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Friday, January 18, 2013

On Immigration and Social Security

 

There are two very big issues on America’s plate in 2013; A) what to do with Social Security (SS) , and B) immigration. For the most part, these two topics are uniquely different. There is one important area where they over lap – money.

SS maintains an account called the Earnings Suspense File (ESF). This is account used for booking money that comes into SS from improper SS ID# (SSNs). Credits to ESF can arise from administrative errors. It’s easy to imagine how some one transposes a few digits on the SSN, and the computers at SS recognizes the mistake. Until the error  is fixed, the money from payroll taxes on that SSN is suspended in the ESF.

The ESF is not just an account where errors are trapped and later reconciled. It is a doghouse account that has collected well over a hundred billion dollars over the past decade. The vast majority of the money in the ESF comes from workers who are using an illegal SSN.

 

This site produced the following report on the Earnings Suspense File (ESF) at SS:

 

Screen Shot 2013-01-17 at 9.07.31 AM

 

There is no data after 2010 on the ESF account. I made some conservative assumption for 2011/12, and adjusted it for interest earned starting from 2001. The P&I totals over the past eleven years come to $138 billion for SS and $33B for Medicare. That ain’t hay; for SS it means that 5.3% of the entire SS Trust Fund is ill gotten gains, for Medicare the contribution from illegal workers is equal to 8+% of its Trust Fund.

From 2001 through 2012 the total amount of wages paid to undocumented workers comes to just shy of $900 Billion. Wow! The annual average is $75B. Today, the average documented worker earns $53K a year, this means that 1,400,000 jobs (100+K a month!) might otherwise go to documented workers.

Unemployment is 7.8%. A more desirable level would be 5.5%. To achieve this, approximately 4mm jobs are needed. There are 7+m jobs being filled by undocumented workers today.

 

It’s tempting to look at these comparisons and reach a conclusion that America could move the needle on unemployment by eliminating undocumented workers. As a practical matter I don’t think that is possible, nor would it be desirable.

 

This a perplexing problem, and I don’t know what to do about it. However, “Fixing” the problem that exists is something that has to be done. Consider the ESF data:

 

bkcorrect

 

The obvious conclusion from the chart is that when the US economy is strong, illegal workers come. When the economy weakens, the undocumented workers leave. There are signs that the long recession in housing is over. If that is to be the case, then the country can expect a new wave of undocumented workers to come with the recovery.

 

Given the split that exists between conservatives and liberals on all issues today, it would seem unlikely that anything can be done to make this “right”. That would be a stupid result, there is a hell of a lot riding on the outcome.

 

Note:

If an illegal worker obtains a forged SSN, and uses it to obtain work in the US, then that illegal worker will be entitled to receive SS benefits on exactly the same terms as a legal worker. The only difference is that the illegal worker must receive their SS payments in a bank account outside of the country. What a system!

 

bkchaos

 

 

 

 

 

 

Comments

  1. Illegal workers drive down wages across the board so need to be eliminated. A labor force is a market, supply and demand applies, flood the labor market with labor and labor is in no possition to demand anything, they become beggers willing to take part time minimum wage and no benefits. It empowers liberalism to provide what the market doesn’t provide.

    There is no such thing as a job no american will do if the price is right and in some cases the working conditions which leans towards hours and schedule not so much the actual physical labor involved. A lot of people do bruttle jobs under really harsh conditions and they are paid for it.

    Driving down wages across the board starves the system for tax revenue and also empowers the nanny state to provide government assistance so everyone loses multiple times. The white collar labor market gets flooded as people go to college by the millions which drives down wages, the tax revenue drops which means the government targets anyone still making a buck and the nanny state grows which means the government targets anyone making a buck some more.

    We ended child labor and slave labor and life went on in this country, to think we need illegal labor is a myth created by labor racketeers who’s products or services wouldn’t be viable in the market place without cheap labor. It’s no loss because people would spend their money on something else and no big deal if the filthy rich don’t have cheap servants.

    • “Illegal workers drive down wages across the board so need to be eliminated”

      Wrong. Those jobs don’t exist at old wage levels. Without lower cost workers those jobs go to China. The world isn’t an island.

      “There is no such thing as a job no american will do if the price is right”

      Businesses chose rates, not workers. Get rid of the government safety cushion and lift the burden off business and you’ll get jobs growth. Government is doing everything possible to make life difficult for business – higher taxes, more regulations, punitive legal system, wage controls, pro union, etc. Those are costs for business. When business can’t profitably pursue an opportunity it doesn’t – that means no jobs.

      If you want more jobs, make things friendly for business and stop buying into the nonsense that punishing business is good for the worker. That just drives jobs overseas where companies don’t have to put up with US government bullsh*t.

      • That’s BS, so china is going to mow our lawns, wash our cars and pick our veggies?

        illegal immigrants are huge drag on budgets while empowering corporate farms…neighborhood farms will flourish more and maybe people will get out and mow their lawns. I would rather pick vegatables than waive a cash for gold sign on a blvd..

        come back to reality

      • Debt, via fractional reserve lending (FRL) allows Americans to consume beyond what their salary supports. That consumption allows businesses to meet demand levels that their employees compensation does not support. The businesses exist because demand has been brought forward in order for the business to supply it’s product or service. Debt is the only mechanism available that will allow demand to be brought forward. Wage suppression has prevented any real time, organic demand to exist, at least not at current GDP levels. Bring in sensible credit standards and interest rates that put purchasing power back into the currency and a lot of “businesses” will simply go away.,

        Instead, people are borrowing away from the future to fund a present which has been denied to them, mostly due to politics. Profiteers of this unsustainable setup work hardest to keep such politics in place.

      • Couldn’t be more false.

        During my first few years of college, I worked at a warehouse that fulfilled online orders. Many of my coworkers were illegals or those on “visas”.

        How would these jobs get outsourced to China when American consumers except their orders fulfilled and at their door in under 4 business days?

      • Simple answer for full employment: Get rid of all illegals AND the crazy excess regulations on businesses.

        One thing not discussed is the huge amount of government or other subsidies to illegals – no charge for medical care, free care and feeding of their kids in public schools (along with free extra attention and resources because they are “second language learners”), we have to buy special car insurance to protect us from uninsured drivers (vast majority of illegals are uninsured), subsidized housing, and on and on.

  2. True Factual story how the Govt.screwed my family.My ILLEGAL son in law married my daughter 6 mounths after the rulles changed,not to allow illegals to obtain US citizenship by marrage.He was told that by US govt.that he should return to Brazil and then could apply for US citizenship but could be denied for 10 years.So he and my daughter with him moved to Brazil and applied for his legal visa 4 years ago.While he was in US he even got a US GOVT. TAX ID NUMBER and always paid his taxes for a house cleaning bussiness they had.NO crimminal record AT ALL.I wrote numeros congress reps and even or so called immigration friendly president all passing the buck or ignoring us.Finally my daughter had enough of Brazil and moved back.He owns a bussiness in Brazil and of coarse they are getting a divorce.I am telling this story so people here understand that all these elected officals proclaiming to be PRO-IMMIGRATION ARE LYING If you ever make it to US as my familys lawyers said the best option is to STAY in US if you are law abbiding.Seems to me the Govt. just wants to keep the situation the same for cheap labour from illigals and all else is just a show for WHOS benifit,you got it,theyre RE-ELECTION

  3. My cousin used to clean rich peoples houses until some labor racketeer with illegals working for him stole her customers. My brother worked in a factory, one of the guys he worked with started an office cleaning business and had tons of help from his legal citizen coworkers cleaning offices nights and weekends until the labor racketeers with crews of illegals destroyed his business.

    It wasn’t work no american would do like the lying yuppies claim. The work was getting done for decades until the yuppie labor racketeers moved in with their illegal labor and destroyed the industry and now everyone expects cheap,cheap,cheap.

    The rich people hiring the cleaning services and catering outfits lap up the propaganda those people are just taking jobs no americans will do even though the work was getting done prior to the country getting over run by illegals.

  4. It was just after Katrina and we were just like every house in town, our roof was covered with the famous blue tarp. So, when we finally got the insurance check to replace the roof, and repair several roof timbers (7 very large pines on roof had to be removed). The nice contractor man came and gave us the average estimate, and then my 82 year old mother who watches lots of newsy TV asked, you don’t hire any of those illegal alliens do you? He mumbled something and the gist was he certainly wouldn’t send any to fix our house. (Think Granny on Beverly Hillbillies, and you got her just right.)

    About a week later a crew of backwood, white trash showed up from Alabama and wanted to know could they set up a tent in our back yard to live in while they fixed the roof. We didn’t think that was a good idea. I began to expect the worst as far as the new roof being a functional roof. They went away and the next day all were back with the contractor and work began. They seemed to be in a big hurry. One man tried to do that slide down the ladder railings, and landed flat on his back off our roof onto our back cement patio. I watched it set-up, happen, and felt the thud. But the guy just got up and kept going. I thought he should have died.

    A day after the job is done, the Alabama WT contingent show up and want us to pay them directly, that they have been cheated out of all their money. We had already issued a check to the contractor for the whole job so he got here pretty quickly with 2 police men. It seems that because we did not let them live in the back yard they had to stay at a local motel, where they seem to have spent a lot of money. When the contractor subtracted their housing costs, there was very little money for them to get home. They thought we should pay them something. The police ushered the group away and down the street and the contractor apologized and advised us never to pay workers directly as these people had asked. Somehow we knew this. I learned that we had a hell of a time with the legal, all-American crew and I wondered if we would have done better with the not so legal roof repairers. I don’t see how it could have been worse, except that our roof is still good to go. They were real roofers and did it right.

    P.S. Granny will be 89 in March.

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