Academic journal article Social Security Bulletin

The Challenge of the 21st Century: Innovating and Adapting S

Academic journal article Social Security Bulletin

The Challenge of the 21st Century: Innovating and Adapting S

Article excerpt

"Social security" is a term used in different countries to describe a wide spectrum of programs that have a correspondingly wide range of problems and prospects. These programs can include health care, income support, compensation for injuries, services, and long- and short-term earnings replacement. They can be--and are--integrated to varying degrees, funded in various ways, and administered in different systems both within and across national boundaries. To focus the discussion here, I will emphasize that what is called "Social Security" in the United States is (1) a mandatory contributory insurance program for nearly the entire labor force; (2) funded almost entirely by employer and employee contributions placed in trust funds, which use surplus funds to hold government bonds; and (3) pays old-age, survivor, and disability benefits, which are calculated on the basis of past earnings histories.

Since the enactment of the Social Security Act in 1935, the program has grown from one covering wage and salary workers in commerce and industry, making payments to 220,000 persons in its first year of operation, to a set of programs covering 133 million workers and paying benefits to about 42 million former workers and their dependents--including more than 360,000 persons outside the United States.

To summarize these developments in a few words, today's programs represent three great achievements. First, the 1935 vision of a system that would protect workers and their families from the economic impact of old age, death, disability, and poor health has been realized. Second, through the development of the tax system, methods have been devised to bring in the self-employed, farm workers, and domestic workers so that the vast majority of current workers now participate in their own social insurance. Third, the challenges of implementing ways to define and measure disability have been met in a program that extends new benefits to more than 600,000 disabled workers each year. Moreover, the programs now paid for out of the Social Security trust funds are closely linked with others, which provide virtually universal health care to the elderly and means-tested income support to both elderly and disabled persons.

This growth has been guided by multiple, if not always distinct, underlying principles. Any program intended to endure for generations must reflect a broad social consensus, and policymakers have indeed been successful in forging a program that has proven to be one of the most popular programs in the history of the United States. About 3 out of 4 Americans report being favorably impressed with Social Security, and on the occasion of its 50th anniversary, a resounding 92 percent judged the program a success.

Still, the picture is not one of unbroken success. During the past decade and a half, especially, Social Security has been faced with a number of challenges, some of which have not been fully resolved and will remain at issue in the years to come. Many of these problems reflect the predictable progress through stages of the system's maturation, but others arise from unexpected changes in the social and political context in which it will function.

The Three Ages of Social Security

The present system can be considered, in part, a triumph of many years' effort at design and implementation. However, it has also been significantly shaped by external forces. As these forces have changed, sometimes predictably and sometimes otherwise, Social Security has changed with them.

The middle third of this century can be characterized as Social Security's "Age of Invention." During this period, the main features of the program--the types of benefits (retired-worker, dependent, disability, and medical) and eligibility criteria--were steadily expanded until the system assumed more or less its present form. This development took place in a period in which conditions were rather different than they are today, and more conducive to program expansion. …

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