Q: What impact do undocumented immigrants have on Social Security?


Q: What impact do undocumented immigrants have on Social Security?

A: Undocumented immigrants have two main impacts on Social Security, both of which help support the system. The first impact is to pay more in Social Security taxes than they receive in benefits: many undocumented immigrants pay Social Security taxes (by using an Individual Tax Identification Number if they don't have an SSN, or by using a fake SSN presented to an employer), but are not eligible for benefits because they do not have legal status. The Social Security Administration's chief actuary estimated this net benefit was ~$12 billion in 2010 (see chart above). Undocumented workers hope that paying in will help them get legal status in the future. 

The second impact is the effect of children born in the U.S. to undocumented immigrants. These kids are natural born citizens and this "contribution to future generations of workers is the largest part of the effect." Social Security is a "pay-as-you-go" system, where current tax collections fund the benefits currently being paid out. This means increases in the tax-paying population (more kids who will get jobs and pay taxes!) help fund benefits for people who are currently retired (like aging baby boomers). 

- originally published in the 8/14/2017 newsletter

Stephanie Lee