There has been considerable discussion of this matter in recent times.
As is often the case with economic and political topics, there is no
consensus of opinion among the experts; the same statistics, plus a
bit of speculation, can lead to opposite conclusions.
This interesting paper, "The Contribution of Legal Immigration to the
Social Security System," by Stuart Anderson, Executive Director of the
National Foundation for American Policy, looks at the impact of legal
immigration upon Social Security:
The Contribution of Legal Immigration to the Social Security System
http://www.nfap.net/researchactivities/studies/SocialSecurityStudy2005Revised.pdf
Here's the abstract of "Social Security Benefits of Immigrants and
U.S. Born," published by the National Bureau of Economic Research:
"Abstract: For each year of work under the Social Security System,
immigrants realize higher benefits than U.S. born, even when their
earnings are identical in all years the immigrant has been in the
U.S.. Two features of the social security benefit calculation are
responsible: the social security benefit formula transfers benefits
toward those with low lifetime covered earnings, and all years an
immigrant spends outside the US are treated as years of zero income.
Immigrants with high earnings who have worked in the U.S. for only a
10-20 years benefit most from these procedures. If instead earnings
were averaged only over the years an immigrant resides in the U.S.,
and benefits prorated immigrants would receive the same return on
their social security taxes as US born who have the same earnings in
each year. It is difficult to justify the current procedures
determining benefits for immigrants on the basis of income or wealth
differences between US and foreign born. Among HHRS respondents, mean
total wealth of immigrants is 92% of the mean total wealth of US born,
while the mean income of immigrants exceeds the mean income of US born
by 3%. But income and wealth are less evenly distributed among foreign
born than US born. Depending on whether the appropriate period for
calculating benefits is taken to be 35 or 40 years, prorating would
reduce the present value of benefit payments to the cohort of
immigrants born from 1932-1941 (91% of the HRS cohort) by $7.5 billion
or $15 billion respectively. The 1932-1941 cohort represents 1/7 of
all foreign born who are now 25-64. We also ask whether, from a
selfish financial viewpoint, US born participants would have preferred
to have immigrants from the HRS cohort included in social security.
The answer is yes. Despite their better deal, most immigrants in the
HRS cohort will pay more in taxes than they will receive in benefits,
although just barely."
EconPapers: Social Security Benefits of Immigrants and U.S. Born
http://econpapers.repec.org/paper/nbrnberwo/6478.htm
A cached copy of the entire paper may be found here:
Cached copy, Social Security Benefits of Immigrants and U.S. Born
http://64.233.187.104/search?q=cache:NOUAfM8rofkJ:www.econ.lsa.umich.edu/classes/Econ622/Retirement/Retire/Gustman-Immigrants_SS.pdf
Here's a paper called "Immigration in an Aging Society: Workers, Birth
Rates, and Social Security," by Steven A. Camarota, the Director of
Research at the Center for Immigration Studies:
Center for Immigration Studies: Backgrounder
http://www.cis.org/articles/2005/back505.pdf
Camarota is often cited in discussions of this subject. Here is an
excerpts from a news article that summarizes some of his findings:
"The Social Security Administration, in making its standard 75-year
projections into the future for the system, must make several
assumptions about immigrants, including how many arrive each year. It
also assumes 25 percent of new arrivals will leave the US each year,
and that they will have average earnings.
In fact, Camarota notes, a large body of research shows immigrants on
average make decidedly less money than native-born Americans. So they
pay less payroll taxes. And they draw out proportionately more because
the system is structured to redistribute income a little. It provides
a bigger pension to low-income workers relative to their Social
Security contributions than it does for higher-income workers.
Thus, the younger age of immigrants may not result in a positive
impact on Social Security, Camarota concludes.
Moreover, many immigrants are eligible to draw on the Earned Income
Tax Credit, a program Congress devised in 1975 to refund all or part
of Social Security taxes paid by low-wage workers. The credit is
funded out of general revenues, not by the Social Security system. But
it remains germane to the aging issue.
Even if legal immigration was doubled - from an assumed 800,000 per
year to 1.6 million - it would still leave more than 90 percent of the
Social Security future funding problem in place in dollar terms,
Camarota calculates."
Christian Science Monitor: Immigration can't save Social Security
http://www.christiansciencemonitor.org/2005/0509/p17s01-wmgn.html
This comes from an article which originally appeared in the New York Times:
"Using data from the Census Bureau's current population survey, Steven
Camarota, director of research at the Center for Immigration Studies,
an advocacy group in Washington that favors more limits on
immigration, estimated that 3.8 million households headed by illegal
immigrants generated $6.4 billion in Social Security taxes in 2002."
Global Aging: Illegal Immigrants Are Bolstering Social Security with Billions
http://www.globalaging.org/pension/us/socialsec/2005/illegal.htm
Also from the New York Times article cited above:
"It is impossible to know exactly how many illegal immigrant workers
pay taxes. But according to specialists, most of them do. Since 1986,
when the Immigration Reform and Control Act set penalties for
employers who knowingly hire illegal immigrants, most such workers
have been forced to buy fake ID's to get a job... workers must be paid
by the book - with payroll tax deductions...
Starting in the late 1980's, the Social Security Administration
received a flood of W-2 earnings reports with incorrect - sometimes
simply fictitious - Social Security numbers. It stashed them in what
it calls the "earnings suspense file" in the hope that someday it
would figure out whom they belonged to.
The file has been mushrooming ever since: $189 billion worth of wages
ended up recorded in the suspense file over the 1990's, two and a half
times the amount of the 1980's.
In the current decade, the file is growing, on average, by more than
$50 billion a year, generating $6 billion to $7 billion in Social
Security tax revenue and about $1.5 billion in Medicare taxes.
In 2002 alone, the last year with figures released by the Social
Security Administration, nine million W-2's with incorrect Social
Security numbers landed in the suspense file, accounting for $56
billion in earnings, or about 1.5 percent of total reported wages.
Social Security officials do not know what fraction of the suspense
file corresponds to the earnings of illegal immigrants. But they
suspect that the portion is significant."
A few more online articles that may interest you:
Wall Street Journal: Immigrants play a key role in Social Security
http://www.opinionjournal.com/editorial/feature.html?id=110006397
The San Diego Union_Tribune: Illegal immigrants and Social Security
http://www.signonsandiego.com/uniontrib/20050410/news_mz1e10ruben.html
Global Aging: Immigrants Are Social Security 'Boost'
http://www.globalaging.org/pension/us/socialsec/2005/boost.htm
VDARE: Immigrants Can?t Bail Out Social Security
http://www.vdare.com/rubenstein/050324_nd.htm
Indian American Center for Political Awareness: Study by National
Foundation for American Policy
http://www.iacfpa.org/p_news/nit/iacpa-archieve/2005/02/25/immi2-25022005.html
Nathan Newman: "Saving" Social Security: Invest in Immigrant Children,
not the Stock Market
http://www.nathannewman.org/archives/000054.shtml
OnlyPunjab: American News
http://onlypunjab.com/fullstory2k5-insight--status-28-newsID-12235.html
Slate: The Social Security Crisis - Solved!
http://slate.msn.com/id/2096880/
My Google search strategy:
Google Web Search: "social security" immigrants
://www.google.com/search?hl=en&q=%22social+security%22+immigrants
I hope this is helpful. If anything is unclear or incomplete, please
request clarification; I'll be glad to offer further assistance before
you rate my answer.
Best regards,
pinkfreud |
