A new report from the Partnership for the New American Economy and an analysis of Social Security data by MSNBC offer more evidence that immigrants, whether they are documented or undocumented, are major contributors to the economic well-being of major safety net programs. Because immigrants are generally younger and healthier than the native-born population, as well as frequently more entrepreneurial, their net- contributions to programs like Social Security and Medicare, and the stimulus they provide to job growth and the economy far outweigh their costs.
Last week the Washington Post reported that immigrants were the “best thing” that ever happened to Medicare, because they are pumping more money into the system and taking fewer benefits out, according to a new report by the Partnership for the New American Economy. U.S. immigrants’ net contribution to Medicare’s Hospital Insurance Trust Fund, the program’s core funding source, was $183 billion between 1996 and 2011, while US-born Americans’ contribution was negative $69 billion. On a per person basis, immigrants contributed $62 more per person to the trust fund than the U.S.-born, and claim $172 less in benefits.
According to the report, the net $183 billion contribution from immigrants during this period was enough to ensure the prolonged buoyancy of the Medicare trust fund, which will remain solvent through 2030. Immigrants’ contributions alone have helped secure three extra years of hospital coverage for the roughly 52 million Medicaid beneficiaries living in the U.S. While the non-citizen contributors who are helping keep this program afloat are a combination of the both documented and undocumented immigrants, and given that the undocumented are not eligible for federal benefits like Medicare one might conclude that they are a help to the program because they don’t receive benefits after paying into the system. However, the study finds that the major reason they are a net-benefit is their relative youth and good health.
Undocumented immigrants in particular are also playing a key role in saving Social Security, according to the Social Security Administration, as reported by MSNBC. Every year, undocumented immigrants collectively pay as much as $13 billion into the system while only receiving $1 billion in benefits in return. In total, undocumented workers have contributed more than $100 billion over the last decade while living in the shadows, says Stephen Goss, chief actuary of the Social Security Administration (SSA). In 2010, the SSA estimated that as many as 2.7 million undocumented immigrants were paying into the system. As baby boomers retire, the contributions of these hard-working undocumented immigrants will be crucial.
However, leaving undocumented immigrants in the shadows where they pay into a system that they never benefit from is not a long-term solution to Social Security’s long-term welfare. A better plan would be to legalize workers, so we ensure all are paying into the system. MSNBC reports:
“One of the solutions proposed to offset the diminishing funds has been comprehensive immigration reform. In a study commissioned by Florida Sen. Marco Rubio, a Republican member of the Senate’s Gang of Eight architects for immigration reform, found that the legislation would have boosted GDP by 1.63% and created more than 3 million jobs.
Adriana Kugler, a former chief economist of the U.S. Department of Labor under the Obama administration and a professor at Georgetown University, said lifting undocumented immigrants into the legitimate workforce would have a significant impact on Social Security’s long-term future.”
While hopes of immigration reform languish in Congress, President Obama is expected to take executive action by the end of the summer that could protect millions of these undocumented immigrants from deportation. The actions could temporarily grant work permits to some undocumented immigrants, helping more get legal jobs and pay more taxes. Allowing the undocumented to integrate into society will have many benefits, as many studies have noted. Immigrants tend to be entrepreneurial and create more job-creating businesses than the average population, in addition to being younger and healthier. Allowing them to stay legally will strengthen our economy and our social programs for future generations.
Photo by 401(K) 2012.