Unpublished CES Studies
||Volume IX. Committee Publications
Old Age Security in the Economic Security Program
by the Committee on Economic Security
|N0 HUMAN spectacle is more poignant than that of old age surrounded by poverty and indifference and given over to neglect and loneliness. That spectacle is, unfortunately, far more common today than it ever has been before. This is only in part a consequence of the depression and further recovery to a high level of prosperity would of itself result in only a slight improvement. The savings of the group who are now old have been largely wiped out; their jobs are gone and when employers add to their personnel it is the young, not the old, to whom they will turn. Nor are the middle-aged who are unemployed, and they number millions, in a much more favored position. It is against the policy of many of our greatest industries to employ or reemploy them. Their savings have been spent, too, if not swallowed up by bank failures or worthless securities. Many of these are at present without any means other than the "dole" granted by private or public charity.
Unless something is done, and done quickly, these aged and middle-aged unemployed will constitute a tremendous burden on their children and will bind not one, but three, generations in the slough of economic despond. Unless we take steps to prevent it, the depression of recent years will be levying its toll on human well-being in the time of our grandchildren.
OLD AGE INSECURITY FACTS
THREE million five hundred thousand, or almost half of all persons 65 years of age and over in this country are estimated to be wholly or completely dependent on others for their support. Nearly a million of these are now receiving public or private relief.
Many others eke out an existence in the homes of relatives or friends, themselves hard pressed for the necessities of life.
Ten years ago it was estimated that there were 85,000 aged people in public poorhouses. Many more live there today, although the exact number is unknown. Investigations have shown conditions in most of these public poorhouses to be deplorable, often with the mingling of the old, feeble-minded, delinquent, juveniles, and others.
About 180,000 men and women are at present receiving some kind of pension under the old age pension laws existing in 28 States. At least 900,000 old people by reason of their age, their need, and their eligibility under State laws will actually qualify for such assistance by 1936. State old age pension systems, hampered by lack of funds, especially since the depression, reach only a small part of the needy aged.
Trade-union and industrial pensions provide to a limited extent for only about 150,000 old people.
THIS is the tragic picture of old-age insecurity which confronts us at present, an insecurity against which there is but the scantiest and most insufficient safeguards.
THE OLD AGE PROBLEM
MOST people try during their productive working years to lay aside enough money to support themselves when they become old and unable to work. Numerous surveys show that only one-half to two-thirds of our people are able to do that. For the rest, old age is a tragedy because it cuts off earning power and the large majority of people in low-income groups simply do not have sufficient means to live the rest of their lives without working. Children, other relatives, and friends support most of the needy old people, frequently at considerable sacrifice to themselves and their young children. In this depression the support of aged relatives has become an unbearable burden for many families. Many old people, however, have not even these resources to fall back on and for them old age means poverty and humiliation-the poorhouse or the public relief rolls.
At this time there are approximately 7,500,000 men and women in the United States who are 65 years of age or older. By 1970 there will be more than 15,000,000 of this age group in the country and by the year 2000 about 19,000,000. The increase in the proportion of the aged to the total population will be only slightly less striking. Today somewhat less than 6 percent of the entire population is 65 years of age and over. By 1970 more than 10 percent will fall in this class; and by the end of the century above 12 percent. The old-age group in the population will increase remarkably in the next half century and future generations will face an even greater old-age problem unless measures are instituted to prevent it. While the period of old age and the number of old people is steadily increasing, the years of wage earning are being cut down. Men are being eliminated from industry at earlier ages, and even middle-aged men are finding it increasingly difficult to locate jobs. The price of a job for those who do succeed is likely to be the acceptance of work of a routine sort appreciably below their customary standard. How will these men be able to provide for their old age without help? Old-age dependency is not merely a depression problem. It is always with us. It is a permanent problem which must be dealt with effectively now if it is not to become an unbearable burden in this and future generations.
AN OLD-AGE SECURITY PROGRAM
THE Committee on Economic Security recognized that a dual attack upon the old-age problem is necessary: (1) Adequate public assistance for those already old and dependent, and (2) careful planning to prevent old-age dependency in the future. They discovered no magic, black or white, with which to solve the problem, no; did they propose reckless experimentation. They proposed that we build immediately on tested foundations to care for the present needy aged and that we inaugurate such measures as will in the future provide real old-age security for American workers.
WHAT THE PROGRAM PROVIDES
1. OLD-AGE PENSIONS THROUGH FEDERAL AID - This will provide adequate pensions for persons who are now old or are approaching old age and for old persons in the future who are not covered by the proposed old-age-insurance plan and who may become dependent. There are now 28 States which have old-age-pension laws on their statute books. True, some of them exist only on paper, but in most of our larger States there already exists machinery for the investigation of claims and the payment of benefits. There is no reason to scrap that machinery. The laws themselves are defective simply because State finances have been unable to give these laws the support which they require.
To enable the State laws to function adequately and to encourage the enactment of similar legislation in other States the Federal Government proposes to pay one-half the cost of old-age pensions under State laws. As a condition of the grant the State laws will be required to meet certain standards set up by the Federal Government as to age of eligibility, residence requirements, and administration of the funds. The amount of the old-age pensions which will be paid to needy aged persons will necessarily vary from State to State, depending upon the means of the individual, the cost of living, and what the State and local governments will be able to provide with aid from the Federal Government. There is no maximum limit imposed by the proposed Federal Economic Security Bill, although the Federal aid would be limited to not more than $15 per month per person.
This part of the old-age security program is an immediate and practical means of providing for people now old who are dependent on the public for support and there will probably always be some need for this type of aid. It is a far more desirable form of assistance than emergency relief or institutional care for helpless old people. It has distinct limitations, however, which must be clearly understood. Old-age pensions are granted only on the basis of a means test. The applicant must prove his need before he is eligible for aid and, since they are free pensions, they are inevitably large enough only for subsistence. No country in the world has ever given free pensions on any other basis. They are a regular and dependable form of relief, but still relief. For a more permanent and satisfactory solution of the old-age problem other measures are essential.
2. OLD-AGE INSURANCE FOR ALL EMPLOYED WORKERS- A national compulsory contributory system of old-age insurance will enable men and women to build up their own provisions for old-age annuities free from any means test and much more adequate than are possible with a free pension system. Under the proposed Economic Security Bill, the system will be applicable to all employed workers and is to be financed by equal contributions from employers and employees.
Under such a system annuities will come to workers as a right to which they are entitled on a contractual basis and will provide a decent income on which to retire when they become old. It can be made entirely self-supporting and will pay relatively large annuities as soon as benefits become payable. It is not a method of relief but a systematic means of protecting workers from want and dependency in their old age. With such a system workers will be able to face old age secure in the knowledge that they will have an independent and adequate income in their later years.
In order to permit self-employed persons who are not included in the above compulsory contributory system to build up security for their old age the Economic Security Bill provides for voluntary government annuities at cost, designed especially for people of low incomes.
SOCIETY, as well as the insured persons, will have much to gain from the operation of an old-age-insurance system. It will assure American men and women a comfortable self-respecting old age and will relieve society of an enormous burden.
The measures outlined in the Economic Security Program are not only adequate measures for old-age security, they are eminently practical and possible. They are based on the successful experience of this and other countries. They are not visionary proposals nor do they raise hopes which are impossible of realization. They do not profess to solve with one magic stroke a maze of complicated economic problems. They profess to do exactly what they will doprovide real old-age security for the mass of gainfully employed workers and discharge in a humane and economical way the debt that society owes to the productive workers of yesterday.
|COMMITTEE ON ECONOMIC SECURITY
Secretary of Labor, Chairman.
HENRY MORGENTHAU, Jr.,
Secretary of the Treasury.
HOMER S. CUMMINGS,
HENRY A. WALLACE,
Secretary of Agriculture.
HARRY L. HOPKINS,
Federal Emergency Relief Administrator.
EDWIN E. WITTE,
1734 NEW YORK AVENUE, NW.
WASHINGTON, D. C.