Americas baby boomers are
nearing retirement, which will have to be supported by
fewer young workers than ever before. Patrick Osio, a
journalist with Hispanic Vista, points out that
Americas Hispanic youths will be an integral part in
countering any future social security crunch. But they
will need some help in gaining the necessary job skills.
Harvard professor Samuel P.
Huntington suggested that the United States ignores the
dual culture of U.S. Hispanics the Hispanic
Challenge at its own peril.
A clash of generations
He is absolutely right but not for the reasons he
Investing in better educating
Hispanic youths in America should be
considered not as a favor to
Hispanic-Americans but as an
investment in the U.S. economy and the
national retirement plan.
Rather, the real challenge for U.S. society is how to
give young Hispanics the skills they will need to
support the countrys aging non-Hispanic white
The peril faced by the White Anglo-Saxon Protestant
(WASP) part of the population described by Huntington is
that they are aging very fast and that their social
security benefits will depend on the earning power of
young U.S. Hispanics to a degree that few Americans
A shrinking support-base
To illustrate why, consider that in 1950, there were
16 workers for each person receiving social security
retirement benefits. That figure had dropped to 3.3
workers per beneficiary by 1994.
And the ratio between workers and recipients will
only drop further. By 2025, there will be down to two
workers and by 2050 to 1.3 workers per recipient.
What are the numbers?
This is where the Hispanic population comes in, which
overall is much younger than the non-Hispanic white
Among Hispanics, 48% are under 25
years old and only 19% are 45 or
Among Hispanics, 48% are under 25 years old and only
19% are 45 or older. There are 2.6 young Hispanics for
every mature Hispanic worker or retiree.
Among non-Hispanic whites, the numbers are very
different: 32% are under 25, while 38% are 45 or older.
That adds up to less than one young person for every
mature worker or retiree.
This obviously means that Hispanics will play a
disproportionately large future role in financing social
security benefits for elderly Americans.
The problem is that Hispanics make less money on
average and thus pay fewer contributions into the
system than many of the non-Hispanic white Americans who
will be retiring soon.
What it all adds up to
Presently, the three-year annual average earning of
non-Hispanic whites is $47,194 while the average for
Hispanics is $33,946.
Presently, 21.8% of Hispanics possess
only elementary education.
The combination of social security taxes paid by
employee and employers amounts to 15.3% of income, up to
a level of $87,900.
Because of their higher average incomes, non-Hispanic
whites on average pay $7,220 in social security taxes
each year, while Hispanics only pay about $5,193 a
difference of $2,027.
This may not seem like much, but it adds up to a
difference of $2 billion or more for every one million
When todays non-Hispanic white workers reach
retirement age and start collecting their social
security benefits, the working-age population will be
far more heavily Hispanic than today.
The real challenge is to prepare todays young people
so that they will have high future earnings, generating
ample tax revenue with which to cover the social
security promises to todays workers. This means that
special attention must be given to preparing Hispanic
youth for high-paying jobs.
Avoiding the obvious
Elected officials are far more preoccupied with
solutions to the social security financing problem
like private accounts that fix nothing fundamentally.
Because of their higher average
incomes, non-Hispanic whites on average
pay $7,220 in social security taxes each
year, while Hispanics only pay about
$5,193 a difference of $2,027.
Over the years, various stopgap measures have been
introduced: Taxes have been raised, as have taxable
earnings. Benefits have been reduced as well, by
postponing the age of retirement.
In 2004, full benefits are obtained at age 65 and
four months. Each year, this retirement age will
increase by two months until full benefit retirement
age will have reached 67.
For todays workers, this amounts to a benefit
reduction combined with an additional two years of
Without raising taxes again or increasing retirement
age any further, there are two alternatives left, both
of which are important for all Americans but
especially for Hispanics.
The first is to invest in the education and
preparation of U.S. youth to achieve higher earnings and
A smart decision
The second is to increase the number of young
immigrants allowed into the United States.
By 2025, there will be two workers
for each person receiving social
They can carry part of the load by raising the number
of available workers per retiree.
Investing in better educating and preparing Hispanic
youths should be considered not as a favor to
Hispanic-Americans, but as an investment in the national
economy and the national retirement plan.
Developing our resources
Presently, 21.8% of Hispanics possess only elementary
education. This has to undergo a dramatic change in the
next 10-15 years. And greater emphasis must be placed on
education for the trades.
Not everyone is destined for college, and there are
huge numbers of well paying jobs in the trades but
little educational emphasis and attention is paid to
this type of preparation.
The obvious answer
To retirees, it makes little difference whether the
workers paying their retirement benefits speak Spanish,
Hindi or any other language among themselves or at home.
Retirees could care less if the workers paying
payroll taxes retain their former homelands culture or
enjoy media in their ancestral language.
What would really bother retirees would be to receive
a letter from the social security administration
announcing benefit cuts.
So, yes, let white, non-Hispanic America continue
worrying about Hispanic culture. But white America
avoids investing in its future workers and taxpayers
in Hispanic youth at its own peril.