Economic Security Conference Background

Old Assumptions, New Realities: Economic Security for Working Families in the 21st Century


By Steven Rathgeb Smith and Jennifer Romich

The foundation for much of the U.S. social, health and employment benefit system was created in 1935 with the passage of the Social Security Act (SSA). The SSA authorized a national social insurance program for retired workers, established joint federal-state unemployment insurance programs, and created a modest program of cash assistance for lone mothers to be financed jointly by the federal and state governments. Soon after passage the SSA was amended to cover some initially excluded occupations and to extend benefits to the survivors of covered workers. Coverage for permanently disabled workers was added in 1956. In the 1960s lawmakers created the federal Medicare program for Social Security recipients and the federal-state Medicaid program for families receiving public assistance.

For over seventy years, the SSA has provided the foundation for incremental expansion of national social insurance programs. These programs were aimed primarily at previously employed adults unable to work due to age or disability, and they have greatly improved the economic security of these adults and their dependents.

The original provisions of SSA did much less to protect working-age adults and their children. Over the years, federal, state and local governments have addressed this and other gaps in the initial SSA provisions by developing a large and largely uncoordinated array of programs targeted on specific populations and needs – from health and nutritional assistance for low-income pregnant women to public and publicly subsidized housing, means-tested child care subsidies, public preschool services, specialized social and mental health services, employment preparation and vocational training programs, and many more. Less visibly, federal and state lawmakers have used specialized tax deductions and credits to create incentives for employer-provided benefits, to subsidize individual expenditures for home mortgages, retirement and college savings, and other expenses, and to provide refundable tax credits for low income workers. The original programs of the SSA have also been pressed to respond to other service needs. The means-tested Medicaid health insurance program, for example, is now the primary public funder for long-term care for the elderly and disabled. Medicaid dollars are also used in many states to provide therapeutic, rehabilitative and personal assistance services for mentally ill and disabled individuals. The SSA authorized public assistance program (TANF) is used to provide child care subsidies and job preparation services and the same title of the Act funds state child welfare, foster care and adoption services.

Over the past 70 years, U.S. social benefits and employment supports have been built, piecemeal, over, on and around the foundation of the SSA – a foundation that did little to address the needs of working age individuals and that reflected depression-era social, economic and population characteristics. Even a brief comparison of these conditions to 21st century realities suggests how much has changed over time and how much these change matter for contemporary social benefit and employment policies. When the SSA was passed in 1935…..families functioned as an economic and home production unit in which a male breadwinner earned a 'family wage' sufficient to support himself and dependents and a female homemaker provided full-time, uncompensated carework in the home.

The organization of work and family life has changed dramatically in the last 70 years. The large majority of all women, including those with children, are now employed and far fewer adults – male or female – earn enough to provide the sole support for a family. As women have entered employment, total annual working hours at the household level have grown steadily. Americans work longer hours annually than their counterparts in any of the OECD countries and the care of dependent family members is increasingly ‘outsourced’ to child care, afterschool care and nursing home arrangements. For additional information on:

Most nuclear families remained together and were able to pool income and share caregiving labor across the lifecycle. Patterns of family formation have also changed substantially over the decades. About half of all new marriages now end in divorce and over thirty percent of all births are now to unmarried women, greatly increasing economic risk for the one-half of children born today who can expect to spend at least part of their childhood with a single parent. Remarriage and cohabitation are more common than they were 70 years ago, creating new and more complex living, parenting and economic arrangements. Young adults spend more years preparing for their careers, and marry and have children at much later ages, increasing the economic demands on many parents. With longer life expectancies and higher incomes, older adults are also more likely to live apart from their families, providing less caregiving labor within the family and often receiving less as they age. For additional information on:

An expanding economy promised to absorb new workers with the returns from increasing prosperity shared proportionately across all income levels. The Social Security Act, passed at the height of the Great Depression, was premised on the expectation that economic recovery would bring widely shared economic benefits. The belief that a rising tide of economic prosperity would “lift all boats” was largely confirmed for many decades, as the U.S. economy grew steadily and, outside short periods of recession, per capita GDP increased and poverty and income inequality deceased. But the equalizing and poverty-reducing effects of economic growth ground nearly to a halt in the 1970s. For the past thirty years, the U.S. economy has continued to grow in both absolute and per capita terms but the benefits have been increasingly concentrated among those in the highest income brackets. Income and wealth inequality has increased and poverty rates have remained nearly constant as inflation adjusted earnings have stagnated and declined for less skilled male workers and have grown only modestly for women, due largely to increases in their hours of employment. For additional information on:

Individuals expected to have stable and continuous employment throughout their working years. The original SSA programs were designed to provide insurance against the common lifecycle risks to earnings – including old age, disability and widowhood – for adults who were otherwise stably employed, usually in a single occupation and often with a single employer throughout their working years. The economy of the 21st century provides new opportunities and creates forms of risk that would have been impossible to foresee 70 years ago. Alongside historically high employment rates, voluntary and involuntary employment transitions have grown in recent decades and family incomes have become increasingly volatile. The share of all workers covered by collective bargaining or civil service arrangements has fallen and the share of all workers in nontraditional job arrangements – including contingent and temporary positions -- has grown, increasing the likelihood of employment and earnings disruptions. For additional information on: