Setting the record straight: are undocumented immigrants draining Social Security?

According to Pew Research Center, 18% of Americans are relying on social media as their primary source for news. This makes social media platforms the single largest news authority to the majority of the country.

But despite social media being our go-to for all things current events, most of us also know these sources often aren’t reliable.

So in this series, we’re taking a look at some of the most widespread beliefs circulating on social media platforms about Social Security. We want to check in with the experts to see if some of the most popular Social Security claims we see every day are based in fact or just plain fiction.


To start this series off, we want to begin with what—in our experience—is the MOST hotly debated and repeated claim we see in comments from Facebook to Twitter to Reddit and…just about everywhere else.

…And just a fair bit of warning here: whether you agree with this claim or not, it is very likely to raise your body temperature by at least a few degrees once you read it. You might want to grab a glass of cold water before we continue.

Ready?

Alright, let’s jump right in.

Claim: Social Security is being negatively affected by undocumented immigrants applying for and receiving benefits.

If reading that ruffled your feathers a little bit, you’re not alone. This claim pops up in the comments in just about every Social Security post we see on Facebook, and it has an amazingly powerful ability to turn even the most civil discussion into a moderator’s nightmare. To be perfectly honest, it happens so often we’re not entirely comfortable even taking this claim on.

But if we want to have a discussion about the validity of popular Social Security beliefs, there’s no way we can leave this one unexamined. It ranks HIGH on that list. And it’s the source of a lot of unnecessary internet fracas.

This claim typically shows up when we’re talking about different issues affecting Social Security’s long-term funding problems.

There are several factors at play in the Trust Fund’s insolvency, but to sum them all up, there’s just more money going out in benefits than coming in. And it’s been happening for long enough that in 2034, the Social Security Trustees estimate we will no longer have the surplus funds to continue paying full scheduled benefits.

The factors contributing to the benefit versus contribution imbalance are largely demographic. There are more beneficiaries than ever before now the massive Baby Boomer generation is retiring, and there just aren’t enough working people to contribute in excess of that demand.

And thanks to Coronavirus, we’re also in a historic period of unemployment, wage loss, and business closures. That’s not exactly helping on the contribution front either. The COVID recession alone has set us back one year from previous long-term projections.

But that explanation, simple as it is, is often not explanation enough to people who are anxious about their retirement security, bewildered by the lack of Congressional action (we’ve known insolvency would be a problem for many, many years), and perhaps looking for a more direct and actionable reason for our predicament.

That’s where we think this claim may have started. Many are just now learning about this funding crisis, but the truth is only the coverage about it is new. This problem is as old as the last major Social Security funding fix—and that occurred during the Reagan Administration.

Imagine only hearing about this HUGE problem that could affect MILLIONS of retirees—not to mention the working people who could very well be asked to contribute more to shore up the program—in the last few years. And then imagine being told Congress has known this would happen for nearly 40 years and done nothing. It’s just the gradual shifting of age and economic demographics over time. And we just…sort of ignored it entirely.

It might be much easier for people to believe that something more dubious and recent has happened.

Improper payments to a large undocumented population would fit that bill. Immigration has been a particularly heated topic the past several years, so it’s no surprise we might look to that as a potential reason why Social Security is suffering.

This idea has gained even more steam from the fact that several of our elected officials themselves have suggested it’s a reality. In fact, H.R.5577, the No Social Security for Illegal Aliens Act of 2020, was introduced in Congress just a year ago with 15 cosponsors.

So, is it true undocumented immigrants are collecting Social Security? Are they collecting benefits without paying into Social Security? And is this happening on a scale large enough that it’s negatively affecting Social Security’s finances?

Let’s start with a few pertinent facts about immigrant benefit eligibility.

You do not have to be a citizen to earn Social Security benefits in the United States. Non-citizens may be authorized to work and issued a Social Security Number. If they work in a Social Security-covered position, they will be expected to pay FICA taxes. After working for 10 years, they will be eligible for Social Security benefits like a citizen would be under the same requirements.

There are certain immigrants who are eligible to receive Social Security benefits WITHOUT working 10 years. The United States has Social Security totalization agreements with 26 countries that allow for a prorating of benefits. These agreements say work histories from both countries can be combined so immigrants can meet eligibility requirements to receive benefits. Immigrants hailing from of these countries who have earned at least six work credits in the United States can receive Social Security.

Undocumented immigrants in the Deferred Action for Childhood Arrivals (DACA) program are eligible for Social Security Numbers and work authorization. If a DACA request is approved, an undocumented immigrant can receive work authorization and a Social Security Number. Once the proper procedure is followed to get these things, these workers can begin earning work credits to eventually apply for Social Security benefits on retirement. To qualify for DACA, individuals must have been younger than 31 as of 2012. The absolute oldest a DACA immigrant would be right now is 40, so no one under the DACA program is claiming Social Security benefits.

Undocumented immigrants are only eligible for a small number of benefits—Social Security is not one of them. Excluding DACA-approved individuals, undocumented immigrants are roundly excluded from major benefit programs. There are only a handful of services available to these immigrants, including access to emergency medical care, disaster relief, communicable disease treatment and vaccination, and community crisis services and soup kitchens. Only in dire situations or where it’s a matter of public health are undocumented immigrants eligible for benefit programs.

These facts are valuable context to this argument. Bits and pieces of these policies popping up online and being misinterpreted or politicized could be partially to blame for the belief in widespread benefit payments to undocumented immigrants.

Now, let’s check out the hard facts about undocumented and ineligible workers and beneficiaries.

With very few exceptions, you must earn 40 work credits in the United States to be eligible for any Social Security retirement benefit. You must also contribute to Social Security via FICA taxes while working. Social Security is an earned benefit system. And that system functions the same way for immigrants as it does for U.S.-born citizens. As well as having to work a certain amount of time and pay taxes, immigrants must be legally present in the country.

In order to work in the United States to earn those work credits, you’d also need to have a Social Security Number. You can only get that if you’ve been issued a work permit.

Now, do people steal Social Security Numbers? Yes. There arrests for fraudulent SSN use every year. SSNs are often illegally obtained to access a variety of things, most importantly employment. You have to be able to produce a SSN to an employer for tax paperwork to get a job.

But using a fake SSN only provides a gateway to employment. After that, FICA taxes would be withheld from that person’s paycheck just like any other person. The tax that funds Social Security comes out of our pay before it ever touches our bank accounts.

So assumptions about those working illegally receiving benefits when they haven’t contributed to Social Security are incorrect. The only people who could potentially claim benefits are those who have earned the benefit by contributing to Social Security a certain number of years. Performing that work under a false SSN does not change that fact. The work credits would appear on the record of a SSN that doesn’t actually belong to the person using it, but the FICA taxes would very much come out of that person’s pay.

In this actuarial note released by the Social Security Administration in we can get full picture of how unauthorized work is affecting Social Security’s long-term financial status.

Effects-of-Unauthorized-Immigration-on-the-Actuarial-of-the-Social-Security-Fund

In 2013, it seems the SSA was also pretty interested in answering this question. According to their own analysis, over 10 million immigrants were found to be working illegally in the United States, and they contributed approximately $13 billion to Social Security through payroll taxes in 2010.

Regarding improper OASDI benefits paid to undocumented immigrants, it seems there were as many as 180,000 beneficiaries at that time. In total, the SSA estimates those benefits amounted to about $1 billion.

In this report, the SSA concludes in its report that while improper payments to undocumented immigrants occurred, the net effect undocumented immigration has on Social Security is a $12 billion dollar gain.

So to answer the two big questions in this social media claim:

Are undocumented immigrants receiving Social Security benefits?

Yes. The SSA has confirmed that a percentage of those working illegally in the United States are indeed collecting Social Security benefits.

However, implications or explicit statements this is a significant amount of people are inaccurate. The vast majority of those working illegally in the United States are not collecting any kind of Social Security benefits.

To put these numbers into perspective, in 2010—the year examined in this report—there were over 52 million people actively receiving Social Security benefits. The SSA estimates 180,000 of them were undocumented immigrants.

Are improper payments to undocumented immigrants affecting Social Security’s long-term solvency?

Yes. The SSA has determined payroll tax contributions to Social Security from unauthorized work far exceed the amount paid out in benefits to undocumented workers. Undocumented immigrants do have an impact on Social Security’s cash reserves. It’s just a positive impact.

In general, unauthorized immigration has dropped to its lowest level in a decade, according to Pew Research Center. In fact, immigration to the United States in total is trending downward. Between 2017 and 2018, new immigrations decreased by 70%.

While this means there’s no reason to fear any worsening problems with improper benefit payments, it also means we ARE going to have a totally different immigration-related problem with Social Security: not enough immigrants paying into Social Security.

Maintaining a healthy influx of new workers into the country provides millions of dollars to the Trust Fund through FICA taxes. When the working generation isn’t big enough to support a larger retiring generation, we rely on immigrants to close that gap. The truth is Social Security has always benefited financially from people deciding to live and work here.

But either way, immigration is NOT something that critically impacts Social Security’s funding—not enough to put a significant number of years on or off the insolvency countdown clock. At the end of the day, it’s that combination of long-term organic demographic factors that’s taking the “security” out of Social Security—that’s what we’re ultimately going to have to contend with to fix our problems.

So there we have it. The oft-repeated claim that unauthorized immigrants are draining large amounts of money from the Trust Fund just isn’t true. None of the data made available by the SSA supports that claim. It may be a tense issue on social media, but we can’t find any reputable sources to back it up.

As we said, the truth about Social Security’s funding woes is somewhat hard to swallow. Social Security is in trouble now—for us today—because Social Security only seems to be important to lawmakers on the campaign trail. After that? Nothing gets done. It’s a problem the winners table for the next guy to figure out.

But as the retirees and near-retirees soon to be affected by insolvency, we have to cut through the myths and unite around solving the real problems impacting Social Security. And right now, the REAL problem is Congress doing nothing.

There are no more “next guys” to push this problem off on. The Trust Fund needs to be repaired immediately.

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