DACA Recipients Bolster Social Security and Medicare

Since its creation in 2012, the Deferred Action for Childhood Arrivals (DACA) program has been a lifeline to more than 835,000 immigrants pursuing their dreams in America. Through its temporary but renewable protections, current recipients have been able to remain with their families and live free from the fear of deportation. Additionally, the work authorization eligibility provision of DACA has opened doors for recipients, enabling them to pursue education, employment, and entrepreneurship opportunities.

DACA recipients are deeply embedded in the fabric of American society—as spouses and parents of U.S. citizens, as active community members, and as workers and entrepreneurs benefiting local and national economies. In fact, current DACA recipients have lived in the United States for an average of 24 years, sharing households with more than 1 million U.S. citizens.

Despite these strong ties DACA recipients have to the country, the future of DACA protections remains uncertain due to continued attacks in the courts by Republican attorneys general seeking to end DACA. As a result of the ongoing litigation, the first-time DACA applications of hundreds of thousands of potential recipients are not being processed. Were DACA open to these additional recipients, the cumulative contributions detailed below would be even greater.

This column highlights how the payroll tax contributions of DACA recipients strengthen Social Security and Medicare for many Americans. As DACA recipients work and earn nearly $27.9 billion in annual wages as both employees and employers, they pay federal, state, and local taxes and contribute nearly $2.1 billion to Social Security and Medicare—despite not being eligible for these benefits under current law. To permanently protect the hundreds of thousands of DACA recipients living in the United States and to honor their rich contributions to the country, which reverberate across local economies and communities, Congress should provide a pathway to citizenship for DACA recipients.

DACA recipients participate in the workforce

DACA’s protections from deportation and recipients’ ability to apply for work authorization have allowed these individuals to more fully participate in the formal work economy—to the benefit of their families, their communities, and the entire country.

According to CAP’s 2022 survey of DACA recipients, 90.7 percent of DACA recipients ages 25 and older are employed. As DACA recipients earn more, they achieve greater financial independence for themselves and their families. In fact, the survey found that after receiving DACA, 47.4 percent of respondents moved to a job with better pay, while 40.6 percent of respondents moved to a job that better fit their education and training. Additionally, DACA has helped recipients put their skills and abilities to fuller use by accessing better opportunities to take steps toward their career and educational aspirations.

Importantly, the survey also showed that the median annual earnings for DACA recipients who work full time total $60,000, which is approximately the same as the median annual earnings for the average full-time worker in the United States.

Eight years of survey data have shown that DACA recipients’ average reported hourly wages have increased by 137.2 percent, from $11.92 per hour in 2015 to $28.27 per hour in 2022. This not only benefits recipients and their families but also the entire country: According to the Institute on Taxation and Economic Policy, thanks to DACA, recipients are able to contribute more in taxes as a result of increased employment rates, earnings, and tax compliance rates.

DACA recipients’ contributions to Social Security and Medicare benefit Americans

The economic gains of DACA recipients reverberate throughout the country, strengthening the security of working Americans, retirees, and their families. In fact, CAP estimates that in 2022, more than 482,000 DACA recipients were in the workforce, collectively earning nearly $27.9 billion and contributing nearly $2.1 billion to Social Security and Medicare annually. In addition, their employers contributed more than $1.6 billion in payroll taxes toward Social Security and Medicare on these DACA recipients’ behalf.

Social Security is a critical lifeline for America’s working families, funding retirement, disability, and survivor benefits. It is also a major source of income for many older Americans: More than 67 million people across America receive Social Security benefits, and past research has shown that 37 percent of men and 42 percent of women over age 65 rely on Social Security benefits for more than half of their income. Medicare, meanwhile, provides vital federal health insurance to older Americans. Currently, more than 58.7 million adults ages 65 and older rely on Medicare for health insurance.

Taken together, these programs allow millions across the country to live with more economic security. By contributing to these programs through their tax contributions, DACA recipients are helping ensure that millions of Americans can access health care and comfortably retire.

Conclusion

When DACA recipients are able to live and work free from the fear of deportation, they thrive and contribute more to their communities—to the benefit of the entire country. However, DACA’s temporary protections are not enough; DACA recipients continue to grapple with the possibility of deportation, with their protections under threat of being eliminated by the courts—as is the goal of the ongoing litigation brought by multiple Republican attorneys general.

Congress must act to pass permanent protections that put DACA recipients and other Dreamers on a pathway to citizenship, giving them the certainty of safety and stability that they so deeply deserve and enabling them to enhance their already significant contributions to the United States.

The authors would like to thank Nicole Prchal Svajlenka, Jean Ross, Beth Almeida, and Bobby Kogan of the Center for American Progress, as well as Tom K. Wong of the U.S. Immigration Policy Center at the University of California, San Diego, for their support with the demographic and economic components of this column. They also thank CAP’s Nicole Rapfogel for her assistance with accessing health data and Tom Jawetz, Debu Gandhi, and Will Roberts for their review and feedback.

Methodology

Estimates of DACA recipients’ Social Security and Medicare tax contributions are based on 1) data from the 2022 national survey of DACA recipients conducted by Tom K. Wong at UC San Diego, alongside United We Dream, the National Immigration Law Center, and the Center for American Progress; and 2) tax withholding rates and self-employment tax rates from the IRS. The estimated number of DACA recipients in the workforce is based on the active number of DACA recipients, as of December 2022, calculated using the percentage of employed DACA recipients in the 2022 DACA survey.

These estimates adjust for contributions of DACA recipients who may be self-employed, assuming that this rate is similar to that of the general population in 2022. These estimates also account for DACA recipients who earn more than the “maximum taxable earnings” subject to the Social Security payroll tax for 2022. Total estimates also factor in a 7.69 percent net tax gap in payroll taxes, which captures the average percentage of tax underpayment, underreporting, and nonfiling, as estimated by the IRS. However, the authors’ calculations do not adjust for state and local governmental employees who are not covered by and do not contribute to Social Security.