SOCIAL SECURITY

Office of the Chief Actuary

SOCIAL SECURITY ADMINISTRATION BALTIMORE MD 21235-0001

July 9, 2013

Senator Jeff Sessions

Committee on the Budget

United States Senate

Washington, D.C. 20510

Dear Mr. Sessions:

Thank you for your letter of May 7 requesting further information related to estimates for S. 744

(The Border Security, Economic Opportunity, and Immigration Modernization Act) and to our 

recent Actuarial Note Number 151 on the effects of undocumented immigration under present 

law. Our letter to Senator Rubio dated May 8, 2013 has been public since that time. In addition, 

our letter of June 28 provided further analysis and long-range estimates for the Bill as passed by 

the Senate. I believe that these letters may have answered some of your questions and I 

apologize for the delay in answering any questions not addressed in these letters. It has been a 

pleasure working with Tori Gorman of your staff in understanding the features of the Bill as 

introduced and the questions you have posed.

In your letter, you suggest that enactment of the Bill “will provide legal status and a pathway to

citizenship to more than 30 million individuals over the course of the next decade - many of

whom are low-skill, low-wage workers.” Our estimates suggest that about 8 million individuals 

who were residing in the U.S. without current legal documentation at the end of 2011 would 

receive RPI status. In order to gain legal permanent resident status, these individuals would 

generally need to remain in RPI status for 10 years, and would not be eligible to apply for 

citizenship until several years after that. While in RPI status, these individuals would not be 

eligible for means-tested benefits (like SSI and Medicaid). However, from the point of 

application for RPI status, the Bill would provide legal work authorization and, thus, would 

increase substantially the number of workers in the country who are paying payroll taxes to the 

Social Security trust funds and income and other taxes to Federal, State and local governments. 

We do project that these individuals would, over time, gain insured status for Social Security 

benefits, but that these benefits would be modest, commensurate with their earnings level and 

abbreviated working career under Social Security coverage. 

Please see below answers to specific questions you raised in your letter:

• In Actuarial Note Number 151, Effects of Unauthorized Immigration on the

Actuarial Status of the Social Security Trust Funds, the Office of the Chief Actuary

(OCACT) suggests that there are two types of unauthorized workers who currently 

reside in the United States: (1)those who do not pay into Social Security (3.9

million workers), (2) those who use a Social Security number (SSN) that does
2

not match their name but still remit FICA taxes (1.8 million workers). In addition,

the average wage of the latter group is about 80 percent of the average wage, or 

about $34,000 in 2010.

- What assumption does your model make regarding the wage and earnings

profile of the 3.9 million unauthorized workers in the underground economy? 

Logic suggests that these workers would earn a lower wage than their

"documented" cohorts would. 

Answer: We assume that unauthorized workers who work in the underground 

economy earn 70 to 75 percent of the average wage level.

- How do these wage profiles change as a result of S. 744, and what are the

avenues that produce this change in wages? 

Answer: Under enactment of S. 744, for those individuals who move to RPI 

status, become legal work authorized, and move into the “above ground 

economy,” we assume they will begin to receive higher annual earnings, 

rising to 80 to 85 percent of the average wage while in this status. Once 

granted legal work authorization, currently unauthorized workers will have 

greater opportunity to seek employment of their choice with optimal pay and 

benefits. For those who eventually gain permanent legal resident status, or 

become citizens, we assume that their annual earnings level will approximate 

the average earnings level in the U.S. economy. 

- Further Information: In addition, please note that in Actuarial Note Number 

151 we identified a total of four groups of residents without current legal 

work authorization who were working in 2010. The additional two groups not 

listed above are: (3) those with a valid Social Security number issued under a 

temporary visa, but had overstayed the period they were authorized to work 

(0.6 million workers), and (4) those who used a false Social Security number

obtained using fraudulent birth certificates (0.7 million workers).

• S. 744 includes a process for unauthorized workers to become eligible for federal 

entitlement benefits including Social Security. Included in that process is a 

requirement that workers maintain a level of financial security during the period 

before they become eligible for federal benefits. Specifically, the worker must be 

able to demonstrate that they are not likely to become a public charge or have 

income or resources that are equivalent to at least 125 percent of the federal 

poverty level during the period when they have provisional status. (This 

financial self-sufficiency test is not applied at the point of the initial application, 

but only when the application is renewed.) However, these requirements are 

insufficiently low and have limited ability to restrict the availability of federal 

benefits to aliens with very low incomes.1

 1 The current criteria are overly broad to the point that most means-tested programs are not included in the 

assessment. Guidance from the State Department and the Department of Homeland Security 

specifically prevents immigration officials from considering the likelihood that an alien will qualify for 

Medicaid, Supplemental Nutrition Assistance Program (SNAP or food stamps), child-care benefits, and 
3

- Given that current unauthorized workers with very low incomes might 

eventually become eligible for federal benefits, what assumptions does the 

OCACT make about 1) the number of these workers who will be ineligible

for federal benefits due to their inability to satisfy tests of financial security,

and 2) the likelihood that unauthorized workers will eventually become 

eligible for Social Security (both old-age and survivors insurance, as well

as disability insurance)?

Answer: We assume that roughly 5 percent of those granted RPI status initially 

for 6 years will, upon reapplication, be denied continued RPI status due to 

failing to meet the financial security requirements. For those who meet these 

requirements and maintain RPI status, they will have the opportunity to receive 

Social Security benefits in the future based on earnings that have been credited 

to their account, on which they and their employer have paid payroll taxes. For 

those who remain in the country, complete the period in RPI status and become 

legal permanent residents (or citizens), we project that they will be nearly as 

likely to attain insured status and receive benefits under the Social Security 

program as native born citizens.

• S. 744 incorporates the DREAM Act, which would provide expedited U.S. citizenship 

to 2-3 million illegal immigrants of any age who claim to have been brought to the

country as children.

- What assumptions does your model make regarding the impact of the 

DREAM Act on chain migration (family members of those who are eligible

for DREAM Act amnesty who would also be granted citizenship)?

Answer: Our estimates incorporate “chain migration” for individuals attaining 

citizenship and legal permanent resident status. In the case of individuals 

eligible under the “Dream” portion of the Senate Bill, entry into the U.S. is 

required under the age of 16. As a result, chain migration for this group is 

small. With entry into the country under age 16, siblings and parents generally 

also entered and so would already be in the U.S. and eligible as Dreamers or RPI 

in their own right.

- What is the impact of this chain migration on the OASDI trust funds? 

Answer: Chain migration is a substantial part of total legal immigration. 

Historically, the unlimited category of immediate relatives of U.S. citizens 

represented about 40 percent of new legal permanent residents each year. The 

roughly 5 million individuals expected to gain LPR status over the next 10 years 

under Merit Track 2 are largely individuals who have already been waiting for 

 

other means-tested entitlements when determining whether they would be considered a public charge. In 

fact, the only two programs considered as evidence for the likelihood of becoming a public charge are 

Supplemental Security Income (SSI) and Temporary Assistance for Needy Families (TANF) cash 

assistance. In addition, S. 744 does not specify what should be included as a "resource.” However, one can 

assume that resources would include bank deposits and investments, stocks and bonds, insurance policies, and 

other liquid assets. Therefore, an alien who is "asset rich" but with a very low wage income (or even no wage)

would pass the income and resource test for becoming eligible for federal benefits.
4

years to enter the U.S. under the family preference limits. This additional 

number in the next 10 years entering the country, along with the chain migration 

expected for the future (ultimately at about 40 percent of total legal immigration 

is a substantial source in immigration) that contributes to our population and 

labor force. Chain migration not only adds relatively young workers who will 

work and pay taxes for years before receiving benefits, but they also have 

children that further add to our population and improve the financial status of the 

Trust Fund. The mechanism through which increased immigration improves the 

financial status of the Trust Funds is the same as the effect for additional births. 

Increases in births and in young immigrants alters the age distribution of our 

overall population toward younger ages, which is beneficial to the cost of the 

Social Security and Medicare programs expressed as a share of our tax base, the 

earnings of American workers. The implication of both increased immigration 

and increased birth rates is shown in the sensitivity analysis of the 2013 Trustees 

Report. 

- How will DREAM-related chain migration affect the number of

individuals eligible for SSI?

Answer: As described above, we estimate very little chain migration associated 

with “Dreamers.” 

• Two exogenous assumptions will have outsize influence on the budgetary and 

economic projections associated with immigration reform: (1) the impact of low- skill,

low-wage immigration on the productivity of native-born high-skilled workers, and 

(2) the degree to which new, low-skill, low-wage immigrants displace native-born

workers with similar skills.

- What assumptions does your model make regarding the impact of S. 744 on

productivity among higher-skilled workers and the displacement of similarly

skilled native-born workers?

Answer: The Bill as passed by the Senate provides a combination of reduction 

in inflows of undocumented immigrants who have lower than average skills, 

and a more than offsetting increase in legal immigration with a mix of low and 

high skills. On balance, we estimate no net effect on overall productivity of the 

U.S. workforce and no displacement of current workers. The added net 

immigration will, in addition to increasing the labor force, increase demand for 

goods and services and therefore employment and GDP. 

- How sensitive are the results of your analysis to changes in these exogenous 

variables?

Answer: As indicated in our two letters to Senator Rubio, and the sensitivity 

analysis in the Trustees Reports, the actuarial status and the amount of GDP and 

economic growth are all positively affected by increases in net immigration. 

Over the long run, productivity in the U.S. economy is certainly enhanced 

through innovation that results from the diverse workforce resulting from past 

and future immigration. Historically, labor productivity (real GDP per hour 
5

worked) has increased at about 1.7 percent per year. The intermediate 

assumptions of the Trustees Report reflect a continuation of this trend into the 

future.

I hope the answers provided above will be helpful. Please let us know if we may be of further 

assistance in any way.

Sincerely,

Stephen C. Goss

Chief Actuary