The Social Security Act of 1935
The Social Security Act is arguably the most significant piece of legislation of the twentieth century. At one stroke, the social welfare of Americans became an explicit, and central, purpose of the United States government. Overturning a history of isolated, narrow, and state-led social insurance policies, the Social Security Act profoundly changed the federal structure of the United States. The Social Security Act brought the federal government directly into the life of almost every American. Washington now took the lead in developing, controlling, and bankrolling social policies in the United States, producing a vast transfer of power and policy from the states to the federal government. Finally, the Social Security Act served as the backbone for a massive expansion in social insurance programs that would ensue over the coming decades.
The Social Security Act was a sudden and dramatic break from America's earlier approach to social welfare. As we have seen, for the first 140 years of our history, there had been little government activity in this era. Although the Progressive movement had raised social insurance issues at the state level, legislative victories had been slim. Before the Social Security Act only one state (Wisconsin) had completed enaction of a law to protect unemployed workers.1 Only 17 states had pension laws for needy senior citizens, and just three, California, Massachusetts, and New York, were of any size. Each was extremely restrictive. Combined, these laws covered but 3 percent of the elderly, and averaged just 65 cents a day in benefits. No state had a law offering a retirement pension to private sector workers. (Only 5 percent of workers had access to any pension