Immigrants’ lower birth rate bodes ill for Social Security

Ideas make their own way in this world and even good ones sometimes take a long time before they gain enough traction to change our thinking. Demographers, for example, have known for some time that immigration does not always affect the aging of a country’s population as much as people believe.

This idea has had a tough go of it in popular opinion and in key areas like economics and public finance where we prefer to hold on to our old beliefs.

The old beliefs were not totally wrong, but they did create stereotypes which can be as hard to budge as NFL linemen. We think of the immigrant families of our books and movies, each with a platoon of noisy kids, and that mental image forms the foundation for our beliefs. These beliefs are reinforced by our own experiences in public places where larger families tend to attract our attention. It is in our nature to remember these and forget the others we perhaps hardly noticed.

The result is that we tend to believe that immigrants to the United States tend to have more children, which will be a good thing for Social Security because they will provide the tax-paying workforce necessary to support the growing number of retirees. In our collective mind it is the “good side” of immigration, offsetting to some extent its social costs.

Unfortunately, the facts are blocking the way to this easy solution. Immigration will not substantially alter the aging of our population and we will have to figure out a way to save our Social Security system from crashing — a way that is based on reality.

In a new report, “The Declining Fertility of Immigrants and Natives,” Steven A. Camerota and Karen Zeigler of the Center for Immigration Studies take a look at the statistics on birth rates in the United States. They conclude that while immigration significantly affects our total population, “…its impact on slowing the aging of American society is very limited.”

The birth rate for immigrant women is higher than for native born women but not enough to have a significant impact on the aging rate for the overall population. And the difference in birth rates is shrinking dramatically, perhaps because immigrants adopt the social values of their new country. The report states that, “the birth rate for women in their reproductive years (ages 15 to 50) declined more than twice as much for immigrants as natives between 2008 and 2013.”

This is a big disappointment for those of us who thought that increased immigration would allow Social Security to “fix itself” — without the need for wrenching political battles, painful cutbacks, or a major restructuring of the entire system.

Social Security has been operating in the red since 2010 and its deficit is being covered by the U.S. Treasury’s general fund. The Trustees for the combined Social Security and Medicare programs estimate that by 2019 the Treasury will have to begin selling off the Trust Fund’s asset reserves. Current projections indicate that these will run out in 2033, leaving no method under current law to bridge the gap between expenditures and revenue. Social Security would be forced to limp along for a while, able to pay perhaps three quarters of its current benefits.

This is not a happy future to contemplate. So we don’t. Politicians do not want to take on a problem that the public doesn’t want to face, so they don’t. But we have to, and so do they.

We are not alone. Our Social Security and aging population problems are replicated in the mature economies of Japan and Europe. And their citizens and politicians do not seem any more eager than we are to address the problem.

The underlying causes of Social Security’s financial problems are both simple and complicated at the same time. The simple cause boils down to this: people are outliving the ability of the system to generate enough revenue to support them. This situation is aggravated by an accelerated flow of beneficiaries as the baby boom generation retires but will not disappear even after they are absorbed into the system.

In 2007 the New England Journal of Medicine published a physician’s article about a cat named Oscar who seemed to know, even more reliably than the doctors at the hospital, when patients were going to die. It wouldn’t be surprising to find that the Social Security Trustees have left standing orders with security not to allow Oscar anywhere near the place.

We are entering into a presidential election cycle and it seems unlikely that any politician will want to take on this problem on until 2017, if then. But Oscar or not, Social Security is dying. It needs our help.

James McCusker is a Bothell economist, educator and consultant. He also writes a column for the monthly Herald Business Journal.

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