Did Illegals Misusing SSNs Earn More on Average Than US Women?

Terry Jeffrey

4/30/2014 12:01:00 AM - Terry Jeffrey

If you simultaneously accept estimates published by the Census Bureau and the Chief Actuary of Social Security, then illegal aliens who misused Social Security numbers to work illegally in the United States in 2010 earned more on average than American women did.

The Office of the Chief Actuary published an analysis in April 2013 entitled, "Effects of Unauthorized Immigration on the Actuarial Status of the Social Security Trust Funds." It included this question and answer:

"Question: Of the unauthorized workers paying OASDI (Old-Age, Survivors, and Disability Insurance) taxes, what is the average level of earnings upon which the taxes are levied and how does that level compare with the broader U.S. labor force?

"Answer: We assume the average level of taxable earnings for these unauthorized workers equals about 80 percent of the average level for all workers. For 2010, we estimate this average level for these unauthorized workers to be about $34,000."

The Census Bureau's historical income Table P-43 lists "Workers (Both Sexes Combined) by Median Earnings and Mean Earnings."

This table says that in 2010, American workers had mean earnings of $42,494. The $34,000 in average taxable earnings the Chief Actuary estimated for illegal aliens paying OASDI taxes does indeed equal 80 percent of that.

Meanwhile, the Census Bureau's Table P-42 lists "Workers by Mean Earnings and Sex." It says female workers in the United States in 2010 had mean earnings of $33,771 (in 2010 dollars).

That is slightly less than the $34,000 in average taxable earnings the Chief Actuary estimated for unauthorized workers misusing Social Security Numbers.

However, the Chief Actuary's analysis concedes that estimating the relationship between the illegal alien population and the flow of money in an out of the Social Security program is not easy.

"The difficulty lies in determining what portion of total taxes paid to and benefits received from the Social Security Trust Funds derive from the earnings of these immigrants," says the analysis. "We can only estimate these amounts using the best available information."

The Chief Actuary's analysis concluded there were a total 7 million unauthorized workers in the United States in 2010. It divided these unauthorized workers into two basic categories: 3.9 million who worked in what it called "the underground economy," and 3.1 million who misused Social Security Numbers to secure jobs for which their employers withheld taxes.

The actuary subdivided the 3.1 million into three groups. These included: 1) 0.6 million who "entered the country legally with a temporary visa, have overstayed their visa (work or student), and are working using their legitimately acquired SSN;" 2) 0.7 million who "obtained fraudulent birth certificates at some point in the past and these birth certificates allowed the workers to get an SSN," and 3) 1.8 million who "worked and used an SSN that did not match their name in 2010."

According to the actuary report, the illegal aliens paying payroll taxes are a fiscal boon to Social Security.

"Our projections assume that unauthorized residents work at about the same rate as the rest of the population by age and sex, but earnings are less likely to be reported as taxable and even less likely to be credited for future benefit entitlement," says the analysis. "Thus, our projections suggest that the presence of unauthorized workers in the United States has, on average, a positive effect on the financial status of the Social Security program.

"For the year 2010, we estimate that the excess of tax revenue paid to the Trust Funds over benefits paid from these funds based on earnings of unauthorized workers is about $12 billion," says the analysis.

The Office of the Inspector General of Social Security published its own analysis last August on the misuse of Social Security Numbers.

In 2010, the IG said, employers filed 7.3 million W-2 forms on which the name and the Social Security Number did not match and that SSA could not attribute to a known Social Security Number holder. These W-2s reported $70.3 billion in wages -- an average of $9,630 per W-2.

SSA accounted for this $70.3 billion in wages in what it calls the Earnings Suspense File. "The ESF," said the IG, "has accumulated approximately 320 million wage items representing about $1.1 trillion in wages for TYs 1937 through 2010."

Said the IG, "In previous reports, SSA acknowledged unauthorized noncitizens' intentional misuse of SSNs has been a major contributor to ESF growth."

"Furthermore," said the IG, "a senior employment tax official at the IRS acknowledged that unauthorized noncitizens accounted for a high percentage of inaccurate wage reporting."

"In addition," said the IG, "the IRS was reluctant to impose existing fines or penalties against employers who consistently submitted erroneous or inaccurate wage reports."

Given the government's manifest tolerance toward those who employ illegal aliens, how consistent have some of those employers been in filing erroneous or inaccurate W-2s?

The IG looked at the 100 employers in 2007 through 2009 who filed the largest number of bad W-2s and the 100 who filed the largest as a percentage of their payroll. Collectively, these 200 employers filed 2,477,546 no-match W-2s over the three-year period -- or 19 percent of all they filed.

One employer filed 117,792 in three years, said the IG, and another had 98 percent on which the name and Social Security Number did not match.