The True Impact of Immigration on Social Security

By Vanessa Copeland

For anyone who had a basic government class in high school, you may remember that Social Security was implemented as part of Roosevelt’s New Deal during the Great Depression. During that time, senior citizen poverty rates were upwards of 50 percent. This Act was Roosevelt’s answer to economic hardships such as old age, poverty, unemployment and the struggles faced by widows and fatherless children. Since its enactment, Social Security has been the single most successful social program in our nation’s history. However, beginning this year, for the first time since 1982, the Social Security Board of Trustees report found that Social Security’s payouts will exceed what is brought in via revenue.  Even more disturbing is the projection that in just 15 years Social Security’s nest egg, which has been building since inception, will be entirely gone. 

Now before you start panicking and setting things on fire, this does not mean that Social Security will be bankrupt. In fact, the means with which Social Security gets its revenue – payroll tax and benefit taxation, make bankruptcy impossible. What it does mean is that the current payout schedule cannot be maintained in the long-run. The Board of Trustees has projected a necessary cut in retiree’s benefits by up to 23 percent. Considering that more than 3 out of 5 retirees lean on Social Security for at least half of their monthly income, this is extremely alarming. 

Some of you may be aware we have an election coming up this year. Two of the hot topics have been Social Security Reform and Immigration Issues. More often than not, the latter gets blamed for the problems of the former. I’m sure most of you have happened across a comment or meme blaming immigration, specifically illegal immigrants, for the demise of Social Security. However, if you look at a Board of Trustees report, it paints a different picture. 

According to last year’s report, immigration is not only a positive for the sustainability of the program, it’s vital. Legal immigrants are often young which means they are more likely to be in the U.S. work force for decades. Due to having the opportunity to one day obtain citizenship, immigrants pay into Social Security via payroll tax just like every other American, regardless of if they do or do not one day earn retiree benefits. Current political and national attitudes regarding immigration as a whole may be detrimental to the sustainability of Social Security. 

Now, some of you may be thinking, well what about “the illegals”? You may be surprised to learn that illegal immigration has no negative impact on Social Security. Undocumented workers who are employed without a Social Security Number (SSN) are unable to accrue any sort of credit towards SS benefits. And, in instances where an undocumented worker obtains a fake SSN in order to gain employment, the worker still pays payroll tax which goes directly to the program, even though they will never be able to reap the program’s benefits. It is estimated that SS gets approximately $13 billion, that’s Billion with a B, in payroll tax revenue from undocumented workers. 

Now the record has been set straight. What will you do with this knowledge? 

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2 Comments

  1. In addition, the contribution sent in has increased. In the beginning it was smaller, perhaps 1 percent. Then mandatory contribution percentages went up incrementally, to 3 percent, and currently contributions are at ??? 7 percent???

  2. Y:ou are correct about the inception of Social Security under FDR. Funds grew with the number of participants contributing and with interest accrued on the federal savings account set up for old-age retirement. There was sufficient funds that all who contributed could live on their own payments into the account, once they reached age 62. But in the 1960’s, President Lyndon Johnson saw the substantial funds set aside there, wanted to declare a War on Poverty, and so he moved a large part of Social Security Retirement Funds from its separate account, into the General Fund account. Hence, he could take money from the General Fund to go for high rise “projects” housing (which were eventually trashed). Food Stamps and ADC could be given to women and children. A man in the house was expected to work at a job, and could not live in the home to receive any benefits meant for the women and children, so they had to move out so only the women and children would receive funds, leaving children without a father-figure. Job opportunities did not seem to be much a part of the War on Poverty, so skill set or education for these men were wanting. Consequently, Social Security Funds for Retirement were fewer, and the amount people could receive was smaller. The age to start going on Social Security went up, to keep funds viable for receipients.who had paid into it. We are where we are today, with fewer funds for retirees than would have been available without removal of dollars for the War on Poverty. Many people saw what was coming and either paid in to 401-K’s or some other form of employer type savings, on a private business level. Other people did their own investment programs.

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