Unprecedented Growth In W2s For Illegals Threatens Social Security's Solvency

Unprecedented Growth In W2s For Illegals Threatens Social Security’s Solvency

TSCL Releases New Analysis Of The Cost Of Illegal Immigration

An inconsistency between U.S. immigration law and Social Security threatens to undermine the Social Security benefits of millions of U.S. senior citizens.  TSCL recently publicized this threat by releasing a new analysis that found the cost of immigration "guest worker amnesty" would worsen the solvency of the Social Security.

Congress is considering immigration legislation that would legalize an estimated 12 million illegal immigrants by providing work authorization and with it, valid Social Security numbers.  A recent law change requires immigrants to be working here legally at the time a Social Security number is assigned in order to claim benefits, but a provision of that law appears to allow immigrants to become entitled to benefits should they receive work authorization at some later time.

Thus, illegals who obtain authorization to work in this country, as they would under immigration reform, presumably could eventually claim Social Security.  In addition, when determining entitlement for insured status, and when calculating the initial retirement benefit, the Social Security Administration (SSA) uses all reported earnings from covered employment in the United States, even if the earnings were from illegal or "unauthorized" work.

Although immigration law prohibits work without authorization, immigrants do find jobs, and the majority of employers report their earnings to SSA.  False and invalid Social Security numbers (SSNs) are supplied to employers virtually without any serious or immediate consequence.  Employers report the wages using these numbers or, in some cases where no number exists, file the reports using a series of zeros in the SSN box (000-00-000).

Each year SSA receives more than 250 million W-2s.  When the name and SSN don't match SSA's records, the W-2 is held in the Earnings Suspense File (ESF).  The unauthorized wages earned and reported under invalid SSNs represent a rapidly growing future benefit liability because earnings are used to determine both the number of quarters of coverage worked for insured status, and the initial retirement benefit.
The most recent data indicates there has been a very significant jump in both the number of these mismatched reports, and the amount of wages they represent in recent years.  The Social Security Administration made unpublished data available to TSCL that indicates the ESF is growing at an unprecedented pace, and the cumulative wages represented now exceeds $585 billion.

Once illegal aliens obtain a valid SSN, they can provide SSA with evidence of earnings reports from unauthorized employment prior to receiving their SSN.  Their earnings will be reinstated under their valid SSN.

It's widely anticipated that benefits will be cut, perhaps significantly, for retirees at some point in the relatively near future, and that significantly higher taxes will be needed.   TSCL is calling on Congress to close the loophole that allows benefits for illegal work.  TSCL endorses the "No Social Security for Illegal Immigrants Act" (H.R. 736) introduced by Representative Dana Rohrabacher (CA) which would exclude earnings for unauthorized work from being counted toward benefit entitlement.

Sources: "Social Security Benefits For Non-citizens," Congressional Research Service, July 20, 2006, RL32004.  Statement of the Honorable Patrick P. O'Carroll, Inspector General, Social Security Administration Before the Subcommittee on Social Security of the House Committee on Ways and Means, March 02, 2006.  "Better Coordination Among Federal Agencies Could Reduce Unidentified Earnings Reports," Government Accountability Office, February 2005, GAO 05-154.

June 2007