SOCIAL SECURITY ACT OF 1935 The Social Security Act of 1935 initiated one of the most compre hensive programs for social welfare ever undertaken through direct legislation. It established a Federal old-age insurance system ; made provision for Federal co-operation with the States in unemployment insurance systems and in programs for giving financial aid to three groups of the needy—the aged, the blind, and dependent children. The measure also extended Federal aid available to the States for four health and welfare services and for vocational rehabilitation.
It was recognized from the first that, in a program of such pro tions changes would have to be made as experience and study pointed the way for improvement. Therefore, the Federal Act placed upon the Social Security Board the duty of studying the program and from time to time making recommendations concerning its im provement and extension. On Jan. 16, 5939, the President transmitted to Congress a comprehensive report made by the Social Security Board containing proposals for amending the act.
Further, to have the benefit of advice from persons outside the Government on methods of improving the old-age insurance system, an Advisory Council on Social Security, composed of representatives of employers, employees, and the general public, was appointed in May 1937 by the Senate Finance Committee and the Social Security Board. The Advisory Council submitted its recommendations to Congress on Dec. 59, 1938.
Through the first half of 1939, extended public hearings were held before the House Ways and Means Committee, and the Senate Finance Committee, at which all interested persons could appear and express their views on the social security program. On the basis of information and recommendations from these various sources, the Social Security Act Amendments of 1939 were passed in August of that year. The results of these amendments are marked liberalization
of the protection provided by the program and improvement of its administrative procedures. Provisions for increased efficiency were extended to include State agencies administering the programs ,which operate on a Federal-State co-operative basis by requiring that they must establish and maintain personnel standards on a merit basis.
and Survivors Federal in surance system established by the Social Security Act of 1935 was designed to provide a basic retirement income after age 65 for wage earners insured under the system, the benefits to be financed by equal taxes on the employer and the employee. Prior to consideration of the Social Security Act, no attempt had been made to establish a governmentally operated old-age insurance system in the United States, other than retirement plans for public employees. Private pension plans had been adopted by some business organizations, chiefly among the heavy industries--over 40% of the employees affected being on Class I railroads. But in 1930 the number of employees affected by private pension plans was only approximately 3,500,000. Under the Federal old-age insurance system, wage-record.accounts had been established for approximately persons by the end of Benefits.—The system established by the act of 5935 provided for payment of monthly benefits, beginning in 1942, to insured workers 65 years of age or over when they retired, if between Dec. 31, 1936 and attainment of age 65 they had worked one day in each of at least five calendar years in covered employment, and had, during that period, earned a total of $2,000 or more. The benefits provided in this act were based on the employee's total wages during this qualifying period (exclusive of amounts in excess of $3,000 received in one year from any one employer). The system provided for monthly benefits amounting to of 1% of the first $3,000 of total wages plus of I% of the next $42,000, plus of I% of the next $84,000. The maximum monthly benefit was set at $85, the minimum at $10. A lump-sum payment equal to 3Y2% of the employee's total wages was provided for those reaching 65 without qualifying for monthly benefits ; and a death payment of similar amount was pro vided subject to deduction of any benefits the worker might have received during his lifetime.