Boom from illegal labor

They'll never receive benefits they pay for

Stockton, Calif. - Since illegally crossing the Mexican border into the United States six years ago, Angel Martinez has done backbreaking work, harvesting asparagus, pruning grapevines and picking the ripe fruit. More recently, he has also washed trucks, often working as much as 70 hours a week, earning $8.50 to $12.75 an hour.

But Martinez - who comes from the state of Oaxaca in southern Mexico - contributes more than most Americans to the solvency of Social Security.

Last year, Martinez paid about $2,000 toward Social Security and $450 for Medicare through payroll taxes withheld from his wages like those of any other worker. Yet unlike most Americans, who will receive some form of a public pension in retirement and will be eligible for Medicare as soon as they turn 65, Martinez is not entitled to any benefit.

He belongs to a big club. As the debate over Social Security heats up, the estimated 7 million or so illegal immigrant workers in the United States are now providing the system with a subsidy of as much as $7 billion a year.

While it has been evident for years that illegal immigrants pay a variety of taxes, the extent of their contributions to Social Security is striking: the money added up to about 10 percent of last year's surplus - the difference between what the system currently receives in payroll taxes and what it doles out in pension benefits.

Marcelo Suarez-Orozco, co- director of immigration studies at New York University, spoke sardonically when he said that illegal immigration could provide "the fastest way to shore up the long-term finances of Social Security."

It is impossible to know exactly how many illegal immigrant workers pay taxes. But according to specialists, most of them do.

Since 1986, when the Immigration Reform and Control Act set penalties for employers who knowingly hire illegal immigrants, most such workers have been forced to buy fake IDs to get jobs.

Available for about $150 on street corners in just about any immigrant neighborhood in California, a typical fake ID package includes a green card and a Social Security card. It provides cover for employers, who, if asked, can plausibly assert that they believe all their workers are legal. But it also means that workers must be paid by the book - payroll tax deductions and all.

IRCA, as the immigration act is known, did little to deter employers from hiring illegal immigrants or to discourage them from working. But for Social Security's finances, it was a great piece of legislation.

Starting in the late 1980s, the Social Security Administration received a flood of W-2 earnings reports with incorrect - sometimes simply fictitious - Social Security numbers. It stashed them in what it calls the "earnings suspense file" in the hope that someday it would figure out to whom they belonged.

The file has been mushrooming ever since: $189 billion worth of wages ended up recorded in the suspense file over the 1990s, 2 1/2 times the amount of the 1980s.

In the current decade, the file is growing, on average, by more than $50 billion a year, generating $6 billion to $7 billion in Social Security tax revenue and about $1.5 billion in Medicare taxes.

In 2002 alone, the last year with figures released by the Social Security Administration, 9 million W-2s with incorrect Social Security numbers landed in the suspense file, accounting for $56 billion in earnings, or about 1.5 percent of total reported wages.

Social Security officials do not know what fraction of the suspense file corresponds to the earnings of illegal immigrants. But they suspect that the portion is significant.

"Our assumption is that about three-quarters of other-than-legal immigrants pay payroll taxes," said Stephen Goss, Social Security's chief actuary, using the agency's term for illegal immigration.

Illegal immigrants help even more because they will never collect benefits. According to Goss, without the flow of payroll taxes from wages in the suspense file, the system's long-term funding hole over 75 years would be 10 percent deeper.

Yet to immigrants, the lack of retirement benefits is just part of the package of hardship they took on when they decided to make the trek north. Tying vines in a vineyard some 30 miles north of Stockton, Florencio Tapia, 20, from Guerrero, along Mexico's Pacific Coast, has no idea what the money being withheld from his paycheck is for. "I haven't asked," Tapia said.

For illegal immigrants, Social Security numbers are simply a tool needed to work on this side of the border. Retirement does not enter the picture.

"There will be a moment when I won't be able to continue working," Martinez acknowledges. "But that's many years off."

By Eduardo Porter The New York Times Tuesday, April 05, 2005