt On His Signing the Social Security Act, August 14, 1935

Roosevelt signing Social Security Act of 1935 in the Cabinet Room of the White House. Also shown, left to right: Rep. Robert Doughton (D-NC); Sen. Robert Wagner (D-NY); Rep. John Dingell, Sr. (D-MI); Unknown man in bowtie; Secretary of Labor, Frances Perkins; Senator Pat Harrison (D-MS); Congressman David L. Lewis (D-MD). Library of Congress photo, LC-US262-123278.

“Today a hope of many years’ standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last. This Social Security measure gives at least some protection to thirty millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions and through increased services for the protection of children and the prevention of ill health.

“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.

“This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.

“I congratulate all of you ladies and gentlemen, all of you in the Congress, in the executive departments and all of you who come from private life, and I thank you for your splendid efforts in behalf of this sound, needed and patriotic legislation.

“If the Senate and the House of Representatives in this long and arduous session had done nothing more than pass this Bill, the session would be regarded as historic for all time.”

Some Introductory Facts About Social Security

Background: “Social Security” is the term commonly used to describe the federal retirement benefit program created by Title II of the Social Security Act of 1935. Title II, labeled FEDERAL OLD-AGE BENEFITS, created a “universal contributory social insurance” program designed to protect workers and their families against loss of income due to retirement or the death of a wage earner. Initially, to be eligible for Social Security a wage earner must have worked in covered employment, earned at least $2,000 and attained the age of 65. (Note: Initially, “covered employment” was very narrowly defined, limited mainly to paid work in manufacturing and commerce. As described in Section 210 below, large segments of the working population were exempt from coverage.)

Section 210 defined the term “employment” as “…any service, of whatever nature, performed within the United States by an employee for his employer, except- (1) Agricultural labor; (2) Domestic service in a private home; (3) Casual labor not in the course of the employer’s trade or business; (4) Service performed as an officer or member of the crew of a vessel documented under the laws of the United States or of any foreign country; (5) Service performed in the employ of the United States Government or of an instrumentality of the United States; (6) Service performed in the employ of a State, a political subdivision thereof, or an instrumentality of one or more States or political subdivisions; (7) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual…”

Social Security has grown and evolved to become the primary source of retirement income for most Americans; and seven out of ten beneficiaries derive more than half of their income from Social Security benefits. For eligible beneficiaries, Social Security is also a family protection plan. It provides a guaranteed floor of income for spouses and dependent children of wage earners who die or become disabled during their working lives, workers who become disabled, widows age 60 and over, and widows age 50 and over with disabilities. The level of benefits received by participants is increased annually through cost-of-living adjustments (COLA).

By design, Social Security’s benefit formula is progressive, replacing a higher percentage of pre-retirement income for low-income workers (about 60 percent of income replaced) than for high-income workers (about 27 percent replaced.)

Brief History of Social Security Developments

1935 – August 14: President Franklin Delano Roosevelt signed the Social Security Act.

1937 – The Federal Insurance Contribution Act (FICA) required workers to pay taxes to support the Social Security system. Payroll taxes were 2%.

1939 – Social Security was expanded to cover dependents and survivors. Payroll taxes were 2%.

1950 – Coverage was expanded to job outside of commerce and industry, and benefit levels were increased. Payroll taxes were 3%.

1956 – Disability Insurance was created, and expanded over the following years. Early retirement at age 62 for women was permitted. Payroll taxes were 4%.

1961 – Early retirement at age 62 for men was permitted. Payroll taxes were 6%.

1972 – Automatic cost-of-living-adjustments (COLAs), which index benefits to inflation, were introduced. The formula to calculate increases initially overstated inflation by 25%, and people born between 1910 and 1916 received an unintended windfall. Payroll taxes were 9.2%.

1977 – The mistake in the benefit formula was corrected. The “notch” refers to the difference in benefits paid to the group that received the windfall and those who retired following the formula correction. Social Security was thought to be actuarially sound. Payroll taxes were 9.9%.

(For more detailed history of Social Security developments, visit the History section of the Social Security Administration’s Web site: http://www.ssa.gov/history/”)