It’s easy to think that SSNs have always been with us, but this isn’t true.
They have a history that started in the era of the Great Depression. The original goal was not to have a universal identity number for Americans.
This article shows you how they started and how they become what we know now.
Table of Contents
The Great Depression And SSN Numbers
The economy of the United States was languishing in the early 1930s. A third of the working population was out of work and unable to support themselves and their families.
At the time, people had to resort to charitable services for food and meager financial assistance. There was widespread poverty with many people simply unable to eat.
FDR and The New Deal
Franklin D. Roosevelt defeated President Herbert Hoover in the 1932 presidential election.
He set out in his first one hundred days to tackle the Great Depression with a series of executive orders and programs for poverty relief. FDR called this the New Deal.
1935 Social Security Act
One of the major programs was the Social Security Act that was passed by Congress in 1935.
This was the first rollout of a national welfare program across the United States.
It was designed like this:
- Employers set aside a percentage of monthly employee earnings
- Employers matched that percentage and sent a cheque to the Federal Government
- The Social Security Trust Fund received and managed the monies
- The Trust Fund sent monthly cheques to retirees, disabled people, and widowed families based on historic earnings
Why a Social Security Number was needed
The design of this welfare program had a significant challenge.
It had to track the monthly or annual earnings of every working citizen from the first day they took their first paying job.
And the tracking didn’t just stop at the date of death. Some payouts to families after death were based on time limits up to ten or twenty years.
The solution was to issue the person with a social security card for their first job.
The card contained a Social Security Number that would track their paid employment for the rest of their lives.
The First Social Security Cards
The social security identification numbers were originally stored on punch cards.
The cards didn’t just store the sequence of numbers we are familiar with. Of course, they had to store the person’s name, date of birth, and some other identifying factors.
Younger readers may have never seen or heard of punch cards. The picture below shows a punch card for an SSN. It’s a physical card with rows of the same digits.
It may be a little difficult to see but the first row has the number 1, the second row has the number 2, etc. Some slots are indented like you might shade the cell in a spreadsheet.
More about punch cards
Punch cards were the physical equivalent of data in spreadsheets or records in a database.
This was the way information was stored on machines from their incarnation in the 1880s. I’ve seen references saying that they were used up to the 1960s. That’s an underestimate!
When I worked for a major airline company in the 1990s, some archived data was still held on punch cards that had never been further digitized.
Occasionally, usually for legal reasons, old cards had to be located and read into equally old IBM machines.
By then, they could be more accurately described as punch sheets – massive rolls of special paper with indentations.
SSN storage problems
The problem with punch cards as they can only hold so much information.
In 1951, Congress decided that more information about individuals needed to be tracked and stored. But there wasn’t enough room on the cards that had been created at that point.
Bear in mind that in 1943, there were over 100 million cards.
The Social Security Board was faced with re-issuing hundreds of millions of new cards. But that cost wasn’t the main problem.
The cards were physically stored in six-and-a-half acres of storage space! The extra information would require doubling that area.
Switching to magnetic tape
The Social Security Board turned to the main experts in digital storage at that time: IBM.
IBM had machines that used magnetic tape to hold massive amounts of data in a fraction of the space taken by punch cards.
The first IBM machines to hold SSNs were set up in 1956.
SSNs Were Originally Intended For Restricted Federal Use
Roosevelt had never intended to implement a universal identifying number for all Americans. The original intention was for identification at the federal level to track earnings and welfare payments.
However, the President was keen to eliminate the waste and inefficiency of some states using their own systems and identification numbers.
FDR issued an executive order in 1943 to ensure that all federal agencies used SSNs for their employees.
This was the start of a slippery slope.
It immediately became a big money-saver for state and local institutions to use the same identification numbers.
In the rest of this article, I’ll detail the history of the expanding use of SSNs in American lives.
History Of The Expansion Of SSN Numbers In America
Social security numbers were introduced as a means of implementing the welfare programs laid out by the 1935 Social Security Act.
In 1943, President Roosevelt mandated that federal agencies eliminate any other identifying numbers for their employees. Only the SSN could be used for federal employees.
Let’s track the usage from the 1960s onwards.
SSN in the 1960s
In 1961, the Civil Service Commission started to use SSNs for all civil servants. They gradually eliminated all other identification systems.
The IRS (International Revenue Service) had historically held itself apart from other government agencies. The IRS head honchos set out to set up their own tax identification number.
The costs that they projected were enormous. The federal government simply wouldn’t foot the bill.
In 1962, the IRS switched to using SSNs as taxpayer identification. This was a major contribution to the expansion of use by other state and commercial organizations.
In 1967, the Department of Defense (DOD) retired its military service identifier and switched to SSN.
SSN in the 1970s
In 1972, SSNs are issued for the first time to people entering the U.S.
That year also saw them issued to everyone applying for federal benefits of any kind. This was another major expansion.
In 1976, individual states started using SSN for driving licenses.
In 1977, SSN was used by some food stamp programs to assess eligibility for support.
Usage Of SSN Expands Through The 1980s
The 1980s saw a significant expansion in the use of SSN.
In 1981, the school lunch programs switched to using SSN to assess eligibility based on the parents.
In 1982, the federal loan program switched to using SSN for eligibility.
In 1983, there was a major expansion through the banking system. All holders of accounts that bear interest had to have an SSN.
By the mid-1980s, not all states were on board with the widespread use of SSNs. In 1984, the Reagan presidency introduced amendments to the Social Security Act.
These amendments ensured that a range of welfare programs required SSN including:
- Aid for Families with Dependent Children (AFDC)
- Food stamp programs
- Unemployment payments
In 1988, many blood donor facilities required SSN to track donations. That same year, Title II beneficiaries needed SSN to be eligible.
SSN for children
Up to the mid-1980s, there was still no compelling reason for parents to apply for an SSN for their young children. Usually, it wasn’t until teenagers hit the age of applying for a driving license.
That changed in 1986 when applying for tax credits for child dependants in tax returns. SSNs were now required for children aged five and upward.
This age band soon dropped even lower. In 1988, SSN was required for children aged two and upward.
That year, some states issued SSNs along with birth certificates.
SSN In The 1990s
1990 also saw the need for taxpayers to have SSNs for their children from birth grow closer. That year, child dependants who were one year and upward required SSN for tax returns.
In 1994, the restriction on the age of children was completely removed for taxpayers. Any child (i.e. from zero upward) named on a tax return required an SSN.
In the same year, some states started to use SSN in the process of jury selection.
In 1990, all veterans in receipt of support from the Department of Veterans Affairs required SSN.
Expansion in 1996
1996 saw a widening of the net. SSN was needed for applications for:
- commercial driver’s license
- marriage license
- occupation license
The change to marriage license applications was a big expansion. This led to many people that year having to scramble to get an SSN before their big day.
Commercial Use Of SSN
The previous sections have focused on the history of SSN in federal and state government use.
There was a parallel expansion in the use by commercial organizations. There is a challenge with accurately tracking the history there because many commercial organizations were very secretive about how they used customer data.
And the credit reporting agencies were the most secretive of all. These specialist agencies had been collecting and storing consumer information since the previous century. This was information like unpaid loans, overdrafts, and late credit card payments.
There was little awareness up until the 1960s on the sheer breadth of information being tracked and stored. Many agencies simply refused to allow private citizens from accessing the information in these files.
The entire purpose of these agencies was to sell the information to other businesses such as retail and financial companies.
Up until the advent of the SSN, they were having to rely on names and addresses to track individuals across consumer interactions with different businesses. This was a problem with the John Smiths of this world.
And as many people change address (sometimes to evade being tracked), this identification was a major headache.
SSN to the rescue
The expansion of SSN was a massive benefit to commercial interests.
By 1996, companies didn’t even have to ask over the phone for an SSN when dealing with a customer.
They just needed to ask for a copy of a driving license. That year, it was mandatory to have the SSN on driving licenses.