Why Was Social Security Created?

The Social Security program began in the 1930s in the United States against the backdrop of economic hardships created by the Great Depression. The roots of an economic security program are much older, extending back to the 19th-century Europe. Changes in society gave rise to the program, as well.

Geography

As a consequence of the Industrial Revolution of the 19th century, wage-earning jobs in U.S. urban centers began to replace the family farm and extended family as a source of economic security. In 1890, less than one-third of Americans lived in cities. By 1930, more than half of them did.

History

The idea of a national economic security program developed in 19th century Europe. Germany instituted the first Social Security program in 1889 under then-Chancellor Otto von Bismarck.

Significance

In the United States, the Great Depression of the 1930s caused high unemployment and economic stress nationwide, leading President Franklin D. Roosevelt to announce in 1934 his intention to provide a Social Security program.

Time Frame

President Roosevelt signed the Social Security Act into law on August 14, 1935. The program began by making lump sum payments to retirees until 1940, when monthly benefit payments began.

Benefits

Amendments to the Social Security Act in 1939 provided for survivor and dependent benefits. Automatic cost of living adjustments for Social Security recipients began in the 1970s, to protect the benefits from losing value to inflation.

Fun Fact

The first reported applicant for Social Security was Ernest Ackerman of Cleveland, Ohio. He retired one day after the program began. Five cents were withheld from his pay during his one day of participation in the program. After retiring, he received a lump sum benefit of 17 cents.

Resources

• Social Security - A brief history