Social Security Act

Karlee Kirking

What Was It?

On August 14, 1935, the Social Security Act established a system of old-age benefits for workers, benefits for victims of industrial accidents, unemployment insurance, aid for dependent mothers and children, the blind, and the physically handicapped.
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Social Security has had many successes

Its successes outnumber its failings. Social Security has succeeded in creating dependency on the government . That, of course, always leads to larger, more-intrusive government and tighter government controls. Social Security killed the American tradition of individualism that was distrustful of big government. To millions of senior citizens, Social Security is the only income they have. It makes them totally dependent on the government for their subsistence and wholly dedicated to maintaining and expanding the system.Social Security has succeeded in discouraging private savings, since people can look to the government for income after they retire. That ends up reducing investment, job creation, productivity, and growth. Money that would be invested in productive private-sector activities is directed to the U.S. Treasury for redistribution instead. Social Security has succeeded both in increasing the cost of hiring workers and in lowering real wages, because some or all of the money businesses pay in Social Security taxes could have gone to wages. If the direct labor cost budgeted for a particular job is $50,000, then the salary offered cannot exceed $46,446.81 because of the “employer’s share” of the Social Security (6.2 percent) and Medicare (1.45 percent) taxes that must be paid. How the salary is divided up typically doesn’t affect the employer’s bottom line. It is all a labor expense. However, under certain competitive labor circumstances, employers must absorb some of the tax, raising the cost of hiring and reducing the number of jobs.

Does it still exist today?

YES! The United States still uses the Social Security. Today we are familiar with the 401k. To most Americans Social Security is a retirement plan, an insurance program, an investment account, or a government 401(k). In many cases it is the only thing they are counting on to provide them with income when they retire.