On May 26, the Supreme Court upheld the Legal Arizona Workers Act of 2007. Now any business in the Grand Canyon State that knowingly or intentionally hires undocumented workers can lose their business license. If they are caught with a second offense within three years, they can be shut down. The law also requires employers to use E-Verify to check whether prospective hires are authorized to work.
As an attorney and firm believer in the need for comprehensive immigration reform, I found the Court's decision troubling. It signals that states can continue to experiment with anti-illegal immigration initiatives. Eight states already have laws similar to Arizona's Legal Worker Act. According to the National Conference of State Legislatures, this year there have been 279 bills in 44 states focusing on penalties for businesses that hire illegal immigrants. But a patchwork of local immigration laws on is no substitute for a coherent national policy.
While punishing employers for hiring illegal workers is a good idea, Arizona's law has not been shown to reduce illegal immigration. In 2008, the first year it was in effect, state income tax collection dropped 13%. But sales tax revenues on food and clothing remained fairly steady. The Arizona Republic, economists, and researchers have all concluded that the law has sent unauthorized workers into the underground economy, not back to Mexico. The law shifted people into informal employment, resulting in a drop in much-needed tax revenue.
In upholding Arizona's law, the Court also approved the mandatory use of E-Verify. With this program, employers check the names of prospective employees against a database maintained by the Social Security Administration and the Department of Homeland Security.
One problem with E-Verify is that it often does not detect unauthorized workers. A 2009 study by the U.S. Citizenship and Immigration Services found that E-Verify cleared 54% of illegal immigrants to work.
In his majority opinion, Chief Justice John Roberts noted that E-Verify clears 98% of new hires to work. Yet the system poses a real hurdle for those incorrectly identified as unauthorized to work. This could be almost anyone, from those who have married, divorced or changed their name, to those unlucky enough to be the victim of a clerical error. The Government Accounting Office (GAO) estimates that taking E-Verify national would result in 164,000 workers a year being incorrectly tagged as not eligible to work. Arizona's law allows only eight working days to fix errors before a person must be fired. By the way, good luck with that. The GAO has called the process of fixing errors in the federal government database "formidable."
Although the government promotes E-Verify as "Fast, Easy, and Free," it places a significant burden on small businesses. Bloomberg estimates that if E-Verify were to go national, small businesses would have to spend $2.6 billion in time, training, and productivity to become compliant. E-Verify can be a hassle for big corporations, too. In 2008, Intel reported that 12% of its workforce was incorrectly tagged as ineligible to work.
In his dissenting opinion, Justice Stephen Breyer was rightly concerned by an unintended result of Arizona's law. Employers, faced with the risk of penalties or the loss of their business, will be reluctant to hire those who look or sound foreign-born. This opens the door for discrimination against Latinos, legal residents, or anyone who doesn't "look" American.
In the wake of the Court's ruling, the Obama Administration must ensure that the anti-discrimination provisions of employment laws are zealously enforced. The government must also invest in improving E-Verify's accuracy. Still, the program is a compliance tool, and was never intended to be enforcement option. It is not going to create jobs; its consequences may be the opposite. Unfortunately, the Court's decision shows disregard for immigration policy, economic reality, and civil rights.