Social Security Pays Benefits for “Illegal Work” Says Inspector General

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Social Security Pays Benefits for “Illegal Work” Says Inspector General

In 1992 a Mexican woman began working illegally under an invalid Social Security number. Six years later, when she obtained a valid Social Security number, Social Security gave her credit for the wages she had earned illegally. The woman started receiving Social Security disability benefits in 1999 and, according to Social Security’s Inspector General, from 1999 to 2002 she collected more than $583 per month in benefits.

From 1971 through 1979 a Mexican man illegally worked under his father’s Social Security number and, before collecting benefits, had these wages transferred when he acquired his own Social Security number. From 1999 to 2002, he was able to collect approximately $11,441 in retirement benefits.

These two cases illustrate a massive loophole in Social Security policy that has potentially devastating consequences for the Social Security system. According to the Social Security Inspector General, current Social Security policy allows non-citizen aliens to work illegally in the U.S. for a number of years, eventually acquire a valid Social Security number, and then have the illegal earnings posted to their new numbers. They may then receive disability or retirement benefits based on their legal AND illegal earnings.

In a recent report given to the House Ways and Means Subcommittee on Social Security, the Inspector General said that a 1999 audit estimated invalid Social Security numbers may have already cost the Social Security Trust Fund $287 million and could cost as much as $63 million annually. Over the lifetimes of persons who claim benefits using the invalid numbers, the cost to the Trust Fund could exceed $1.7 billion. In 2000 alone, earnings were reported for more than a half a million persons using non-valid Social Security numbers.

The Inspector General stressed that the policy of crediting wages to persons who worked illegally may have greater implications for the future. And it is this that concerns TREA Senior Citizens League. The government is contemplating a future amnesty agreement for Mexican citizens residing illegally in the United States. If that occurs, a likely result is that Mexican citizens who have been in the country illegally would be allowed to obtain valid Social Security numbers and could then receive full credit for any earnings from their previous, illegal work.

In addition, the Inspector General cited the proposed totalization agreement with Mexico. Said the Inspector General, “although the Social Security Administration estimated the number of Mexicans who may apply for benefits under the proposed agreement, the treatment of illegal work was not discussed.”

According to a recent story in the New York Times, an estimated four million illegal Mexican immigrants live in the United States. According to the Inspector General, should an amnesty or totalization agreement with Mexico occur, Social Security may potentially need to reinstate a large volume of wages based on earlier illegal work. Some $374 billion in benefits are represented by wages accumulated for invalid Social Security numbers.
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Legislative Alert: TSCL is shocked to learn of this policy and is concerned that many Members of Congress may not be aware that Social Security rules reward illegal work. The Inspector General’s Congressional Response document did not appear in any known media reports and appears to have had only limited circulation. TSCL strongly supports the Social Security Inspector General’s recommendation for legislation that prohibits the crediting of non-legal earnings and work history for purposes of benefit entitlement.

Source: “Congressional Response Report—Social Security Administration Benefits Related to Unauthorized Work,” Office of Inspector General, Social Security Administration, March 2003, A-03-03-23053. “Old ID Card Gives New Status to Mexicans in U.S., Rachel L. Swarns, The New York Times, August 25, 2003.

November 2003