and three spent more than $4. BY Table 2.-Percentage distribution of old-age benefits awarded in January- comparison, for general assistance 1956, by benefit-computation method and sex only two States spent more than $2 [Based on lo-percent sample] per inhabitant for vendor payments. Beneflt-canputation method

Totalnumber...... -.....------.----.....---.------....-.--... Old-Age Insurance Bene- Total percent- -- .______.___._ . . .._.____._...... -.----- ~1w~100/~==% Ben&t based on earnings after 1936 ______._...._.__.__._ ...... - ... . fits, January- Benefit based on earnings after 1950...... __.__.___...... -.------..... Benefits Awarded Total~rcent...... -...... -....-.---.---.-.-...... -.----.- ...... - Beneficiary not eligible for the dropout ._.__._ ...... _._.____._._ ...... _ During the first half of 1956, old- Benefit based on earnings after 1936.. ___._...... ___._.--- ...... - age benefits were awarded to nearly Benefit based on earnings after 1950._.______._._._ -.- ..____._._._. Benelkiary eligible for the dropout ..__ _.____._._._._ . . . .._ ____._._. 409,000 persons, about 100,000 less Beneflt based on earnings after 1936. . . .._.______._.... .______. than the number in the corresponding Beneficiarv not eliaible for benefit based on earnings after lQ.Y.L-. Beneficiary eligible for beneflt based on earnings after 195& _ _ ._.. months of 1955. The 1955 period in- Benefit based on earnings after 1950__.______._._._._._..-.--.-.--.-. 1952 beneAt formula plus 1954 conversion table ______._... -_- ._.._. cluded a large number of awards to 1954 beneUtformula....-..~....~~.....-..-.~~~~~~~~~~.~.~.~.....-. persons affected by the liberalization in the retirement test under the 1954 amendments. (These provisions, awarded old-age benefits in the first the dropout under the alternative which became effective in January half of 1956 were eligible for the qualifying condition. Such cases 1955, changed the earnings test for dropout-that is, up to 5 Years of should occur infrequently after 1956 wage earners from a monthly to an lowest earnings could be excluded in because, for applications filed after annual basis, raised to $1,200 the the calculation of their average , the beneficiary would amount that beneficiaries can earn in monthly wage (table 2). The drop- lose one or more monthly beneflts a year before any benefits are with- out provision may be applied if the from failure to file a timely applica- held, and lowered from 75 to 72 the worker has 6 quarters of coverage tion. age at which beneficiaries can receive after , or if he first becomes In some instances, though workers benefits regardless of the amount of eligible-that is, fully insured and of were eligible for a benefit computa- their earnings.) Self-employed farm- retirement age-for old-age benefits tion based on earnings after 1950, ers and other workers qualifying for after . The remaining 6 their benefits were higher when the beneilts solely as the result of work percent of the beneficiaries had been computation was based on earnings newly covered under the 1954 amend- eligible for benefits since August 1954 after 1936. Among workers eligible ments could be eligible for benefits or earlier but did not have sufficient for a benefit computation based on as early as the second quarter of work after June 1953 to qualify for earnings after 1950 with the dropout, 1956. Although workers in this group are represented to only a small extent Table %.-Number, percentage distribution, and average monthly amount of in the awards of the first half of 1956, old-age benejits awarded in January-June 1956, by starting date used in benefit computation, age, and sex their number will be more significant in awards of the second half of the [Based partly on lo-percent sample] year and the early part of 1957. Total I Male Female Method of benefit computation.- I - I About 94 percent of the beneficiaries Average Num- Average Percent monthly her Percent monthly amount amount _ -- Table l.-Average old-age benefits awarded in January-June 1956, by Total ____.___._._ I 408,671 I 100 1 $69.99 1 282,024 -. 100 875.62 126,647 100 S5i. 46 benefit-computation method and 65-69.. __.______... 301.186 ii 71.31 201,747 sex 70-74 ______81,081 70.79 61,223 75-79 . . .._....____..__ 20,359 : 54.w3 14,662 [Based on 1Oqercent sample;sverase benetlts shown 6Oandover __.. -- . .._ 6,045 47.56 4,392 to the nearest dollar] ---- =: Based on earnings after 1950_....___. 314,850 106 76.90 223,725 100 82.33 91,125 100 62.95 Benefitk~-c;~;tation Total Male Female -. 6.549 ..______._. 224,018 2 79.07 156.273 --- 70-74 _.______a_ 70,035 75.74 52,984 2 80.2285.39 67,74517,051 1974 61.8164.47 75-79 ...... _ -_-___ 15,QSQ 2” 59.25 11,138 f 62.9653.36 4,8511.478 .52 46.4950.68 Total.--.-.- _._._ ____ $70 $76 s57 6Oandover ___...._.. 4,808 51.25 3.330 --- -~~ =: Benefkiory not eligible Based on earnings for dropout .___._.___. 40 41 37 after 1936_..._..__ 93,821 100 46.84 ‘58,299 100 48.94 35,522 100 43.39 -. ~~---~ Benefkiary eligible for 78 52.07 31,644 89 44.67 dropout ___...._._._._ 72 78 59 14 39.78 “E ; 38.26 Ben&t based on earn- 6 34.63 36.89 ings after 1936__._.__ 49 52 45 2 33.14 175 (9 33.80 Benefit based on earn- ingsaftcrlQ%-e-e. 78 83 64 - 1 Age on birthday in 1956. 2 Less than 0.5 percent.

18 Saaizl Secufitv the beneflt was higher for about ‘7 Table &-Number, percentage distribution, and average monthly amount of percent when earnings after 1,936 old-age benefits awarded in January-June 1956 to beneficiaries eligible for the dropout, 1 by starting date used in benefit computation, age, and sex were used (for men, 6 percent; for women, 8 percent). Data for 1955 [Based on lo-percent sample] showed about the same proportions. Future trends in the number of Total Male Female I I I awards under the different benefit formulas are not clear cut, but awards Average wnthlv based on earnings after 1936 will probably be made for many years to come. There are several reasons: Total __._._.___._ 1 382,565 1 100 1 $72.06 1 264,673 / 100 / $77.87 1 117,892 / 100 $59.00 (1) Persons who do not have 6 58.88 62.38 quarters of coverage after 1950 are 51.Q8 eligible only for a computation based 48.24 on earnings after 1936. Among per- 63.90 sons eligible for a dropout computa- 64.95 tion to whom an old-age benefit com- 63.w 52.73 puted with a 1936 starting date was 48.63 awarded in the first half of 1956, less - than one-fourth were eligible for a 44.81 1950 starting-date computation. TYP- 44.97 ical of the group permanently insured 41.61 41.40 but not having 6 quarters of coverage 30. w after 1950 are disabled persons and 1 Brnrficiaries clipible for the exclusion of up to 5 * Age on birthday in 1956. women who left the labor force when years of lowest earnings in the calculation of the aver- 3 Less than 0.5 pwwnt. middle-aged or younger. Some of age monthly wage. these individuals will not reach re- tirement age for many years. Hence, Table &-Number and percentage distribution of old-age benefits awarded in awards will be made for many years January-June 1956, by starting date used in benefit computation, amount to individuals qualified only for a of monthly benefit, and sex benefit computation based on earn- II&cd partly on lo-percent samplcl ings after 1936. (2) Benefits based on earnings Total Male I Female after 1936 are computed by means of Amount of monthly benefit - the 1939 benefit formula and then in- Number Percent Number Percent NUIIlbW Percent ~~ creased by use of a conversion table, but benefits based on earnings after Total..-...... -... 408,671 100 282.024 100 126,647 -. 100 $30.00 . .._..._.._._._._... 31,263 11 26,941 21 1950 are computed either by means 30.10-39.90 ____._.__....._ .._._. 12.593 4 12.060 10 of the 1952 formula, increased by use 40.0049.Qa ._._...... _._c.-. 13,177 t! 11,468 50.00-59.90 .._...... _____..-.. 15.763 12,535 1: of a conversion table, or by means W.OO+Q,9.90.._....__..____._._... 31,639 11 25.031 20 70.00-79.90.. _...... __._ .._... 31. Q69 14 of the 1954 formula. When the aver- SO.(Kt89.90. __ _._....._... ..__.. 32,591 :2 18.2349.962 age monthly wage is the same whether 90.0049.90 ______. -..__.. 54,582 f F 6.820 i loo.W-108.50. ._...... ___---. 58.44i 3,596 3 based on earnings after 1936 or after ___~ _. Average benefi.. ._.... -.- .___.. $69.99 _ . . 675.62 _ $57.46 1950, the 1936 starting-date com- -zz.Y =: putation produces higher benefit Based on earnings after 1950 __I 314,850 I 100 223,725 1OO 91,125 -. 100 amounts. If earnings are low, the $30.00 .._._.____.___.._.. . .._._. 24,657 8 11,210 5 13,447 15 30.10-39.90. .- ._...... _...____. 14,774 5 7.473 3 7,301 computation for an average monthly 4o.Ow49.90 .__...... ______...... 12.658 4 6.759 3 5.899 i 50.00-59.90 ___. _._.__...... _... 13,918 4 7,088 3 6,830 wage based on earnings after 1936 6o.w-ti9.w __.____...... _... 45.181 14 23,916 :: 21,265 2: may result in a higher benefit than 70.00-79.90 _..___ ...... _... 41,940 13 25,614 16,326 8O.OW39.9C..- ...... ______38,277 12 28,636 ii 9,641 :; the computation for a substantially 90.0049.W .._...... _._._____.___ 61,402 54,582 6,820 lW.oo-108.50 _.___...... _... 62.043 ii 58.447 26 3, 596 : higher average monthly wage based ~~ -. on earnings after 1950. By 1962, the Aaerage benefite _ __._._._.______. $76.90 . .._._ $82. .58 _ $62.95 benefit resulting from a 1936 starting- Based on earnings after 1936 93.821 100 a.289 loo / 35,522 -. 100 date computation may exceed the f30.00..- .____._ --..- . . .._._. ____----p 33,547 36 20,053 34 13,494 38 30.10-39.90..-...... --...~-.. 9,879 11 5.120 9 4,758 13 benefit from a 1950 starting-date 40.0049.QO.._...._.______.._... 11,987 13 6,418 11 5.56Q 16 computation even though there were 50.00-59.90 ___..__...... _._. 14,380 15 8,675 :i 3,7665.705 16 W.fXb69.90 ______-.- _.__ 11,489 12 7,723 11 no earnings before 1951. 70.M7Q.W _____...... _.__ 8.263 6,355 11 1,908 (3) A computation based on earn- 8O.WH.S.

Bulletin, March 1957 19 tain age 22 after 1950 (and have 6 Table 7.-Number and average monthly amount of old-age benefits in current- quarters of coverage after 1950). payment status at the end of each half year, by starting date used in benefit computation, -.56 Hence the 1936 starting-date compu- tation will be a possibility, under [Numbers in thousands] present law, until about the year 2000 Based on earnings -when everyone attaining age 22 be- I Total Based on earnings aiter 1950 after 1936 I- fore 1951 will have reached at least Half “ear I I I age 72. endirig- Average Average As Percent Average of all old- Number monthly For some workers eligible for a Number monthly NUIllbW monthly age bene- amount amount ficiaries amount benefit computation under the 1954 _. formula, the dropout of years with June 1954...... -.-- 3,519 $51.81 1,026 $64.86 2,494 low earnings does not produce a sig- December 1951..... 3,775 59.14 1,260 i3.81 ;; 2,515 June 1955_^___..... 4,215 61.03 1,683 i5.01 40 2,532 51. i4 nificant increase in the average ..... 4,474 61.90 1,932 75.10 :“6 2.542 51.87 June 1956m...- ..__.. 4.732 62.76 2,196 75.46 2, 536 51. 76 monthly wage. If the worker had low - earnings, it is often to his advantage to apply the 1952 benefit formula to the average monthly wage, calculated computation (for men, 1 percent; for the highest possible benefit (except without the dropout, and to increase women, 5 percent). These propor- when the special closing date of July the resulting amount by means of tions are roughly half those for 1955 1, 1956, is used). The full dropout of the conversion table. Of those work- award data. Future trends appear de- 5 years will not be operative, there- ers eligible for a benefit computation pendent on two conditions: fore, until 7 years have elapsed after based on earnings after 1950 with the (1) Earnings in at least 2 of the 1950-that is, until 1958. For com- dropout, about 2 percent were award- years between the starting date and putations with a closing date of Jan- ed higher old-age insurance benefits the closing date used in the benefit uary 1, 1955, for example, only 2 years under this alternative method of computation are required to obtain were dropped. As the number of years that are dropped increases, it is rea- sonable to expect a greater difference Table 6 .-Number and percentage distribution of old-age benefits awarded in January-June 1956 to beneficiaries eligible for the dropout, 1 by starting between the average monthly wage date used in benefit computation, amount of monthly benefit, and sex based on the 2 remaining years and [Based on IO-percent sample] that based on all years after 1950. - Hence, in the next few years, further Total I Male decreases in the proportion of awards Amount of monthly benefit ~ based on the computation using the Number Number Percent Percent 1952 formula plus the conversion ta- ble computation are to be expected. Total~.~..~...~.~...... ~. 382,565 100 264,673 100 117.892 (2) In the more distant future, $30.00 _._.___.____.______--.... 43,259 11 21,224 18 30.10-39.90. ______-_-.-._.-_-_- 21,296 6 10,910 however, the proportion of awards 40.09-49.90. ___..._. _.._ -.._-_. 22.538 6 10,893 : with higher benefits determined by 5o.w-59.9i.. .-.-- ._._ -_- _._____ 26,313 12,052 10 600~9.90 ...... _.______.__.-. 54,891 1: 24,611 21 using the 1952 formula plus the con- 70.00-79.90 ______..__ -_- 49,129 13 17,94i 15 80.00-89.90 .____... ---..-.-._-.-. 41,991 11 9,870 version table will probably increase. QMo-QQ.90 __...._ --.- .__.. 61,105 16 6,789 i 1w.00-108.50..~-.-..-..~- ___.__. 62.043 16 3,596 3 As the number of years elapsed after 1950 goes up, the relative effect on the Average benefite _. .-.. _._- .._____ $72.06 $59.00 average monthly wage of a 5-year Based on earnings after 1950 ._ 305,769 1W 87.615 loo dropout will be less and less. The $30.00 ._.__. _... -. 20.462 11,471 years dropped out may not increase 30.10-39.90. __... --...-._.- .____. 13,220 6,677 40.00-49.90..-...- .._._.__...._.. 12,178 5.705 the resulting average monthly wage 50.00-59.90 ___._..___._._..... -.. 13,458 6.656 60.00~9.90 ______...... __ -.. 44,067 20.989 enough to offset the advantage of the 70.00-79.90..-..--.....-....---.. 41.296 16.152 80.00-89.90 . .._.....__.__.. 37,940 9, 580 conversion table-even if the years 90.00-99.90 .._. --...- . ..____..... 61,105 6,789 dropped are years without any earn- 100.00-108.50. __ _.______._...... 62.043 3,596 ings. Auerage benefit. _ _ _. _-__ ._. $77.86 $83.47 _.__ ._..__ $63.90 Age distribution.-Persons aged 65- Based on earnings after 1936 76,796 100 46,519 100 30.277 100 69 made up 74 percent of all those S3O.M).______. .__.______._ 22,797 30 13,044 28 9,753 32 awarded old-age benefits in the first 30.10-39.90 ___.___.... -.-. 8,076 11 3.843 8 4.233 40.03-49.90 _.___.... -.- . .._.. -... 10,360 13 5.188 :“, 6 months of 1956. For benefits based 5O.W59.90 ...... _._ _.__.__._ 12,855 17 7.4595,172 :i 5.396 18 on earnings after 1950, that age 6o.OW69.90.__. -..- . .._ __._.____ 10,824 14 7,202 15 3.622 12 70.00-79.90 .__.._.___.__.. --.--.. 7,833 10 6,038 13 1,795 group represented 71 percent of the 8O.W88.50..~.. ______...... 4,051 5 3.761 8 290 : total, and for benefits based on earn- Aoerage benefite _ _ _._i__ ._-.. __ $48.95 $51.64 . . .._ $44.81 ings after 1936, 82 percent (table 3). As in the past, many persons in the 1 Beneficiaries eligible for the exclusion of up to 5 years of lowest earnings in the calculation of the average monthly wage. latter group had no current earnings

20 Social Security and filed for benefits as soon as they ble for the dropout also contributed are included for all the programs that reached retirement age. to the increase. are now in operation or for which Average monthly benefit.-The av- legislative authority has already been erage old-age benefit awarded in Jan- granted. The Budget envisions ini- uary-June 1956 was $69.99, nearly a Proposed Social Security tiation of no new programs under dollar less than the average in the Budget, 1957-58 proposed legislation; it does antici- first half of 1955. The 1955 period pate supplemental appropriations to- included many awards-at a high On January 16, 1957, President taling more than $277 million in the benefit level-to persons who were Eisenhower submitted to Congress second half of 1956-57. working full time and who filed be- the Budget of the Gov- Total social security expenditures cause of the liberalization in the re- ernment for the fiscal year ending estimated for 195758 are $104 million tirement test under the 1954 amend- , 1958. Of the $71.8 billion more than the $1,626 million (includ- ments. The 1956 decrease in the aver- proposed for new authorizations, ing supplemental appropriations) esti- age benefit awarded resulted in spite $45.3 billion is for major national mated for 1956-57. They top the 1955- of (1) an increasing proportion of security and related programs. This 56 actual expenditures of $1,492 mil- beneficiaries eligible for the dropout amount makes up 63.1 percent of the lion by $238 million. The largest part and (2) inclusion, to a larger extent, total and is within 1 percent of the of the increase is in the amounts re- of earnings under the $4,200 wage proportion budgeted for the 2 previ- quested for grants to the States for base. The average monthly amount ous fiscal years. the four categorical public assistance awarded on the basis of earnings after Estimated expenditures1 for the So- programs. The 1956 amendments to 1950 to persons eligible for the drop- cial Security Administration amount the Social Security Act will be fully out was $77.86 (for men, $83.47; for to $1,730 million for 1957-58, not in- effective on these grant programs for women, $63.90) (table 4). cluding the operations of the Bureau the first time in 1957-58. President Distribution by size of beneft.- of Old-Age and Survivors Insurance Eisenhower said in his Budget Mes- Minimum benefits of $30 were payable and the Bureau of Federal Credit sage : “The social security amend- in 14 percent of the awards made Unions, which are not included in ments enacted in 1956 raised Federal during the first 6 months of 1956, Federal administrative budget totals. matching funds for State public as- and benefits of $90 or more were Table 1 shows the allocation of this sistance to people whose needs are payable in 30 percent of the cases sum within the Social Security Ad- not met by social security insurance, (table 5). For beneficiaries who were ministration. Appropriation requests and provided new grants for medical eligible for the dropout and whose care. Largely as a result of the 1956 benefits were based on earnings after amendments, Federal grants for pub- 1 F&imated expenditure data in the lic assistance are estimated to in- 1950, about 40 percent were payable Budget reflect the sums to be paid out by at a rate of $90 or more (for men, 52 the Treasury in a given fiscal year rather crease $100 million to a total of $1.7 percent ; for women, 12 percent) than the total amount expended in the op- billion in the fiscal year 1958.” The (table 6). About half the benefits erstion of any program for that year. President pointed out that State in this range were more than $100; virtually all of these were $103.50, Table 1 .-Expenditures for the Social Security Administration from general based on 1 year’s earnings of $3,600 funds, fiscal years 1955-56, 195647, and 195748 and 1 year’s earnings of $4,200. For [In thousands] more than half the beneficiaries not - -7 eligible for the dropout, minimum Estimated Actual, - benefits of $30 were payable. Bureau and item 1955-56 1956-57 I- 1957-58 Benefits in Current-Payment Total, including supplemental appropriations under existing lrgis Status lation.-.....-...... ----....-...----.-.-..-...-.--.-...... $1,492,491 61,625,685 $1.730.101 The growth in the proportion of Total, excluding supplemental appropriations . . . ..__._._...... 1,492,491 1.348,&3339I- 1,730,692 persons receiving old-age benefits Bureau of Public Assistance. _...... _.__...... -.--- - _.._ ... 1) 456,901 1,584.296 1,684.093 based on earnings after 1950 is indi- Qrants to States for public assistance...... __ ._ ...... 1,455,2i5 1, 582, ,534 1,679,400 Annual appropriation ...... _. _. __...... _. .. . _._. _...... 1.455,275 1,305. .534 1,679,400 cated in table 7; by June 1956 this Supplemental appropriation. _- _...... _._.._ ...... 2i7,oao Grants to States for training public welfare personnel -. .._._._._._. .- 2,5fM group represented 46 percent of all Salaries and expenses- __ _.__...... ___...... ----..---...... 1,626 l.i62 2.193 old-age beneficiaries. Annual appropriation .... .___...... _._ _...... _._._ .... . 1,626 l,i34 2,186 The average Supplemental appropriation. __._.__ _...... _._._.___._ ...... amount payable to all old-age bene- Children’s Bureau...... -.--...... -.--..-- ...... 35,402 41.1: 43,63: Grants to States for maternal and child health and welfare . ..-...... 33,623 39.361 41.500 ficiaries has gone up continuously- Salaries and expenses. __. ..____...... _...--...... -...--- .. . 1 779 1,BOi 2,133 Offme of the Commissioner.. .._...... _.._...... -.-.--- ...... ‘188 221 2,375 from $58.75 in (when Cooperative rcsearch or demonstration projects in social security ... 18 2,072 the benefit amounts were raised) to Annual appropriation .._...... _._._ ...... _._._ ...... _ ...... 2,070 Supplcmmtal appropriation. _ _.._...... ___ ...... 18 $62.76 in June 1956-as the propor- Salariesandexpenses I...... -.-.--..~.....-.---...... -.-.- .. . 203 30: tion of benefits based on earnings - after 1950 has increased. The grow- 1 Includes reimbursement from the old-age and survivors insurance trust fund and, in 1956-57 and 1957-58, also from the disability insurance trust fund. ing proportion of beneficiaries eligi- Sourer: The Bud@ of the U. S. Government for the Fiscal Year Ending June SO. 1958.

Bulletin, March 1957 21