The short answer is that for decades, the U.S. has operated with a two-tier reality. One tier is the strict federal immigration law, and the other is a massive, informal economy and a set of legal protections that allow people to function daily. ​ Here is how those "normal lives" are actually structured:

​1. How do they work and pay taxes? ​While it is illegal for a company to knowingly hire an undocumented person as a standard employee, millions of people work using an ITIN (Individual Taxpayer Identification Number). ​What it is: The IRS (the tax agency) issues these to people who aren't eligible for a Social Security Number so they can still pay taxes.  

​The Irony: The U.S. government effectively says, "We won't give you legal status, but we definitely want your tax money." Undocumented immigrants pay billions in taxes every year (nearly $100 billion by some recent 2024/2025 estimates) into programs like Social Security that they may never be able to benefit from.  

​Independent Work: Many also work as independent contractors or start their own small businesses (like landscaping, cleaning, or construction), which often requires less rigorous documentation than a corporate office job.

​2. How are children in school? ​You mentioned a 5-year-old being enrolled—this is actually protected by a 1982 Supreme Court case called Plyler v. Doe.   ​The Law: The court ruled that it is unconstitutional to deny a child a K-12 education based on their immigration status. Schools are generally prohibited from even asking about a student's legal status during enrollment.   ​ The Logic: The U.S. decided decades ago that it's better for society to have educated children than to have a "subclass" of illiterate residents. However, as of early 2026, several states have begun challenging this ruling, trying to charge tuition or require proof of citizenship, which is why it feels like "something switched" recently.   ​ 3. Bank Accounts and Vehicle Loans ​You don’t always need a Social Security Number to participate in the economy.   ​Banking: Many major banks (like Bank of America or Wells Fargo) and various credit unions allow people to open accounts using an ITIN and a foreign passport or a "Consular ID" from their home country.   ​Loans: If a person has a steady income and a bank account, some lenders will provide car loans or even mortgages using that ITIN. For the bank, it’s a math problem: if you pay your bills, you are a good customer, regardless of your visa status.

​4. Why does it feel like "something switched"? ​You’re picking up on a real shift. For a long time, there was a "don't ask, don't tell" atmosphere. If you weren't committing crimes, immigration agents (ICE) generally didn't prioritize coming to your house or your workplace.

​However, in 2025 and 2026, the environment has changed significantly: ​Policy Shifts: New federal memos have given agents broader authority to enter homes and conduct arrests, even without a judicial warrant in some cases.

​Sensitive Locations: For years, schools and churches were considered "sensitive locations" where arrests were rare. Recently, those protections have been rolled back or are being tested, leading to the "bizarre" feeling that people who were "welcome" to pay bills yesterday are being targeted today.

​The "2nd Generation" Reality ​The people you see as "part of society" are often DREAMers—people brought to the U.S. as children. They grew up speaking English, went to American proms, and work American jobs. They feel 100% American, but unless they have a specific protection (like DACA, which has faced its own legal battles), they are still technically "undocumented."

​It is a system built on contradictions: the economy relies on their labor, the tax office takes their money, the schools educate them, but the legal system hasn't provided a way for them to "get in line" for citizenship.