The United States is in a social security crisis. As our working population ages and birth rates drop, we are soon going to contend with a boom of retirees and less social security money to aid them in their twilight years.
The solution? An immigration policy that encourages legal migration, stimulates the economy and infuses our labor force with able-bodied workers.
Studies Show Legal Immigration is a Good Thing
M.A. Clemens, in a reflection on the trillions of dollars that we are leaving untouched with our current immigration policy, wrote:
“The gains from eliminating migration barriers dwarf-- by an order of a magnitude or two-- the gains from eliminating other types of barriers. For the elimination of trade policy barriers and capital flow barriers, the estimated gains amount to less than a few percent of world GDP. For labor mobility barriers, the estimated gains are often in the range of 50-150 percent of world GDP.”
Moses and Letnes, in their 2004 study, found that complete removal of emigration barriers led to an efficiency gain of 96.5% to the world GDP. Klein and Ventura found even more optimistic results in 2007, with an efficiency gain of 122% of the world GDP.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, notes that the researchers at the Minneapolis Fed estimate that the U.S. economy would grow by at least a half-percentage point a year if legal immigration increased by 1 million people a year.
In the comprehensive 2016 study of the economic impact of immigration on the economies of wealthier nations such as the United States, the International Monetary Fund concluded: “Immigration significantly increases GDP per capita in advanced economies. One percentage-point increase in the share of migrants in the adult population can raise GDP per capita by up to 2 percent in the long run, mainly through increased labor productivity.”
The numbers don’t lie: Legal immigration boosts our economy, our labor force, and our ability to sustain productivity in light of the decline of the future native-born working population.
The Reality of Social Security in America
The Intentions of Social Insurance
Since 1935, the Social Security Act has played an integral role in helping those in disadvantageous positions, such as the elderly and the ill. The main stipulation is that it is funded by those working, with the promise of repayment following retirement.
It also provides much-needed income for people who would not have one without the existence of the social security program, due to disabilities that limit their capacity to work.
The Impending Crisis of Social Insurance
America is nearing a crisis. The largest age demographic in the United States is leaving the workforce, meaning that those who depend on social security for their retirement are confronted with a lack of funds.
Couple that with the fact that the birth rate has nearly halved in the United States since 1950, and we’re facing an aging population with a mere percentage of the social security funds available.
A compelling piece of evidence from the OASDI Trustee report shows that in 1950, there were 16.5 workers available to contribute to every beneficiary receiving funds from the SSA. Today, only 2.9 workers are available per beneficiary. Funds are running low, and a solution is desperately needed.
Even in this current state, the majority of Americans consider Social Security a retirement necessity and want to see it continue in the future. The National Academy of Social Insurance survey notes that 81% of Americans are willing to pay more in taxes in order to ensure its continued existence.
Legal Immigration Economics and the Future of Social Security
America has the unique opportunity and set of circumstances to pour billions of dollars back into our economy through intelligent, legal immigration reform. As it stands, the United States grants legal residence to 1 million immigrants a year, or 0.3% of the total population.
IDEAL proposes a plan to bring in an additional 2 million immigrants per year, allowing up to a 1% immigration rate, which is well within the averages seen in the past. Doing so would add at least $300 billion annually to the American economy. Long term, it gives a serious boost to the social security fund, as legal immigrants on a work visa pay into the tax system, just as natural-born citizens do.
Immigration reform gives us the opportunity to serve our most vulnerable populations, create a stronger workforce, and provide for the health of our retirement system in the long term.