Are Immigrants the Key to Social Security Solvency?

by Paul Stern

As the march towards the 2016 campaign season begins, the United States of America will once again face tough questions about how to address the issues facing our nation. Among these issues is the rapidly increasing threat to the Social Security program created by a shrinking workforce and subsequently growing retiree population. While the problems facing our social welfare programs are varied and complex, studies have shown that high levels of migration and sensible reforms to our immigration system can help sustain our nation’s dwindling social security system, as well as rejuvenate an aging American workforce.

In 2011 the first wave of the baby boomer generation reached retirement age, effectively starting a demographic shift in the American workforce. According to a 2012 annual report produced by the Social Security Administration (SSA), about 80 million Americans will file for retirement benefits throughout the next two decades. The study notes that this statistic roughly translates to an average of ten thousand baby boomer retirements each day over a 20-year period. This growing population of retired Americans is problematic for two reasons. First, the trust fund for Social Security’s Old Age and Survivors Insurance (OASI) is predicted to dry up by the year 2033, leaving the system with enough trust fund reserves to pay out just 75 percent of its yearly scheduled benefits. Second, the American workforce stands to lose a significant number of workers. A 2014 report released by the Census Bureau shows that baby boomers make up roughly a quarter of the United States population. As the rate of retirements increases, the ratio of American workers to retirees decreases, leaving fewer American workers with the task of sustaining more and more retirees. By 2025, the Social Security Administration predicts that there will be just 2.5 workers paying in to social security per beneficiary.

The United States of America is not alone in facing these problems. Across the globe developed nations are fighting to maintain a youthful workforce to combat the negative economic consequences of aging and shrinking populations. However, high levels of immigration have allowed the United States to sustain a workforce that is on average younger than many developed nations. . According to the most recent Department of Homeland Security yearbook, the United States welcomed more than one million immigrants in 2013. On top of providing significant financial contributions to social welfare systems, immigrants provide key contributions to the U.S. population. According to a study by the Bipartisan Policy Center, immigrants are fifty percent more likely to reproduce than American citizens. This high fertility rate ensures that as current immigrants age, a new generation, coupled with native-born workers, will be able to continue sustaining our nation’s social security system. The Bipartisan Policy Center study notes that without migration, the United States population stands to stop growing between the years 2040 to 2050, providing another obstacle to our weakened system.

The United States of America’s welcoming immigration system is its biggest boon when combating the phenomenon of global ageing. Immigrants are a catalyst behind population growth, thus keeping the average age of the American workforce lower, and the ratio of workers to retirees from shrinking at the rate of many other developed nations. A 2014 Pew Research Center study finds that immigrants were responsible for 51 percent of population growth in the United States from 1960 to 2005. From 2005 to 2050 the study predicts that this number will increase to 85 percent, making immigrants a key part of America’s demographic and economic future.

Immigrants also contribute a significant amount of money to keep the social security system solvent. Each year the Social Security Administration releases a Trustee’s Report, showing the financial status of the social security system, as well as the board of trustee’s recommendations for the program as a whole. The 2014 report details the impact of net migration on the social security system in the United States. The report concludes that the higher the level of net migration, the more the program’s cost rate decreases. Unauthorized immigrants have also contributed a significant amount of money to the social security trust fund. In 2010 alone, these individuals contributed an estimated 12 billion dollars, while receiving no estimated benefits due to their unauthorized status. Mapped out over a decade, undocumented immigrants have contributed almost one hundred billion dollars to our social security system alone.

However, the United States of America can bring these individuals out of the shadows and offer them the opportunity to get right with the law, without forfeiting the economic benefits provided to social security, that these contributions bring. Should the estimated 11 million undocumented immigrants be given a pathway towards citizenship, the financial stability of the Social Security program will improve tremendously. In a 2013 letter to Marco Rubio, Social Security Administration Chief Actuary Stephen G. Gross, states that the net impact of the Senate’s comprehensive immigration reform legislation, which would provide the estimated eleven million undocumented immigrants a pathway to citizenship, would mirror the impact of higher migration levels detailed in the Social Security Administration’s Trustee Report mentioned above.

The 2016 election season will be an important one for our nation. As each day passes, ten thousand more American workers become eligible to receive Social Security benefits, and the social security system moves a day closer to insolvency. However, as world population ageing continues to plague countless developed nations, the United States has managed to stave off the immediate negative consequences of a rapidly growing retired populace, due in part to the large immigrant population that, in combination with native-born Americans, has kept our social security system solvent. However, as the push for comprehensive immigration reform shows, there is certainly room for growth. The impact of immigrants on American social welfare programs is increasingly positive. The demographic impact of these individuals provides our nation with a more youthful workforce and better preparation for sustaining these programs as well. Though the road to social security solvency is certainly a complicated one, reforming the U.S. immigration system is an effective step in the right direction that needs to be on the next president’s list of priorities.

Paul Stern received a B.A. (with honors) in Government & Politics with a minor in Spanish Language and Cultures from the University of Maryland, College Park. His honors thesis focused on the positive economic effects of highly skilled immigrants, and how the United States could learn from policy changes employed by other nations. He has engaged in both research and casework throughout various professional experiences, and will soon be volunteering with recently resettled refugees in the Washington D.C. area. All opinions are his own.

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