Billions Earned Under Fake Social Security Numbers Could Calculate Benefits

Billions Earned Under Fake Social Security Numbers Could Calculate Benefits

Alexandria, VA (March 13, 2013)

Major immigration reform legislation would provide work authorization and Social Security numbers for an estimated 11 million immigrants working here illegally. But without changes to protect Social Security, illegal workers whose status later changes could become entitled to benefits based on jobs worked under fake and invalid Social Security numbers, warns The Senior Citizens League (TSCL), one of the nation's largest nonpartisan seniors groups. Social Security could be on the hook for hundreds of billions in new liabilities according to a new TSCL research report [insert link to the pdf here] based on data from the Social Security Administration.1

Unauthorized immigrants getting jobs show employers false or invalid Social Security numbers. When the Social Security Administration receives copies of W2s in which the name and Social Security do not match those on Social Security’s records, they go into the Earnings Suspense File (ESF). The W2s remain on file until the earnings can be reconciled with the real worker, even if that occurs years later. Since 2000, the Social Security Administration has received about 9.3 million such W2s per year on average, representing more than $69.4 billion per year in earnings.

The earnings reported to the ESF over the past 11 years now total more than $763.5 billion, unadjusted for inflation. “Those earnings are important, because that’s what the Social Security Administration uses to determine entitlement and initial benefit amounts — not the amount of taxes paid in,” says TSCL Chairman, Larry Hyland. Although Social Security is aware of the problem, no government estimates of the potential future cost of benefits based on work under fake Social Security numbers exist.

Immigration advocates say that the taxes on earnings worked under invalid Social Security numbers help boost Social Security’s financing and that workers would have little chance of collecting benefits. “But that would change under immigration reform that provides work authorization,” says Hyland. “Work authorization and a valid Social Security number are the two requirements that would allow former unauthorized workers to file a claim for benefits.”

That could have significant implications for future Social Security costs because, under current law, the fraudulent use of Social Security numbers to gain employment is not penalized. “One would think that the earnings under fake Social Security numbers would not be used to calculate Social Security benefits. But to the contrary, under current policies, those earnings can be reinstated — no questions asked,” Hyland says.

Social Security uses all earnings to determine entitlement even for jobs worked under fake Social Security numbers. If workers have kept evidence of earnings, like copies of their W2s, tax return earnings under invalid Social Security numbers would be reinstated to the new valid number.

“Congress is considering Social Security changes that would cut the benefits of U.S. citizens and authorized workers who paid into the system under valid Social Security numbers,” Hyland points out. “Yet our current polices reward people for the use of fraudulent Social Security numbers, undermining the financial solvency of the program,” he adds. TSCL supports legislation that would ban the use of earnings from jobs illegally worked for use in calculating Social Security benefits.

To learn more, visit For more information about Social Security and Medicare benefits, and keeping costs low while living in retirement, get a free copy of The Social Security & Medicare Advisor. Send a self-addressed stamped envelope and $1 for shipping and handling to: The Senior Citizens League, 1001 N. Fairfax St., Suite 101, Alexandria, VA 22314.

1SS-ESF10-SSA13013 Earnings Suspense File Data, Social Security Administration, January 30, 2013.