SOCIAL SECURITY

Office of the Chief Actuary

SOCIAL SECURITY ADMINISTRATION BALTIMORE MD 21235-0001 

June 27, 2007 

The Honorable Edward M. Kennedy 

Chairman, Committee on Health, Education, Labor, and Pensions 

United States Senate 

Washington, D.C. 20510 

Dear Mr. Chairman: 

As you requested, we have produced a preliminary estimate of the effect on the financial status 

of the Social Security program of the immigration bill that is currently under consideration in the 

Senate. The bill was taken up as S. 1348, but was replaced with Amendment 1150, and then was 

further modified with the adoption of several amendments including 1169, 1190, 1316, and 

1415. The new bill, S. 1639, introduced on June 19, 2007, appears to be consistent with the 

combined effects of amendments cited above. Chris Chaplain, Alice Wade, and I have 

developed a preliminary estimate for S. 1639 (or, equivalently, amendments to S. 1348 adopted 

to this point) indicating a net change that would improve the current actuarial balance by 

0.01 percent of taxable payroll. More details are provided below. All estimates are based on the 

intermediate assumptions of the 2007 Trustees Report. 

Provisions that will increase net immigration tend to improve the financial status of the OASDI 

program both because of the immigrants themselves and their children. This effect is much like 

the effect of increased birth rates, which also have positive effects on the financial status of the 

program. In considering the estimates provided below, note that the values for the 75-year 

period are the average level of the effect over the period, and that actual effects can be 

concentrated more in the early or later years of the period. 

Because the taxable payroll is estimated at about $5.3 trillion for 2007, a provision with a longrange effect of 0.01 percent of taxable payroll may be said to have an average annual effect 

equivalent to $530 million in 2007. Over the next 10 years, the average long-range effect of 

0.01 percent of taxable payroll would be equivalent to about $650 million. 

We estimate that the immigration bill, S. 1348, as amended only by Senate Amendments 1150 

and 1169, would improve the long range actuarial balance of the OASDI program by about 

0.03 percent of taxable payroll. Amendment 1190 further modified the bill by requiring payment 

of any Federal taxes due but not paid for periods before 2007 for individuals applying for a Z 

visa. We estimate this amendment would improve the actuarial balance by a negligible amount. 

We estimate Amendment 1316, which would make the provision for guest workers time limited 

to the period ending 5 years after the first Y visa is granted would lessen the positive effect of the 

bill by 0.01 percent of payroll. Finally, we estimate that Amendment 1415, which would modify 

rules for crediting earnings for OASDI benefit purposes, would have a net negligible effect on 

the OASDI actuarial balance. The combination of these three amendments reduces the positive 
Page 2 – The Honorable Edward M. Kennedy 

effect of the bill by an amount between 0.01 and 0.02 percent of taxable payroll. Therefore, we 

estimate the total effect for the bill including all amendments mentioned above would improve 

the OASDI actuarial balance by 0.01 percent of taxable payroll. 

 Sincerely, 

 Stephen C. Goss 

Enclosure 
SOCIAL SECURITY

MEMORANDUM 

Date: June 27, 2007 Refer To: TCA

From: Stephen C. Goss, Chief Actuary 

Alice H. Wade, Deputy Chief Actuary 

Chris Chaplain, Supervisory Actuary 

Subject: Estimated Financial Effects on the OASDI Program from Enactment of the Proposed 

Senate Immigration Reform Bill S. 1639--INFORMATION 

We have produced a preliminary estimate of the effect on the financial status of the Social 

Security program of the immigration bill (S. 1639) that is currently under consideration in the 

Senate. The bill was taken up as S. 1348, but was replaced with Amendment 1150, and then 

was further modified with the adoption of several amendments including 1169, 1190, 1316, 

and 1415. The new bill, S. 1639, introduced on June 19, 2007, appears to be consistent with 

the combined effects of amendments cited above. 

We estimate the total effect for the bill would improve the OASDI actuarial balance by 

0.01 percent of taxable payroll. All estimates are based on the intermediate assumptions of 

the 2007 Trustees Report. The balance of this memorandum provides some detail on the 

estimates for provisions included in S. 1639, reflecting the succession of amendments cited 

above that have led to the current bill. 

 

Legalization of Current Unauthorized Immigrants

The provision in the current bill that permits legalization of current unauthorized residents 

would allow all undocumented immigrants in the U.S. on January 1, 2007 to apply for a Z 

visa that would permit legal residence and work status for 4 years. To qualify the immigrant 

would need to be working at the time of application, or to be a spouse or child dependent of 

such a worker. Total fees of $3,000 for workers and $2,000 for family members would be 

required. In addition, a special provision for legalization would be provided for agricultural 

workers. The bill would not require proof of past work, but Amendment 1190 would require 

payment of past-due Federal taxes. 

Of the roughly 11 million unauthorized immigrants residing in the United States on January 1, 

2007, we estimate that about 4.5 million would apply for and receive a Z visa and an 

additional 1.5 million would receive a ZA (agricultural) visa. The number estimated for Z 

visas is 0.5 million lower than earlier computed because of the requirement to pay back taxes 

in Amendment 1190. Our preliminary estimate of the effect of this provision (legalization of 

current unauthorized immigrants plus Amendment 1190) on the long range OASDI actuarial 
balance for the current bill is an improvement in the long-range OASDI actuarial balance by 

about 0.01 percent of taxable payroll. 

Guest Workers and Limits on Legal Permanent Residents 

The guest worker provision of the current bill would allow for up to 200,000 individuals per 

year (as revised by Senate Amendment 1169) to gain guest worker status for a period of two 

years in Y-visa status. A maximum of three such stays would theoretically be permitted with 

a minimum separation of one year between stays. Each stay as a guest worker would count 

against the 200,000 limit in the year the stay starts. However, Amendment 1316 made this 

provision temporary, such that Y visas would no longer be granted starting 5 years after the 

first Y visa is issued. Thus in practice even the earliest guest workers would be allowed at 

most two 2-year periods of Y-visa status. 

We estimate that the limits for guest workers would be fulfilled with about 140,000 of these 

guest workers per year representing additional individuals who would not have entered the 

country in the absence of the provision. The current bill provides an allocation of 10,000 to 

attain legal permanent residence (LPR) specifically from Y-visa status. However, the current 

bill also provides for an increase in H-1B visas of almost 100,000 per year, with no ending 

date for such admissions. We estimate that between the additional H-1B visas, the Y-visa 

guest workers, and the increases in the LPR limit for employment-based preference 

(ultimately from 140,000 per year to 380,000 per year), the total increase in the number of 

individuals attaining LPR status under the current bill would be about 200,000 per year for the 

5 years in which Y-visa holders would be available and ultimately at the level of about 

180,000 per year thereafter. As a result, we estimate that the effect on the long range actuarial 

balance for the guest worker and H-1B provisions, along with the change in the LPR limit, 

would be an improvement of about 0.05 percent of taxable payroll. This estimated effect is 

reduced by 0.01 percent of payroll due to the sunset of the guest worker provision after 5 

years. 

Limits on Family Preference, Diversity Immigrants, and H-2B Nonimmigrants

The current bill would, ultimately, lower the limit for family sponsored immigrants from 

226,000 to 87,000 per year. In addition, a limit on parents of U.S. citizens of 40,000 would be 

imposed, reducing the number of such immigrants by an estimated 40,000 per year. Also, the 

diversity visa program would be eliminated reducing legal permanent immigration by about 

40,000 per year. These provisions are estimated to worsen the long range actuarial balance by 

about 0.05 percent of taxable payroll. 

In addition, for seasonal, non-agricultural temporary workers (H-2B visas), the current bill 

would raise the annual caps from 66,000 up to a maximum 200,000 per year. Because 

employer demand is high for these H-2B visas, we believe that this 200,000 cap will be met 

going forward. We estimate that this provision would result in a negligible increase in the 

long-range actuarial balance (i.e., by less than 0.005 percent of taxable payroll.). 
Enforcement and Employment Verification

The bill includes provisions for creating additional physical barriers and additional personnel 

to reduce unauthorized immigration into the country. In addition, the bill calls for efforts to 

enhance the requirements and means for employers to verify the legal status of employees. 

We estimate that these efforts will reduce the annual numbers of unauthorized immigrants 

entering the country significantly, but will also reduce the number leaving the country due to 

the greater difficulty of returning. The employment verification has the potential of 

significantly reducing the incentive to enter the country in unauthorized status. We estimate 

that net annual unauthorized immigration would ultimately be reduced by between 10,000 and 

20,000 due to these provisions, with the effect of worsening the long-range OASDI actuarial 

balance by about 0.01 percent of taxable payroll. However, depending on the effectiveness of 

employment verification the effect could be significantly higher (or lower). 

Limits on Crediting Earnings for Benefits 

The base bill (amendment 1150 Section 607) imposed restrictions on crediting earnings for 

eligibility and benefits under Social Security and Medicare. These restrictions precluded 

credit for earnings in years before a valid social security number (SSN) was issued when the 

SSN was issued after 2007. This provision was estimated to reduce long-range Social 

Security benefit cost by about 0.01 percent of taxable payroll. 

Amendment 1415 to the bill eliminates Section 607 and provides a different restriction that 

would preclude credit for earnings in years without legal work authorization after 2003 where 

the worker had a valid SSN that was issued after 2003. The net effect of this amendment is 

estimated to be a negligible change in the long-range OASDI actuarial balance. 

 Stephen C. Goss 

Alice H. Wade 

Chris Chaplain