Committee on Economic Security (CES)
Part II
OLD-AGE SECURITY
The basic data for part II are drawn from staff reports on old-age security, prepared by Barbara Nachtrieb Armstrong, J. Douglas Brown, Murray W. Latimer, and Otto C. Richter, actuary, and a consulting group of actuaries
Chapter VII
THE ECONOMIC PROBLEMS OF OLD AGE
OLD-AGE non-contributory pensions and contributory old-age insurance are two forms of social legislation designed to prevent destitution among the aged in lower-income groups. The approaches of the two are different in principle, for a non-contributory old-age pension system provides a small periodic payment from public funds to old persons after they have become destitute, whereas an insurance plan permits workers, through the periodic payment of a small percentage of their wages and with the assistance of their employers, to build up a modest retirement income guaranteed by the government. On the one hand aged persons who are without resources are recognized as the responsibility of the community; on the other hand machinery is provided for savings on the part of the worker and his employer for old-age security, with government control of the investment of his savings. In the majority of countries where old-age insurance systems are in operation, government funds and employer contributions supplement the wage earner's periodic payments to his old-age annuity fund.
For society, as a whole, provision to enable the voluntary retirement of the aged from the labor market appears justified by at least three strong arguments: (1) The worker, after years of productive effort, has earned the right to rest; (2) his advanced age or invalidity renders him incapable of an effective part in productive enterprise; (3) his continuance at work prevents a younger man from filling his place and gaining occupational skill, experience, and promotion. Retirement of the older worker at a specified age is usually made compulsory under a contributory old-age insurance system. When no provision is made for an assured retirement income, the majority of elderly wage earners continue to work or to seek employment until they are ultimately forced to dependency, either upon their children or upon the community in which they live.
The effect of destitution and dependency is enormously expensive not only in the cost of actual assistance rendered by governments, private charity, and the generosity of relatives and friends but also in
138
the psychological results of the loss of self-respect and the constant fear of insecurity. Therefore, recognizing both the tangible and intangible values of an earned retirement income, the principal countries of Europe have provided that worker, employer, and state shall contribute toward a fund for old-age annuities. In one sense, this merely represents the diversion of funds from channels of charitable assistance or public relief to channels of insurance against the hazard of dependency. This step would be justified from the standpoint of sound economic policy even if the net cost of insurance were far in excess of the future relief which it replaces, for the quality of self-respect and the relative freedom from fear of old age engendered by old-age insurance have a dollar-and-cents value to worker, employer, and government alike. In view of the fact that the health, morale, and standard of living of the wage earner have definitely improved under social insurance wherever it has been in force, it is easy to understand the great development of social insurance institutions in the civilized world today. The United States, entirely alone among industrialized countries, has lagged behind in social insurance legislation.
In actual money value the old-age annuity provided in foreign countries, even with generous government contributions, is small in comparison with American standards. But even a small, steady income earned as a right bridges the wide gap between complete dependency and independence.
The conditions of modern society, especially in highly urbanized and industrial areas, do not permit the wage earner, unaided, to provide for his old age. Unless wages are increased, thrift encouraged, and savings safeguarded by the government, the community as a whole will inevitably have to meet an increasing problem in the care of the dependent aged. A man's productive, wage-earning period is rarely more than 45 years. Under present conditions he must earn enough in this period to contribute toward the support of aged parents, rear and educate children, maintain his family at a standard of living more or less consistent with American ideals, and save enough in the form of insurance or absolutely safe investment to provide a modest income until death, if he survives his working period. This last item of his budget is the one least urgent, least stressed by advertising propaganda, and most easily disregarded among the many financial demands.
For a given individual the problem of old-age dependency may begin when he is 60 or 65 years old and may last until he is 80 or 90. His health or that of his family may or may not complicate the problem. Moreover, his economic, occupational, marital, or family status may each contribute in turn to make his situation different
139
from that of his neighbor. Hence the date and conditions of the ultimate interruption of his earning power, when the head of a family or a single person must face the fact that he is no longer able to earn a living, is unpredictable for an individual. For a large enough group of wage earners, however, calculations can reveal with reasonable accuracy the number who will survive to old age and the amount of weekly, monthly, or annual contribution on behalf of each member of the group which will provide a given retirement income for each. It is, therefore, possible and practicable through social insurance to provide a safe, adequate income for the period when the individual will be no longer able to earn a living.
When he has the assurance that each day's work builds up an investment for his old age, permitting independence of the charity of the community or financial aid from sons and daughters already overburdened by the cost of maintaining their own families, much of the wage earner's haunting fear of insecurity is removed.
The increase in the proportion of older persons in the population of the United States, the mounting ratio of dependency in old age, and the difficulties which an older worker meets in his attempt to find and hold employment make it imperative that legislative and collective action be taken in this country to avoid ever-mounting costs of relief to the aged and the humiliation of subsistence upon charity.
INCREASE OF AGED PERSONS IN THE UNITED STATES
At the time of the 1930 census there were 6 1/2 million people 65 years of age and over in the United States, representing 5.4 percent of the population. As a result of a declining birth rate in this country, which manifested itself about 1820 and persisted from that time, the ratio of aged persons to the total population has shown a continuous increase for more than a century. The increase was very slow for 40 years, more rapid from 1860 on, and noticeably accelerated between 1920 and 1930, resulting from a rather sharp decline in birth rate which set in about 1920. This decline is expected to persist, moreover, and will, of course, produce a correspondingly sharp increase in the ratio of the aged to the population as a whole. The restriction of immigration, curtailing as it has the influx of younger persons to this country, likewise tends to increase the proportion of older age groups in the population.
As table 26 shows, while the percentage of persons over 65 rose from 2.7 to 4.7 percent of the total population (a 74-percent increase) in the 60 years from 1860 to 1920, it is expected to rise to 11.3 percent (a 140-percent increase) in the 60-year period following 1920. Figure 1 gives the actual and estimated number of
141
persons aged 65 and over, compared to the total population from 1860 to the year 2000.
Since 1870 the three older age groups (30-44, 45-64, and 65 and over) have been increasing faster than the total population. This fact is brought out in table 27. Whereas the total population in 1930 was only 16.2 percent greater than in 1920, the proportions of persons aged 45 to 64 and 65 and over increased, respectively, by 25.7 and 34.5 percent during the decade.
| TABLE 26.-Actual and estimated number of persons aged 65 and over compared to total population, 1860-2000 | |||||||
Year |
Number age 65 and over | Total population | Percent age 65 and over | Year |
Number age 65 and over | Total population | Percent age 65 and over |
| 1860 | 849,000 |
31,443,000 |
2.7 |
1940 | 8,311,000 |
132,000,000 |
8.3 |
| 1870 | 1,154,000 |
38,558,000 |
3.0 |
1950 | 10,863,000 |
141,000,000 |
7.7 |
| 1880 | 1,723,000 |
50,156,000 |
3.4 |
1960 | 13,590,000 |
146,000,000 |
9.3 |
| 1890 | 2,424,000 |
62,622,000 |
3.9 |
1970 | 15,066,000 |
149,000,000 |
10.1 |
| 1900 | 3,089,000 |
75,995,000 |
4.1 |
1980 | 17,001,000 |
150,000,000 |
11.3 |
| 1910 | 3,958,000 |
91,972,000 |
4.3 |
1990 | 19,102,000 |
151,000,000 |
12.6 |
| 1920 | 4,940,000 |
105,711,000 |
4.7 |
2000 | 19,338,000 |
151,000,000 |
12.7 |
| 1930 | 6,634,000 |
122,775,000 |
5.4 |
||||
| SOURCE: Data for years 1860 to 1930 from the United States censuses. Estimates for subsequent years by the actuarial staff of the Committee on Economic Security. These forecasts are made on the assumption of a net immigration of 100,000 annually in years 1935-39, and 200,000 annually in 1940 and thereafter. | |||||||
| TABLE 27. Rate of increase of population by age groups for the United States, 1870-1930 | |||||||||
Years |
Total population |
Age groups |
Years |
Total population |
Age groups |
||||
30-44 |
45-64 |
65 and over |
30-44 |
45-64 |
65 and over |
||||
| 1870-1880 | 30.1 |
29.6 |
37.0 |
49.4 |
1900-1910 |
21.1 |
26.2 |
29.1 |
28.2 |
| 1880-1890 | 24.5 |
31.6 |
29.9 |
40.3 |
1910-1920 |
15.0 |
19.1 |
26.9 |
24.9 |
| 1890-1960 | 21.3 |
27.0 |
27.0 |
27.4 |
1920-1930 |
16.2 |
18.6 |
25.7 |
34.5 |
| SOURCE: Thompson, Warren S., and Whelpton, P. K., Population Trends in the United States, 1933, p. 110. | |||||||||
Table 28 gives further details of the age distribution of the United States population in 1920 and 1930, with a breakdown between urban and rural groups. In 1930 it appears that 5.4 percent of the total population of the country was 65 years of age or over, and that 5.1 percent of the urban and 5.8 percent of the rural population was in this age group. Persons over 40 years of age represented 29.3 percent of the total 1930 population, 30.4 percent of the urban group, and 28 percent of the rural.
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EMPLOYMENT DIFFICULTIES OF THE OLDER WORKER
The increase in the number and proportion of older persons in the population has been accompanied by an increase in the percentage of gainfully occupied persons who are 45 years of age and over, as table 29 indicates. In 1930 some 300 in every 1,000 gainfully occupied persons in the population were 45 or over, whereas in 1890 only 244 out of every 1,000 were in this age group.
This increase of older persons in the group which is employed or seeking work means that, unless the number of employment opportunities increases at the same rate, the competition for employment will become keener and more difficult as time goes on. In such competition the position of older persons tends to become more and more unfavorable.
| TABLE 29. Percentage of persons 45 years of age and over among gainfully occupied, by sex, for the United States, 1890-1930 | |||||||||
| Year
All gainfully occupied |
45 years and over |
Year
All gainfully occupied |
45 years and over |
||||||
Total Male Female Total Male |
Female |
||||||||
1890 100.0 24.4 26.4 15.1 1920 100.0 27.9 30.4 |
18.1 |
||||||||
1900 100.0 24.1 26.0 15.7 1930 100.0 30.0 32.7 |
20.3 |
||||||||
1910 100.0 24.0 26.1 16.0 |
|||||||||
| SOURCE: Barkin, Solomon, The Older Worker in Industry, Report of Joint Legislative Committee on Unemployment Transmitted to the Legislature Feb. 20, 1933 (J. B. Lyon Co., Albany, 1933), p. 48. | |||||||||
Much has been written on the employment difficulties of the older worker, yet no comprehensive or authoritative data are available for the country as a whole. Definitions of the age limit which divides the "younger" from the "older" wage earner are lacking, and conditions which determine the relative advantages of youth and vitality over maturity and experience must obviously vary with different types of occupation as well as with sex. The problem of the older worker is not of recent origin, though it has undoubtedly been intensified by the severity of the depression. Ever since the beginning of the industrial revolution the dynamics of a machine civilization have necessitated constant employment adjustments for all workers. Mechanization has placed an increasing emphasis upon youth, physical strength, and ability to stand nervous strain. Over the past century it has been increasingly difficult for all workers to maintain their skill, their employment, and their security. The burden of unemployment has fallen with great severity on "older" workers--individuals whose obligations, training, and capabilities in general cannot keep pace with the speed demands of modern industry. The older-worker problem is most acute in those industrial and manufacturing processes where age entails a physical liability rather than an experience asset.
144
Surveys of hiring-age policies in specific localities help to throw some light on the nature and extent of the employment difficulties of the older worker. Age distributions of persons in receipt of unemployment relief as well as of those registered for work at employment offices give further evidence of the handicaps of middle or advanced age. And the unemployment census of 1930 reveals significant data on the qualitative and quantitative aspects of the problem. Thus, despite the lack of comprehensive, direct data, certain broad conclusions can be drawn for the United States as a whole.
The general conviction that the older worker finds difficulty in either obtaining or keeping employment, and that this problem is a growing one, is supported by findings of several official investigations, such as those made in New York, California, and Maryland.{1} Although such graphic phrases as "old at 40" and the "scrap heap at 45" suggest an exaggeration of the actual facts, there is undeniable evidence of the progressive use of maximum hiring-age limits in industry. These limits automatically cut off employment opportunities of men who find themselves competing in the labor market in middle life. There seems to be no proof of a general policy of dismissal of older workers. It is likely that the statement made in the New York report on the older worker in industry is a fair statement of the general dismissal and employment system, to wit: If the worker has reached middle age with a long service record, he is less likely to be dismissed than the younger worker. This is because he possesses positive value for his firm. If, however, the older employee has served only short periods in the employ of any one firm in his years under 40, he is just as likely to be dismissed as any younger worker.{2} In all cases the older man is far less apt than the younger worker to secure new employment.
Both the Maryland and California surveys of age distribution in their local industries indicated that, beginning with the age distribution 40-44 years, there is a tendency toward lessened employment for wage earners in mechanical and manufacturing industries and in retail trade. With each 5-year age group after 40 years, the ratio
{1} See Maryland Commissioner of Labor and Statistics, The Older Worker in Maryland (Allied Printing Trades Council, Baltimore, 1930), pp. 8-10; also State of California Department of Industrial Relations, Special Bulletin No. 1, Middle Aged and Older Workers (California State Printing Office, San Francisco, 1930), pp. 8-11 ; State of California Department of Industrial Relations, Special Bulletin No. 2, Middle Aged and Older Workers in California (California State Printing Office, San Francisco, 1930), pp. 11-13; also Solomon Barkin, The Older Worker in Industry, State of New York Report of the Joint Legislative Committee an Unemployment, Transmitted to the Legislature Feb. 20, 1933 (J. B. Lyon Co., Albany, 1933), chs. X and XI.
{2} See Barkin, Solomon, The Older Worker in Industry, op. cit.
145
in each employment group is less than that in the corresponding population age group.{3}
Surveys of the unemployed in Philadelphia indicate that age is an increasingly important characteristic in the employability of unemployed workers. Among employment office applicants, 34.5 percent of the men and 23.6 percent of the women were over 40 years of age. In a sample survey of the unemployed, a larger proportion of men (39 percent) but a smaller proportion of women were over 40. Among employable persons on relief, a large percentage of both sexes (39.2 percent for men and 25.3 for women) were over 40 years of age. This cumulation of older unemployed workers on the rolls of the employment and relief offices in Philadelphia is paralleled in other cities. When data for relief and non-relief applicants in five re-employment and three State employment offices in Pennsylvania are separated, a higher proportion of older workers is found on relief rolls than among non-relief employment office applicants throughout the State.
Age is, next to occupation, the most important factor of economic significance in the employment or unemployment situation of the individual. The squeeze which has occurred in the upper and lower hiring-age limits has brought the mass of the working population within the ages of 20 and 40. Forty years may therefore be taken as a convenient line of division for measuring the relative employability of the registrants at employment offices. In 10 counties in Pennsylvania and 2 in New York, the proportion of women over 40 years of age ranged from slightly less than one-fifth to one-fourth of the total number of women registered for work. Among men applicants in these counties the proportion over 40 years old ranged from 30 to 38 percent. When registrants on relief are separated from the self-sustaining unemployed, higher proportions in the age groups over 40 are found for both sexes among the work applicants in the relief as compared with the non-relief files.
It is significant to note that the proportion of applicants over 40 years of age for both sexes in the city of Philadelphia has increased during the 3 consecutive years of the depression, 1932, 1933, and 1934. In 1932, 31.8 percent of the men and 22.8 percent of the women were over 40 years old. In October 1934, when three-fourths of the
{3} See Maryland Commissioner of Labor and Statistics, op. cit., pp. 13-14, and pp. 30-31. Also State of California Department of Industrial Relations, Special Bulletin No. 1, op. cit., pp. 16-20. Cf. U. S. Department of Commerce, Bureau of the Census, Fifteenth Census o/ the United States: 1930, vols. I and V (U. S. Government Printing Office, Washington, D. C., 1933).
146
registrants were also applicants for relief, 42.4 percent of the men and 26.1 percent of the women applicants were over 40.{4}
The depression quickly increased the quantitative dimensions of the problem. The unemployment census of 1930 showed that the rate of unemployment among males began to rise most significantly in the older age groups, beginning with 40 to 44 years. (See table 30.)
Even in 1930 it was evident that older workers were bearing the heaviest burden in terms of duration of unemployment. It is believed that a census of unemployment taken at the present time would reveal a greater incidence of unemployment among middle-aged and older workers.
| TABLE 30. Percentage of unemployment (14 weeks and over) among males and females in each age group for the United States, 1930 {1} | |||||||||
| Age group | Males |
Females |
Age group | Males |
Females |
||||
| Class A {2} | Class B {3} |
Class A {2} | Class B {3} |
Class A {2} | Class B {3} |
Class A {2} | Class B {3} |
||
All ages |
41.2 |
14.1 |
31.3 |
10.2 |
45-49 |
43.5 |
14.3 |
35.1 |
12.3 |
10-19 |
35.8 |
12.2 |
27.5 |
9.0 |
50-54 |
46.3 |
15.7 |
35.7 |
13.4 |
20-24 |
37.1 |
13.4 |
29.4 |
8.9 |
55-59 |
49.4 |
18.5 |
37.1 |
14.6 |
25-29 |
35.9 |
12.1 |
30.5 |
9.1 |
60-64 |
52.3 |
20.6 |
37.5 |
16.0 |
30-34 |
37.4 |
12.1 |
31.9 |
9.6 |
65-69 |
54.7 |
23.3 |
37.5 |
16.8 |
35-39 |
39.5 |
12.1 |
32.9 |
9.9 |
70 and over |
54.2 |
26.0 |
35.7 |
20.4 |
40-44 |
41.4 |
13.0 |
34.7 |
11.4 |
|
|
|
|
|
| {1} U. S. Department of Commerce, Bureau of the Census, Fifteenth Census of the United States; 1930, "Unemployment", vol. II, General Report (U. S. Government Printing Office, Washington, D. C.,1932), pp. 329-330. For each sex and age group total unemployment equals 100 percent for each class. {2} Persons out of work, able to work, and looking for work. {3} Persons having jobs but on lay-off without pay, excluding those sick or voluntarily idle. |
|||||||||
Once unemployed, older workers tend to have great difficulty in finding reemployment and their chances of reabsorption become less and less with advancing age. Analysis of relief figures clearly shows that older employable persons remain on relief rolls longer and experience longer "relief" periods between jobs than do younger workers. The percentage of persons that had been unemployed for long periods of time was progressively larger with each group beyond the age of 44, as is indicated in table 31.
The same general conclusions are reached by an analysis of census data. Beginning with the age group 40 to 45 the ratio of employed persons to the estimated total number of wage earners and salaried employees other than principal officers is progressively smaller in each successive 5-year age group than the corresponding ratio of the age group in the general population. ( See fig. 2. )
{4} Palmer, Gladys L., Thirty Thousand in Search of Work, Pennsylvania Department of Labor and Industry, 1933; Palmer, Gladys L., The Applicants at Three Pennsylvania State Employment Offlces in 1933, Special Report A-3, Wharton School of Finance and Commerce, Industrial Research Department, University of Pennsylvania, Oct. 31, 1934, and unpublished material for 1934. See also appendix IV.
148
With the enormous shrinkage in employment brought about by the recent severe depression, it is clear that large groups of normally secure, competent older workers have been discharged. The small shop and business, moreover, which formerly absorbed a considerable percentage of older workers, who dropped out of more strenuous industrial pursuits, are becoming less and less prevalent. This trend reduces the economic opportunities previously open to men and women after their peak of physical activity was passed. As a result of these industrial trends, what may be described as "economic old age"--i. e., permanent inactivity and consequent cessation of earnings--begins in many cases early in middle life, often antedating by a considerable number of years the period of physiological old age.
| TABLE 31. Persons with previous work experience at non-relief employment seeking work, classified by length of time since last non-relief employment of 4 weeks or more and by age {1} | ||||||||||||
| Time since last non-relief employment | Age |
|||||||||||
All Ages 16-24 25-44 45-54 55-64 |
65 and over |
|||||||||||
| No.PercentNo.PercentNo.PercentNo.PercentNo.PercentNo. | Percent | |||||||||||
| Total | 10,058 100.0 1,854 100.0 4,958 100.0 1,934 100.0 972 100.0 340 |
100.0 |
||||||||||
| Under 6 months | 1,609 16.1 467 25.4 788 16.0 230 12.0 98 10.1 26 |
7.7 |
||||||||||
| 6 to11 months | 1,611 16.1 414 22.5 803 16.2 252 13.1 105 10.8 37 |
10.9 |
||||||||||
| 12 to 23 months | 1,873 18.7 378 20.6 943 19.1 333 17.3 172 17.8 47 |
13.9 |
||||||||||
| 24 to 35 months | 1,809 18.1 269 14.6 906 18.3 385 20.0 182 18.8 67 |
19.8 |
||||||||||
| 36 to 47 months | 1, 364 13.6 165 9.0 654 13.2 320 16.6 168 17.3 57 |
16.9 |
||||||||||
| 48 months and over | 1,750 17.4 146 7.9 851 17.2 405 21.0 244 25.2 104 |
30.8 |
||||||||||
| Unknown {2} | 42 -- 15 -- 13 -- 9 -- 3 -- 2 |
-- |
||||||||||
| {1} Based on 5-percent sample of "Survey of Occupational Characteristics of Persons Receiving Relief" May 1934, furnished by the Research Section, Division of Research, Statistics, and Finance, Federal Emergency Relief Administration. {2} Unknown distributed in computation of percentage. |
||||||||||||
Obviously, if the earning period is to be shortened by earlier onset of economic old age, earnings must be higher during working years and savings increased to avoid old-age dependency. Analyses of wage trends, however, such as those made by Prof. Paul H. Douglas in his Real Wages in the United States, offer little hope of such increase on the basis of our American experience between 1890 and 1928.{5} When real rather than nominal earnings are analyzed, popular impressions of greatly increased earnings in this country during the last four decades prove to be based more upon fiction than upon fact.
{5} Douglas, Paul H., Real Wages in the United States, 1890-1928 (Houghton Mifflin Co., Boston, 1930); Douglas, Paul H., and Dennison, Florence Tye, The Movement of Money and Real Earnings in the United States, 1926-28 (The University of Chicago Press, Chicago, 1930).
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EXTENT OF OLD-AGE DEPENDENCY IN THE UNITED STATES
It must be pointed out from the very beginning that there are no figures available indicating the extent of old-age dependency for the United States as a whole, although a number of surveys of old people have been made in individual States. Very often these State commissions limited themselves to estimating the number of people who would become eligible under a proposed State law, which, in addition to requiring a means test, made children and relatives responsible for the support of aged dependents. These estimates give no true picture of the economic status of the old people. There are some surveys, however, which classify old people according to property and income, without taking into account the economic status of children and relatives. These surveys give a more accurate picture of the extent of old-age dependency than do the reports which estimate the number of old people who will be eligible for old-age assistance under the State laws.
The simplest method of measuring the economic status of the aged is to ascertain their annual income. It has been customary to place a person with an annual income below $300 in the dependent class. In comparing the estimates of old people who have an income of less than $300 a year (without taking into account any property they might possess), there is close agreement between the two available surveys. As will be seen by the following tabulation, they both place this number at slightly below 50 percent of the aged:
| Percentage of aged people with less than $300 annual income | ||
| Percent | Percent | |
| Connecticut, 1932 (persons 65 and over) {6} | 49.2 |
51.3 urban |
| Wisconsin, 1915 (persons 60 and over) {7} | 47.1 |
|
The Connecticut survey of 1932 brought out the fact that 33.5 percent of the old people over 65 years old in that State had no income whatsoever. The Wisconsin report of 1915 indicated that 21 percent of the old people over 60 had incomes below $100. Only 29 percent of the old people surveyed in Wisconsin had incomes above $500.{7}
An evaluation of the property which the old person possesses provides a less satisfactory classification. Obviously, it is difficult
{6} Connecticut Commission to Investigate the Subject of Old Age Pensions, Report on Old Age Relief (Hartford, 1932), appendix tables 13 and 14, pp. 70-71.
{7} Industrial Commission of Wisconsin, Report on Old Age Relief (Madison, 1915), p. 7.
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to estimate the true value of a home, and even if this were possible, the ownership of a dwelling house does not keep an old person from becoming dependent. The tabulation below indicates the findings of the two surveys with respect to the value of property
Aged persons classified by property |
|
Property |
Percent |
| No property | 34.9 |
| Below $1,000 | 47.6 |
| Below $1,500 | -- |
| Below $3,000 | 58. 7 |
| Wisconsin {9} (60 years and over) | |
| No property | -- |
| Below $1,000 | 41.5 |
| Below $1,500 | 49.8 |
| Below $3,000 | -- |
As in the income classification, the Connecticut survey indicates that old people living in cities are considerably worse off than those in rural areas. The percentage of old people owning property worth less than $3,000 is 61.1 percent for urban areas, while it is 54.1 percent for rural areas.
More important for the purposes of this report than the above classification by income or property separately are the attempts on the part of a number of commissions to combine income and property of the old people, and then place persons with property and income below a specified amount in the dependent group. It is quite arbitrary where this "danger line" is drawn, and different commissions have drawn it at different points. The New York Commission of 1930 {10} was anxious to make a comparison of its findings with those of the Massachusetts survey of 1925{11} and the National Civic Federation Study of 1926-27{12}, hence the danger line was placed at property below $5,000 and income below $300 a year. In order to furnish a comparison, the Connecticut figures were placed on the same basis. It will be seen that the figures of the Massachusetts Commission and of the National Civic Federation study are much lower than they are for the other two surveys. This, at least in part, results from the fact that the Massachusetts and National Civic Federation surveys counted the amount of property and income owned jointly by an old couple at the full value for each member of the couple. It is felt that because of this pro-
{8} See footnote 6 on p. 149.
{9} See footnote 7 on p. 149.
{10} New York State Commission on Old Age Security, Old Age Security (J. B. Lyon Co., Albany, 1930).
{11} Massachusetts Commission on Pensions, Report on Old-Age Pensions (Wright & Potter Printing Co., Boston, 1925).
{12} National Civic Federation, Industrial Welfare Department, Extent of Old Age Dependency (New York City, 1928).
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cedure they do not give a true picture. The Connecticut Commission tried to solve this difficulty by analyzing data separately for old persons living by themselves and for those living with others. Their samples were large enough to enable the Commission to make generalizations for the entire State. The New York samples, on the other hand, were extremely limited, and for this reason no generalization was attempted.
The dependency figures given in table 32 show a very great divergency. They range from 10 percent for old couples in Canton Village, N.Y., to 74.5 percent for single individuals in New York City. The Connecticut report would indicate that rural communities are better off than urban communities. The New York survey does not bear out this conclusion, though it must be remembered that its sample was extremely small. Otsego County, a strictly rural area, has a very high percentage of poor old people.
| TABLE 32. Percentage of persons 65 and over having property less than $5,000 and income less than $300 annually | |||
Survey |
Individuals |
Households |
Total |
Percent |
Percent |
Percent |
|
| Connecticut, 1932: {1} | |||
| Total | 45.7 |
19.8 |
-- |
| Urban | 49.6 |
21.7 |
-- |
| Rural | 39.2 |
16.5 |
-- |
| New York, 1930: {2} | |||
| Canton Village | 36.9 |
10.0 |
25.0 |
| Selected cities | 46.5 |
18.2 |
33.5 |
| Otsego County | 69.2 |
31.8 |
50.2 |
| New York City | 74.5 |
48.4 |
65.1 |
| Massachusetts, 1925 {3} | -- |
-- |
32.8 |
| National Civic Federation, 1926-27 {4} | -- |
-- |
22.7 |
| {1} Connecticut Commission, op. cit., appendix, tables 11 and 12, pp. 68 and 69. {2} New York State Commission on Old Age Security, op. cit., pp. 52 to 65. {3} "Care of the Aged", Monthly Labor Review, vol. 30, no. 4, April 1930, p. 13. {4} New York State Commission on Old Age Security, op. cit., p. 61. |
|||
It becomes clear from the above figures that old married couples or people living with other families are in a better economic situation than are single individuals. In some localities the percentages for dependency of single individuals are two or three times as high as for households with old people.
It might be interesting to investigate what percentage of old people own absolutely nothing and have no income. The National Civic Federation study estimated that 17 percent of the old people surveyed were without income or property, {l3} while the Connecticut Commission puts this figure at 25 percent for single individuals and at 7 percent for households with persons over 65.{14}
A somewhat different classification of old-age dependency was made in New York. The Commission estimated the number of old
{13} National Civic Federation, op. cit., p. 34.
{14} Connecticut Commission, op. cit., appendix, tables 11 and 12, pp. 68-69.
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people who were self-supporting and those who were dependent on relatives, friends, and charity. Table 33 gives these figures. The outstanding fact disclosed is the very high percentage of old people who are dependent upon relatives and friends. This figure increases considerably between the ages of 65 and 70, when there is a proportionate decline in the number of people who earn their own living. It must be borne in mind that these are pre-depression figures and that at the present time the situation is probably more unfavorable.
| TABLE 33.-Old-age dependency in the State of New York, July 1, 1929 | ||
Category |
Percentage distribution |
|
Persons 65 and over |
Persons 70 and over |
|
| Self-dependent: | ||
| Public pensioners | 8.3 |
11.0 |
| Private pensioners | 1.8 |
3.0 |
| Self-support on current earnings | 28.5 |
17.0 |
| Self-support on income | 5.0 |
5.0 |
| Total | 43.6 |
36.0 |
| Dependent: | ||
| On private homes for the aged | 1.0 |
1.5 |
| On relatives and friends | 49.4 |
55.6 |
| On public and private charity | 3.5 |
4.5 |
| Confined by Government | 2.5 |
2.4 |
| Total | 56.4 |
64.0 |
| Source: New York State Commission on Old Age Security, op cit., p. 39. | ||
| TABLE 34. Economic status of aged studied in the District of Columbia, 1934 | |||
Status |
Percentage distribution |
||
White |
Negro |
Total |
|
| Independent | 63 |
30 |
52 |
| Supported by relatives | 30 |
50 |
37 |
| Other means of support (friends, public or private relief) | 2 |
15 |
6 |
| Dependent, but source of support not reported | 1 |
2.5 |
1 |
| Status not reported | 4 |
2.5 |
4 |
| Total | 100 |
100 |
100 |
| SOURCE:"Study of the Aged in the District of Columbia". Monthly Labor Review, vol. 39, no. 2, August 1934, p. 328. | |||
A similar study has recently been made in the District of Columbia. Table 34 is interesting because it gives a breakdown of the aged into white and colored. The dependency of old Negroes at 65 runs as high as 67.5 percent, while that for the white people is only 33 percent, which is considerably lower, it will be noticed, than the pre-depression figures of the State of New York. The District of Columbia, however, is not a typical example.
Scattered estimates of the extent of old-age dependency thus indicate that a large proportion of the aged have made no adequate provision for the period when self-support by working is impossible.
153
The growth of savings accounts in the United States cannot be cited as contrary evidence, for the savings-account situation has been popularly misrepresented. Even were the gain in the number of savings depositors attributable to wage earners' savings accounts (no proof of this is available), there would be no basis for a claim that the reserves of workers had increased in the 15 years prior to the depression. As a matter of fact, the average savings account decreased 29 percent between 1913 and 1928, and the value of the dollar likewise decreased almost 60 percent during this same interval.{15}
The New York Commission on Old Age Security's study of deposits in mutual savings banks (considered the chief depository of wage earners) presents similar evidence. The gain in the size of deposits in the decades before the 1929 crash was more than counterbalanced by the drop in the value of money. Consequently, the average real deposit decreased rather than increased during this period.{l6}
The accumulations of many wage earners' families were lost in the business and bank failures of 1929. These losses have been extended by the inroads made upon savings caused by the widespread unemployment since that time. This situation is not only reflected in the figures of contemporary old-age dependency but will also augment the economic problems of old age for at least 30 or 35 years in the future. The workers who have lost their life savings at 40 will have small prospect of accumulating new reserves before their earning period is over.
The chief support of old people is furnished by their children or by relatives. The Massachusetts investigation of 1925 had estimated that of the dependent aged, 74 percent were supported by their children, while another 14 percent were supported by relatives or friends.{17} This is the reason why the estimates for eligibility to old-age assistance are much lower than the dependency figures would indicate, for it is assumed that most old people will continue to be supported by their children. The following is a tabulation of the estimates of eligibility to old-age assistance. It must be remembered that a certain number of people are excluded under the old-age
{15} See American Bankers Association, savings banks division, Savings Deposits and Depositors for the Years 1915, 1920, 1925, 1930 (New York, 1930), p. 7:
| Year | Total savings deposits | Total number of savings depositors | Average savings account |
| 1913 | $8,548,345,000 |
11,295,931 |
$757 |
| 1928 | 28,412,961,000 |
53,188,348 |
534 |
And see "Change in the Cost of Living in the United States", Monthly Labor Review, vol. 30, no. 2, February 1930, p. 241, or coat-of-living index number 1913=100; 1928=170+.
{16}"New York State Commission on Old Age Security, op. cit., p. 182.
{17}"Care of the Aged", Monthly Labor Review, vol. 30, no. 4, April 1930, p.13.
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assistance laws because of the fact that they do not fulfill citizenship or residence requirements.
Estimated eligibility for old-age assistance under State laws |
||
Percent of persons over 65 |
Percent of persons over 70 |
|
| New Jersey {18} | 9.9 |
11.4 |
| New York{19} | 12.7 |
14.5 |
| New York-projected by Connecticut commission {20} | -- |
15.9 |
| Connecticut {21} | 11.2 |
11.0 |
How many of the aged persons at present in this country are without sufficient means of self-support is, therefore, a question which can be answered only with estimates. Like all other statistics of major social problems, those bearing on old-age dependency must be built up for the country as a whole from meager samplings.
Beyond the fact that about 700,000 old people are members of families that received Federal emergency relief in May 1934 and 230,000 were in receipt of old-age assistance grants at the end of 1934, it is not known how many aged persons in the United States are being supported from public funds. No almshouse survey has been made for more than 10 years, and recent estimates of the public poorhouse population are not available. The United States Children's Bureau records of the almshouse population in a small group of urban areas, however, indicate a sharp increase of nearly 75 percent between 1929 and the end of 1933.{22} Of the aged in private institutions, endowed and semi-endowed, there is no count. No clearing house exists to furnish statistics of either private or public local charitable assistance to old people not in institutions.
Despite lack of complete statistics, however, it can be said with conviction that for some years old age has presented a very substantial economic problem in the United States--a problem which has directed public interest toward old-age security legislation.
{18} State of New Jersey Pension Survey Commission, report no. 1 (MacCrellish and Quigley Co., Trenton, 1931), p. 18.
{19}New York State Commission an Old Age Security, op. cit., p. 77.
{20} Connecticut Commission, op. cit., p. 41.
{21} Ibid., pp. 42 and 43.
{22} U. S. Department of Labor, Children's Bureau, Monthly Bulletin on Social Statistics, vol. I, no. 2, August 1933, pp. 1-2.