September 2, 1935 — radio address on the creation of the Social Security Act

People who work for a living in the United States of America can join with all other good citizens on this forty-eighth anniversary of Labor Day in satisfaction that the Congress has passed the Social Security Act. This act establishes unemployment insurance as a substitute for haphazard methods of assistance in periods when men and women willing and able to work are without jobs. It provides for old-age pensions which mark great progress over the measures upon which we have hitherto depended in caring for those who have been unable to provide for the years when they no longer can work. It also provides security for dependent and crippled children, mothers, the indigent disabled and the blind.

Old people who are in need, unemployables, children, mothers and the sightless, will find systematic regular provisions for needs. The Act limits the Federal aid to not more than $15 per month for the individual, provided the State in which he resides appropriates a like amount. There is nothing to prevent a State from contributing more than $15 per month in special cases and there is no requirement to allow as much as $15 from either State or Federal funds when a particular case has some personal provision and needs less than the total allowed.

Following essentially the same procedure, the Act as passed provides for Federal assistance to the States in caring for the blind, a contribution by the State of up to $15 a month to be matched in turn by a like contribution by the Federal Government. The Act also contains provision for assistance to the States in providing payments to dependent children under sixteen years of age. There also is provision in the Act for cooperation with medical and health organizations charged with rehabilitation of physically handicapped children. The necessity for adequate service in the fields of public and maternal health and child welfare calls for the extension of these services to meet individual community needs.

Consider for a moment those portions of the Act which, while they will not be effective this present year, yet will exert a profound and far-reaching effect upon millions of citizens. I refer to the provision for a system of old-age benefits supported by the contributions of employer and employees, and to the section which sets up the initial machinery for unemployment insurance.

Old-age benefits in the form of monthly payments are to be paid to individuals who have worked and contributed to the insurance fund in direct proportion to the total wages earned by such individuals in the course of their employment subsequent to 1936. The minimum monthly payment is to be $10, the maximum $85. These payments will begin in the year 1942 and will be to those who have worked and contributed.

Because of difficult of administration not all employments are covered in this plan at this time so that the law is not entirely complete in coverage, but it is sufficiently broad to cover all normally employed industrial workers.

As an example of the practical operation of the old-age benefit system, consider for a moment a typical young man of thirty-five years of ago, and let us compute the benefits which we will accrue to him. Assuming that his income will average $100 per month over the period of thirty years until he reaches the age of sixty-five, the benefit payments due him from the insurance fund will provide him with $42.50 per month for the remainder of his life. If he has been fortunate enough to have an income of $200 per month, his income will subsequently be $61.25 per month. In the event that death occurs prior to the age of sixty-five, 3 1/2% of the total wages earned by him subsequent to 1936 will be returned to his dependents. If death occurs after the age of sixty-five, his dependents receive the same amount, less any benefits paid to him during his lifetime.

This vast system of old-age benefits requires contributions both by employer and employee, each to contribute 3% of the total wage paid to the employee. This tax, collected by the Bureau of Internal Revenue, will be graduated, ranging from 1% in 1937 to the maximum 3% in 1939 and thereafter. That is, on this man’s average income of $100 a month he will pay to the usual fund $3 a month and his employer will also pay the same amount over his working years.

In conjunction with the system of old-age benefits, the Act recognizes that unemployment insurance is an integral part of any plan for the economic security of millions of gainfully employed workers. It provides for a plan of cooperative Federal-State action by which a State may enact an insurance system, compatible with Federal requirements and best suited to its individual needs.

The Federal Government attempts to promote and effectuate these State systems, by levying a uniform Federal pay-roll tax of 3% on employers employing eight or more workers with the proviso that an employer who contributes to a State unemployment compensation system will receive a credit of 90% of this Federal tax. After 1937, additional credit is also allowable to any employer who, because of favorable employment experience or adequate reserves, is permitted by the State to reduce his payments.

In addition, the Act provides that after the current fiscal year the Federal Government allocate annually to the States $49,000,000 solely for the administration of their respective insurance systems, thus assuring that all money paid for State unemployment compensation will be reserved for the purpose of compensation to the worker. It has been necessary, at the present time, to eliminate essentially the same groups from participation under the unemployment insurance plan as in the old-age benefit plan, though it is possible that at some future time a more complete coverage will be formulated.

With the States rests now the responsibility of devising and enacting measures which will result in the maximum benefits to the American workman in the field of unemployment compensation. I am confident that impending State action will not fail to take cognizance of this responsibility. The people of the different States favor the program designed to bring them greater security in the future and their legislatures will speedily pass appropriate laws so that all may help to promote the general welfare.

Federal legislation was framed in the thought that the attack upon the problems of insecurity should be a cooperative venture participated in by both the Federal and State Governments, preserving the benefits of local administration and national leadership. It was thought unwise to have the Federal Government decide all questions of policy and dictate completely what the States should do. Only very necessary minimum standards are included in the Federal measure leaving wide latitude to the States.

While the different State laws on unemployment insurance must make all contributions compulsory, the States, in addition to deciding how these contributions shall be levied, have freedom in determining their own waiting periods, benefit rates, maximum benefit periods and the like. Care should be taken that these laws do not contain benefit provisions in excess of collections. While unemployment varies greatly in different States, there is no certainty that States which have had less normal unemployment heretofore will in the future have a more favorable experience than the average for the country.

It is obvious that in the best interests of the worker, industry and society, there must be a certain uniformity of standards. It is obvious, too, that we must prevent the penalizing of competitive industry in any State which plans the early adoption of a sound system of unemployment insurance, and provide effective guarantees against the possibility of industry in one State having an advantage over that of another. This the uniform Federal tax does,as it costs the employer the same whether he pays the levy to the Federal Government or makes a contribution to a State unemployment insurance fund. The amount of the tax itself itself is a relative assurance that benefits will be standardized in all States, since under the law the entire collection must be spent on benefits to unemployed.

The social security measure looks primarily to the future and is only a part of the administration’s plan to promote sound and stable economic life. We cannot think of it as disassociated from the Government’s program to save the homes, the farms, the businesses and banks of the Nation, and especially we must consider it a companion measure to the Works Relief Act which does undertake to provide immediate increase in employment and corresponding stimulation to private industry by purchase of supplies.

While it is not anticipated as a complete remedy for the abnormal conditions confronting us at the present time, it is designed to afford protection for the individual against future major economic vicissitudes. It is a sound and reasonable plan and framed with due regard for the present state of economic recovery. It does not represent a complete solution of the problems of economic security, but it does represent a substantial, necessary beginning. It has been developed after careful and intelligent consideration of all the facts and all of the programs that have been suggested or applied anywhere.

Few legislative proposals have had as careful study, as thorough and conscientious deliberation, as that which went into the preparation of the social security programs. It is embodied in perhaps the most useful and fundamental single piece of Federal legislation in the interest of wage earners in the United States. As President Roosevelt said when he signed the measure: “If the Senate and House of Representative in their long and arduous session had done nothing more than pass this bill, the session would be regarded a historic for all time.

This is truly legislation in the interest of the national welfare. We must recognize that if we are to maintain a healthy economy and thriving production, we need to maintain the standard of living of the lower income groups of our population who constitute ninety per cent of our purchasing power. The President’s Committee on Economic Security, of which I had the honor to be chairman, in drawing up the plan, was convinced that its enactment into law would not only carry us a long way toward the goal of economic security for the individual, but also a long way toward the promotion and stabilization of mass purchasing power without which the present economic system cannot endure.

Our social security program will be a vital force working against the recurrence of severe depressions in the future. We can, as the principle of sustained purchasing power in hard times, makes itself felt in every shop, store and mill, grow old without being haunted by the specter of poverty ridden old age or of being a burden on our children.

The passage of this act with so few dissenting votes and with so much intelligent public support is deeply significant of the progress which the American people have made in thought in the social field and awareness of methods of using cooperation through government to overcome social hazards against which the individual alone is inadequate.

During the fifteen years I have been advocating such legislation as this I have learned that the American people want such security as the law provides. It will make this great Republic a better and a happier place in which to live — for us, our children and our children’s children. It is a profound and sacred satisfaction to have had some part in securing this great boon to the people of our country.

Source: The Depression and New Deal: A History in Documents, ed. Robert S. McElvaine, (NY: Oxford University Press), 2003, pp. 55-56.