Authored by Nancy Altman, Co-Director, Social Security Works
Social Security has transformed the nation, eradicating what once was a primary anxiety of the vast majority of workers -- the terror of growing old. A writer in 1912 described the attitude people had about growing old:
“After the age of sixty has been reached, the transition from non-dependence to dependence is an easy stage – property gone, friends passed away or removed, relatives become few, ambition collapsed, only a few short years left to live, with death a final and welcome end to it all – such conclusions inevitably sweep the wage-earners from the class of hopeful independent citizens into that of the helpless poor.”
Before the enactment of Social Security, people worked as long as they could hold jobs. But this was an insecure state of affairs. The fast pace of many jobs “wears out its workers with great rapidity,” a commentator noted in 1912. “The young, the vigorous, the adaptable, the supple of limb, the alert of mind, are in demand,” he explained, adding, “Middle age is old age.”
Once a job was lost, an older worker could seldom find a new one. Older people almost never had sufficient savings to last until death. Indeed, though individual savings accounts are in vogue these days, their shortcomings have been shown time and again. What is needed in the event of lost wages as the result of old age, disability or death is insurance, not individual savings.
Older people invariably were forced to move in with their children. Those who had no children or whose children were unable or unwilling to support them typically wound up in the poorhouse. The poorhouse was not some ancient Dickensian invention; it was an all-too-real means of subsistence for the elderly in the world immediately preceding Social Security. The vast majority of the residents were elderly. Most of the “inmates,” as they were often labeled, entered the poorhouse late in life, having been independent wage earners until that point.
Destitute senior citizens were a fact of life before the enactment of Social Security. Studies at the time found that nearly half of all those 65 or over had incomes below the subsistence level, even well before the Great Depression. In contrast, the poverty rate among the elderly today is around 10 percent. The reduction in the poverty rate of the elderly is directly due to Social Security. The Center for Budget and Policy Priorities has found a strikingly similar percentage of seniors today have incomes below the poverty level, when Social Security is disregarded.
Social Security is the difference. About one-third of older Americans receive 90 percent or more of their income from Social Security, and a full two-thirds receive half or more of their income from Social Security. The benefits are particularly important to women and minorities. Social Security provided 90 percent or more of the income of almost half of all unmarried (including widowed) women aged 65 or over, in 2008.and for more than half of unmarried (including widowed) male and female African-Americans aged 65 or over.
Furthermore, Social Security is much more than a program for the elderly. It also provides extremely important life insurance and disability insurance protection for workers and their families. In that way, it has also transformed the world with respect to workers who become disabled or who die leaving spouses and dependent children.
Nearly nine percent of the nation’s children either receive Social Security themselves or live in families where part of the household income is from Social Security. It is of particular importance to children in low-income and in minority families. It is the nation’s largest disability program. It provides half or more of the income to 70 percent of those with disabilities. Without that monthly check, 55 percent of disabled workers and their families would live in poverty.
Despite its importance and its efficiency – it returns in benefits more than 99 cents of every dollar spent – too many policymakers are proposing to scale it back and increase its retirement age. They fail to realize that future workers and their families will need its protections even more, given the termination of traditional private sector pensions and the failure of private accounts to do the job.
The current focus on budget deficits has provided an excuse for proposed cutbacks in Social Security, despite the fact that by law Social Security does not add a penny to the deficit nor the federal debt. Indeed, dispassionate policy analysis calls out for increasing Social Security’s benefits. Its proven track record, widespread support, efficient administration, and clear superiority over private sector counterparts makes increasing Social Security the best way to go, if our goal is to improve the economic security of the nation’s workers and their families. Let’s hope that sometime in the not-to-distant future our elected officials will recognize that increasing Social Security would not only be overwhelmingly popular but also the best possible policy, for women, families, those of low-income, younger Americans, and every other demographic one can imagine.
Portions of this blog post were excerpted from Nancy Altman’s book, The Battle for Social Security.