Immigration reform and entitlement reform go together

  • Article by: ROBERT B. REICH , Tribune Media Services
  • Updated: February 26, 2013 - 12:25 PM

Social Security and Medicare are getting into trouble because America is aging so fast. A solution: Expand the number legal immigrants coming to America.

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Photo: Social Security checks.

Photo: Bradley C Bower, Associated Press

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I was born in 1946, just when the boomer wave began. Bill Clinton was born that year, too. So was George W. Bush, as was Laura Bush. And then the next year, Hillary Rodham. And soon Newt Gingrich (known as “Newty” as a boy). And, also in 1946, Cher. (Every time I begin feeling old, I remind myself she’s slightly older.)

Why did so many of us begin coming into the world in 1946? Demographers have given this a great deal of attention, but it’s not that complicated.

My father, for example, was in World War II -- as were the fathers of many other early boomers. Ed Reich came home from the war, as did they. My mother was waiting for him. Get it?

Altogether, more than 76 million Americans were born between 1946 and 1964 -- the biggest demographic wave in American history.

Fast-forward. Most of us early boomers had planned to retire around now. Later boomers had hoped to retire in a few years. But these plans have gone awry. First, boomer wages didn’t rise as fast as we expected they would. In fact, over the last 30 years the median wage has barely budged, adjusted for inflation. As a result, most of us haven’t saved as much as we’d hoped.

Then, employers scaled back our pensions. Instead of the predictable monthly benefits many of our parents got when they retired, we received “defined contribution” plans -- basically, do-it-yourself pensions. Some employers initially offered to match what we socked away, but those employer matches often shrank to the vanishing point.

We nonetheless took comfort from the rising prices of our homes, and assumed they’d become modest nest eggs when we sold them and bought smaller places for retirement.

But then the housing bubble burst.

Meanwhile, whatever we’d managed to sock away in the stock market lost years of value.

We assumed we’d at least have Social Security and Medicare. After all, we’ve been paying into both programs for years.

Yet both are now being eyed by deficit hawks who say the only way to avoid large and unsustainable budget deficits in future years is to limit these programs.

So are the boomers doomed?

Not necessarily. One possible response to the aging of America, not yet on the table: Expand the number legal immigrants coming to America.

A big reason Social Security and Medicare are getting into trouble is because America is aging so fast. It’s not just that so many boomers are planning to retire, and their bodies will wear out. It’s also that seniors are living longer. And families are having fewer children.

Add it all up and the number of Americans who are working relative to the number who are retired keeps shrinking.

Forty years ago, there were five workers for every retiree. Now there are just over three. By 2025, if present trends continue, there will be only two workers per retiree. There’s no way just two workers will be able or willing to pay enough payroll taxes to keep benefits flowing to every retiree.

This is where immigration comes in. Most immigrants are young because the poor countries they come from are demographically the opposite of rich countries. Rather than aging populations, their populations are bursting with young people.

Yes, I know: There aren’t enough jobs right now even for Americans who want and need them. But once the American economy recovers, there will be. Take a long-term view and most new immigrants to the U.S. will be working for many decades.

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