Is schmuck really an obscene word?
Solution 1:
As Bruce said, the word "schmuck" may be more familiarly used for "jerk" today. (The TV show Golden Girls used it regularly to refer to Stan, the ex-husband of Bea Arthur's character, Dorothy.)
But since you asked about "polite company", I would take it a little further and suggest that name-calling or referring to someone as "jerk", "idiot", "bimbo", etc., is just not considered polite and all such words, including "schmuck" should be avoided in those social settings.
Solution 2:
Leo Rosten, in his classic (and funny) book, The Joys of Yiddish (McGraw-Hill 1968), says the word schmuck is defined first as an obscene reference to the penis: "Never use schmuck lightly, or in the presence of women and children. Indeed, it was uneasiness about schmuck that led to the truncated euphemism shmo ....", wrote Rosten. Ibid. p. 361. A secondary definition was "(Obscene) A dope, a jerk, a boob; a clumsy, bumbling fellow."
It seems to me that the word's status as an obscenity has lapsed. Merriam-Webster.com leads the definitions with "jerk," acknowledges the Yiddish definition as the origin, but drops the indication that the term is an obscenity. Moreover, newspaper editors have been bold enough to use the word in headlines.
This change appears to be confirmation of the prophecies of Lenny Bruce, in his stand-up routine, and Allan Sherman, in his 1973 book, The Rape of the A.P.E (American Puritan Ethic : The Official History of the Sex Revolution, 1945-1973: The Obscening of America, an R.S.V.P.) (Putnam Publishing Group), who said that if you say an obscene word enough times, it will lose its shock value and come into common usage without raising any eyebrows.
Nevertheless, I would still refrain from using the term among older Yiddish speakers.
Solution 3:
When a word borrowed from another language passes into English, the tenor of the word, as understood by speakers of that first language, doesn't always come through. An example of this lost-in-transmission phenomenon is schmuck/shmuck. In Hooray for Yiddish! A Book About English (1982), Leo Rosten begins a lengthy discussion of shmuck as follows:
shmuck Obscene as all get-out, but effective. From German Schmuck: ornament...jewel...gewgaw.
A handful of readers of The Joys of Yiddish wrote to protest my including so "dirty" a word as shmuck in that lexicon. I cannot sympathize with their prudery. A dictionary is not a hymn book. ...
[Meanings of the word:] 1. (Taboo) Penis.
Because shmuck is considered so improper, the truncated shmo was invented.
Never use shmuck before women, children or strangers. I may add that, on the whole, Jews are puritanical in public about the pubic.
(Still taboo) A fool, a jerk. ("What a shmuck to fall for that trick!")
(Still obscene) A traitor, trickster, hypocrite or hype artist. ("He's just a low-down, lying shmuck!")
...
Please note that shmuck began as the German word for an ornament or jewel. The word was not lewd in German nor obscene in Yiddish. How did the connotational leap take place from "jewel" to "penis"? By mothers bathing or drying their baby sons. They would croon over them. What better word for the member than "little jewel...ornament...crude pendant." In English, men josh about "the family jewels" and they do not mean rubies. German or Hungarian nurses and governesses, I am reliably informed, used the euphemism shmuck. Jewish mothers and sisters were puritanical enough to refer to "that place" or "that (his, her) thing."
Compare that treatment to Rosten's discussion of putz in the same book:
putz Rhymes with "cuts." German: Putz: ornament. (Vulgar)
As a noun:
- Penis.
But putz is often used, with condescension, for
A dolt, a fool.
A shmeggege, a pigeon, a yokel.
As a verb:
To waste time (as the English "futz")
To sleep around, to be promiscuous.
Some arbiters of language hold that putz is slightly (but only slightly) less vulgar than shmuck (q.v.); others consider putz slightly more offensive because it aims to be euphemistic. Avoid both words. (But to those who love the punch of the colloquial: use putz only after you see who's present.)
Se SHMUCK (taboo).
So even though both words meant "ornament" in German (according to Rosten), and even though both mean "penis" in Yiddish, Rosten identifies shmuck as a "taboo" word among Yiddish speakers and putz as merely a vulgar word.
The offensiveness of a word in its native habitat is of course no sure guide to its sense in a different language that has imported it, but the connotations that the word has or had in its previous environment remain relevant insofar as speakers of the exporting language may be present to hear it used in the new one. It's all very well to say that in recent years shmuck has lost its taboo status in English (if it ever had such status, which I doubt), but in Yiddish it may remain highly charged and offensive—and English speakers would do well to bear that in mind before they throw it around as if it were no more insulting than jerk or idiot.