Expanding Social Benefits: The Role of Social Security

Abstract

On 14 August 1935, President Franklin Roosevelt signed the Social Security Act, the charter law for the closest approximation the United States would achieve to a modern welfare state, or system of public protections for citizens against the hazards of old-age, unemployment, ill health, disability, and poverty. The programs included in the big bang of reforms signed into law on this one watershed day had some very distinctive patterns that have largely survived and shaped the provision of public benefits in the United States to the 1980s.1 Health insurance was omitted altogether from the Social Security Act, but there were three other major parts to the legislation as proposed and passed: unemployment insurance; public assistance; and old-age insurance. Despite proposals for a more nationally uniform approach, unemployment insurance was instituted as a federal-state system, with authority left to the states to collect contributions from employers and employed workers and to provide benefits to eligible workers who later became unemployed. Over subsequent decades, taxation and benefits would become quite uneven across the states. It would also prove impossible to reform this system to pool risks of economic downturns