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Bill Proposes to Punish Businesses that Hire Undocumented Workers

1 February 2010

On Friday, January 29, Senator Mike Jorgenson (R-Hayden Lake) introduced a bill the Employment of Unathorized Aliens Act (the “Bill”) that would fine businesses that knowingly hire undocumented workers.  The basics of the Bill are the following:

– employers have to verify new hires legality by using the e-verify system;
– misdemeanor charges of $50/day — up to $50,000 — for each infraction;
– business license suspension of 15 days for first infraction, 1 year for second, and permanently for third;
– attorney general and county officials in charge of enforcement; and
– legal proceedings prior to any enforcement.

Full text of the bill is available here.

Gem State Business Review Thoughts:

1. Highlights the Need for Immigration Reform.  GSBR believes that our country needs to make it easier for those that want to live and work here legally.  We could write an entire blog on the question of immigration, so let us merely mention the proposed legislation underscores the fact that our immigration policy is a failure … and things needs to be changed in a comprehensive manner.

2. Enforce Existing Laws.  Isn’t it already illegal to knowingly hire undocumented workers?  Yes.  (See, The Immigration Reform and Control Act of 1986.)  It seems that the more appropriate use of the State Legislature’s time would be helping our businesses and citizens through the incredibly difficult time, rather than creating a new law that does the exact same thing as one already on the books.  Announcing new bills makes for good politics, not great leadership.

3. Why Impose Enforcement onto Business? The first question that comes to mind: why are Idaho business being made to become the federal government’s unpaid border agents?  Why should they suffer the consequences for the inability of the Dept. of Homeland Security to close off the borders?  Sen. Jorgenson in a March 2009 editorial claimed that the process of verifying a prospective employee “should take less than 5 seconds”.  The fact that it should take less than five seconds doesn’t really address the fact that it’s an additional burden being imposed on businesses.  That’s like saying, “Yes.  We’re raising taxes, but only by a tiny bit.  Don’t worry.  You won’t know it’s missing.”

4. What Would Enforcement Mean? Here’s where the rubber meets the road.  Let’s assume that instead of 1 January 2011 (the date for enforcement to begin in the bill), that enforcement would actually begin next month, on 1 March 2010.  Let’s also assume, for the sake of argument, that there was 100% compliance with the law, so that every single business in Idaho fired all of the currently employed undocumented workers.  Let’s also add the following suppositions to the hypothetical: (i) undocumented workers are found almost exclusively in the construction, agricultural, and physically intensive service businesses (e.g. landscaping, cleaning, etc.); (ii) these undocumented workers are primarily working for small businesses; (iii) these small businesses are struggling financially, and (iv) the total number of undocumented workers currently employed in the state is 37,500, or roughly 5% of the state’s total workforce.  (This number is most likely incredibly aggressive, but we’ll go with it for the sake of the hypothesis.)  (Tangentaly, Idaho’s most recent unemployment figure was approximately 68,750.)

So now let’s go through the consequences of the hypothesis.  On day 1, there are another 37,500 people without jobs.  These people are now buying fewer groceries, fewer drinks, fewer clothes, fewer movie tickets, and stop paying rent.  So the businesses that were catering to them are less profitable than they are currently.  Those that had previously been contributors to the state (on a net basis) become an increased strain on a state welfare system already stretched beyond capacity.  That’s the downside.  But on the upside, now Idaho cuts its unemployment by more than half because of all the jobs that are open.  …  Uhhh, wait.  Most of the jobs aren’t going to be filled.  As study after study has shown, there are certain jobs that Americans are just not going to do.

Is the former middle manager of a tech company going to go sign up to put up sheet rock for the construction company that built his house?  Why would he if he is making more money from welfare.  Is he going to do it even if he comes out $100 more per month?  To go work outside in the rain and the heat?  Would you?  Is the former attorney going to go clean the office she once worked at?  Would you?

So Mr. X of XYZ Landscaping, who fired two undocumented workers making $10.00/hour, now has to pay two new employees $15.00/hour.  Mr. X attempts to pass the increased labor costs on to his clients, but they refuse and say that they can do it themselves if he wants to raise his rates.  “These are tough times, in case you haven’t heard,” they tell him.  Mr. X’s profits, which were razor thin to begin with (he hasn’t been able to raise his rates in two years), are now non-existent.  His belt-tightening increases … fewer meals out, fewer new clothes, fewer of everything.  Eventually he realizes that the situation isn’t sustainable and he has to let go one of the new workers.  Net result: 1 job loss.

Mr. X and XYZ Landscaping are fictitious, but basic economic theory states that less supply = higher prices.  And evidence shows that Americans are unwilling to do many of the jobs that are now being done with undocumented workers.  So, in the worst economy of the past 50 years the Bill would seriously — if not mortally — wound the kinds of Idaho businesses that are right now just hanging on by a thread.

The GSBR does not endorse a race to the bottom by Idaho in regards to Immigration Law enforcement.   But at a time when job creation by new businesses and encouraging established ones to expand is needed more than anything, why further harm already extremely fragile parts of the economy?

Our state government should be finding ways to help our businesses, to improve our education.  Populist panhandling may make for a good headline, but where would it leave us as a state if the Bill were passed.

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