Immigrants have provided growing support for Social Security. They become part of the workforce that pays OASDI payroll taxes if they work in “covered” employment. It may be a very complex, heated, and even divisive issue. But let me make a very strong point that is obvious from the Trustees’ program data.
Immigrants in the workforce provide cash flow — income — to this pay-as-you-go program. Without immigrants, the Social Security OASI Trust Fund would be running out of funds even sooner.
The sections describing the historical immigration patterns over the decades since 1980 are easy to find in the reports. I won’t recite early history here. What I will note is that immigration levels increased in the years before 2000. Those levels have also risen and fell as the U.S. economy grew or was hit by a terrorist attack, a financial bubble, and a pandemic.
As the following chart shows, the Trust Fund administrators forecast that immigrants will still arrive on our shores. Each year, they assume these new employees are joining the workforce. I organized the chart to print on two pages so that you don’t have to get a magnifying glass to read it.
ImmigrationForecastSweep2pages
Forecasting immigration has become more and more detailed over successive Trustees Reports. Early reports lacked access to decent data and had round numbers — estimates. The Trustees describe how they develop the forecasts. Lots of assumptions. The following link is to the immigration assumption page in the 2018 report. It shows the categories. The data for legal immigration is the most reliable as those immigrants have navigated the administrative system. The “other-than-legal” immigrants are more like guestimates, for the many reasons described in the reports.
SSTrustees2018ReportImmigrationData
The following chart shows the full spread of immigration assumptions in the “intermediate” scenario — most likely — and their averages. By report year. Out the full 75-year forecast horizon. The Trustees present numbers in five-year increments. Occasionally they increase the first assumption. The Trustees expect the reduction in immigrants during Covid to be fully offset by increases in immigration in their post-Covid assumption.
SSImmigrationAssumptionsandAverages
In the next chart, I multiplied each year’s average immigration assumption by 75 (the 75 years of the forecast horizon). A quick-and-dirty view of how the workforce is being fortified by immigrants.
I also calculated the increase in immigrants in each year. This has been on my mind since the 2015 budget deal and the reallocation of OASDI payroll taxes from OASI (Social Security) to Disability. Whereas the major reallocation in the mid-1990s had a big impact, there was no impact when Congress made the short-term reallocation in 2015. I discuss this reallocation in another post. [“Raided?” Not Really…]
It just seems to me that they “goosed” the immigration assumption in 2016 to add some cash to income, which would make the income higher. For actual cash to be added, those immigrants would have to show up and actually enter the workforce.
ImmigrationAssumptionsVariationsandSizing
It is the comparison of the historical forecasts with actual immigration numbers over those years that has most interested me. The next chart shows the actual immigration numbers back as early as 2000. The numbers in italics are estimates of near-term actuals. The numbers do change from report to report, but not significantly for older reports.
I took a look at the nearest-year forecast to see how closely the actual immigration number is to forecasted number. And included the actual for the year after that. Those are in the three columns on the right.
ImmigrationHistoricalsvsAssumptions
What I saw in the actuals were big swings in immigration in recent years. Comparing the recent actual numbers with the forecasts for those same years in prior models, I have a hard time not believing that the OASI Trust Fund will become depleted a bit faster than forecasted.
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