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United States. Social Security Administration.

Annual report of the Social Security Administration submitted to the Congress by the Department of Health, Education, and Welfare (Volume 1942) online

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Given By



U. S. SUPT, OF D0CUMO1T§



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TH



ANNUAL
REPORT

Social Security
Board



1942



FEDERAL SECURITY AGENCY



7th
ANNUAL
REPORT

FISCAL YEAR 1941-42

Social Security
Board

1942



FEDERAL SECURITY AGENCY



FEDERAL SECURITY AGENCY

SOCIAL SECURITY BOARD

Arthur J. Altmeyer, Chairman
George E. Bigge Ellen S. Woodward



BUREAUS AND OFFICES

Executive Director
Oscar M. Powell

Assistant Executive Director
William L. Mitchell



Bureau of Old-Age and Survivors
Insurance
Oscar C. Pogge, Director

Bureau of Public Assistance
Jane M. Hoey, Director

Bureau of Employment Security
John J. Corson, Director



Bureau of Research and^Statistics
I. S. Falk, Director

Bureau of Accounts and Audits
Leonard J. Wilbert, Director

Informational Service
Max Stern, Director



Office of the Actuary
W. R. Williamson, Actuarial Consultant

Office of Appeals Council
Joseph E. McElvain, Chairman



UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1942



For sale by the Superintendent of Documents, Washington, D. C.



Price 15 cents



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LETTER OF TRANSMITTAL

Social Security Board,
Washington, D. C, December 15, 1942.

The Honorable Paul V. McNutt,

Administrator, Federal Security Agency.
Dear Mr. McNutt:

I have the honor to transmit the Annual Report of the Social Security
Board for the fiscal year ended June 30, 1942, for submission to the Congress
as required by section 704 of the Social Security Act.
Respectfully submitted.

Arthur J. Altmeyer,

Chairman.
rn



CONTENTS

I. Social Security in the First War Year 1

Services in the war effort 1

Mobilizing labor 2

Emergency services for civilians 7

Impact of the war on the permanent programs 10

Unemployment compensation 10

Old-age and survivors insurance 11

Public assistance 11

The place of social security programs 12

Extending the social security program 13

Employment security IS

Old-age and survivors insurance 17

Temporary disability 19

Hospital benefits 19

Public assistance 19

The objective of social security 22

II. Insurance and Assistance Programs 24

Administering and financing the programs 24

Responsibilities for Federal-State program.s 27

The program in perspective 31

Employment security 31

Employment service 31

Compensating unemployed workers 33

Administrative expenditures : 36

Administrative developments 38

Separation of placement and insurance functions 42

Old-age and survivors insurance 43

Benefits and beneficiaries 45

Appeals 48

Financing the program 48

Administrative developments 49

Public assistance 52

Financing the programs 58

Administrative developments 60

Appendix:

Bureaus and offices of the Social Security Board, as of July 1, 1942 64

Regional and Territorial offices of the Social Security Board, as of October 1, 1942. . 65

Area offices of the Social Security Board 65

Field offices of the Social Security Board, by region and State, as of June 30, 1942 .... 66

Branch offices of the Social Security Board, by region and State, as of June 30, 1942. . 68
Number of stations of the Social Security Board with itinerant service, by region

and State, as of June 30, 1942 68

Table 1. — Personnel of the Social Security Board, by departmental and field service,

as of June 30, 1936-42 69

Table 2. — Administrative expenditures of the Social Security Board, fiscal year

1941-42 69

V



Page

Table 3- — Old-age and survivors insurance trust fund and unemployment trust fund:
Financial operations, by fiscal years 1936-37 — 1941-42, and by month, fiscal year
1941-42 70

Table 4- — Unemployment trust fund: Deposits, interest, and withdrawals, by
State, fiscal year 1941-42 71

Table 5. — Advances certified by the Social Security Board to the Secretary of the
Treasury for Federal grants to States for public assistance and for administration
of unemployment compensation laws and State employment services, fiscal year
1941-42 72

Table 6. — Federal insurance contributions and Federal unemployment taxes, by fiscal
year, 1935-36—1941-42, and by month, fiscal year 1941-42 73

Table 7. — Federal appropriations and expenditures for administrative expenses and
grants to States under the Social Security Act and the Wagner-Peyser Act, fiscal
years 1940-41 and 1941-42 74

Table 8. — Old-age and survivors insurance: Estimated number of employers and
workers and amount of taxable wages, 1937-41, and by quarter, January 1938-
June 1942 7^

Table 9- — Old-age and survivors insurance: Summary of selected data, by State, by
specified period 76

Table 10. — Employment security: Summary of selected data, by State, fiscal year
1941-42 78

Table 11. — Special types of public assistance under State plans approved by the

Social Security Board: Summary of selected data, by State, fiscal year 1941-42. . . 80
Charts:

1. — Unemployment compensation: Benefits paid as percent of collections, since
benefits first payable and for fiscal year 1941-42, in each State 37

2.— Old-age and survivors insurance: Persons on monthly benefit rolls, December

31, 1941, per 100,000 population, in each State 47

3. — Public assistance: Average payment per recipient under State plans approved by

the Social Security Board, June 1942 5S

VI



Social Security in the First W^ar Year

For social security as for all other basic aspects of our national
life, war was the dominant force in the year ended June 30, 1942.
The upswing in employment and earnings which began in the au-
tumn of 1910, under the impetus of the defense program, gathered
momentum throughout 1941 and influenced every branch of social
security administration and planning. In December, the attack at
Pearl Harbor made necessary immediate action to gear the economy
of the United States to outright war. The social security program,
which was formulated in the depression years, had been designed as
a first step toward preventing or offsetting ordinary risks of the
American people. The defense program, then the war, brought new
questions. What was the place of the social security program in the
Nation's war effort? When the scarcity was not of jobs but of men
to fill them, what were the current needs for social insurance and
assistance? What steps should be taken to forestall insecurity in the
years immediately following the war? In the longer run, will the
impact of the war affect the progi*am in ways which can now be
foreseen ?

Services in the War Effort

The contribution of the social security program in this first year
of war has been in two general areas : on the one hand, the resources
in organization, personnel, technical skills, and working relationships
which could be turned toward meeting general or emergency prob-
lems in the Nation's mobilization ; and on the other hand, the ballast
to the national economy inherent in the regular operation of the pro-
gram. Under the former are, preeminently, the activities of the
United States Employment Service in marshaling labor for defense
production; the use of Federal and State social security agencies in
defense health and welfare services and in evacuation of civilians;
and the operation of emergency programs of civilian war assistance
and benefits. The regular programs have served the emergency
through the continuing provision of income to workers thrown out of
jobs temporarily in the transition to a war economy and through pay-
ments to others, particularly the aged and children, who could not
share directly in the Nation's increasing activity. The following
paragraphs summarize developments in these emergency areas and
indicate the general bearing of the war upon the social security pro-
gram ; operations of the permanent programs are discussed in greater
detail in part II of this report.

1



2 SOCIAL SECURITY BOARD

Mobilizing Labor

In July 1941, regional employment security representatives of the
Social Security Board were designated as chairmen of regional labor
supply committees to deal collectively with problems of labor recruit-
ment, training, and placement, and to ensure that all facilities of gov-
ernment, labor, and management are utilized in solving problems of
labor stringency. These committees include representatives from man-
agement, labor. United States Civil Service Commission, Office of Edu-
cation, National Youth Administration, and Federal agencies con-
cerned with apprenticeship and training within industry. They are
responsible for determining the content, location, and timing of pre-
employment and refresher training courses ; for reporting on antici-
pated displacement of workers in plants whose operations are cur-
tailed or suspended by restricted allocation of raw materials or other
Government orders; for obtaining information on anticipated de-
mands for workers in areas of expanding production ; for promoting
employer compliance with Federal efforts to prevent labor pirating,
hoarding of skilled workers, and indiscriminate advertising of vacau-
cies; and for furthering maximum utilization of available resources
of manpower on the production front. Reports of these committees
have been distributed by the Social Security Board to provide informa-
tion on policies and procedures which have been successful in solving
local, State, and regional problems in manpower allocation. These
reports, supplemented by special surveys, have provided a basis for
the formulation of principles and practices for Nation-wide applica-
tion. The United States Employment Service continued to serve, as
it has served since the initiation of the country's defense program, as
the officially designated Government agency for the recruitment and
placement of workers required by the war production program.

Lahor-Tnarket surveys. — Beginning with October 1941, the United
States Employment Service made special surveys of labor-market
conditions covering major areas of production. These surveys have
provided guides for Federal agencies concerned with allocating war
contracts, determining priority ratings and the feasibility of convert-
ing specific plants to war production, locating plant sites and housing
projects, and developing transportation and other community facili-
ties. In May 1942, an industry approach was instituted as a comple-
ment to the geographic approach to provide adequate digests of cur-
rent and anticipated developments in vital industries and their sub-
divisions. This step geared labor-market analysis more closely to the
organizational approach of the War Production Board and other war
agencies with industrial responsibilities. Special weekly reports on
the agricultural labor market have made it possible to lessen strin-
gencies in some areas by establishing mobile labor camps and by



SEVENTH ANNUAL REPORT 6

organizing community facilities for work on farms in peak seasons
of planting, cultivating, and harvesting.

These surveys disclosed that conversion and re-tooling had been vir-
tually completed by the end of the fiscal year and that production
of war materials in the half year January-June 1942 exceeded by 50
percent the entire output of 1941. War industries have been able to
absorb large numbers of relatively unskilled workers through use of
job dilution and special training. Maldistribution and malutilization
of existing labor reserves, rather than actual shortage, were the major
problems at the end of the fiscal year. In 44 of 160 important indus-
trial labor-market areas, labor supply was more than adequate to
meet present and anticipated needs; in only 35 were there current
shortages of male labor, though shortages of such labor were antici-
pated in 81. These 160 areas included all cities with a population of
100,000 or more and all other areas with known demand for at least
5,000 war workers.

Maximum production depends not only upon adequate and even
distribution of essential war materials but also upon utilization of
locally available manpower. Further efforts are essential to train
inexperienced workers and to break down barriers of racial discrim-
mation and unwillingness to employ Negroes, persons of foreign birth,
aged and handicapped individuals, and women. Estimates indicate
that in June 1942, 41.8 million workers were engaged in nonagricul-
tural employment (exclusive of those in the armed forces) and 11.5
million were employed in agriculture. Further depletion of manpower
to augment the armed forces will necessitate more intensive efforts to
place all employable persons, and will require special community
facilities for the care of young children if women aged 20-45 who nor-
mally are out of the labor market are to enter the labor force in in-
creasing numbers. Wage differentials, substandard working condi-
tions in some industries, and housing and transportation difficulties in
already congested areas result in high rates of turn-over and reduced
production. These labor-market surveys indicate that use of local
leservoirs of labor, training and upgrading of workers, uniform stand-
ards for wage rates and hours and conditions of work, and allocation
of Federal contracts to areas with available labor would go far toward
reducing such turn-over and preventing the disruption of families and
communities which now results from migration of workers from job
to job.

In addition to these special analyses of local and industrial impacts
of the war economy, the 1,500 full-time public employment offices serve
throughout the Nation as barometers of the labor market. They have
registered the waves of unemployment which resulted in turn from
shortages of silk to supply the looms of New Jersey and Pennsylvania,

501295 — 43 2



4 SOCIAL SECURITY BOARD

from curtailment of metals for automobiles in Michigan, household
utensils and refrigerators in Iowa and Wisconsin and costume jewelry
in Khode Island, and, in New York, from restrictions on manufacture
of clothing for civilians. The unemployment benefits paid through
these offices have proved an essential adjunct to the conversion of in-
dustry. In many instances it was evident that employers would soon
need again the workers whom they were obliged to lay off while they
were obtaining equipment and materials to fill war orders. Unem-
ployment benefits helped the workers and their communities to weather
the interval. The existence of unemployment compensation systems
in all States doubtless averted much aimless migration in search of
jobs, with resulting disruption of personal and employment relation-
ships, and so expedited war production when the plants reopened.
Many workers thrown out of jobs for the duration of the war have had
to learn new skills, just as the plants and machines which turned out
automobiles have had to be geared to mass production of the tools of
war. The employment offices have served in this retraining of hands
and eyes and brains to new tasks.

Occupational analyses. — Further gains have been made in analyzing
jobs and industrial processes in both industry and the armed forces in
order to promote the effective use of labor resources. As plants had
to suspend production, such studies have made it possible to advise the
employer and the workers concerning the type of war production
which would best use their skills. It was found, for example, that
displaced jewelry workers could manufacture time fuses with a mini-
mum of special training and supervision. Garment workers have
learned to make parachutes, gas masks, and military raincoats, and
linotype operators and other workers in the printing and publishing
industry have been transferred to war industries. From the ten
thousand job analyses made by the Employment Service in the United
States Army, relationships between skills used in civilian and military
jobs have been determined. Trade and aptitude tests developed by
the Employment Service have also been made available to the armed
forces. Occupational analyses have continued to serve as bases for
upgrading civilian workers and for job dilution, whereby simple proc-
esses are assigned to relatively inexperienced workers and skilled
workers are used to train and supervise beginners.

Training programs. — No exact figures are available on the volume
of in-plant training which has enabled the automotive industry and
other producers of consumer goods to convert to wartime production.
Such measures, supplemented by special courses in vocational schools
and other public institutions, have been important contributions to
the war effort. Some measure of the extent to which public vocational
training courses have augmented the labor supply is obtainable from
data on employment service referrals to pre-employment and refresher



SEVENTH ANNUAL REPORT O

courses and to National Youth Administration defense projects and
from reports on jobs found by trainees. During the fiscal year, about
700,000 referrals to these courses were made, 628,000 to pre-employ-
ment and refresher courses in aviation services, machine-shop work,
sheet-metal work, shipbuilding and boatbuilding, welding, and similar
occupations, and more than 70,000 to NYA courses in which young
persons receive a wage while in training. During the same period,
about 400.000 jobs were filled by trainees of the pre-employment and
refresher courses, 166,000 through placements by the USES, and
nearly 235,000 trainees are known to have found jobs through other
means. After the declaration of war, referrals to these courses and
utilization of trainees moved sharply upward; monthly referrals to
training courses more than doubled from December 1941 to June 1942,
and employment-office assignments to NYA defense projects more than
tripled.

Applicants for pre-employment and refresher training courses have
come from all types of occupations— unskilled laborers, domestic
servants, farmers, housewives, salesmen, and professional persons.
Women have formed an increasing proportion of persons taking
these courses— 18.5 percent of the total in June 1942 as compared
with 5.5 percent in January. In June, nearly half of the women
trainees were in aviation courses and one-fourth were in machine-
shop work. The representation of Negro workers has not shown a
comparable increase, doubtless because it has been more difficult to
place Negroes than white persons in skilled jobs for which they were
trained. While the training courses have served young, middle-
aged, and older persons, individuals aged 25-44 years have pre-
dominated among admissions to these courses and among placements
of trainees. The proportions in various age groups shifted with the
seasons, registering the displacement and subsequent reabsorption of
experienced mature workers by industry, removal of young men
from the labor force through induction into military service, and the
availability of young persons at the close of the school year.

Administmtive developments. — By the autumn of 1941 it was be-
coming evident that a national, rather than a State or regional, ap-
proach to the use of manpower was required to cope with the grow-
ing shortages of workers with critically needed skills, the uneven dis-
tribution of employment opportunities and unemployment, the mi-
gration of workers to areas where w^ar industries were expanding,
and problems of housing and transportation which were developing
in such areas. The conversion, on January 1, 1942, of the State-ad-
ministered employment offices to a system under national operation
followed the Nation's entry into the war and the immediate necessity
for maximum mobilization of manpower for increased production of
war materials. A telegram of December 19, 1941, from President



6 SOCIAL SECURITY BOARD

Roosevelt to State and Territorial Governors declared that: "In
order that there may be complete responsiveness to the demands of
national defense and speedy, uniform, effective action to meet rapidly
changing needs, it is essential that all of these separate employment
services become a uniformly and of necessity nationally operated
employment service." The President requested that the personnel,
records, and facilities required for this operation be made available
to the United States Employment Service, a request to which \A\ the
States responded.^ Four months later, on April 18, 19J:2, the War
Manpower Commission was established within the Office for Emer-
gency Management by Executive Order No. 9139. The membership
of the Commission included, as Chairman, the Administrator of the
Federal Security Agency, and representatives of Federal departments
concerned with military needs, labor resources, and industrial and
agricultural production. The Chairman of the Social Security Board
was named Executive Director of the Commission, and the Director
of the United States Employment Service became chief of the Com-
mission's Division of Industrial and Agricultural Employment.^

The President's order made the Chairman of the Commission re-
sponsible for ascertaining manpower needs and, through directives
issued to the appropriate Federal agencies, for effecting proper alloca-
tion of manpower among the essential functions of military service,
industrial production for military and civilian use, and agriculture.
Five of eight directives issued on May 21 by the Chairman of the War
Manpower Commission concerned the USES : to prepare and maintain
a list of "essential activities," "essential occupations," and "critical war
occupations"; to make preferential referrals of workers to employers
engaged in war production in the order of their priority ; to analyze the
occupational questionnaires distributed under the Selective Service
System and refer individuals with the appropriate skills to jobs in
critical war occupations ; to advise the local selective service boards in
classifying or reclassifying an individual with such skills ; and to in-
crease the activities and facilities necessary to provide additional agri-
cultural workers. Thus, during the first half year of war the USES
was developing as a national mechanism to ascertain the needs for
labor, analyze labor resources, and implement policies and procedures
for full utilization of these resources.



^ Such administration was already In effect in Arizona; at the request of the State
Employment Security Commission, the Board, as of July 21, 1941, assumed responsibility
for administration of the State employment service, which, because of newly enacted State
legislation, could not be operated under conditions required by the Social Security Board
in administering the provisions of the Wagner-Peyser Act.

3 On September 17, 1942, the President, by Executive Order No. 9247, tran.sferred to the
War Manpower Commission the U. S. Employment Service and all functions, duties, and
powers of the Social Security Board relating to employment service.



SEVENTH ANNUAL REPORT 7

Emergency Services for Civilians

The speed with which the USES has been able to reorient its activi-
ties to the emergency demands of the defense program and of war was
the product of the organization, knowledge, and administrative tech-
niques built up through the preceding years. Similar assets have been
brought into play in individual and community difficulties occasioned
by defense emergencies and wartime restrictions and catastrophes.
These activities have made use of social security agencies at all govern-
mental levels. Channels of communication developed through the
regional and field organization of the Board and through the Board's
interrelationships with the States have proved of particular im-
portance.

Defense health and welfare services. — Federal, State, and local public
assistance personnel have assisted in a wide range of emergency welfare
activities developed under the leadership of the Federal Security Ad-
ministrator, first in his capacity as Coordinator of Health, Welfare,
and Related Defense Activities, and subsequently as Director of the
Office of Defense Health and Welfare Services, established in Septem-
ber 1941 within the Office for Emergency Management by Executive
Order No. 8890. Public assistance representatives of the Board serve
on committees advisory to that Office, the Office of Civilian Defense, and
other emergency and permanent Federal agencies concerned with nutri-
tion, housing, medical care, and other services which require Nation-
wide consideration and specific action in areas directly affected by the
war. Regional directors of the Board have served as representatives
of the Office of Defense Health and Welfare Services in coordinating
regional and State facilities for civilian welfare. Public assistance


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