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Only Immigrants Can Save Entitlements

A new report projects that Social Security and Medicare will need much higher levels of immigration to stay solvent.
February 4, 2021
Featured Image
Yeni Maricela Gonzalez Garcia (R) stands with her children (L-R) 6 year-old Deyuin, 9 year-old Jamelin and 11 year-old Lester as she and her lawyer speak with the news media after she was reunited with her children at the East Harlem Cayuga Centers on July 13, 2018 in New York City. Gonzalez Garcia, from Guatemala, drove cross-country to be reunited with her three children after they were taken from an Arizona immigration facility over eight weeks ago. Gonzalez Garcia crossed over the U.S. border with her three children on May 19, only two days before they were taken from her as part of President Donald Trump's controversial zero-tolerance policy of removing immigrant children from their parents after they are detained. (Photo by Spencer Platt/Getty Images)

Immigration policy has long been treated as a form of crisis management. With Congress unable or unwilling to reform the outdated immigration system, successive administrations of both parties have responded to whatever emergency happened to grab the headlines at a given moment: a flood of unaccompanied minors or asylum seekers, surges in unauthorized border crossings, a shortage of farm laborers or high-tech workers, or any of the other myriad problems our laws and bureaucracies were unequipped to handle.

This week, the Biden administration announced that it would take a more measured approach to fashioning solutions. On Tuesday, the president signed executive orders aimed at dealing with reuniting children who, under the Trump era’s disgraceful “zero tolerance” policy, had been separated from their parents—some of whom may never be found because of the gross incompetence and cruelty of the program—as well as orders to create a more human asylum process and to encourage the integration of new Americans. The latter is especially important if the United States is to once again welcome more immigrants into our fold, which depends on Americans accepting these newcomers.

Though none of the president’s orders laid out specifics on how the administration would accomplish its goals, they are a big step in the right direction. But turning ideas and principles into action will require that the American public understands why immigration is not only good for immigrants but necessary for all Americans if we are to grow and prosper in the future as we have in the past. Making the case for this proposition is a new paper, “Room to Grow: Setting Immigration Levels in a Changing America” by my colleagues at the National Immigration Forum, Ali Noorani and Danilo Zak.

Like much of the industrialized world, the United States has an aging population. Fewer babies are being born, especially among non-Hispanic whites. And life expectancy, while plateauing in the last few years, is still long enough (an average of about 85 years old for those already 65 or older) to ensure an ever-growing population of elderly Americans. The consequences are that a smaller percentage of the population is in the workforce and paying taxes to help support older Americans who draw on Social Security, Medicare, and other programs. The Social Security Administration has already warned that the Old Age Survivors and Dependents Program will become insolvent in 2034 if major changes do not occur. Medicare’s Hospital Insurance Trust Fund is due to run out of money by 2026 if current trends continue. Both systems depend on contributions from individuals who are still working to pay for benefits for those who have retired. What all of this represents is a demographic catastrophe on the near horizon unless something changes—and soon.

If social programs for the elderly are to continue to provide benefits at current levels, there are only two options: Either payroll taxes and retirement ages both have to be dramatically raised, or the ratio of working-age Americans to elderly Americans—i.e. those paying into the system and those receiving the benefits—must be rebalanced. It isn’t likely that births alone will increase sufficiently to fill that need. Birthrates among the native-born population have been falling for the last 50 years and will likely continue to fall, even if we were to enact policies to encourage more births, as has been done in Germany, France, and elsewhere to little avail. The only practical answer is to increase immigration, which changes population projections in two ways: Immigrants tend on average to be younger than the native-born population, and therefore have more working years ahead of them to pay into the system; and immigrants have higher fertility rates than the native born. Both factors contribute to the likelihood that the United States can sustain its aging population in the future.

Noorani and Zak suggest that net immigration be increased based on the ratio of working-age adults to adults at retirement age, known as the Old Age Dependency Ratio (OADR). In 1965, the year in which the last major immigration reform bill was signed into law, there were 6.4 working-age adults for every adult who reached retirement age in the United States. Today the ratio is just 3.54 to 1. To fill that gap, Noorani and Zak apply a modified version of the OADR that accounts for longer projected life spans as well as later entry into the workforce by younger individuals who spend more years in school than in previous generations. They conclude that just to sustain the current OADR, the United States will need an annual increase in net immigration through 2060 of about 370,000—in addition to the approximately 1 million immigrants who come to the U.S. each year now.

The proposal may sound ambitious given the politics of immigration, but the authors note it may be the only way “to reduce the ill effects associated with significant demographic decline.” Put another way, without a major increase in the number of additional immigrants we admit each year, only the wealthy may ever be able to afford to retire, much less pay medical bills that rise dramatically with age.

Polls suggest that Americans are warming to the idea of increasing immigration—even without the case for self-interest having been made effectively to date. A 2020 Gallup poll showed the highest support for expanding immigration since 1965, with 70 percent of Americans saying we should maintain or increase immigration and 77 percent saying immigration is good for the country. Given the hostility of the last administration to both legal and illegal immigration, these numbers are especially encouraging.

Of course, merely setting ideal immigration levels is only the beginning of the reform process, and Noorani and Zak do not lay out their preferences for how we should choose which immigrants to admit or on what basis. There will be plenty of opportunity to debate what role family, education, skills, language, and other factors play in admitting newcomers, but the demographic approach the authors describe can and should undergird whatever system emerges in future legislation. They suggest that any immigration legislation Congress considers take into account the demographic impact of changes. But they also recognize that the key to any successful immigration proposal is integrating new Americans so that they can “contribute and thrive at the workplace and in our communities.”

President Biden also emphasized this latter point in Tuesday’s executive order “Restoring Faith in Our Legal Immigration Systems and Strengthening Integration and Inclusion Efforts for New Americans.” We need more immigrants, but we also need to help them become Americans—not just for their sake, but for ours.

Linda Chavez

Linda Chavez is a former Reagan White House official and a senior fellow at the National Immigration Forum.