Posted on 04/05/2005 9:49:08 AM PDT by bluebeak
Illegal workers aid solvency of Social Security
By Eduardo Porter NEW YORK TIMES NEWS SERVICE
April 5, 2005
STOCKTON – Since illegally crossing the U.S.-Mexico border into the United States six years ago, Angel Martinez has done backbreaking work, harvesting asparagus, pruning grapevines and picking the ripe fruit.
More recently, Martinez also has washed trucks, often working as much as 70 hours a week, earning $8.50 to $12.75 an hour.
Advertisement
Not surprisingly, Martinez, 28, has not given much thought to Social Security's long-term financial problems. But Martinez – who comes from the state of Oaxaca in southern Mexico and hiked for two days through the desert to enter the United States near Tecate – contributes more than most Americans to the solvency of the nation's public retirement system.
Last year, Martinez paid about $2,000 toward Social Security and $450 for Medicare through payroll taxes withheld from his wages like those of any other worker. Yet unlike most Americans, who will receive some form of a public pension in retirement and will be eligible for Medicare as soon as they turn 65, Martinez is not entitled to any benefit.
He belongs to a big club. As the debate over Social Security heats up, the estimated 7 million or so illegal immigrant workers in the United States are providing the system with a subsidy of as much as $7 billion a year.
While it has been evident for years that illegal immigrants pay a variety of taxes, the extent of their contributions to Social Security is striking: The money added up to about 10 percent of last year's surplus – the difference between what the system currently receives in payroll taxes and what it doles out in pension benefits.
Illegal immigration could provide "the fastest way to shore up the long-term finances of Social Security," Marcelo Suarez-Orozco, co-director of immigration studies at New York University, noted sardonically.
It is impossible to know exactly how many illegal immigrant workers pay taxes. 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 IDs to get jobs.
Available for about $150 on street corners in just about any immigrant neighborhood in California, a typical fake ID package includes a green card and a Social Security card. It provides cover for employers, who, if asked, can plausibly assert that they believe all their workers are legal. It also means workers must be paid by the book – payroll tax deductions and all.
IRCA, as the immigration act is known, did little to deter employers from hiring illegal immigrants or to discourage them from working. For Social Security's finances, it was a great piece of legislation.
Starting in the late 1980s, 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 to whom they belonged.
The file has been mushrooming since: $189 billion in wages ended up recorded in the suspense file over the 1990s, 2½ times the amount of the 1980s.
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, the last year with figures released by the Social Security Administration, 9 million W-2s 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. They suspect the portion is significant.
"Our assumption is that about three-quarters of other-than-legal immigrants pay payroll taxes," said Stephen Goss, Social Security's chief actuary, using the agency's term for illegal immigration.
Immigration also helps Social Security's finances because new immigrants tend to be of working age and contribute more than they take from the system. A simulation by Social Security's actuaries found that if net immigration ran at 1.3 million a year instead of the 900,000 in their central assumption, the system's 75-year funding gap would narrow to 1.67 percent of total payroll, from 1.92 percent – savings that come out to a half-trillion dollars, valued in today's money.
Illegal immigrants help even more because they will never collect benefits. Without the flow of payroll taxes from wages in the suspense file, the system's long-term funding hole over 75 years would be 10 percent deeper, Goss said.
To immigrants, the lack of retirement benefits is just part of the package of hardship they took on when they decided to make the trek into the United States.
Tying vines in a vineyard 30 miles north of Stockton, Florencio Tapia, 20, of Guerrero, along Mexico's Pacific coast, has no idea what the money being withheld from his paycheck is for.
"I haven't asked," Tapia said.
For illegal immigrants, Social Security numbers are simply a tool needed to work on this side of the border. Retirement does not enter the picture.
"There will be a moment when I won't be able to continue working," Martinez said. "But that's many years off."
Mario Avalos, a naturalized Nicaraguan immigrant who prepares income tax returns for many workers in the area, including immigrants without legal papers, observes that many older workers return home to Mexico.
"Among my clients, I can't recall anybody over 60 without papers," Avalos said.
No doubt most illegal immigrants would prefer to avoid Social Security altogether. As part of its efforts to properly assign the growing pile of unassigned wages, Social Security sends about 130,000 letters a year to employers with large numbers of mismatched pay statements.
Though not an intended consequence of these so-called no-match letters, in many cases employers who get them dismiss the workers affected. Or the workers, fearing that immigration authorities might be on their trail, just leave.
Oh jeez...they just will say anything.
Oh would that some thinking network such as FNC would investigate the number of elderly who can't get their social security checks because some "undocumented worker" has "used" their social security number! Or how about those trying to receive the pensions that they earned, only to be denied because someone is perpetrating fraud on their social security identification?
Lastly, how about a show about those individuals who are US citizens who are arrested and prosecuted for identity theft and then to ask why it's not criminal for someone who entered illegally to do the same thing?
yeah ... all the cost to the state and local governments (schools, health care, etc.)
Maybe this is the secret democrat plan #2.
Secret Plan #1 being euthenizing people
Adding solvency to Social Security and destroying California's health care system....what a tradeoff!
I thought Bush was going to let them take all their SS in a lump sum when they when back to Mexico. Even if they're only 40 when they "retire".
Oh Geez...where do you begin with a story like this?
If you don't count the illegals, Socialism Security is in far worse shape than we all thought
Whaddya mean, "secret DEMOCRAT plan?" They're all in on it!
Someone needs to tell "Edwardo" that in his home state of California, illegals are costing us NINE BILLION DOLLARS A YEAR!!! And that's AFTER all the expenses & contributions have been accounted for!
Helloooooo???
Just consider it a 'tax' for working here ILLEGALLY!
The people are getting it, NOT the politicians.
http://www.newswithviews.com/Wooldridge/frosty46.htm
In the above article is the reality we need to hear about; not this propaganda piece attempting to prop up support for a broken system.........
I love statements like this, it admits that the task is impossible, my experience tells me that everyone paid in cash is NOT paying taxes, and there are a vast number of these in the illegal immigrant category.
Then it says "specialists" say... without even a hint of the name of the specialist. How about my grandmother, she is a good specialist, yeah, lets ask her...
Article must be considered BS although it is true that those who do pay payroll taxes are adding to the social security income, the government is just spending their money now, and these workers will be granted full benefits at some time in the future, because (its only fair heh heh). And the solvency will eventually be covered by not paying benefits and raising payroll taxes, hopefully only on Bill Gates, cause then no one else need worry.
One more terrorist attack in America and Jorge Bush can bend over and kiss his arse good bye!
How many low wage workers will it take to support one baby boomer retiree in 2015?
Secret Plan #1 being euthenizing people
And you know who the targets for #1 are (they'll need to give me a massive dose of lead poisoning).
Acutally, Bush has a not-so-secret plan to float US Social Security to Mexican illegal aliens. It's called the US Social Security Totalization Agreement with Mexico.
With it, the Angel Martinez's of the world will receive benefits for the $2,000 he paid into the system, but will receive a whole lot more and will receive it for the rest of his natural life.
Be glad for Angel because even though you have to work at least 10 years (40 quarters) before you become eligible to apply for benefits, Angel becomes eligible to receive US Social Security after only 1-1/2 years (6 quarters).
Not only that, but under the terms of the agreement (signed in May, 2004) Angel can also apply for and receive benefits for his wife and children, even if his wife and children have never stepped foot in the US.
Thankfully, Angel will not have to live in the US. He will be able to have the SS send his 'retirement' checks to him in Mexico.
Aren't you glad George W. Bush is looking out for the welfare of Angel Martinez?
There must be a Jayson Blair school for these fiction writers of the NY Slimes.
Their editors give them an assignment and some drugs and lock them in a cheap hotel room with a word processor. A few hours later they come up with these Jayson Blair stories.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.