The argument that ongoing mass immigration to the United States is necessary to keep the Social Security program solvent is not based on any credible evidence or analysis. While immigration is not the fundamental problem facing Social Security, it is not going to “save” it, either. And, if immigration continues apace, it will only exacerbate an already untenable situation.
Social Security is funded by a payroll tax on employers and employees who each pay 6.2% (total 12.4%) into the Social Security Trust Fund (SSTF). Currently, taxable wages are capped at $147,000. The future of Social Security depends on whether contributions to the SSTF exceed payouts to recipients. According to the Social Security Board of Trustees, the SSTF is projected to be depleted in 2034.
The fate of the Social Security system is often injected into the immigration debate by those who advocate for increases in annual immigration, and who also usually tie that to a blanket amnesty for all illegal aliens residing in the United States. Their logic is that a high level of immigration is needed to keep Social Security afloat, more immigration is always better for the Social Security system – even illegal immigration – and any cuts to immigration will cause the SSTF to run out of money in very short order.
This all may seem commonsense in that more people means more money for the SSTF. That is true. However, it also means more people will be collecting Social Security and drawing down the SSTF. Right now, the amount in the SSTF is not enough to meet the growing number of beneficiaries. Therein lies the fatal flaw in the Social Security system.
It is understandable that many Americans may believe that adding tens of millions more people to the U.S. population is necessary to “fix” Social Security, or that reducing immigration will lead to its demise, for that is what they constantly have been told by the political left, right, and center for years (another reason to abandon long outdated political descriptors when it comes to U.S. immigration policy.)
Back in 2018, the "progressive" media outlet Vox ran a piece that typified the misinformation and the scaremongering so often associated with this conversation, along with the general silliness that characterizes Vox "newsplaining." Alexia Fernández Campbell penned a piece entitled, “Why baby boomers need immigrants to fund their retirement, in 2 charts.” Campbell cites the 2018 Social Security Board of Trustees report as support for her assertion that “Economic estimates show that immigration would help save the Social Security system. Not just legal immigration — illegal immigration too.”
Most who read or hear that immigration help save the Social Security system will likely understand that to mean that immigration will help to prevent the Social Security system from running out of money. What the report actually says, and what the second chart in Campbell’s story illustrates, is that an optimistic projection by government actuaries shows that an increase in immigration may slightly decrease the SSTF deficit after 75 years (2018-2092). This in no way “saves” Social Security over the long haul. It means that the federal government may not owe as much money to Social Security beneficiaries that it cannot pay than it otherwise would without immigration (p. 182).
Given that illegal aliens are barred from receiving Social Security benefits, an amnesty making them eligible would lead to an even quicker draw down of the SSTF. While much was made of the “positive net effect” of illegal immigration on Social Security when DACA and later DAPA (amnesty for parents of citizens of LPRs) were instituted, including by then SSA Chief Actuary Stephen Goss, when Goss submitted testimony to Congress in 2015 about that positive effect, he estimated that granting amnesty to 5 million people would delay SSTF insolvency by three months.
More recently, the Association of Mature American Citizens (AMAC) published “Immigration and Our Social Security: A Frequently Misunderstood Subject” in its monthly magazine distributed to AMAC members. (AMAC was formed in 2007 with the organization framing itself as a conservative alternative to AARP. One can find its Stance on Key Issues on its website – including on Social Security, which doesn’t mention immigration – and on immigration, which doesn’t mention Social Security.)
Unfortunately, the author, Gerry Hafer, thoroughly misunderstands how immigration effects Social Security. Hafer, like Vox’s Campbell, tries to impress upon readers that immigration is necessary to keep Social Security solvent, with the implication that more immigration than we currently have is needed.
While lawmakers focus on tactical changes needed to sustain Social Security for future generations, it becomes more and more important to recognize the degree to which the program relies on net immigration to bolster our country’s flagging workforce participation rate – the key tax-paying component of the equation in financing Social Security’s operations.
Hafer does not ask why the country’s workforce participation rate is “flagging?” If he did, he would find that it certainly isn’t because there aren’t enough working-age Americans. There are 45.4 million U.S.-born citizens between the ages of 16 and 64 who are not in the labor force. These people are not included in the official unemployment number and the reasons that so many Americans have fallen out of the labor force deserves more than the passing reference Hafer gives them.
Hafer, too, brushes aside the problem of illegal immigration by saying those working illegally pay into Social Security (some do, many do not) yet won’t ever receive benefits – a common and thoroughly misleading argument. He leaves out the fact that this is only true if illegal aliens never receive amnesty or don’t receive benefits through fraud (SSNs are frequently stolen by illegal aliens.) And it totally ignores the immense overall cost of illegal immigration to U.S. taxpayers. Is extending the SSTF by a few months worth the hundreds of billions of dollars illegal immigration costs taxpayers each year?
If one listens to the corporate media or does a quick internet search, one will find many other claims about how the current immigration level, at the very least, is necessary but not necessarily sufficient, to fund Social Security. What one will not find is any honest accounting to back up those claims.
Immigrant households use welfare programs at a significantly higher rate than native households, straining federal and state budgets; which is why proponents of mass immigration emphasize how it “grows the economy” while ignoring the fiscal costs imposed on U.S. taxpayers. Immigrants (legal permanent residents) qualify for Social Security after meeting the same earnings requirements as those born in the United States. Adding to this demand on public benefits are the children born in the United States to immigrants. Due to the current interpretation of the 14th Amendment, any child born in this country automatically receives U.S. citizenship. This can distort how many measure the full impact of immigration when it comes to the use of government programs. Right now, there are 17.2 million U.S.-born children under 18 with immigrant parents. More people may mean more money pumped into Social Security. It also means a growing number of people who qualify for benefits.
The bottom line is that immigration isn’t going to help save Social Security. At best it can only prolong the program for a short time while creating an even larger pool of beneficiaries. As presently constructed, the Social Security system will never be able to meet its obligations.
Immigrants are younger than Americans but not by much, and the effect on the worker-to-retiree ratio is marginal. Steven Camarota at the Center for Immigration Studies has done extensive work on immigration and the aging U.S. population. His work shows that immigrants are coming to the United States at older ages, and that post-1990 immigration, when annual immigration to the United States began to average one million a year, “had a minimal impact on the share of the population that is of working age.” Camarota has calculated that in order to maintain the current working-age share of the population, immigration would have to increase five times its present level.
Immigrants, on average, are less educated, earn less over their lifetime, and have bigger families than the U.S born, which is creating a growing demand for government benefits. If the United States were to reconfigure its immigration system to admit enough younger immigrants to keep the worker-to-retiree ratio we have now, most immigrants would pay considerably less into the SSTF than they would be owed.
Immigrants age at the same rate as the U.S. born. Claiming that immigration is a fix for Social Security is, as many have pointed out in counterargument, supporting a classic Ponzi scheme. Our immigration system is only a short-term “fix” for Social Security but only as a sort of triage. In the long-term, it becomes a major liability that will make it very difficult for the U.S. government to pay out promised benefits to retirees and disabled Americans.
The Social Security program is unsustainable, but it can be propped up in the short-term by mass immigration. It cannot be sustained by immigration. Immigration will have to constantly increase at a rapid rate to fund payouts to beneficiaries until the whole thing collapses, which it will eventually unless serious structural reforms are made. If Social Security is to be saved, Americans need to have a serious discussion about the problems facing the program, not unfounded claims about the benefits of mass immigration.
Immigrants aren’t to blame for the SSTF deficit, Congress is. The immigration system as it currently operates will only make the problem worse.
ERIC RUARK is the Director of Research for NumbersUSA
Updated: Wed, Mar 1st 2023 @ 11:01am EST