So in the last lecture we talked about the employment programs that were part of the New Deal. And in this lecture, we're going to talk about the income security programs that were part of the New Deal. But let's start by returning to this basic idea of social insurance. Earlier in the course, I introduced the idea of public aid and the idea of social insurance. Public aid, it's a poverty program given to people that are poor. It dates back to the English Poor Law, it's always had the concepts of worthy and unworthy poor. Social insurance is what Garfinkel will have called a floor program, because it provides benefits for everyone to make sure that we are able to have stable and sustainable lives. So in the progressive era, there were state-based social insurance programs. A professor at the University of Wisconsin, called JR Commons, began to develop ideas had been at work in Europe, of building institutional economic programs to stabilize people's lives. So one of the first was unemployment insurance. That if you lost your job, you would be able to have at least some weeks of pay while you look for an other. And another one was worker's compensation. If you were hurt on the job, you would get earnings until you could go back to work. Or if you couldn't get back to work, you would get earnings for the rest of your life. And so those are two-state based social insurance programs that still exist. Unemployment insurance is changed quite a bit in the New Deal, but we'll come to that later. And there was state-based retirement programs. In the 1930s, remember Roosevelt was finding a time when the states had no money, and people's lives had been very disrupted. So he built programs where you had to work and pay in, but the benefits were of right, and these are the big major social insurance programs of the new deal. The first one of which is a minimum wage. It is to say that there are some wages that are oppressive and that kind of a job should not exist. We talk about this more in the third course, but minimum wage is put in place at floor that everybody had to pay this much at least, which was considered a wage that would allow people to survive. And then he put in place the Social Security system, which was made up of two parts, initially. The old age insurance program, and the survivors insurance program. So while you worked, you paid in, and then at 65, which is an age invented by Roosevelt, you would begin to get your old age insurance back, a monthly check that would keep you going. And if the bread winner was killed or died, the surviving spouse and the children would get survivors insurance. So this was an insurance plan, which everybody in the country paid into, and then in turn we came to the time when would receive. So this insurance plan was for people that were in need. And when Roosevelt declared 65 as the retirement age, the actual life expectancy of the average American was 62. So most Americans will never see Social Security. What's changed since is life expectancy has come longer, and we'll talk about that later in the course as well. And then the federal government stepped in to help state-based unemployment systems. So since there was so much on employment, the state unemployment systems that had collected payments and built an insurance system were going broke. And so the federal government stepped in and said that when unemployment rose past a certain point, the federal government would put money in the state systems. So the states could continue to pay unemployment insurance. And to this day, that is the unemployment insurance system. It is a state-based system which the federal government underwrites in times of high unemployment. And then Roosevelt as governor of New York built the first government-funded housing projects. Actually on the Lower East Side of New York, not very far from where I am sitting. And when he went to Washington, part of the WPA programs were to build federal public housing. The idea was that workers had the right to have decent housing at an affordable wage. So in the United States, we've developed this to some point. We'll see a little later that we started and then stepped away. In many places in Europe, and in other parts of the developed world, a very large proportion of the population lives in public housing. And then Roosevelt attempted to pass a national health care bill. This is the first attempt at national health care. President Truman also tried it, and we'll pick up in the 1960s when the next attempts come. So the federal government federalized the mother's pensions programs, the state-based mother's pensions programs into a state-run but federally funded aid to dependent children, which later becomes AFDC, aid to families with dependent children. And it provided benefits all across the country, but the eligibility was changed by different states, as was the benefit level. And so this is the federal rule, a permanent federal rule in public aid develops, here. So just one last comment in this section, during the early part of the 20th century, the progressive era and the New Deal, the richest 10% of the nation had 45% of the income. After the New Deal, income inequality fell very significantly. And so by 1940, the richest 10% only had 32% of the nation's wealth. And that remained relatively consistent until we get to the Reagan presidency in 1982. And now we've come back to the point where the richest 10% have 45, or actually these days more like 50% of the national income. So this is a fundamental question about the role of social welfare, and is this the role that we expect government to take?
