Balancing the nest egg

By Michelle Chen May 15, 2009

In the wake of the new Social Security and Medicare trustee reports, the media and doomsaying politicians are drumming up panic about the pending implosion of America’s nest egg. Critics say this is a perrennial campaign of nonsense, and that the long-term issues in Medicare and Social Security can be fixed through rational reforms. Former Labor Secretary Robert Reich also points out that Medicare is facing greater peril, driven not so much by structural flaws as runaway medical cost growth. The inner-workings of Social Security are still worth a look, though, because it’s a critical resource for elders in communities of color. Older Blacks and Latinos generally have less to fall back on post retirement. Compared to white beneficiaries, a much higher proportion of Blacks and Latinos depended on Social Security for at least 90 percent of their income. In addition, older immigrants have less access to Social Security; compared to their non-immigrant peers, they depend more heavily on wage income (at lower earning levels) and SSI (a parallel program that assists aged, blind and disabled people with little or no income), according to the Migration Policy Institute. On balance, contrary to popular perceptions of immigrants mercilessly sucking up public benefits, immigrant demographics translate into a boon for aging boomers. Federal data shows that immigrant workers tend to be young (offsetting population aging trends). And many older immigrants do not have enough registered earnings to qualify for benefits. With equity in mind, some progressive economists have pitched realistic policy changes to make retirement more sustainable for all, such as strengthening Social Security tax policies and creating a national retirement income system. Whatever uncertainties are on the horizon for Social Security and Medicare, there’s clear evidence that immigration reform could ease the strains of America’s increasingly lopsided demographics. The National Foundation for American Policy projected that a 33 percent increase in legal immigration would bring about $138 billion to Social Security over 50 years. And according to a 2005 White House assessment, 50 to 75 percent of undocumented immigrants are already paying state and federal taxes (indirectly subsidizing other retirees with unclaimed funds) The Immigration Policy Center argues that immigration reform needs to be a part of the conversation on sustaining Social Security and Medicare.

The aging of the native-born population will leave the U.S. economy short on workers and taxpayers just when more workers and taxpayers are needed to support the increasing number of retiring Baby Boomers… sensible immigration reform would maximize the economic contributions of immigrants, which will shore up not only Social Security and Medicare, but the U.S. tax base and the U.S. workforce as well.

If conservatives are so worried about the alleged Social Security crisis, maybe they’ll finally stop writing off immigrants’ potential contributions to core social programs. After all, they wouldn’t be trying to ram through shortsighted policies and score political points at the expense of the truth, would they? Image: Urban Arts