Commentary

Immigrants: The key to Social Security

Marketplace Staff Apr 7, 2010
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Commentary

Immigrants: The key to Social Security

Marketplace Staff Apr 7, 2010
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TEXT OF COMMENTARY

Bob Moon: Even though most Americans are putting money into the Social Security, those taxes are falling short of what’s needed to break even. And that is an issue that concerns commentator Robert Reich.


ROBERT REICH: This is the year Social Security will pay out more in benefits than it receives in payroll taxes. This tipping point came sooner than anyone expected because the recession has kicked so many people off payrolls. But it was coming anyway. And it adds new urgency to reforming Social Security — a task the president’s commission on the nation’s debt is focusing on.

No one should be surprised if the commission suggests raising the retirement age a bit, reducing benefits to retirees with more wealth, maybe increasing the amount of income subject to Social Security taxes.

But another group of policymakers, far removed from Social Security, is now focusing its efforts on an issue that’s likely to have a bigger impact on Social Security than any of these changes. And that issue is immigration.

You see, the biggest reason Social Security is in trouble, and Medicare as well, is because America is aging so fast. The baby boom generation is retiring. Seniors are living longer. And families are having fewer children.

Add it all up and the number of people who are working relative to the number who are retired keeps shrinking.

Thirty years ago there were five workers for every retiree. Now there are three. Within a couple of decades, there will be only two workers per retiree. There’s no way just two workers will be able or willing to pay enough payroll taxes to keep benefits flowing to every retiree.

This is where immigration comes in. Most immigrants are young because the impoverished countries they come from are demographically the opposite of rich countries. Rather than aging populations, their populations are bursting with young people.

Once the American economy recovers, most new immigrants to the U.S. will be working for many decades.

Get it? One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree, and the simplest way to do that is to allow more immigrants into the United States.

MOON: Former Clinton Labor Secretary Robert Reich is a professor of public policy at the University of California, Berkeley.

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