Is retirement security tied to immigration?
As baby boomers put Social Security on a course toward depletion, some experts are debating whether legalizing those in the U.S. without permission and encouraging immigration would help shore up the system with tax contributions — or drain it by adding more beneficiaries to the rolls.
The Washington Post
For construction worker Marcelo, the way he will live out his old age will probably depend on the details of an immigration-reform plan that a group of U.S. senators intends to unveil next week.
Marcelo, who has lived in the U.S. without permission since 1999, and his wife, a house cleaner also here illegally, have no retirement savings, although both have paid taxes since arriving from their native Bolivia.
“Sometimes it’s like you’re wasting your time,” said Marcelo, 48, a Silver Springs, Md., resident who did not want his last name used because of his immigration status. “When you think of the future, there’s nothing coming.”
An immigration-reform package is likely to include a path to citizenship for the nation’s 11 million immigrants in the country without permission, many of whom already file tax returns and pay into the Social Security Trust Fund. Now, as the imminent retirement of 78 million baby boomers puts Social Security on a steady course toward depletion, some experts are debating whether legalizing the undocumented and encouraging immigration will help shore up the system with tax contributions or drain it by adding more beneficiaries to the rolls.
A low birthrate and a disproportionately large population of aging baby boomers have created a top-heavy ratio of retirees to working-age Americans, with too few younger workers to support government benefits at current levels.
Some argue that if those in the country illegally are allowed to live and work here legally, they will contribute more. “There is the hope that they would get better jobs ... and fewer of them would be under the table,” said Leighton Ku, professor of health policy at George Washington University. “If you’re legalized, your employment opportunities improve a lot.”
A 2012 Social Security Administration report estimated that, on balance, adding more immigrants would give a slight boost to Social Security, because the population of workers would rise sooner than the population of beneficiaries.
But the boost is not large. About 1 million immigrants a year now come to the United States; whether this number stays the same or increases to 1.37 million, the fund will be depleted around 2033, the report said, noting that the fund gets a 0.07 percent gain for every additional 100,000 immigrants.
“It is relatively small,” said Madeleine Sumption, senior policy analyst at the Migration Policy Institute. “But given the extent of the problem, Congress is going to want to be looking for all of the avenues that they can use to improve the financial health of Social Security, and if you look at what the other options are, there’s a limited number of things you can do.”
Possibilities, she said, include some combination of immigration, tax hikes, benefit cuts and increase in the retirement age — all politically difficult moves.
Dowell Myers, an immigration expert at the University of Southern California’s Sol Price School of Public Policy, said that although a steady inflow of immigrants will not eliminate the imbalance, the problem would be much worse without them.
“Immigrants contribute far more in their working years than they are a burden on the ratio in their senior years,” he said. “Having more immigrants means more workers to carry the load. And then immigrants have their own children, and they help carry the load.”
But Steven Camarota, director of research at the Center for Immigration Studies, which supports limits on immigration, said America’s immigrants are not young or fecund enough to shore up the system. “If the immigrants all came at 20 and had seven or eight kids, you would see more of a difference,” he said. The average immigrant arrives at age 30, and immigrant women have, on average, 2.1 children, according to the Pew Research Center.
Analysts on both sides agree that increasing the number of highly skilled immigrants would shore up the system more than the Social Security Administration report accounts for, because high-skilled immigrants pay more taxes and spend more than low-skilled ones. Lawmakers said last month that they are considering doubling the number of visas for highly skilled workers, to about 130,000 per year.
But many lower-skill jobs will also need filling as America ages, said Ai-jen Poo, director of the National Domestic Workers Alliance. For example, about 23 percent of caretakers for the growing ranks of the elderly are immigrants, most not here legally, she said. “We simply do not have the adult bodies to take care of the older adult population,” she said.
In addition, many elderly immigrants contribute indirectly to the economy without holding jobs that earn benefits, said Patience Lehrman, national director at Project Shine at Temple University, a program that helps older immigrants.
“A 75-year-old grandmother may not be able to work a 65-hour workweek, but by virtue of the fact that they can baby-sit the children of their child who is working full time, their child can participate in the GDP,” she said.
Many immigrants not here legally have been paying into the system for years. Since 1996, they have been able to file taxes using a government-issued individual taxpayer identification number; others use fake Social Security numbers. An estimated half to three-quarters of these immigrants pay taxes, Sumption said.
But even if they are allowed to become legal residents and ultimately citizens, their years of taxpaying may not translate into retirement benefits they can use. To be eligible, a person must have paid into the system for at least 10 years, and it is not clear whether, under immigration reform, payment by workers who were once in the country without permission would count retroactively toward Social Security.