While so often derided by politicians seeking to divide and score points, Mexican immigrants remain a vital part of both the American workforce and its society more broadly. They remain, however, extremely vulnerable financially.
Research from the University of Southern California shows how Mexican immigrants often face far greater obstacles in accessing social security benefits, which often results in them having to work later in life than their American peers. What’s more, those who do receive benefits are more likely to be reliant on them than their white peers.
Complex journey
The researchers explain that Mexican immigrants in the US often face a long and complex journey to retirement. This is because while they may work in the US, they don’t accrue social security benefits in Mexico. What’s more, if they are undocumented, they’re also shut out of any social security offered in America. This is despite most official estimates suggesting that around 75% of undocumented immigrants are believed to pay payroll taxes. The researchers believe this creates around $7 billion worth of social security contributions that they’re prevented from claiming.
The researchers were interested in examining the so-called determinants that would enable an individual to retire. These include things such as their health and income but also their access to social security benefits.
“The social security benefits that comprise most retirement income for Mexican-born immigrants had a far greater effect on retirement decisions than did other sociodemographic, health or institutional influences,” the researchers explain.
For instance, a $10,000 increase in social security wealth was found to increase the chances of retirement for whites by 0.5%, but for Mexican-born immigrants by 0.9%.
A longer career
After analyzing data from both America and Mexico, the researchers found that Mexican workers in the US were likely to work considerably longer than their non-Hispanic peers.
“Some of them send their savings to Mexico when they were working in the U.S. They don’t have any sources of income or savings in retirement, so they have to continue working,” the researchers explain.
Indeed, while the average age of retirement was 62 in the US, it is 65 in Mexico. The researchers believe that because Mexican workers are more likely to rely on whatever social security benefits they’re entitled to, any changes in the system are also likely to have a big impact on the length of their careers.
“Given the impact of social security wealth in our analyses, we expect future changes in the U.S. social security system will strongly affect labor force participation and retirement decisions of Mexican-born immigrants,” the researchers explain.
Beneficial changes could be in the form of so-called totalization agreements. These would enable immigrants who have worked in a country for at least five years to be eligible to receive retirement benefits, even if they’re not citizens of that country. The researchers explain that ordinarily pension benefits are determined by the number of years someone has contributed to the system.
They explain that the United States currently has totalization agreements with around 30 other counties, but that Mexico is currently not one of them.
“Instituting such an agreement,” they conclude, “would enable Mexican-born immigrants and return-migrants to more readily access social security benefits and to improve their wellbeing in retirement.”
