Undocumented Workers, Contributions, and Citizenship - An interesting tension...

The Washington Post recently published an article that discussed the significant impact that the contributions of illegal workers have had on Social Security. The impact is quite positive because billions of dollars are being paid into a system by individuals who are unable to utilize the benefits. In essence, they are subsidizing a product that is not for their use. Stephen Goss, the Chief Actuary of the Social Security Administration states that he would estimate the benefit of these payments to number between $120 and $240 billion by 2007. Though that number is a pretty wide swipe, at the low end, this represents 5.4% of the trust fund's total assets, with the high end exceeding 10%. Essentially, Social Security would be in a much worse state if not for the contributions of the illegals. Certainly there are arguments that other programs are worse off for the presence of undocumented workers, but to say that they are only "leeching off the system" would be unfair. This also takes away a portion of the arguments of those clamoring for immigration reform.

Enter Charlie Crist, an independent (newly) candidate for one of Florida's Senate seats. Crist recently told the Huffington Post that he believes the solution for Social Security is to establish a meaningful path for those who are here illegally to achieve their citizenship and thus continue to contribute with the expectation that they may one day claim their share of the contributions.

While this may be "feel good" news to those fighting for immigration reform, this is not the silver bullet for Social Security. Adding one contributor and one taker to any equation does nothing more than to continue at current levels. Unless Social Security can use additional contributors to realize efficiencies of scale, there will be no improvement. It is this author's opinion that Social Security will realize more efficiencies through the implementation of technological improvements than it will from adding to both numerator and denominator of the Claimant calculation.

Immigration reform may come, but it is safe to say that it will arrive for the benefit for Social Security and those who Claim benefits from it.

For information about Social Security, contact Thomas O'Brien at Feiler & Associates.