Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
The Costa Mesa City Council recently asked city CEO Tom Hatch to investigate mandating electronic employment verification (E-Verify) for all private workers in the city. E-Verify attempts to exclude unauthorized immigrants from the labor market without burdening employers or Americans. As Mr. Hatch will hopefully discover in his investigation, the system has failed on both counts.
The private sector's experience with E-Verify is abysmal. When chipmaker Intel used E-Verify to screen several of its new hires in 2008, over 12 percent were initially flagged as unauthorized. All were eventually cleared to work, but as Intel put it, "only after significant investment of time and money, lost productivity and, for our affected foreign national staff, many hours of confusion, worry, and upset."
This problem occurs wherever E-Verify is applied and at all skill levels. The 2007 Legal Arizona Workers Act (LAWA) mandated E-Verify for all hires in the state. Arizona business, MCL Enterprises, which owns 24 Burger King restaurants in Arizona, reported that over 14 percent of its employees – including 75 percent of foreign workers – were initially deemed unauthorized by E-Verify. They were later cleared for legal employment.
According to a recent report from the non-partisan Public Policy Institute of California, LAWA had the unintended consequence of "shifting unauthorized workers into less formal work arrangements." In other words, mandating E-Verify in Arizona merely pushed undocumented immigrants deeper into the black market. With bigger black markets come more crime and less tax revenue for cash-starved governments.
Ineffective and error-prone, E-Verify hurts small businesses and pushes huge numbers of American citizens out of the workforce by raising the costs of employment. Amidst 9.2 percent Orange County-wide unemployment and a shaky economic climate, rejecting this regulatory behemoth should be a no-brainer regardless.
Yet E-Verify can't even accomplish its core objective. According to a major 2009 audit by research service Westat, 4.1 percent of the system's initial responses to employment verification queries were inaccurate. E-Verify even approved more than half of all employees who were actually unauthorized!
More worrisome still is E-Verify's alarmingly high rate of false positives. An Orange County wide E-Verify mandate would force over 10,000 legal workers out of the work force. Even if the federal agencies that administer E-Verify succeed in dramatically lowering its error rate, as they've repeatedly promised in congressional hearings, catching some unauthorized immigrations simply isn't worth the price of pushing thousands of legal workers in Orange County into unemployment.
An E-Verify mandate would also create a massive bureaucratic nightmare for millions of Americans. If you despise the long lines and poor service at your local DMV, just wait until E-Verify is the law of the land. If the system incorrectly flags you as unauthorized to work, prepare to spend weeks, months, or even longer dealing with bureaucrats at your local SSA (Social Security Administration) field office.
E-Verify is so poorly administered that even government agencies required to use it on their own employees can't properly comply with the system's standards. The SSA, for instance, failed to use E-Verify on 20 percent of its new hires. And of the employees who were successfully verified, nearly half weren't processed on a timely basis.
Last November, voters tossed out hundreds of politicians across the United States in an unprecedented rejection of economic regulation. E-Verify is just more regulation. Costa Mesa's residents shouldn't be forced to ask the federal government for permission before they are free to earn an honest living. Mr. Hatch's investigation should place E-Verify where belongs: on the ash heap of legislative history.