June 3, 2013

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A $4.6 Trillion Opportunity (WSJ, 6/03//13)

Immigrants help ease this demographic problem in three ways. First, most come here between the ages of 18 and 35, near the start of their working years. Second, few come with elderly parents (only about 2.5% of immigrants are over age 65 when they arrive), and the seniors who do come aren't eligible for Social Security because they have no U.S. work history. Third, immigrants tend to have more children than do native-born Americans and their offspring will also pay into the system.

These facts are confirmed in the latest report of the Social Security trustees released last week. They conclude that the program's long-term funding shortfall "decreases with an increase in net immigration because immigration occurs at relatively young ages, thereby increasing the numbers of covered workers earlier than the numbers of beneficiaries."

How big a bonus are we talking about? Enormous. We asked Stephen Goss, Social Security's chief actuary, to estimate the value of the 1.08 million net new legal and illegal immigrants that currently come to the U.S. each year. He calculates that over 25 years the trust fund is enriched in today's dollars by $500 billion and the surplus from immigration mushrooms to $4 trillion over 75 years.

"The numbers get much larger for longer periods," Mr. Goss explains, "because that is when the additional children born to the immigrants really help."

Posted by at June 3, 2013 3:28 PM
  

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