Looming Retirement Crisis-Can Social Security Become More Secure?
Posted by Chip Block on October 15, 2019 10:25 AM EDT
Thomas' recent blog on the impact of the aging population and its negative impact on the long term care crisis......
...really grabbed my attention. So, I thought it would be a good idea to share important aspects of a recent article I read on Wharton Business School's email newsletter, Knowedge@Wharton.
The article was focused on how the role of legal immigration could have a positive impact on the pending crisis for retirement savings that is tied to the issues facing Social Security. Since for many people, Social Security is an important element of their retirement plans, this article is relevant, while also perhaps controversial. In addition, since in our writings we have often cited the important research that Gallup Inc. has published centered on the five essential elements of wellbeing and the role of financial wellbeing and career wellbeing, it seemed to me that this article is in keeping with the purpose of our focus on improving population health and wellbeing.
In essence, the premise of the article is that legalizing immigration will create younger streams of potential employees and therefore payees into the healthcare system and into social security as well. The quotes below are ones that were highlighted in the article. For access to a reprint/PDF of the article go to the Documents tab on this profile portal, or click the following link: https://hamptonroadscares.org/show/healthetogether-solutions-group-norfolk-virginia/file/3805
Selective quotes from the article:
"If you wanted to devise a solution to some worrisome trends on the horizon for the U.S. — threats to continued GDP and employment growth, an under-funded Social Security trust fund — you might consider a mechanism called immigration. Forecasters see challenges in the ability of a limited U.S. population expansion to support economic growth. An influx of immigrants is one obvious answer".
“In relative terms compared to other countries, if we care about our relative position vis-à-vis China, for instance, immigration is going to be a critical part of maintaining that position,” said Alexander Arnon, senior analyst with the Penn Wharton Budget Model (PWBM), on a recent Knowledge@Wharton SiriusXM radio segment. U.S. immigration policy is extremely important to the future of the economy over the next few decades, notes Arnon, due to the country’s aging population and relatively low native fertility. “If we hold things constant, we’re looking at a population that is roughly stabilizing after a few decades from now. If we want to continue growing, if we want to maintain our relative position in the world population, really the only way we’re going to accomplish that is if we bring in more immigrants.”
"Shifting the mix of legal immigrants toward college graduates would have little impact on employment and slightly increase GDP; legalization of undocumented workers would slightly reduce employment and have a negligible impact on GDP; increasing deportations would substantially reduce both employment and GDP; and the largest positive impact on employment and GDP would come from increasing the net flow of immigrants".
“One of the things that we found is if we increase immigration, legal immigration in particular, the entire population as a whole of the United States becomes younger, there are more working-age people who are contributing to economic growth, and also — given current trends in immigration — the population becomes more educated. And so we wind up with more productivity,” said Kimberly Burham, managing director of legislation and special projects for the PWBM, on the Knowledge@Wharton radio show. “We wind up with a larger tax base that helps tax burdens on ordinary Americans. And it also helps financing for these entitlement programs like Social Security. So increasing immigration can have a lot of positive impacts on the budget.”
Finally, I conclude with another relevant point from the article.
"The need to undergird Social Security is no small matter. The program is currently threatened by a shortfall expected to exceed $14 trillion in the next 75 years, with its trust fund projected to be depleted by 2034. Population growth in the U.S. is also hardly booming. In 2017 and 2018, birthrates declined and death rates rose, with immigration accounting for nearly half of the population growth in the U.S., according to the Census Bureau".
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