A History of Social Security – Part I

Moving Toward Social Security As We Know It

Nearly everybody who looks at the history of Social Security points to one period as the most important in making a program as we know it today. What was that dynamic era?  It was the Industrial Revolution, a time in the mid-1800s when major advances in technology moved work from the farm to the factory.  Beginning in Germany and England, these changes had an enormous impact on the nature of labor in several ways.

The first significant change involved simple economics. In the past, a worker’s production went directly to himself and to his family.  Thing of a farmer who grows and eats his own crops.  There was no outside force influencing his profits; he kept what he made.  Even in tribal communities that collectively hunted or gathered, they still consumed what they caught or collected.  In an industrial plant, however just the opposite is true.  A worker who helps to make clocks does not feed his family those clocks for dinner.  Instead, he gets a wage for a product that he never sees again.  As a result workers were now at the mercy of a large “market”; their security was no longer their own responsibility.  Instead to being vulnerable to dry or rainy seasons, the worker became vulnerable to booms and busts of a market economy.

The next change brought forth by industrialization was risk.  Factories are dangerous places. Heavy machinery, fire, dust and fumes all made the possibility of injury and sickness much greater.  In response to these conditions, Congress eventually passed a bill authorizing the Occupational Safety and Health Administration (OSHA).  Moreover, any person exposed to these hazards over many years might have a shorter life expectancy that a person whose workplace was the great outdoors.  These dangers were risky to the employer as well:  factory owners were concerned that they would have to pick up costs when a worker went down.  Pressure from both forces therefore increased on the government to provide protection against this new world of uncertainty.

The Industrial Revolution changed not only the way people worked, but also the way they lived.  Through urbanization, millions of Americans moved from rural areas to cities in the early 1900s. How did this relate to Social Security?  It’s a family matter.  When Americans lived in farming communities, they lived as an extended family.  In other words, parents, grandparents, children, uncles, aunts and cousins all tended to share land and the responsibilities that came with it.  Included in these duties was care for the elderly.  Children would support their parents when their parents were no longer able to work.  As the lure of city jobs became stronger, the younger generation departed while the older generation remained.  Parents could not count on their children; the need for government help was getting clearer.

Even with all these economic and societal shifts, Americans were not sold on the idea of social insurance or social security.  In 1912 for example, Teddy Roosevelt’s Progressive Party proposed a national program and the voters resoundingly rejected it.  Americans seemed more inclined to rely on community plans – such as food vouchers – that a broader system that would tax everybody for the eventual good of some.  We must remember that America during the 1920s was a very prosperous country.  It appeared that the potential of our industries was without limits.  The poor, disabled and aged were not the fist concern for most workers.