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This chapter focuses on the Social Security Act and the disparate treatment of blacks, Mexicans, and European immigrants in the administration of Social Security, Unemployment Insurance, Aid to Dependent Children, and Old Age Assistance. Though framed as legislation that would help the “average citizen,” scholars have shown that the Social Security Act in fact excluded the vast majority of blacks from the most generous social insurance programs, relegating them to meager, decentralized, and demeaning means-tested programs. European immigrants, by contrast, benefited from many of the provisions of the Social Security Act, and in at least some respects, they benefited more than even native-born whites. The net result of these policies was that blacks were disproportionately shunted into categorical assistance programs with low benefit levels, European immigrants were disproportionately covered under social insurance regardless of citizenship, and Mexicans were often shut out altogether.

This chapter provides a broad overview of the social welfare programs authorized by the Social Security Act, both when it was created in 1935 and as they exist in 2009. A timeline shows how the Social Security Act has developed into the form in which we know it today, with twenty-one Titles, or parts, generating more than fifty of the nation's most significant social programs. The chapter distinguishes between the Act's social policy construction and the specific programs created from the policy — a distinction applied to all the Act's specific programs, discussed in subsequent chapters.

The story of the Social Security Act documents the growth and development of America's social welfare commitments within the framework of a monumental social, economic and political document. The 75-year debate over the proper social welfare role of the Federal government enters the 21st century with a well-institutionalized policy certificate, but the incremental tinkering with the Act's social programs over the years has left a bewildering array of policies and programs, many unsuited to today's social welfare needs. Unemployment insurance offers a striking example of the need for renovation. Yet the need for overhaul remains a reluctance that, once opened for debate, some of the social welfare advances assured by the Social Security Act may be lost.

Title XVI of the Social Security Act, Supplemental Security Income (SSI), evolved as a hybrid form of assistance with a mixed pedigree. Daniel Patrick Moynihan sought to convince President Nixon to make all the assistance programs that existed under the original Social Security Act into a single assistance program administered by the Federal government, similar to the insurance programs. The complexity of blending the original assistance programs — Aid for the Aged (AA, Title I), Aid to Families with Dependent Children (AFDC, Title IV), Aid for the Blind (AB, Title X) and Aid for the Disabled (AD, Title XIV) — into a single federally administered assistance program proved too ambitious. Not only were the programs poorly matched, but also the policy objectives of assistance clashed with President Nixon's efforts to reduce the social welfare responsibility of the Federal government. SSI was finally created when Aid to Families with Dependent Children was left to stand alone as a state administered program.

Cash payments to persons who become unemployed through no fault of their own was a part of the original Social Security Act and continues to function under the Act's authority, although today it is administered by the United States Department of Labor. Even though the cash payments are essential for the unemployed who are unable to find work, the program is hobbled by its funding mechanisms, definitions of employment, complex state differences over the extent of unemployment coverage, and policy questions of whether this program best serves the unemployed or their employers. This social insurance program is most in need of drastic reform if it is to meet the requirements of American labor in twenty-first century America.

Including social services as part of the foundation of America's social welfare obligation recognized a long-standing tradition that, rather than providing money, economic need could be mitigated by helping individuals become more independent and socially stable, thus achieving financial independence. Yet in spite of years of struggle to achieve a “service strategy”, the exact nature of social services and their application remained unclear. Provision of specific products like day care (“hard services”) and counseling (“soft services”) are provided at the discretion of the states, funded by several block grants.

Chapter 9 traces Breckinridge’s contributions to the nascent welfare state during the Great Depression. Breckinridge and other activist women made it their mission to establish a national minimum for all Americans by crafting a federal welfare state. Building on the groundwork they had laid in the Progressive era, Breckinridge and her allies in the New Deal administration--especially in the U.S. Children’s Bureau--insisted that it was the federal government’s responsibility to care for all its citizens. They worked to establish federally funded social services, ban child labor, and establish a minimum wage under the Social Security Act of 1935 and the Fair Labor Standards Act of 1938.

This chapter states that a pension plan is a financial intermediary. A pension plan is also a contractual arrangement that employers and unions use to manage employees. It also transfers claims to income from an employee’s working years to his or her retirement years. New patterns of business organization gave rise to what may be called the employee’s pension problem. A pension plan creates financial claims on behalf of employees. The Social Security Act of 1935 had a profound effect on private pension plans because it profoundly changed the employer’s pension problem. The tax rules for retirement plans reduced a high earner’s tax liability. The differences between single-employer and multiemployer pension plans are reviewed. Officials in Congress and the executive branch agreed that federal policy should accommodate pension and welfare-benefit plans.

This chapter traces the promotion of home care in the two decades after WWII, looking at social welfare non-profits, government, and pioneering hospital provision of home care. It demonstrates how competing definitions of care—particularly the labor of care—fundamentally shaped old age, disability, and welfare policy; job training; and an emerging labor market. Gendered and racialized understandings of carework, home life, rehabilitative missions, and institutional authority initially led home care down two developmental tracks: one associated with social work and welfare and the other, more prestigious and better-funded, with health and the hospital. The shift of clientele from families with children to aged and disabled people and the increased medicalization of care thwarted the efforts of the Children’s Bureau network of women to create full-time, even public civil service, jobs than part-time, casualized ones. By the early 1960s, the Public Health Service replaced the Children’s Bureau as the center of government coordination of a joint private-public effort.

This chapter details events in Josephine Roche's life from 1934 to 1939. Serving as assistant secretary of the treasury in the New Deal government carried Roche to the height of her renown and power. Between 1934 and 1938, her central responsibility was health policy, but the full range of her involvement in the New Deal went well beyond that core focus. She also shaped one of the most significant pieces of federal legislation in the twentieth century, the Social Security Act, and oversaw the implementation of such New Deal programs as the National Youth Administration, all the while pushing for more effective regulation of industry and the unionization of American workers. As she dashed from one New Deal initiative to another, Roche was celebrated as an icon of female achievement who represented the new level of power achieved by women in politics and government during the 1930s.

This chapter presents a close examination of the drafting of the Social Security Act which corrects some key misperceptions of this history. Today, it is generally understood that the Constitution was an impediment to the adoption of a national scheme for unemployment and other forms of social provision during the New Deal. But this view was absent at the time. Instead, all of the lawyers involved in producing the Social Security Act believed that the spending power, based on the precedent of disaster relief, was broad enough in 1934 to permit the government to operate a national system of unemployment insurance. Indeed, legal experts at the time viewed the mixed federal-state programs that were pursued for political reasons as far more constitutionally vulnerable.

This chapter examines the railroad unions' fight to create a railroad pension system, which was the legislative model of the Social Security Act. Passage of the Railroad Retirement Acts of 1934 and 1935 and the court challenges that they faced set important legal precedents, which helped insure that the Social Security Act would not be ruled unconstitutional. Senator Robert Wagner, who wrote the National Labor Relations Act and the Social Security Act, acknowledged the importance of the railroad legislation in fostering his desire to create a national retirement system, which he believed would foster economic stability by increasing the purchasing power of a growing segment of the population: the elderly.

This chapter addresses the significance of the New Deal to the development of publicly funded foster care and its relationship to the nascent welfare state. The chapter includes many first-hand accounts of parents turning to foster care because they could not provide both economic support and nurturing care to their children. The chapter argues that the onset of the Great Depression marked a setback for the delivery of child welfare services. However, the promise of a more rational system of federal welfare provision through passage of the Social Security Act and other New Deal programs raised hopes that economic insecurity for families could be so drastically reduced as to eliminate (or at least diminish) the role of poverty in separating children from their families. In addition, Title V of the Social Security Act also provided funds to develop state-level public child welfare services, which helped spur the creation of a child welfare infrastructure.

This chapter explains how pay-as-you-go financing works and the problems that it has caused for Social Security. In general, a pay-as-you-go pension system is funded by payroll taxes. The Social Security Act of 1935 specifies who must pay payroll taxes and the amount of their earnings that is subject to the tax, as well as how retirement benefits will be determined. As Social Security matures, its cost drivers trend upward. In particular, raising benefits had become more complicated. In 1972, an agreement was reached to adjust automatically Social Security benefits. The benefit indexation in the 1972 legislation turned out to be a catastrophe. By the time of the 1980 presidential campaign, Social Security financing was still a significant policy problem that would be inherited by the Reagan administration.

This chapter examines the issuance of nonmarketable Treasury debt in the second half of the 1930s. It begins by describing an early example of a government trust fund and the first instance of a trust fund investing in special issue debt. The latter set an important precedent for later, much larger, trust funds and played a crucial role in the complicated history of bonus payments (during the 1930s) to veterans of World War I. The chapter then turns to the mechanics of the two trust funds established by the Social Security Act. It concludes with a discussion of the very different savings bond program.

This chapter starts the examination of state sanctions by considering the concept of a trade dispute disqualification from the right to recieve unemployment benefit. The effect of disqualification is to deny unemployment benefit to the claimant in respect of both himself and any dependants. After considering the function of the trade disqualification, the discussion turns to the way in which measures have evolved and have been liberalized since its introduction in 1911. These modifications have gradually narrowed the range of people affected by the disqualification to exclude innocent victims caught up in the dispute. This is then followed by a discussion of the principal features of the present law, as it operates under the Social Security Act 1975, as amended by Social Security Act 1986.

This chapter examines concerns arising from the financing of pay-as-you-go retirement plans. After Congress passed the Social Security Act in 1935, Edwin Witte, executive director of the Committee on Economic Security that drew up the original Social Security legislation, remained engaged in discussions about the program’s evolution. His strong belief that the system should be funded never wavered. He was convinced that the shift to pay-as-you-go financing would create a “Santa Claus state.” The denominator in the dependency ratio for Social Security was the number of workers paying payroll taxes, while the numerator was the number of people receiving Social Security benefits. In 1950, amendments were made in the Social Security Act, expanding coverage to about 10 million additional workers and increasing benefits for existing beneficiaries by almost 80 percent.