Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
Arizona’s immigration laws — Senate Bill 1070 and the 2007 Legal Arizona Workers Act (LAWA) — were designed to drive undocumented immigrants out of the state by levying punishments on Arizona businesses that hire undocumented immigrants.
The laws seem to have accomplished this immediate goal, but they have done so at the expense of Arizona’s economic recovery. This is part of the message I will be delivering at the Arizona Immigration Solutions Conference at Mesa Community College on Saturday.
LAWA, known as the “Employer Sanctions Law,” forced Arizona businesses to verify the legal work status of all employees through an expensive and abysmally inefficient federal database called E-Verify. SB 1070 created more problems by strengthening the E-Verify provision of LAWA that enhances the business “death penalty” in Arizona. For a second offense of knowingly or intentionally hiring undocumented immigrants, businesses lose their operating licenses.
The system is a huge time waster for small businesses, especially those that cannot afford a full-time human resources staff to correct problems.
Mike Castillo, a small business owner in Scottsdale, is a perfect example. He wanted to hire a part-time employee in 2010. A technical glitch in E-Verify made it difficult to file the necessary information, so Castillo had to solve the problem himself. This forced him to spend precious time away from his core responsibility — running his business.
E-Verify creates problems for larger companies too. MCL Enterprises, which owns 24 Burger King restaurants in Arizona, reported that more than 14 percent of its employees — including 75 percent of foreign-born workers — were initially deemed unauthorized to work in the United States by E-Verify. Those workers were later cleared for legal employment by federal agencies after great company expense and time.
Why should we care? Because more than two-thirds of economic activity in the United States comes from the small business community. The last thing we need to do, especially in this poor economic climate, is add to the day-to-day burdens of already overtasked small companies.
E-Verify, meanwhile, does not even meet its main goal. A major 2009 audit by the research service Westat found 4.1 percent of the system’s initial responses to employment verification queries were inaccurate, and E-Verify initially approved more than half of all employees who were actually unauthorized.
According to the nonpartisan Public Policy Institute of California, LAWA has shifted “unauthorized workers into less formal work arrangements.” In other words, E-Verify is pushing undocumented immigrants even deeper into the labor black market.
Arizona’s agriculture industry is also suffering at the hands of these laws. Santiago Gonzalez used to farm 3,300 acres in Phoenix’s West Valley growing potatoes, onions, alfalfa and watermelons. This year he planted 10 acres of onions, down from 700 acres two years ago, because he could not find enough workers. Gonzalez is not alone. There were 17,900 fewer acres under cultivation in Arizona in 2010 than in 2007. This helps explain why, since mid-2008, the Arizona unemployment rate has been consistently higher than the national average.
Agriculture is a $10 billion annual industry in Arizona, but it cannot survive without a sufficient labor force. Farmers cannot raise wages because they operate on such thin margins and we expect low food prices. So many are left with no choice but to plant less or move production to Mexico, thereby reducing employment levels.
When Arizona farmers plant less, they buy less fertilizer, pesticides, farm equipment, gasoline, and the myriad other goods and services that go into producing food. Arizona farm output is down because the government increased threats to employers while doing nothing to address the need for legal foreign workers.
In the end, lawmakers in Arizona — or any other state — cannot fix all of the nation’s economic problems by passing laws like LAWA and SB 1070, which unfairly turned struggling businesses and workers into suspected outlaws and simply make matters worse. Ultimately Congress must increase legal immigration and work visas to make it happen.