Could immigrants save Social Security?
Social Security needs Congressional attention if it is to retain its fiscal health. By 2035, the youngest of the baby boomers (born between 1946 and 1964) will reach their 70’s, and if nothing is done, the government will only be able to pay out 83% of promised benefits. Both Republicans and Democrats understand that action must be taken, but, as you can imagine, their choices of whether to cut benefits or raise the funds to sustain them differ markedly.
Republicans, in characteristic hyperbole, stress the vulnerability of a faltering system. House Speaker Mike Johnson even characterizes the program as “the greatest threat to our national security,” In a more measured, yet nevertheless alarming, hint of what he might do to Social Security, Medicare, and Medicaid, in March Trump said, “There is a lot you can do in terms of entitlements, in terms of cutting.” Some Republicans advocate a major overhaul. Others, like Ron DeSantis, argue for scrapping the whole thing in favor of privatization. What would that look like? IRA accounts for all workers? Ripping away the safety net from minor children of workers who died before receiving any benefits, the spouses who did not work in the paid workforce long enough to qualify, and the disabled who now benefit from the program?
In March 2024, the House Republican Study Committee, representing 80% of Republican membership and chaired by House Speaker Mike Johnson, made clear their fiscal priority—preserving the Trump tax cuts for corporations and the top 2% by shrinking retirement benefits for average workers, by reducing the cost-of-living adjustments, by raising the age for full benefits from 67 to 69, and by changing the early retirement age from 62 to 64. Two more years on the job to qualify for full benefits may not seem harsh to those with middle class jobs, but what about the workers who have performed decades of manual labor? Think of the Amazon warehouse workers who, year after year, walk the equivalent of 15 miles a day on cement floors during a 10-hour shift.
Democrats, on the other hand, have advocated refilling the trust fund coffers by collecting social security taxes on other sources of income (e.g. inheritances and income from investments) and lifting the salary cap ($168,600 per year). Workers’ salaries are subject to a 12.4% tax (6.2% paid by the worker and 6.2% by the employer). Those fortunate enough to receive a salary over $168,600 currently pay nothing on the income over that amount. Simply removing that cap would, over time, restore 55% of Social Security’s unfunded obligation.
There is another way of putting the social security system on surer footing that neither Republicans nor Democrats talk about—increasing the labor force. In 1960, there were 5 workers for every Social Security recipient. In 2033, there will be only 2.4 workers for every beneficiary. Add to that the effect of declining fertility rates from a high in 1963 of 5.32 births per woman during her childbearing years to 1.64 in 2020, with further declines expected, resulting in a deeper fall below the “replacement rate” of 2.1.
As our workforce shrinks, we need an infusion of hard working younger workers, both highly skilled and manual laborers, who will pay their taxes and benefit from the skills learned on the job and the American wages they receive. Current immigrants perform vital work for all of us. Think of the six immigrant workers making repairs to the pavement on the Francis Scott Key Bridge in Baltimore on the night they plunged to their death. Or the Filipino nurses, so well trained in their native country that they easily pass state licensure exams.
The National Center for Health Workforce Analysis predicts that by 2036, the demand for workers in Long Term Care settings will grow 42% and 41% for home health aides assisting seniors aging in place. With such jobs currently going unfilled, we can only expect a deeper shortage. Many of these jobs require only a high school education and on-the-job training and could easily be filled by immigrant labor.
A targeted increase in immigrant labor would not only augment our workforce in areas with current shortages; it would also contribute to the vitality of our economy. Immigrant workers already do. According to the American Immigration Council, in 2021, the 30 million immigrants working in the U.S. paid $524.7 billion in federal, state, and local taxes and contributed $1.4 trillion in spending power to the U.S. economy. Most pay into Social Security even though few will ever meet the requirements necessary to claim benefits.
Today’s workers must pay for the benefits received by yesterday’s workers. If we want to strengthen this popular safety net for current and future retirees, our representatives in Congress must break their partisan stalemate and develop a common sense immigration system, one that welcomes younger workers.