Congress is coming together on immigration legislation that would provide work authorization and access to Social Security numbers to millions of immigrants who worked here illegally. A new TSCL research report based on data from the Social Security Administration (SSA) indicates that Social Security could be on the hook for hundreds of billions in future claims for benefits based on earnings from jobs worked while illegal.
Unauthorized immigrants get jobs by showing employers false or invalid Social Security numbers. When the SSA receives copies of W2s in which the name and Social Security number don’t 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. 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. Although Social Security is aware of the problem, no government estimates of the future cost of benefits based on work under fake Social Security numbers exists.
That could have significant implications for future Social Security costs, because under current law the fraudulent use of Social Security numbers to work 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," says TSCL's Executive Director Shannon Benton.
Under current policies, 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 W2s and tax returns, earnings under invalid Social Security numbers would be reinstated to the new valid numbers.
TSCL's seniors and supporters feel this policy rewards people for the use of fraudulent Social Security numbers, undermining the financial solvency of the program. TSCL supports legislation that would ban the use of earnings from jobs illegally worked prior to authorization for use in calculating Social Security benefits.
Sources: "House GOP Seeks Immigration Solution," CQ Roll Call, February 28, 2013. "Growth of the Social Security 'Earnings Suspense File,'" Mary Johnson, The Senior Citizens League, February 2013.