The Social Security Act (1935)

Signed by President Roosevelt in August 1935, the Social Security Act created the federal old-age insurance program funded by payroll taxes. It is the foundational law of the modern American welfare state.

The Social Security Act of 1935 was the centerpiece of the second wave of New Deal legislation. President Roosevelt signed it in August 1935 after months of work by a cabinet committee led by Secretary of Labor Frances Perkins. The act established a federal old-age insurance program funded by a payroll tax on workers and employers. Workers who paid in during their working years became entitled to monthly benefits beginning at age 65. The act also created a federal-state unemployment insurance system, aid to dependent children, and grants to states for assistance to the blind and disabled. The first monthly retirement checks went out in 1940. The original act was designed for a country in which industrial wage workers were the typical earners and life expectancy at birth was less than 65. It excluded farm laborers and domestic workers, occupations in which Black workers were heavily represented, an exclusion that has been the subject of significant historical debate. Subsequent amendments expanded coverage. Disability insurance was added in 1956. Medicare was added in 1965. Benefits were tied to inflation in 1972. The 1983 amendments raised the retirement age and the payroll tax to restore the program's long-term finances. Today, Social Security is the largest single item in the federal budget and pays benefits to roughly 70 million Americans every month. It is also the most popular federal program, which is both a measure of its success and a reason structural reform is politically difficult.