Can Immigrants Save Our Social Security?
By Bill Johnson / February 1, 2017
For a decade or more, members of Congress have yelled for changes in the Social Security system. They have argued that if nothing changes, the system will run out of money.
The reason is simple: there won't be enough money coming into the fund from Social Security taxes to pay the monthly checks going out to Social Security recipients. The latest report by the Board of Trustees says that would happen within the next 10 years. Trustees recently told Congress that reserves would be so low by 2023 that benefits would have to be cut to 89 percent of the current level.
Two major factors contribute to this. The first is that Americans are living longer because of better healthcare, medical advances, and lifestyle changes. Therefore, they're collecting Social Security checks for more years than in the past. The second is that women are having fewer babies now. In 2007, the birth rate was 2.1 babies per woman. The latest study puts the birth rate at 1.88 per woman. Demographers remind us this is not enough to replenish the population. Unless a woman has at least two children there won't be enough to replace the father and mother when they die.
A George Mason University study found that in 1950 there were more than 16 workers for each retiree. Today there are about three people work and pay into the system for each retiree. In 2013, about 163 million workers paid into the system while about $58 million collected checks out of the system. When the so-called "baby boomer generation" retires, the math gets worse. There will be even fewer workers for each retiree. Unless native-born women have at least two children our population will continue to shrink and exacerbate the Social Security problem.
That brings us to immigrants and how they relate to sustaining the U.S. population and supporting the Social Security system. (We're talking about legal immigrants.)
Immigrants from many countries have higher birth rates than native-born women who have decided to have smaller families than in years past. Those immigrants provide workers who pay into the Social Security Trust Fund. According to the Small Business Administration, immigrants are nearly three times more likely to start a small business and create jobs are people born in the U.S. "The New American Economy," a bi-partisan group of 500 Republicans, Democrats, mayors, and business leaders, found that in 2011 immigrants started 28 percent of new businesses in the U.S. The jobs created help fund the shrinking Social Security Trust Fund.
Of course, Congress could deal with this Social Security funding problem by raising Social Security taxes to bring more money into the system, but few members want to be responsible for raising taxes at any time. You can guess the odds on that. So maybe the best plan to save Social Security is to put out the welcome mat for immigrants.
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