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Saving Social Security? Now that's a job for immigrants

April 23, 2006|Kenneth Swift | KENNETH SWIFT is a finance director for a multinational technology company headquartered in Orange County.

EXPERTS SAY that sometime before the middle of this century, the Social Security trust fund will run out of money. The demographic culprit is the estimated 70 million baby boomers who will leave the workforce in ever larger numbers, leaving behind fewer workers to pay the taxes necessary to keep the system afloat.

Coupled with expected increases in life expectancy, the Social Security Advisory Board estimates that, by 2050, the ratio of workers to retirees will have declined from the current ratio of 4 to 1 to about 2 to 1.

How can the number of taxpaying workers be increased, short of instituting a national fertility campaign? Create an immigration policy that links visa availability with future employment needs and targets potential immigrants entering their most productive -- and highest taxpaying -- years.

Current policy imposes numerous artificial limits (preferences) on classes of workers, limits that have little or no relationship to markets. For example, the Department of Health and Human Services estimates that current demand for registered nurses exceeds supply by about 100,000 annually. The department expects this shortage to increase tenfold, to almost 1 million annually, by 2020. Yet the quota for the H1-C visa, which allows qualified nurses from other countries to work in the U.S. for up to three years, is set at a miserly 500 a year. The cap is even state specific: A state with a population greater than 9 million can have no more than 50 foreign nurses annually; all others cannot exceed 25.

Further, according to this month's State Department Visa Bulletin, the wait time for an employment-based permanent-resident visa for the skilled professional category (which includes nurses) is about five years. If you have a family member overseas who would like to become a taxpaying American, the wait time can exceed more than 10 years, depending on familial relationship and country of emigration. By the time a visa is issued, the recipient may be beyond his or her most productive years. In fact, the Social Security Advisory Board calculates that the current median age of visa applicants is 55. This makes no sense.

The Department of Labor says that in addition to nurses and other healthcare workers, other fast-growing professional occupations are in computers, mathematics, education and library science. These fall into the H1-B visa category, with an annual effective cap of 58,200. Last year, that category reached its cap by August.

By raising the quotas on such visa professional categories as H1-C to better correspond with future employment needs, Congress can also increase the pool of Social Security taxpayers at a time when the native-born workforce is shrinking. For example, the Social Security Advisory Board estimates that the retirement system's deficit would be reduced by 5% for each 250,000 increase in employed immigrants.

These changes in immigration policy alone will certainly not solve Social Security's future cash-flow problem. But they could contribute to reducing the deficit while satisfying job markets created by an aging population.

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