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Mandatory E-Verify Would Overwhelm Social Security Administration, Increase Disability Backlog

(Photo: longislandwins / Flickr)

The train of threats to Social Security this year keeps on rolling, this time from the Chairman of the House Judiciary Committee. The “E-Verify” program threatens to undermine the Social Security Administration (SSA) and the millions of Americans who rely on it.

Assuming the President stays the course and refuses to propose Social Security cuts, E-Verify would represent the biggest threat to Social Security that is currently on the table – aside from the Republican Presidential Candidates. (Click here for the Strengthen Social Security Campaign’s position on E-Verify.)

The legislation in question is called the Legal Workforce Act and comes under consideration by the House Judiciary Committee today. The bill is not primarily designed to cut Social Security spending – rather, it is meant to curb the legal employment of every undocumented worker in America. While immigration-related, a mandatory E-Verify program would also cripple SSA by draining limited funding and imposing heavy burdens on one of the most efficient government programs in existence.

In short, E-Verify is a tool designed to prevent the employment of undocumented workers in the United States. Employers run the personal information of new hires though the E-Verify electronic system, which is connected to the SSA master database of Americans with Social Security numbers. In its developmental stages, the program has been optional for employers, but this new legislation would make it mandatory. Bottom line: E-Verify would add significant responsibilities and workload to an agency that is already overworked and underfunded, and jeopardize the ability of future retirees and disabled workers to get their benefits in a timely fashion. Here’s how:

Mandatory E-Verify would cost American workers their jobs and create confusion at SSA.

When E-Verify finds an inconsistency between a name and that person's work authorization, it issues a “tentative nonconfirmation” (TNC), after which an employee has several days to contact SSA or DHS to correct the error or risk losing their job. Unfortunately, a significant number of these TNCs are issued in error. Amazingly, over half of all errors were falsely issued “final nonconfirmations,” a definitive finding that someone is not legally authorized to work, forcing their employer to fire them for no good reason. With a total American workforce of 154 million, that translates to over 770,000 jobs lost.

So what does this mean for SSA? It translates to an already overburdened staff that now has to deal with hundreds of thousands of extra calls and office visits, sometimes entailing a lengthy review process for individual cases. In 2008, when there were only 7 million E-Verify queries, 88,000 people called the 1-800 number or visited SSA due to E-Verify errors. If the program were mandatory, SSA would have to review 154 million records in the initial implementation period, causing nearly 2 million more calls into SSA during that period alone.

SSA is already underfunded and overburdened, and cannot afford to take on the consuming and perpetual E-Verify project.

SSA has long been underfunded. Agency administrative expenses alone have been shorted 8 of the last 10 years (compared with the amount it requested of Congress to operate at full capacity). There was a particularly huge cut in 2011, almost a billion dollars below the required level, which was part of the last-minute compromise between Speaker Boehner and the Democrats this past April. Because of those negotiations, SSA has already had to take several measures to limit its regular operations because it simply can't afford them — many of which will increase costs further.

E-Verify proponents often claim that SSA would be funded to keep up with its new responsibilities. While that's possible, it's unlikely, given the Republicans' current impulse to cut every government program in sight. It's easy to imagine a scenario whereby SSA is forced to cut even more of its regular operations in order to accommodate the new E-Verify agenda. Critical goals of the agency, such as reducing the unacceptably long backlog for pending claims, would have to be ignored further into the future. Or maybe it was the point all along to cripple the administration of Social Security benefits themselves and attack this extremely popular program through the back door.

According to the American Federation of Government Employees, the union that represents SSA employees, SSA has already taken the following steps because of the reduced funding:

  • Closed field offices 30 minutes early each day
  • Stopped mailing the Annual Social Security Statement
  • Instituted an agency-wide hiring freeze (excluding the hearings department)

And moreover, if SSA is funded at the current 2011 level through 2012 (probably a best-case scenario at this point), it would mean:

  • They would lose another 4,400 employees, on top of the 3,500 they expect to lose this year, for a total reduction of7,900 employees in two years.
  • They would complete 2.8 million disability claims, nearly 400,000 fewer than in 2011, with pending levels rising from 845,000 to about 1.2 million and processing time exceeding 4 months.
  • Each furlough day would result in approximately 19,000 retirement claims, 11,000 initial disability claims, and 3,000 hearings they would not be able to complete.

And all of this when there will be 10,000 new retirees claiming benefits each day for the next 20 years!

E-verify would remove millions of taxpayers from the pool that pays into Social Security, thus weakening the solvency of the Trust Fund.

As we've seen, the point of E-Verify is to remove illegal workers from legal employment, likely ending their tax contributions to Social Security and other federal revenue streams. This is a wasted opportunity, as any undocumented worker that pays taxes provides a net gain to the system (since they don't collect benefits). As we all should know by now, undocumented workers are not going to leave the country when E-Verify comes knocking. They fill an important niche in our economy and are here to stay — the only difference is that more of them will be funneled into the underground economy, or miscategorized as (partially tax-exempt) independent contractors. One 2008 bill that would have made E-Verify mandatory without a pathway to legalization would have decreased federal revenue by $22 billion over 10 years.

Of the approximately 8 million undocumented workers, it is estimated that about two-thirds of them pay payroll taxes into the Social Security Trust Fund, accounting for $12 billion in 2007. (The Trust Fund is the total pot of surplus money paid into Social Security that is not immediately sent out as benefits, now totaling $2.7 trillion.) In total, undocumented workers have contributed somewhere between $120 and $240 billion to the Trust Fund, accounting for 5.4 to 10.7 percent of its total assets. In addition, these workers tend to be younger than the average American, so the impact of their tax contributions will grow as the Baby Boomers retire and the percentage of seniors in America rises from 12 percent to 18 percent. According to the chief actuary of SSA, without the contributions of undocumented workers, the Trust Fund would run out of assets six years earlier than estimated in the 2010 Trustees Report. That's staggering.

According to most experts, mandatory E-Verify wouldn't affect those who already receive Social Security benefits, because current beneficiaries receive their checks through a mostly automatic process. But this much is sure: nearly everyone else applying for new benefits would be affected. It is anyone's guess how SSA would respond to being buried with new caseloads at a time when, even pre-E-Verify, “unprecedented workloads combined with declining budgets [have] damaged [the agency's] service delivery,” according to the SSA Commissioner himself. An employment verification system should only be part of comprehensive immigration reform, and should only come into being when these serious flaws have been fixed. For now at least, mandatory E-Verify is the surest way to threaten the social safety net with paralysis.

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