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How Migrants Help Fund U.S. Citizens' Pensions
By Mark Stevenson, Philadelphia Inquirer
August 31, 2004
MEXICO CITY - For the 14 years he worked as an undocumented migrant in the United States, Carmelo Rivera saw up to $30 deducted each week from the $300 to $500 he earned as a vineyard worker. The deductions were supposed to pay for his retirement.
But like millions of other Mexicans who worked under false Social Security numbers, he is unlikely to see a penny of it.
If some members of Congress have their way, undocumented migrants would be permanently barred from seeking to reclaim tens of billions they have paid into Social Security. Instead, the money will go to fund American citizens' retirement.
Neither the migrants nor Mexican officials are fighting the bill, despite what is at stake: a little-known Social Security account called the "earnings suspense file," which grows at a rate of about $6 billion a year and now stands at $376 billion.
The account is a catchall for mismatched names or numbers, but is funded mostly by undocumented migrants.
Some see it as the price of working in America.
"People work under made-up [Social Security] numbers because they don't have any choice," said Rivera, 34, of southern Oaxaca state. As for the lost money - the only retirement savings for him and his wife - "that's just something you take in stride. It's part of the cost of the rules they have."
Many migrants are unaware they can get credit for past contributions, even if made under false numbers, if they later get legal residency and present receipts or pay stubs.
"It's not very common, and it is not necessarily very easy," said Mark Hinkle, a spokesman for the Social Security Administration in Washington.
Juan Jose Nino Tejedor, who heads the migrant affairs office for the Mexican state of Veracruz, says he does not know of a single case.
Migrants such as Rivera are afraid of being punished if they admit they worked illegally. "We try to have as little contact with the authorities in the United States as possible," he said.
Hinkle said privacy rules barred his agency from reporting past visa violations to police. But some workers are using both false names and numbers, making it virtually impossible to ever prove a claim.
As difficult as the process already is, some lawmakers want to make sure no illegal migrants ever receive Social Security. A bill submitted to the House last year by Rep. Dana Rohrabacher (R., Calif.) would "forbid any Social Security credits for illegal aliens or work [done] in violation of the terms of a visa."
The wages of undocumented workers are "illegitimate earnings, and whether some of that money is going into the suspense file is basically irrelevant," said Jack Martin of the Federation for American Immigration Reform, or FAIR.
Dan Griswold of the Cato Institute in Washington, a nonprofit public-policy research foundation that has worked to promote Social Security privatization, notes that "these people pay into the system, and few ultimately collect anything. These are some of the lowest-paid workers. They deserve to receive some kind of benefit from their contributions."
Griswold notes that the migrants' payments are "gravy for Social Security" because the money from the suspense file is rolled into the agency's general fund - where it helps finance pensions for American citizens.
Some funds wind up in the suspense file because of the misspelling of U.S. citizens' names, or other administrative errors.
But migrants appear to be the largest contributors by far. Some of the last estimates on the amount paid into Social Security by undocumented workers were produced in 1994 by the Washington-based Urban Institute, an economic and social-policy research organization.
At the time, the amount was estimated at $2.7 billion a year when there were about five million undocumented migrants. But researcher Jeffrey Passel estimates the migrant number has doubled.
Assuming, as Passel's studies did, that about half of them work on the books, even at minimum wage, their contributions would now total at least $3.35 billion annually. That would be a little more than one-half of 1 percent of the $533.5 billion collected in Social Security tax payments in 2003.
Supporters of the ban say that when undocumented workers claim lost years of payments, they also build up more qualifying time for a pension, which could add to projected Social Security shortfalls.
A U.S.-Mexico accord signed in June allows legal workers to qualify for some retirement benefits based on time worked in the United States. But it does not address the larger problem of undocumented migrants.
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