The preceding analysis was so detailed because the decisions were so consequential. The framework established by the original Social Security Act proved remarkably durable. Old Age Insurance started as a purely national program and has remained so ever since. Unemployment Insurance and Aid to Dependent Children (later AFDC) started as federal programs and still require the national and state governments to administer and finance them. Even when officials replaced AFDC with Temporary Assistance to Needy Families (TANF) in 1996, they continued the national government’s role in helping to finance the program and set eligibility rules. Likewise, workers’ compensation was left to the states in 1935 and has remained there to the present.
Nevertheless, these governing arrangements were not always permanent. Aid to the Blind and Old Age Assistance started out as federal programs but were nationalized in the early 1970s with the creation of the new Supplemental Security Income (SSI) program. At a couple of junctures after 1935, policy makers also considered greater national involvement in workers’ compensation. With one small and telling exception, they declined to alter the previous decision to leave workers’ compensation to the states. The rest of this paper analyzes the most important of these episodes.
WORKERS COMPENSATION AND DISABILITY INSURANCE
As Martha Derthick (1979) shows in her landmark study, the development of Social Security was in many ways more important than its enactment. Initially, old age insurance paid no benefits and covered a little over half of the workforce. Beginning in the late 1930s, however, policy makers started to build off old age insurance, adding survivors’ insurance (1939), disability insurance (1956), and medical insurance for the elderly (1965). They also started to expand the range of occupations covered by old age insurance, with the most notable successes coming in 1950. That same year marked the first of many benefit increases, the largest of which occurred in the late 1960s and early 1970s. The overall pattern of expansion was driven not by interest groups of the elderly, but by a dedicated and capable cadre of bureaucrats who developed alliances with powerful members of Congress.
Berkowitz and Berkowitz (1985) argue that this history of expansion can be understood partly as an effort to compensate for the deficiencies of states’ worker compensation laws. With job-related fatalities so common and death benefits so meager in the 1930s, policy makers pushed early and hard for survivors’ insurance. They designed survivors’ insurance so that benefits would be paid even if covered workers were killed on the job. The persistent inadequacy of workers’ compensation benefits, they claim, was one reason that bureaucrats and legislators felt a continuing need to make old age and survivors’ insurance benefits more generous.
The most direct link was to disability insurance (DI), the design of which began shortly after the Social Security Act was enacted. A number of policy makers in