Undocumented Workers and Their Exclusion From Social Security Benefits

Undocumented immigrant workers, despite contributing billions to Social Security and Medicare in taxes, cannot receive retirement benefits.

A recent report from the Community and Labor Center of the University of California, Merced analyzes and exposes the challenges faced by undocumented workers, particularly older immigrants. The report emphasizes the need for urgent changes to prevent thousands of immigrant families from falling into extreme poverty.

In California, that change could come if a bill being considered by the Legislature is approved.

No Benefits

Undocumented immigrant workers, even after paying taxes using an individual taxpayer identification number (ITIN), cannot receive the Social Security retirement benefits that other people generally get when they reach age 65 or older.

These ITINs are issued to people without a Social Security number for the sole purpose of paying the federal taxes that every worker must pay. But despite contributing significantly to the Social Security system, these workers are excluded from the social safety net. This, of course, has consequences that go beyond the individual as it affects the financial well-being of thousands of immigrant families who already tend to have much lower incomes than other socioeconomic groups.

The Report and a Legislative Initiative

The Community and Labor Center’s report, released in March and titled “A Golden Age: California’s Aging Immigrant Workforce and Its Implications for Safety Net Policies,” indicates that in 2019 there were almost 3 million California workers born outside the country. Of them, 1,253,625 are estimated to be undocumented immigrants. Among these workers, a considerable number were over 55 years old; including 9,558 aged 75 or older, 67,960 between 65 and 74 and 316,539 between 55 and 64.

Given the political polarization affecting immigration issues and the unlikelihood of congressional action to resolve this issue, some California politicians and immigrant rights activists are taking action on their own.

In March, Assemblyman Juan Carrillo (D-Palmdale) introduced bill AB 1536, that aims to include undocumented immigrants, who reside in California, in the Cash Assistance Program for Immigrants (CAPI). Currently, this program provides monthly benefits only to permanent residents with appropriate documentation, refugees, and migrants who have requested asylum. AB 1536 would extend this assistance to undocumented immigrants who are not eligible for other programs due to their immigration status.

Contributions to the Social Security System

Despite their exclusion from benefits, there is clear evidence that undocumented immigrants make substantial contributions to the Social Security system.

In 2019, more than 2.5 million tax returns were filed using an ITIN. This represents almost $6 billion in taxes. A study by New American Economy revealed that annually undocumented immigrants contribute approximately $13 billion to Social Security and $3 billion to Medicare. This more than significant financial contribution highlights the urgency of addressing exclusion from its benefits.

According to California’s legislative agenda, AB 1536 must be taken up by the Appropriations Committee on August 14. A fundamental test that must be passed.

Undocumented Mexicans Among the Most Affected

By focusing the problem on specific groups, the conclusion is reached that working, paying taxes and not receiving benefits disproportionately affect Mexicans residing in the United States. Due to geographic and historical considerations, this ethnic community constitutes a substantial number of all undocumented immigrants. Of almost 11 million undocumented immigrants, it is estimated that 4.9 million are Mexican.

The United States has agreements with 30 countries to protect workers who have been working and paying taxes, part of their lives in their home country and part in the United States. These treaties serve to avoid duplicating tax obligations and provide retirement benefits to those who qualify. Although negotiations for an agreement with Mexico began in 2001, it was not legislated and therefore never implemented.

So, considering the large number of Mexicans who have worked in the United States and who, through their taxes, have made contributions to the Social Security system, it is alarming that when they reach old age, they do not have a single cent or benefits due to the lack of a comprehensive agreement between the two countries. An agreement that should recognize contributions made in one country as valid for the retirement system of the other.

A Light of Hope

This situation, which affects not only undocumented Mexican immigrant workers, but a large part of the undocumented workforce, and especially those who have reached retirement age, is a pressing concern that requires immediate attention. In that sense, the report from the University of California at Merced highlights the need for policy changes to prevent vulnerable immigrant families from falling into extreme poverty. The proposed bill, AB 1536, offers a glimmer of hope, providing relief to those who have contributed significantly to the Social Security system. As this issue advances, it is essential that lawmakers and policymakers prioritize equity, inclusion, and the well-being of all those who have contributed to the nation’s prosperity.

This article was supported in whole, or in part, by funds provided by the State of California, administered by the California State Library and Latino Media Collaborative.