Getting By Before Social Security
During the Progressive era and the New Deal, reformers argued—and historians, by and large, have agreed—that America’s late19th- and early-20th-century industrialization impoverished the elderly. As workers aged and became less fit for physically demanding factory work, the reformers contended, they were cast onto the proverbial scrap heap. Only after the Social Security Act of 1935, supposedly, was there financial security in old age.
The case no longer seems airtight. It is true, says Gratton, a historian at Arizona State University, looking at median annual earnings between 1890 and 1950, that workers over 50 were generally paid less than younger men. But older men shared in the steady improvement in real income for all workers. Men 60 and older earned $528 in 1890 and $936 in 1918 (in constant dollars). More important, however, was the fact that men of all ages could count on their children to help support the family from the time the children were young all the way into adulthood. In 1918, offspring provided nearly onethird of family earnings in households headed by men in their early sixties.
Over the years, moreover, the general rise in real wages allowed families in all age groups to reduce their reliance on the earnings of offspring.
Not only that, but between 1900 and 1910, about one-fifth of all men who reached age 55 eventually chose "retirement," living without paid labor or the support of grown children, say Carter, an economist, and Sutch, an economist and historian, at the University of California’s Riverside and Berkeley campuses, respectively. "Individuals saved in order to be able to retire. Many used their savings to purchase assets, which they invested in owner-occupied, owner-operated farms, shops, and homes. Many men voluntarily left the wage sector long before retirement age to work for themselves." Later, the authors believe, these men liquidated their assets (or rented them to others) to provide adequate income in their old age.
The declining role of children’s earnings before the Social Security Act was enacted indicates that both young and old Americans wanted to get away from that way of providing for old age, which, Gratton notes, can cause a lot of intergenerational friction. "The Depression raised the specter of a return to the old way, and the New Deal offered an attractive alternative." Americans took it.
__"The Poverty of Impoverishment Theory: The Economic Well-Being of the Elderly, 1890–1950" by Brian Gratton, and "Myth of the Industrial Scrap Heap: A Revisionist View of Turn-of-the-Century American Retirement" by Susan B. Carter and Richard Sutch, in The Journal of Economic History (Mar. 1996), 302 Thayer St., Box 1981, Brown Univ., Providence, R.I. 02912.__
This article originally appeared in print