The National Law Forum

The Blog of the The National Law Review

Where do Social Security Payments Made by Undocumented Workers Go?

Greenberg Traurig Law firm

Many employers are familiar with the following scenario: You hire someone, put them on payroll and deduct taxes from their checks automatically – just like you do with all employees. You then find out through an audit by U.S. Immigration Customs and Enforcement (ICE) or by the employee coming clean that he or she is using a fake social security number. You consequently terminate employment on the grounds that they violated the company’s “honesty policy” or simply because he or she is not authorized to work in the United States. So what does Social Security do with the payments that the employee has made?

According to the Social Security Administration (SSA) unauthorized workers are paying an estimated $13 billion per year in social security taxes and are receiving about $1 billion in return. During an interview, Stephen Goss, the chief actuary of the SSA, estimated that there are approximately 11 million undocumented people in the United States and about 7 million of these people are working illegally. Further, out of these 7 million undocumented workers, approximately 3.1 million people are using fake or expired social security numbers. Goss noted that undocumented workers have paid around $100 billion in social security taxes over the last decade, which the SSA has treated as a positive cash flow without a home. Goss indicated that the $100 billion in unclaimed social security created by undocumented workers has been a key factor in allowing the SSA “to be paying benefits for as long as it now can.”

So, and in answering the headline question, the SSA puts all of these “homeless” contributions into the Social Security Trust Fund for Old-Age and Survivors Insurance (OSAI). This fund is used to ultimately pay out social security benefits to U.S. workers and retirees.

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