Should Social Security Continue to Pay Benefits Based On Illegal Work?

Should Social Security Continue to Pay Benefits Based On Illegal Work?

There’s been little debate over changing a provision of Social Security law that allows for payment of benefits to noncitizens based on earnings from illegal work.  Should this be changed to protect Social Security?

Illegal immigrants get jobs using counterfeit, invalid, and stolen Social Security numbers that employers use to withhold payroll taxes and report earnings to the Social Security Administration.  Immigration advocates argue that unauthorized workers have little chance of collecting benefits.  But once illegal workers gain a valid Social Security number, that changes.  Social Security Administration policy allows noncitizens who have evidence of earnings, even for jobs worked under invalid Social Security numbers, to claim and reinstate those earnings for use in determining entitlement once they obtain their own work authorized Social Security number.  The earnings are then used to determine the initial retirement benefit amount.

Could Social Security finances be improved by banning Social Security work credit for earnings from illegally-performed work?  The following overview is from the non-partisan Congressional Research Service report “Social Security Benefits for Noncitizens” and summarizes how earnings worked in jobs while illegal are treated for Social Security purposes under current law.

How Illegal Earnings Are Treated For Social Security Purposes

Current Law

  • Treatment of unauthorized earnings differs, depending on when an individual is assigned a Social Security Number (SSN).  Individuals who were assigned an SSN before 2004 are not required to have authorization to work in the United States at any point to qualify for Social Security benefits.  Individuals assigned an SSN in 2004 or later are required to have work authorization at some point to qualify.

Individuals Assigned an SSN Before 2004

  • All Social Security-covered earnings are credited for purposes of qualifying for benefits, regardless of an individual’s work authorization status.  An individual is not required to have work authorization at any point to count all earnings for Social Security purposes.  (In other words, some non-citizens can qualify for Social Security benefits based entirely on illegal work.)

Individuals Assigned an SSN in 2004 or Later

  • With respect to benefit applications based on an SSN assigned on or after January 1, 2004, individuals must have work authorization when an SSN is assigned, or at a later time, to gain insured status.  If an individual has work authorization at some point, all of his/her Social Security-covered earnings count toward qualifying for benefits (all authorized and unauthorized earnings).  If an individual never obtains work authorization, none of his/her Social Security-covered earnings count toward qualifying for benefits.

Sources:  “Social Security Benefits for Noncitizens: Current Policy and Legislation,” Congressional Research Service, February 1, 2008.