Mar 21

Immigration Won’t Save Social Security

Quote Below: More Information from the Media

“Well, Social Security is going to have a tough time making payments to workers who retire years from now unless the working population of America grows dramatically. One thing you already know about Social security: It is not a gift from the government. I’ve paid hundreds of thousands of dollars into Social Security. And you probably have also.

“But the government controls this money like it was an entitlement. Washington can and probably will, change when you can start collecting, the rules under which you can retire and the amounts you get when you do. It’s your money, but Washington rules over it.

“Social Security is also a pyramid scheme—a Ponzi scheme is a less polite term. The system only works when there is more money coming in than being paid out. So far this pyramid has worked because Americans were producing a lot of babies – or, to put it another way, a lot of future workers.

“Americans might suddenly go crazy and again start having lots of kids. But that’s not likely given the costs of raising children nowadays. And even if there were another baby boom, that wouldn’t help for another 18 years or so, when those newborns start entering the workforce. So the only answer to keep the Social Security pyramid functioning is to allow people from other countries to come here to work, pay taxes and contribute to Social Security.” – Why Immigration Is Key to Saving Social Security, John Crudele, New York Post, 1/29/18 [Link]

Fact Check of Quote: The idea is simple: Immigrants are younger on average than native-born Americans, and they have a higher fertility rate than native-born Americans. Therefore they will provide a great infusion of new taxpayers to sustain Social Security and provide retirement benefits for our elderly population. But there are problems with this idea.

The first is that immigrants are not that sufficiently young and fertile to make a significant impact on our age structure. Pew did a study and found that if we had stopped immigration in 2015, our median age in 2060 would be 45 years. This is only three years older than the projected age of 42 with the immigration level remaining unchecked between 2015 and 2060.

Since that study, data reveal a sharp decline in immigrants’ fertility. While still higher than the native rate, the two rates appear to be moving toward convergence. This should hardly be a surprise. The author notes that the “costs of raising children” limit the native birth rate. It is most likely that those costs would have the same effect on immigrants’ births.

The second problem is that immigrants on average receive more in public benefits than they pay in taxes. Hence they will not be making a net contribution to Social Security or any other program. This will become most apparent for Social Security when immigrants reach retirement age and apply for retirement benefits.

Immigration advocates are quick to point out, however, that illegal aliens won’t be collecting benefits, even though they pay into social security, because they are not legally entitled to them. One thing to keep in mind with this assertion is that by common estimate about half of illegal aliens are paid under the table. This means they pay no federal taxes, including Social Security taxes. Many of the others who do file fraudulently claim tax credits which offset or largely offset what they pay into Social Security.

Furthermore, a large number of illegal aliens may in fact draw Social Security benefits, either by getting amnesty or by using fake Social Security numbers.

The third problem with immigration saving Social Security for American natives is that immigrants might well see their interests as being different from those of American natives. And they might form voting blocs to pursue those interests. As the author of the article above points out, Social Security benefits are not set in stone. They can be changed by government action.

Finally, as unending mass immigration makes society more diverse and probably more unstable. Social insecurity is not a good climate for retirement.

Permanent link to this article: https://www.aicfoundation.com/immigration-wont-save-social-security-2/

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