United States - Social development

Social welfare programs in the United States depend on both the federal government and the state governments for resources and administration. Old age, survivors', disability, and the Medicare (health) programs are administered by the federal government; unemployment insurance, dependent child care, and a variety of other public assistance programs are state administered, although the federal government contributes to all of them through grants to the states.

Between the early 1960s and 1993, the number of welfare (AFDC) recipients rose to 4 million families in spite of efforts to get clients "off the welfare rolls and into the payrolls." In 1996, President Clinton signed into law a groundbreaking welfare reform act that turned nearly the entire responsibility for the welfare system over to the states in the form of block grants. It also set a two-year limit on continuous welfare payments and a five-year cap on all payments over the mother's lifetime. The new system has been successful in reducing the number of recipients and in encouraging them to make the transition from "welfare to work." However, critics attributed at least some of the program's success to the booming economy during this period.

The Food and Nutrition Service of the US Department of Agriculture oversees several food assistance programs. Eligible Americans take part in the food stamp program, and eligible pupils participate in the school lunch program. The federal government also expends money for school breakfasts, nutrition programs for the elderly, and in commodity aid for the needy. The present Social Security program differs greatly from that created by the Social Security Act of 1935, which provided that retirement benefits be paid to retired workers aged 65 or older. Since 1939, Congress has attached a series of amendments to the program, including provisions for workers who retire at age 62, for widows, for dependent children under 18 years of age, and for children who are disabled prior to age 18. Disabled workers between 50 and 65 years of age are also entitled to monthly benefits. Other measures increased the number of years a person may work; among these reforms was a 1977 law banning mandatory retirement in private industry before age 70. The actuarial basis for the Social Security system has also changed. In 1935 there were about nine US wage earners for each American aged 65 or more; by the mid–1990s, however, the ratio was closer to three to one.

In 1940, the first year benefits were payable, $35 million was paid out. By 1983, Social Security benefits totaled $268.1 billion, paid to more than 40.6 million beneficiaries. The average monthly benefit for a retired worker with no dependents in 1960 was $74; in 1983, the average benefit was $629.30. Under legislation enacted in the early 1970s, increases in monthly benefits were pegged to the inflation rate, as expressed through the Consumer Price Index. Employers, employees, and the self-employed are legally required to make contributions to the Social Security fund. Currently, 6.2% of employee earnings (12.4% of self-employed earnings) went toward old-age, disability, and survivor benefits. Wage and salary earners pay Social Security taxes under the Federal Insurance Contributions Act (FICA). As the amount of benefits and the number of beneficiaries have increased, so has the maximum FICA payment. In 1990, Social Security Taxes leveled off at 7.65% on earnings up to $51,300. Among workers with many dependents, the Social Security tax deduction can now exceed the federal income tax deduction.

In January 1974, the Social Security Administration assumed responsibility for assisting the aged, blind, and disabled under the Supplemental Security Income program. In 1998, the Social Security system paid out $375 billion in monthly and lump sum benefits, including $232.3 billion in monthly retirement benefits and $43.5 billion in disability benefits. Medicare, another program administered under the Social Security Act, provides hospital insurance and voluntary medical insurance for persons 65 and over, with reduced benefits available at age 62. Medicaid is a program that helps the needy meet the costs of medical, hospital, and nursing home care.

The laws governing unemployment compensation originate in the states. Therefore, the benefits provided vary from state to state in duration (generally from 26 to 39 weeks) and amount (about 50% of earnings); the average employer contribution to Workers' Compensation in 1995 was 2% of payroll; which covered all or most costs, depending on the state.

Private philanthropy plays a major role in the support of relief and health services. The private sector plays an especially important role in pension management.

The federal agency Corporation for National and Community Service, established in October 1993, absorbed most of the programs of ACTION, established in 1971. CNCS coordinates three principal US volunteer service efforts: Ameri Corps, which has 40,000 volunteers placed in programs such as Habitat for Humanity and Volunteers in Service to America (VISTA); Learn and Serve America; and the National Senior Service Corporation, enlisting senior Americans persons to work with children and others who have special physical, mental, or emotional needs.