By Marcia Mantell, RMA
Celebrating retirement security for women.
On August 14, 1935, another major milestone in building women’s financial security was entered into the law books. Earlier wins for women were starting to stack up: By the late 1890s women could finally own and inherit property in many states. In 1920, women won a 72-year battle for the right to vote. From 1900 onward, women were gaining opportunities to work outside the home in professional roles—and the right to keep their own paychecks.
So, it seemed to be an important next step in women’s financial ownership when President Franklin D. Roosevelt signed the Social Security Act into law. Passing by huge margins in both the House (372 yea, 33 nay, 27 not voting) and the Senate (77 yay, 6 nay, 12 not voting), this law established for the first time, a Federal program that included retirement benefits for workers. It was an extraordinary agreement, a result of the severe levels of unemployment and poverty brought on by the Great Depression. The Social Security Act addressed the needs of retired and aging Americans, as well as unemployment insurance, dependent children support, and assistance for the health of mothers and their children.
However, when looking closer into the 1935 Act, there was something missing: retirement benefits for women.
Defining Workers for Social Security
From the beginning, Social Security was not a welfare program. It was specifically designed as a pre-payment system: workers and employers contribute a percentage of wages throughout their working years, and in return, workers would receive monthly benefit payments in their old age. But not all workers were eligible to contribute into the program, and therefore, would not be entitled to retirement benefits at 65.
In fact, the definition of “worker” was incredibly specific under the Social Security law. It was defined as a wage earner in any type of job or service, “of whatever nature, performed within the United States by an employee for his employer, except…” And, that is where things got off-track for women. There were specific exceptions to covered, or eligible, workers:
· anyone doing agricultural labor for pay
· anyone providing domestic services in a private home
· many military service members (they had a different pension provision)
· U.S. Government workers
· anyone employed by a State or local government.
· And, any worker at a place of employment “organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.”
In effect, nearly every type of job a woman might have held in 1935 was specifically excluded from future Social Security retirement benefits. A large share of women who worked were employed as public school teachers, secretaries in government offices, and as maids, cooks, and other domestic help. And, they worked their family farms in the rural areas of the country. None of these women were afforded retirement security.
Women Were Homemakers, Not Workers, in the 1930s
One could argue that not all that many women were working in the 1930s. From the 1930 U.S. Census, we can see that 22% of females, ages 10 and older, were working. But most were in “uncovered” jobs in the list of exceptions. Only 22% worked in manufacturing; the other categories were largely not covered by Social Security.
The norm at the time was for young women to marry and her husband provided for her. Homemakers were reported in 95% of the families in 1930 and 74% of all females were married or widowed. The 26% of single females were mostly children.
At this same time, it was illegal for married women to work in 26 states. The U.S. Government prevented more than one member of a family from working in government jobs. And, in general, it was considered unacceptable for women to work outside the home, as they were taking a job from a man.
Such was the social structure when Congress was crafting a Social Security retirement system. Benefits were to be for workers. Workers, by default, were assumed to be men.
However, there were three staunch advocates who wanted to see the laws change to improve both wage opportunities and financial security for women, whether they were homemakers or working outside the home. President Franklin D. Roosevelt, his wife, Eleanor Roosevelt, and Secretary of Labor, Frances Perkins. She was the first woman cabinet member, and the person in charge of moving forward labor laws for women and Social Security, among other initiatives.
As soon as the Social Security Act was signed into law, discussions and arguments began about the missing protections for women. How was a wife who became a widow going to stay out of poverty? Especially in her older years?
The 1939 Social Security Amendments Provide Security for Women
Fortunately, Congress moved quickly, recognizing the gaping holes in the original Social Security law. In 1939, the first set of Social Security Amendments were appended to the original law. In overwhelming support in the House (363 yea, 2 nay, 64 no voting) and passage in the Senate by 59 yea, 4 nay, 33 not voting, the Amendments became law.
On August 11, 1939, almost four years to the day after signing the original Social Security Act, President Roosevelt signed the Amendments. His remarks acknowledged that any type of social legislation must be improved and strengthened over time as the country changes. He felt that these Amendments represented “another tremendous step forward in providing greater security for the people of this country.” Specifically, there would be financial protections for wives and widows in their later years.
Effectively, these Amendments changed Social Security into “a system of old age and survivors' insurance providing life-time family security instead of only individual old age security to the workers in insured occupations.”
Before the first Social Security retirement checks would be issued, women and widows were included under the umbrella of benefits. FDR was particularly concerned about widows. He recognized and reported during the signing of the Amendments that now millions of widows and their children would receive some degree of protection if her husband died before her. And, in a progressive move, widows with children would be afforded social insurance benefits whether her husband died before he retired, or after.
Ensuring that women have a safety net in retirement is truly something to celebrate on Social Security’s 85 birthday.
Expanding Social Security Over the Decades – Including Men
Since the first Social Security check was paid in January, 1940, to a woman in Vermont, there have been many improvements. For the most part, amendments have improved women’s access to benefits. Initially, wives could not claim spousal benefits until they reached age 65. The law later allowed for her to claim as early as 62. Divorced women were only able to claim on an ex-husband if the marriage lasted 20 years; today, a 10-year marriage allows for claiming on an ex-spouse.
It is also important to note that Social Security has expanded benefits to men as well. In 1935, it was assumed that a man would always work until age 65. Therefore, it took longer before men could claim early benefits at 62. Originally, if a man became a widower, he could not claim survivor-husband benefits, if there were any available. It took a Supreme Court ruling in 1975 to open up Social Security widower benefits to young fathers who lost their wives. Arguing for gender equality of benefits was none other than attorney Ruth Bader Ginsburg.
Looking Forward to the Next 85 Years for Social Security
The Social Security law has changed many times over the last eight and a half decades. But at the core, it has remained ever steady: designed for, and delivering on the promise, to provide a modest safety net for older Americans in retirement years. The math is fundamentally the same – your individual benefit is based on your own highest 35 years of work earnings, or your spouse’s work history.
Even as we take a moment to celebrate the successes of a program brought to fruition as a result of the Great Depression, we must also keep an eye on the future. Social Security needs to be stabilized. Federal politicians need to stop using it as a pawn in every political election. And, we need to modernize this critical foundation of income for nearly every American’s retirement.
And perhaps most importantly, we should champion changes to help accommodate the realities of work, wages, and women’s ongoing, changing roles. We need to recognize and adjust the thinking—and the benefit calculations—to how real women manage jobs, careers, family structures of every kind, and children.
More simply, Social Security was designed 85 years ago to protect at-home-wives-and mothers. That model is archaic. It now needs to be redesigned for the full-time-career-woman-working-mother-loving-wife-and-future-caregiver.
Here’s to a Happy Birthday for a program that is critical to women’s financial security and the important role it plays in women’s financial independence.
About the Author: Marcia Mantell
Marcia Mantell, RMA®, NSSA®, is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of What’s the Deal with Retirement Planning for Women?, the newly published What’s the Deal with Social Security for Women? and blogs at BoomerRetirementBriefs.com.