Press Release & Background
September 29, 1998
New NPG Report:
Why foreign workers
are not the solution
to saving Social
Washington, DC – (September 29) – A new report released by the
Washington, DC based organization Negative Population Growth debunks the myth
that the importation of more foreign workers is the solution to saving our
nation's failing Social Security system.
Authored by immigration policy expert David Simcox, the report argues that
increases in immigration today will result in a larger system-wide crisis in the
future. The report also found that the United States population would need to
swell from today's 270 million to over 600 million people by 2050 to provide
Social Security benefits to America's 88 million baby boomers.
"Recruiting millions of foreign workers and their relatives to try to
pay for current retirees is downright foolish," stated NPG Executive
Director Sharon McCloe Stein. "This quick-fix scheme will at best
temporarily postpone the inevitable. What do we do for the next generation of
retirees? Do we import another 300 million people? Could we even find that many
sufficiently qualified potential immigrants?"
"Folks are always looking for easy answers to tough problems. Trying to
use immigration as a quick fix for Social Security is one such easy answer that
on serious scrutiny fails to meet the test of plausibility," stated Stein.
The report, "Social Security: The Ponzi Path to Dystopia,"
addresses the false notion that the solution to saving Social Security is more
The report analyzes:
- Will today's immigration rates of 1.2 million a year support or sink
Social Security as we know it?
- As we expand our workforce to prop up current retirees, what will we do to
support ensuing generations of workers when they reach retirement?
- How do we make Social Security solvent without sacrificing the savings of
future generations of Americans?
The study's author, David Simcox, is an expert on migration and chairman of the
Center for Immigration Studies. Other featured speakers include NPG Executive
Director Sharon Stein and Research Director Edward Lytwak.
Population and Social Security: Background*
- Social Security most commonly refers to four programs financed through
Social Security (FICA) payroll taxes: retirement pensions (frequently called
old-age insurance), survivors insurance, disability insurance, and Medicare
for the aged and disabled. First established by Congress in 1935 as a basic
safety net for retired and disabled workers and their dependents, the Old
Age and Survivor's Insurance (OASI) program has become the economic mainstay
for most elderly Americans.
- As the single largest source of income for the elderly, accounting for two
of every five dollars older Americans receive, Social Security has been
extraordinarily successful in reducing poverty among America's 65 plus
population. Likewise, Medicare, added in 1965, has been instrumental in
making health care available to all elderly Americans, as well as preventing
high medical bills from depleting their lifetime savings.
The Population Connection
- Ratio of active to retired workers crucial. Social Security was set up so
that taxes from active workers pay the benefits of retired and disabled
workers, as well as their survivors and eligible dependents. Thus, being a
pay-as-you-go system, the solvency of Social Security is directly tied to
the ratio of workers to those receiving benefits. The rapid population
growth of the "baby boom" created a huge generation - some 77
million strong —which now, as active workers, contributes far more in
taxes than the benefits paid out to retirees from previous generations.
However, after 2010 this huge population bulge of boomers will begin to
Increasingly, taxes from the active workers will be unable to fully pay their
Social Security benefits.
The growth connection to insolvency
- Although U.S. population growth has continued to supply new workers, three
factors have combined to undermine the future solvency of Social Security.
First, the per recipient cost of Social Security benefits has grown due to
generous cost-of-living adjustments, the skyrocketing costs of medical care,
and increases in life expectancy. Second, as the baby boomers entered the
work force in the 1970s, they had fewer babies - future workers. This
population boom and bust cycle has significantly contributed to the
declining ratio of workers to retirees (an unbalanced age structure) after
The third factor is high immigration which replaced native-born births as the
main source of U.S. population growth. In general, these immigrant workers have
less education, lower skills, a higher tendency to avoid taxes, and overall
lower earnings with consequently lower Social Security tax contributions.
The Coming Dilemma
- The balance shifts. Since its inception, taxes from current workers have
exceeded the benefits paid out. However, in 2013, benefits paid out are
projected to begin exceeding current Social Security tax income, with the
balance made up from the federal government's general budget (as it begins
paying back money borrowed from the Social Security trust funds during the
many years that it ran a surplus). By 2032, the trust fund surplus is
expected to be exhausted as the deficit between taxes paid and benefit costs
reaches its peak.
Projected deficits to be enormous.
- By 2030, the Social Security entitlement shortfall is projected to reach
massive proportions as retirement benefits increase from 4 to a whopping 6
percent of the gross domestic product (GDP) and Medicare costs increase from
less than 3 to 6 percent of the GDP. As the benefit shortfall increases
after 2013, politicians will be faced with a no-win situation of raising
taxes, increasing deficit spending, cutting non-Social Security expenses and
programs, and/or curtailing Social Security benefits.
- Avoiding the trap of an unending Ponzi scheme. More population growth,
especially through high immigration, would only worsen the problem and pass
it on to our posterity. In order to achieve a barely favorable actuarial
balance of workers to retirees, the U.S. population would need to add 200
million more workers —with the requisite earning capability— on top of
the additional 130 million already projected for 2050. More workers today
means more retirees tomorrow, and the addition of even more new workers to
An immigration growth treadmill?
- Realistically, increasing the ratio of workers to retirees could only be
done through massive increases in our already historically-high immigration
levels. This perpetual growth treadmill would create many more additional
costs that would far out weigh any benefits to Social Security, especially
since immigrants use far more in public services than they contribute in
taxes. The additional burdens —on our environment and quality of life—
necessary to accommodate a U.S. population of 600 million would make the
problem of funding Social Security pale by comparison.
Population Policy Solutions
- A sound foundation for long-term sustainability. Insuring the long-term
solvency of Social Security, as well as our quality of life, requires the
kind of solid foundation provided by a stable population with an evenly
balanced age-structure. Getting off the population growth treadmill and
beginning the necessary and gradual transition to a smaller, optimal
population is essential to this long-term sustainability. Such an optimum
population would feature an even distribution among all age groups with a
solid ratio of working Americans (aged 18-64) to both the young and old.
Our rapid population growth has played a major part in creating the Social
Security dilemma, it is now time to recognize that continued growth is part of
the problem, not the solution.
* Take advantage of an aging America in the 21st century to begin a
transition to a smaller and more sustainable population of about 150
* We must resist the temptation to accept simplistic, but false,
solutions for the future structural challenges to Social Security.
* The long-term viability of our society must rest on the assumption
that population growth cannot continue indefinitely.
* We must adopt realistic and responsible solutions that balance the
interests of both current and future generations of Americans.
Used with permission of NPG.
The report, "Social Security: The Ponzi Path to Dystopia," is
available on this website.