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On Immigration and Social Security
There are two very big issues on America's plate in 2013; A) what to do with Social Security (SS) , and B) immigration. For the most part, these two topics are uniquely different. There is one important area where they lap over - money.
SS maintains an account called the Earnings Suspense File (ESF). This is account used for booking money that comes into SS from improper SS ID# (SSNs). Credits to ESF can arise from administrative errors. It's easy to imagine how some one transposes a few digits on the SSN, and the computers at SS recognizes the mistake. Until the error is fixed, the money from payroll taxes on that SSN is suspended in the ESF.
The ESF is not just an account where errors are trapped and later reconciled. It is a doghouse account that has collected well over a hundred billion dollars over the past decade. The vast majority of the money in the ESF comes from workers who are using an illegal SSN.
This site produced the following report on the Earnings Suspense File (ESF) at SS:
There is no data after 2010 on the ESF account. I made some conservative assumption for 2011/12, and adjusted it for interest earned starting from 2001. The P&I totals over the past eleven years come to $138 billion for SS and $33B for Medicare. That ain't hay; for SS it means that 5.3% of the entire SS Trust Fund is ill gotten gains, for Medicare the contribution from illegal workers is equal to 8+% of its Trust Fund.
From 2001 through 2012 the total amount of wages paid to undocumented workers comes to just shy of $900 Billion. Wow! The annual average is $75B. Today, the average documented worker earns $53K a year, this means that 1,400,000 jobs (100+K a month!) might otherwise go to documented workers.
Unemployment is 7.8%. A more desirable level would be 5.5%. To achieve this, approximately 4mm jobs are needed. There are 7+m jobs being filled by undocumented workers today.
It's tempting to look at these comparisons and reach a conclusion that America could move the needle on unemployment by eliminating undocumented workers. As a practical matter I don't think that is possible, nor would it be desirable.
This a perplexing problem, and I don't know what to do about it. However, "Fixing" the problem that exists is something that has to be done. Consider the ESF data:
The obvious conclusion from the chart is that when the US economy is strong, illegal workers come. When the economy weakens, the undocumented workers leave. There are signs that the long recession in housing is over. If that is to be the case, then the country can expect a new wave of undocumented workers to come with the recovery.
Given the split that exists between conservatives and liberals on all issues today, it would seem unlikely that anything can be done to make this "right". That would be a stupid result, there is a hell of a lot riding on the outcome.
Note:
If an illegal worker obtains a forged SSN, and uses it to obtain work in the US, then that illegal worker will be entitled to receive SS benefits on exactly the same terms as a legal worker. The only difference is that the illegal worker must receive their SS payments in a bank account outside of the country. What a system!
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Just why did you say "when the US economy is strong, illegal workers come. When the economy weakens, the undocumented workers leave"? It seems that they were just as illegal when they left.
That said, I believe that those who arrive illegally should be treated as illegals, caught and deported. Anything earned by them should be used to offset expenses incurred in getting rid of them and any family that came with them. Anything else should be confiscated.
My wife and her brothers, and their families, went through the proper channels. I had to promise to support them if needed. If they could do it, so could all those illegals.
Amen, Geezer! Me too. I had to go and be "interviewed"/interrogated on camera as to every aspect of day to day life. What we did and when we did it, where we went, sex life, everything. Plus, had to go to ins office in state we resided in- this meant 110 miles each way for these interviews. I had to bring paperwork showing all of my finances, proof that I would be responsible for her support, etc. Then, there's also the $1,000's spent on filing forms, etc on the initial application and renewals. For illegals to just scam and get it all for nothing with zero commitment on their part? Yeah, it sucks.
they should all come to IL-our asshole guv and legislators are going to give all of em driver's licenses
MAybe. But they you have to subtract all those taxes not paid working under the table, living 20 to a house and sending all their kids to school for nothing, outright welfare/SNAP costs, unpaid multiple ER visits and "free" healthcare given to them and not to mention they make up about a quarter of convicts. Like paying for that?
Go around an illegal-infested hood and see if they contribute to society on balance. Then move there. I'm sure you will like it.
Bruce apparently loves them so much he's thinking of buying some property in Pilsen 'hood in Chicago to increase his profile as a slum lord. I hope he has to pay the AMT til he's broke.
The wood chipper is never off at ZH these days. If you disagree with me, you are wrong, and if you are wrong, I hate you. Vrooom gurgle gurgle in you go.
But you probably are wrong on that one. Illegal workers might show up at the hospital emergency room for care they never pay for; put their kids in public schools; have American-born kids who receive SNAP, etc. In a more abstract sense, they put wear and tear on roads and public facilities just like anyone else.
There is also conceptually the SNAP and unemployment for the citizen worker who probably doesn't really want the job for what the boss (a charter member of the Tea Party half the time) is willing to pay, but in theory could have the job.
Bruce I (mostly) agree with you. You have everything, yet you waste your time on US serfs. Why ?
I think your cohorts are afraid, and know the end is neigh.
You are a hypocrite. You are trading the fFroth, while you talk down your ilk/breathern<
Who you thinking are my breathern??
You think maybe me and the Koch boys are hooked up or something?
Not the case at all.
Illegals aren't going back for many reasons. First, the Feds want them here. I never thought I would see the day when a state was taken to court by the Federal Gubmint for trying to save itself from catastrophe. Their children {tens of millions of them} will be obedient servants to the Feds who feed them, clothe them, educate, medicate, and pander to them on all levels. Business wants them here for all of the obvious reasons. They grow gubmint with their insatiable appetite for social services and corrections. They are transforming this country into what the elites want. In many ways, we are already not the "United" States anymore, and in another 5-10 years, we will be completely balkanized, held together only by the police state. Caesar had it right;"DIVIDE AND CONQUER".
SS deducted from wages, most of it retained by government?
That there's a .gov wet dream....and partially explains the unchecked illegal immigration of the 2000's....
What does a Ponzi require? An endless supply of fresh suckers.
I think of immigration, legal and illegal, in those terms anymore....
That, and the Tower of Babel.
Maybe I'm missing something but the wage figure is more like -$10k per year.
For instance, 2010 @ $70 billion / 7.3 million W-2 forms = $9,600 (more or less).
Keep in mind most off-the-books hires are paid cash with no withholding. That would include most hires in construction.
Real estate 'recovery' is a stretch as the 'go-go finance' that made the bubble work is deader than a doorknob. Instead, financing is by Ginnie Mae @ low-equity loans and new buyers are underwater right off the bat.
signs that the long recession in housing is over? WTF bruce
I was wondering if someone was going to lay into me on that.
Me? I see those signs. Maybe I'm seeing the wrong things. I own properties in a number of states, I can tell you that South Florida has made a big recovery, so has NY.
Quick story:
Lady I know, 33, doing okay, making $86k a year in D.C. She has 17K in the bank.
She calls and asks if she has enough money to buy a house. I say "Forget it! You need 20% down these days, and the banks aren't lending!"
Next fucking day she sends me a letter from a Community Bank. They give her a preliminary okay for a $500k mortgage, with only 5% down!!!!!
One day!! 5%!!! If this is happening in DC, then the housing market is not going to tank anytime soon
Folks in the top 20% income percentile can get mortgages, yep. Surprising? Nah, not really. Good thing only rich folks need places to live.
I live in South Florida, but do not profess to be an expert on the RE market here. However, a few things:
Foreclosures are better than a year ago, but I would not say good. Units held off market do not depress prices: http://www.sun-sentinel.com/business/fl-realtytrac-foreclosures-year-end...
Yeah median prices are up quite a bit from a year ago: http://www.sun-sentinel.com/business/realestate/fl-ziprealty-report-2013...
Miami-Brickell - condo canyon - is hot.
But in a lot of cases it seems that many purchases are cash only via investors of many stripes (South Americans, Canadians, investment concerns).
My son has a friend who has the 20%+ to put down, is pre-approved, but has lost three propertis to cash sales.
So, it's better, perhaps stabilized, perhaps one could say a kind of (price) recovery, but I don't think it's healty or sustainable.
Looking at the RE section from last Sunday's paper, there sure seems to be a lot of $500,000 and up new homes advertised.
The kind of jobs that would sustain that kind - or even a median kind - of home purchase are few and far between down here.
I dunno about the "EZ credit", like I said seems to be gated a lot by cash deals.
Pete
Don't take this to me saying that all is well. If you read me, you know that is not what I think.
I think RE has gone back to being a local issue, versus a national issue. In Florida, Naples is still in the shitter. But Miami, Ft. Lauderdale and West Palm have all come back.
So those who say that it stinks by them, maybe right. I just don't see it as the national crisis it was 3 years ago.
One thing about the lady in DC, the reason she wanted to move was that her rent went up 15% over two years. If rents are rising in your area, don't be betting on a collapse in RE prices. There are properties to be had that pay a 4+% cash-on-cash return. The alternative investment? That pays next to zero these days. Add in the chance for a rent increase in a couple of years, and RE doesn't look so bad.
Remember, what Bernanke wants more than anything, is for rents to go up. Crazy as that is, "don't fight the Fed", is probably less crazy.
i agree with you from experience. real estate has become local again. i can second your analysis of south florida and add hawaii and selected second home markets. it is not going anywhere but prices are beginning to rise at historical rates tied to income, jobs and inflation(and a few cases of supply/demand metrics). the real good deals are gone almost everywhere but there are still some good deals out there.
Bruce, I know that you know that the DC area is a world onto itself- living off the rest of the country. Inflated wages, property values, costs of living, etc. I have family in that area and can say that similar homes to mine are 2.5-3 times the value of where I live. It;s been that way for at least the last 20 years, but it is still a bubble. The same can be said for the financial heart (NYC area) of our country as for it's political (DC) one. Sooner or later this too shall pass... As for the illegals- I wish this cheesy bastard would stop picking and choosing which laws he is going to enforce and do the right thing and enforce what we already have on the books. Illegal used to mean illegal. Now, not so much, unless you want to take advantage of your right to own a firearm...then, it's illegal even when it is not. Go figure.
Bullshit! IT AIN'T HAPPENIN BRUCE. It may happen to your example, aka, a young Black woman, Federal employee that has a guaranteed pay raise from here to eternity. The rest of the country is in a shit hole. The housing market will not recover for decades. Lower wages for the working class MINORITY, less jobs, too many houses, etc. The Federal Government, the Bankster Cartel, The Real Estate Cartel, including the Realtor/Broker, the Realestate Agent, and of course the complicit sucker that bought into this shit of a McMansion for pennies are the reason the market won't "tank anytime soon", ITS BECAUSE WE'VE FUCKING TANKED ALREADY.
I do see a dead cat bouncing up after 4 years of monetary and rule ignoring suspended animation, don't see underlying fundamentals pushing the market
are you kidding me-and Bruce doesn't see that this type of shit is at the root of the problem? she'll choke on the first property tax bill she gets-and that's after she leverages that mortgage into a cute little Bimmer w/ $500 a month payments
Yes I can see the recovery from my back yard.
The Federal Reserve bought $21.9 billion in agency mortgage-backed securities Jan. 10-16, less than the $29.9 billion it bought in the prior week, the New York Federal Reserve Bank said on Thursday.
The U.S. central bank sold $2.4 billion of mortgage securities guaranteed by Fannie Mae, Freddie Mac or the Government National Mortgage Association, or Ginnie Mae, in the latest week. It sold $9.4 billion the previous week, the New York Fed said on its website.
On Sept. 14, the Fed began a $40 billion monthly increase in MBS purchases, its third round of large-scale bond buying, known as QE3, in an attempt to support the housing recovery and boost economic growth.
Since October 2011, the Fed has been using funds from principal payments on the agency debt and agency MBS it holds to reinvest in agency MBS, which was an earlier move to help the housing market.
"The P&I totals over the past eleven years come to $138 billion for SS and $33B for Medicare. That ain't hay;"
I assume by "hay" you are not referring to the $85B monthy Fed expenditures funded by future taxpayers for taking bad mortgages off the hands of the banks whose CEOs already bonused themselves a large percentage for the brilliant idea of writing bad loans to people who can't pay them back knowing that the Fed would cover it.
UE is 7.8% Sure it is...
can that $ be used to round 'em up and ship 'em back? these articles get worse and worse and fail on so many levels. Bruce should stick to writing about the EUR/CHF peg like he used to.
Yes, this is correct. Mexico is competitive to China. So what?
What you are also saying is that Mexican labor costs are even lower than China's!
Given that Mexico's wage rates are so low on a global basis, there is an even greater incentive to leave Mexico and come here - provided there were jobs.
The illegals around me make $100 a day - take home. Much better than in Southern Mexico.
"...there is an even greater incentive to leave Mexico and come here - provided there were jobs."
There are no jobs here any more. They will not come. I don't know anyone except a skilled drywaller, plasterer or mechanic making $100/dia. I guess you may end up having to pay full price soon enough.
And there is no way that the US is going to be able to recoup the losses on yanquis hiring Mexicanos illegally unless there is some suit in the World Court and all that stuff that is never going to happen. However, that would mean that there would be fewer "undocumented workers" living off the dole of Social Security- and fewer putting in, too.
Giving those guys a hard time on the way out the door for a job well done is not the way to solve the Ponzi that is the Social Security System. The entire idea needs to be re-thought, with the first step saying no more SocSec checks to a foreign address and anyone who has knowingly hired an illegal worker will be held financially responsible for their input into the System.
My bet is that most Mexicans would leave for home and work down the block from their mother's house in the new Sanyo assembly plant than would want to be a gardner in New York State in February. That's what wage parity does for a community.
Personally, I wish them luck in their new factory and I do hope it succeeds.
"The entire idea needs to be re-thought, with the first step saying no more SocSec checks to a foreign address ...."
So all the pensioneiros living in Costa Rica, Cancun, Panama and Uruguay need to come home, just because they draw SS? Where will they all live, and how will they pay their suddenly-doubled expenses?
"The entire idea needs to be re-thought, ...."
Cutting off all SS checks with a foreign address certainly needs to be re-thought. A lot of those folks can't afford to live in America anymore.
They can arrange a proxy bank account in the States after the bank verifies it is legit.
"There are no jobs here any more. They will not come."
Yet they do, because there are plenty of folks willing to pay less in [fill in the blank for almost any job] to someone willing to work for it, which is the race to the bottom model that is the clear winner in the new global economy. Right to work will set you free.
Your unionist perspective might work if it hasn't already proven not. Some of the strongest union states have suffered the most. If union protected wages were the answer and the demon was lowering wages, why do we see these results? The reality is the loss of jobs is driven by the loss of demand for their products and services. People without jobs don't spend much to hire other union workers or illegals. As long as we can buy imported goods without protectionism, all wage systems fail, except the very cheapest. Your solution is that everyone fails, even those willing to work for near nothing. I can't see how that is a solution. Illegals have become the issue because they are the only defense we have at countering cheap imports. Only the absolutely most cost efficient, whether it be through technology, innovation or dirt cheap labor can compete in this environment. You can ring your hands about the demise of the middle class all you want but as long as we continue to borrow money from the bankers to purchase foreign made goods, there is no stopping what is happening.
Why'd you bring up unions?
"Illegals have become the issue because they are the only defense we have at countering cheap imports"
illegals are pathogens flooding in to the open wound of a wounded animal named "america".
Makes me sick to see amerikans defending it.
"They sure is HARD workers"....(it's got a nice antebellum ring to it though...)
"If union protected wages were the answer and the demon was lowering wages, why do we see these results?"
Because TPTB have LET the demon in the back door
They all seem to be coming back to New Jersey and getting hired .....it's amazing they get jobs and locals can't ....cash n' carry
I was in New Jersey for a wedding a few years ago. As we were getting close to the Church, my wife and I couldn't help but notice that the downtown was unusually full of people (maybe around a thousand) and nearly all of them appeared to be Latinos. My first thought was: Holy Shit--when did NJ turn into Mexico?
Mexicans are more prevalent in the west, are you sure rbh81 that they aren't Domincans or Puerto Ricans?
Let me know when they start to leave so I can go back.
:D
They all seem to be coming back to New Jersey and getting hired .....it's amazing they get jobs and locals can't ....cash n' carry
The worse the economy gets the more cheap labor is desired.
vicious
circle
The new paradigm is already emerging and that is wage inflation has caught up with the Chinese. It is just as, if not now cheaper to assemble just about anything in Mexico.
Problem (mostly...) solved.
:D
___
How was that for a plan, eh?
BOTTOM LINE:
Since WE know where the bulk of this comes from, it should go INTO SS TRUST FUND.( they take so much out in FREE healthcare/welfare), this is a mere pittance.
The illegals that paid it, get paid for the illegal jobs, and it's only right that THEY help pay back the hand that FED them.
Ron Paul has the best idea on controlling illegal immigration, do not pay them benefits.
npr has switched sides and now seems to support the girlfriend-denier movement:
"Here's an instance of at least two experienced reporters who tiptoed to the edge of the truth and didn't quite believe where their reporting took them.
The story was too important to let the absence of verifying facts get in the way.
.. the reporters and their peers wanted the story to be true."
shocking.
too difficult to conceive that something other than the official story could be true?
shocking.
unless you're a veteran (spoiler: it's just the same old truther thing .. go tiptoe over to some *other* edge)