June 2011


In a strongly worded column, Bob Terry, the president and editor of The Alabama Baptist, responds to the Alabama Anti-Immigrant Law and the recent Southern Baptist Convention resolution on illegal immigration.

At its best, the Christian church has never allowed the government to dictate to whom its message and ministry may be directed. Baptists, especially, have championed the separation of church and state. Anytime the government attempts to tell the Church with whom it may share the gospel, that government is out of bounds. Baptists have bled and died to keep the government from ruling the Church. The government may not use its power to control the Church’s ministry.

He cites something I did not know about the legislative history of the Beason-Hammon bill.  He states:

It is unfortunate and unnecessary that Alabama churches have been drawn into this debate. The state Senate adopted an amendment to this bill that would have allowed churches to minister to illegal immigrants without fear of government reprisals. But that amendment was purposefully removed during conference committee considerations between Senate and House members.

The Alabama Legislature knowingly attempted to insert itself into the sacred space reserved for God alone in dictating to churches to whom and how they might minister in Jesus’ name.

According to Terry, someone specifically and “purposefully” aimed this legislation right at the “sacred space reserved for God alone.” The concerns of the churches would have been alleviated by the Senate Amendment, but the members on this conference committee would not allow such disregard for the “rule of law” by churches. Wow.

As I pointed out in April (here and here), this law does place those ministering to Hispanics in an awkward spot.

Now churches find themselves in that untenable position of facing the possibility that a youth director could be jailed because he allowed an immigrant child without proper papers to ride in the church van to Vacation Bible School. That should not be.

It is no wonder the immigration law has evoked the ire of most of the state’s major denominations. The Roman Catholic statement says the law violates the First Amendment to the Constitution, “in particular by criminalizing our Gospel imperative of serving the poor.” The Episcopal bishop said the law “will make it impossible to love and be hospitable to our neighbors as we ought to do.” The United Methodist statement reads, in part, “We also believe it (the law) contradicts the essential tenets of the Christian faith.”

It should not be surprising that an Alabama Baptist missionary declared he is willing to go to jail, if necessary, in order to continue ministering to Hispanics.

But hey Sen. Holzclaw and Rep. Hammon: just disregard this critique because he is just another liberal crackpot.

As I have noted here and here and here, no matter how much the supporters of the Alabama Anti-immigration bill want to label opponents, this bill has serious problems with critics from all quarters of the political spectrum.

Yesterday, it was reported that Republican Congressman Spenser Bauchus (who previously received a 92% rating from the American Conservative Union for his voting record on major issues, the highest rank in the Alabama House delegation) openly criticized the Alabama Anti-Immigration Law claiming:

  1. “I think it’s going to be almost impossible to enforce certain parts of the law,”
  2. “I think it will suppress economic activity,”

And the Sheriffs raised logistical questions about the enforcement aspect as well.

But Alabama’s 67 sheriffs are not as worried about scripture as they are about enforcing a law that many also see as a form of profiling and harassing people who look foreign.

The new law gives local law enforcement agencies the right to detain suspected illegal immigrants without bail until their status is determined, which could lead to even more strain for the legal system.

Entrekin said most county jails are already overcrowded and questioned whether suspected illegals are to be housed with the general jail populations.

“I don’t think the (Legislature) really looked at it when they voted on the bill,” [Etowah County Sheriff] Entrekin said.

As noted before, for the future of Alabama, Republican Governor Leutienent Kaye Ivey promised under the current leadership “more of the same” and more “budget cuts”

I hope not.

  •  Opelika-Auburn News article, “Bleak budgets will devastate courts across the state for fiscal year 2012. State courts received $152 million for fiscal year 2011, but will receive only $138.9 million for fiscal year 2012, according to Alabama’s Administrative Office of Courts. When costs must be cut, that means people will lose jobs. Hurst said her office must be trimmed from 18 staffers to 10 by Sept. 1. The case load, however, does not diminish.”
  • Tallassee City Schools lose their instructional aids for teachers due to budget cuts. Tallassee Tribune
  • Alabama Public Television shouts down Montgomery bureau and cuts shows “Capitol Journal” and “We Have Signal” due to budget cuts. Montgomery Advertiser
  • State forensic crime labs close due to budget cuts. WAFF

One impact of the budgets passed by the Legislature are summarized well by the Opelika-Auburn Editorial Board:

Whereas good people who have served the public will soon be unemployed, the public will really feel the brunt of it when their courthouse service time is slowed dramatically. The Lee County Circuit Clerk’s Office could lose up to eight of 18 staffers by Sept. 1. The amount of paperwork will not be trimmed accordingly. No, it will continue to pile up.

Who processes court dockets? The clerk’s office.

Who processes divorce papers? The clerk’s office.

Who processes traffic fines for the state, restitution for victims and paperwork filed for orders of protection? The clerk’s office.

And when the clerk’s office is running at half staff, what happens to this paperwork then? Courts move more slowly. Divorce cases linger. Spouses seeking protection may not get the official documentation when they need it.

All of this, courtesy of the Alabama state budget.

But money is tight, and we understand that. There is no magic wand to generate more revenue for state coffers. All we can do is continue to hope the economy turns despite the gloomy forecast. Medicaid continues to grow in dollars appropriated, while other important agencies shrink. What is the Legislature supposed to do about that, take away from the sick?

All we can do is hope the Legislature takes a harder look at priorities in Alabama and sends money to places that desperately need it most.

How does the Alabama Legislature value swift justice? Apparently $13 million less than it did a year ago.

Can this be said to be responsible budgeting?

Former President George W. Bush often advocated the development of an “Ownership Society,” for him, a restructuring of Social Security with the stock market.  I have often suggested that Alabama Democrats must forcefully promote a Ownership Society itself. I am not suggesting we turn Social Security into a stock market funding scheme; we need a set of policies which rebuild wealth-producing assets for low- and middle-classes. From incentivizing lending to microbusinesses to empowering savings accounts for children, Alabama Democrats can help return economic power, entrepreneurship, and financial independence to those not deemed “too big to fail.” Why?

Washington University scholar Michael Sherraden first proposed the modern concept of “asset building,” as it is often called, in his 1991 book, Assets and the Poor. Sherraden argued that while income is necessary to escape poverty, it is not sufficient. Without assets–savings, a home, land, small business, education and skills, investments, a retirement account–it will be difficult, if not impossible, for the poor to permanently achieve financial security, especially across generations.

In addition, Sherraden argued that asset ownership–distinct from income flow–changes the way people think and behave and ultimately affects a range of social outcomes.

This month’s Fast Company magazine highlights another policy which would economically empower the working people of Alabama.

Remember Plantation Patterns, the profitable patio-furniture manufacturer in Wadley, Alabama which was shut down because of the bank failures. With active and pending work-orders, hundreds of workers were forced out of work. Instead of exclusively incentivizing international corporations to come here, imagine if Alabama also empowered workers such as those in Wadley to invest and collectively buy-out plants like Plantation Patterns. Let’s provide a framework for these potential entrepreneurs, our own people. Here is just another report from Farberware where this actually occurred.

As shown in this article, this ownership model is powerful and proven.

There are two things in which I believe strongly: that business is at the root of our economic challenges and that business is at the heart of the solution to those challenges. I don’t know whether that makes me a pessimist or an optimist–but I like to think it makes me an ideals-driven pragmatist.

That’s why I’m excited about a new way of doing business that’s not just good in theory, but has proven itself to be a workable solution in reality. It’s happening right now, right here in the United States. Business is realizing the power of placing ownership in employee hands. Instead of fixing a broken system, a few innovative communities are creating a whole new system altogether, one that‘s profitable, sustainable, people-focused, creates good jobs, and rebuilds dying communities. Say hello to Evergreen Cooperatives, the economic model of our future: the worker-owned business built upon the predictable revenue flow of place-based anchor institutions.

These models from Cleveland draw their inspiration from one of the most successful corporations in the world.

Many aspects of the Evergreen Cooperatives are modeled on the Mondragon Cooperatives, created by an activist Catholic priest in 1956 with the goal of lifting the Basque region of Spain out of the poverty it experienced in the aftermath of the Spanish Civil War. Today, Mondragon is a network of more than 120 worker-owned cooperatives generating more than $20 billion in annual revenue and employing 100,000 workers, making it Spain’s fourth largest industrial and seventh largest financial group.

Mondragon has a very unique structure which gives its wrokers a unique direct ownership interest in the company, as described here.

The basic building blocks of the MCC have been its industrial co-operatives. The industrial co-operatives are owned and operated by their workers. The workers share equally in the profits – and, on occasion, losses – of the co-operatives, and have an equal say in their governance. That they are able to do so is due to the unique structures and systems of governance and financial management which the Mondragón co-operatives have developed. In the case of governance, the workers in a co-operative have their say in the first instance through its General Assembly, where the performance of the co-operative is discussed and its policies determined. The workers also elect a Governing Council, which conducts the affairs of the co-operative between Assembly meetings, and an Audit Committee – referred to by some as the “Watchdog Committee” – which monitors the co-operative’s financial operations and its compliance with its formally established policies and procedures. Only members of the co-operative – all of them workers – are eligible to stand, and voting is on a one member/ one vote basis.

Our people will need to begin to think like owners instead of just workers which means taking responsibilities for losses,  belt tightening in lean times, but also lapping up the “gravy” during prosperous times.

The Mondragon pay scheme is quite unique as well; it avoids the problems of excessive executive compensation have plagued the US. A Mondragon bank or credit union would never have an executive earning 844 to 1 more than the low-wage worker as JP Morgan.

The earnings of a Mondragón co-operative are the property of its members. In place of wages, members are paid monthly advances – referred to as anticipos – against the income their co-operative expects to receive. Two further advances required by Spanish custom are made available at Christmas and for the summer holiday period. The co-operatives observe a “principle of external solidarity”, under which no advance should exceed by more than a narrow margin the wages paid for comparable work by nearby private sector businesses. The level of each member’s advance is determined in the first instance by a labour value rating which the Social Council of the co-operative assigns to the job. Overall, incomes are kept as equal as possible. The highest advances a co-operative pays its members cannot exceed the lowest by more than eight to one. By 1990, members had had an estimated increase in their purchasing power since 1956 of around 250%.

Additionally, the Mondragon model truly builds wealth for its members:

A further share of the co-operative’s earnings is credited to the members as capital. The capital structure has been designed to produce the greatest possible consciousness on the part of the each member that he is a stake-holder in the co-operative. The identification is achieved initially by requiring as a condition of entry to the co-operative that each member should make a direct personal contribution to its capital. There is an entry fee which currently stands at about $US12,500. Payment can be made on the basis of a 25% initial contribution, followed by monthly instalments. The co-operative then establishes an individual capital account for the member, to which 70% of his initial contribution is credited. The capital accounts earn interest at an agreed rate, and are credited each year with – say – 40% of the co-operative’s surplus, apportioned among members on the basis of their salary grades and the hours worked. Members may draw on the interest accumulated in their accounts, or use the accounts as collateral for personal loans, but the principal cannot normally be touched until they resign or retire. Payouts from the capital accounts of members currently retiring in Mondragón – over and above their superannuation entitlements – are in some instances in excess of $US100,000.

Here is a video from the BBC from 1980 discussing its Mondragon’s history, model, and development

In Cleveland, in the heart of the Rust Belt, this model seems to be thriving according to Fast Magazine:

So how is this new system working? Recently, I had the opportunity to visit the first two Evergreen businesses that were launched in October 2009: the Evergreen Cooperative Laundry, a cutting-edge green business, and Ohio Cooperative Solar.

Ohio Cooperative Solar (OCS) was profitable in its first five months in operation; current annual revenue is projected to be $1.3 million. At the end of the fiscal year, a portion of profits will be allocated to each OCS employee owner’s capital account, furthering the idea of people-focused business.

The Green City Growers, a hydroponic greenhouse, expects to break ground on the construction of a four-acre greenhouse this summer, with its first crop ready for harvest in the spring of 2012. When fully operational, it will produce 5 million heads of lettuce and 300,000 pounds of herbs annually and employ between 30 to 40 workers year-round.

Listen to these accounts of the cooperative model during the recent recession:

From a standing start in 1956, the MCC has grown to the point where by mid-2008 it was the seventh largest business group in Spain. Annual sales increased between 2006 and 2007 by 12.4 per cent to some $US20 billion, and overall employment by 24 per cent, from 83,601 to 103,731. Exports accounted for 56.9 per cent of industrial co-operative sales, and were up in value by 8.6 per cent. Mondragón co-operatives now own or joint venture some 114 local and overseas subsidiaries.

Hard-hit by the economic meltdown as like other business the co-operatives now find themselves, their members are tightening their belts in a further exercise of the solidarity that has enabled them to weather previous major downturns, and achieve new heights. For example, in 2008 worker owners at the Fagor appliance co-operative elected to forego the additional four-week’s pay normally due to them over the Christmas period, and have subsequently cut their pay by eight per cent. As the MCC’s Human Resources Director, Mikel Zabala, points out, “We are private companies that work in the same market as everybody else. We are exposed to the same conditions as our competitors”.

The only way for Democrats in Alabama to recover from 2010 will be to develop and perfect a new generation of solutions and ideas for prospering Alabama which are consistent with the deepest convictions of our people. I think this can be one.

I anticipated the defensive responses from supporters of the Alabama Anti-immigration Bill when I wrote “Leftist judges are striking down these Anti-immigration Bills, right?” I figured that lazy labeling (Liberal, leftist, etc.) would soon be applied to the federal judges striking down these laws.  Such empty sloganeering had already been employed here in Alabama by the bills supporters.

Well, it has arrived full tilt. Representative Hammon, a chief architect of the Alabama law, is reported to have responded to the federal court striking several provisions of the Georgia law:

“It is no surprise that liberal groups working to shield those who live here illegally are trying to block implementation of Georgia’s immigration law, and we are sure they will make similar efforts here in Alabama,” Hammon said.

And other supporters also here,

Michael Hethmon of the Immigration Reform Law Institute, which has been helping state lawmakers draft Arizona-like laws around the country, said Alabama legislators were hoping for a legal challenge when they passed their law, thinking they could get a different ruling than the one issued in Phoenix by U.S. District Judge Susan Bolton, who blocked the Arizona law last year.

The Alabama legislators “looked at Judge Bolton’s reasoning and said, ‘We’re not on the left coast here, we’re in the 11th Circuit, and we think we’re going to get a different interpretation by a different judge,'” Hethmon said.

We’re not on the left coast? Well, neither are Utah or Indiana. In fact, Utah is in the 10th Circuit and Indiana is in the 7th Circuit, neither are hotbeds of liberal constitutional theory. So the fly-over region is not proving any more helpful to Rep. Hammon and Mr. Hethman.  Remember: of the seven judges to rule against these anti-immigrant laws so far, four have been Republican appointees from Reagan and Bush.

The fact of the matter is that this legislation is just bad law. The Alabama legislature passed the bill in the face of federal courts already ruling against more tame legislation in Utah and Arizona. Georgia, at least, tried to conform their law more to that prior case law some.

In Georgia, state Rep. Matt Ramsey, a Republican who sponsored the bill, cut out the “reasonable suspicion” requirements, meaning officers there will check a person’s immigration status if he or she can’t produce identification or provide other information that could help determine identity. . .

Other states, such as Alabama, have decided to stick with the Arizona model and see how a different judge rules on it.

Similarly, Indiana modified their some as well:

Nevertheless, contrary to the attempts of such  labeling, opposition to this bill does not come exclusively from “liberals.” Alabama County Commission Association, the Cato Institute, the American Family Association, the National Association of Evangelicals, US Chamber of Commerce and the Southern Baptist Convention all have all opposed to this type of legislation. Conservative Republican Congressman have opposed it as well.

Let’s stop labeling and address the merits of the contrary arguments.

BTW: Can anyone else name another piece of legislation which legislators affixed with the sponsor’s name: “Beason-Hammon Alabama Taxpayer and Citizen Protection Act?”

If trends continues in federal court, the only portion of the Alabama Anti-immigration Bill left standing will be the “Permission to Work” list aka mandatory E-Verify, one of the portions the Legislature forgot to fund.  (I have addressed other consequences of E-verify here, here, and here.)

A new report issued today entitled ‘Seen and (mostly) Unseen: The True Costs of E-verify” details the true costs on businesses and individuals of a mandatory E-verify system.  According to the report summary,

This brief seeks to arm policymakers and the public with a better understanding of the true costs of E-Verify. It explains the system’s known costs, such as lost tax revenue and monetary burdens on small businesses, and estimates the cost of additional fiscal burdens— to individuals verified through the system, to employers utilizing the system, and to the federal government in running the system—that have been absent from much of the dialogue surrounding it.

In particular, we focus on the added costs that do not get scored in government revenue estimates, such as the high legal costs to employers to defend their use of the program, the “jobs tax” that will be needlessly applied to American workers, and the increased burdens on federal agencies from new mandates. All of these numbers add up to one simple conclusion: Mandating E-Verify without legalizing all workers is too expensive, especially in these fragile economic times.

BUSINESS START-UP COSTS AND ANNUAL UPKEEP: The reports finds that first year start-up costs for businesses will be:

  • 10 employees = $1254
  • 50 employees = $3163
  • 100 employees = $5,515
  • 500 employees = $24,422

Additionally, the annual costs after year-one for all small businesses will be $435 on average, not including legal fees to comply with government regulations and defend against lawsuits. (“One lawyer experienced in E-Verify claims, who wished to remain anonymous, stated that the system “is a gold mine for lawyers” because of the high costs of setting up a compliance system, and of fending off federal government audits.”)

The E-verify does not allow employers to pre-screen applicants.  Accordingly, employers will be less likely to hire applicants which “look” undocumented or Latino; they will not want to deal with the hassle of a TNC.  Here is where the litigation lawyers will make a killing.

According to Westat, naturalized citizens are more than 30 times more likely to receive
a TNC than U.S.-born workers. What these findings tell us is that areas with higher
concentrations of immigrants and new Americans will have a harder time coping with
the effects of E-Verify.

“JOB TAX”: The reports estimates there will be an average $225 per person indirect “jobs tax” to procure proper photo identification for the system.  0.5 percent of all people run through E-Verify do not currently have a sufficient photo ID, and would need to acquire one to use the system.

There will be additional tax on average of $190 per person to resolve erroneous Tentative Non-confirmations. 0.8 percent of all legally authorized employees will receive a TNC, 152,000 in Alabama alone.

POSSIBLE JOB LOSSES BECAUSE OF ERROR RATES:  Per the report,

If E-Verify was made mandatory more than three-quarters of a million legal workers— including U.S. citizens—would lose their jobs because of the system’s error rate. Approximately 0.8 percent of all U.S. residents who are citizens or legally eligible to work in the country receive an erroneous TNC. A small portion of these workers, about 0.3 percent, are able to successfully contest their findings, and gain proof of work authorization. The remaining 0.5 percent are unable to correct their records and receive an equally erroneous FNC.

These are American workers, legally authorized and otherwise innocent, who will ultimately lose their jobs. A final error rate of only 0.5 percent may not seem like a particularly large number, but with an estimated 154,278,000 workers across the country, that translates out to just over 770,000 jobs lost.

Translated for Alabama: 10,000 legally authorized Alabamians will ultimately lose their jobs because of E-verify error rates. For the 15,000 which receive a TNC, they are exposed to danger from employer non-compliance.

We worry, however, that unscrupulous employers will either demote, fail to pay, or otherwise discriminate against an employee who receives a TNC. Indeed, 42 percent of workers who received a TNC in 2009 were not notified of the status by their employers, robbing employees of the ability to contest, and of the ability to ultimately keep their job. Westat further found that a portion of those employers who did inform their workers about TNCs did not explain to them the procedures for contesting, or the eight-day window in which an employee may contest.

For the 10,000 which lose their job because of system error, they will have continuing problems after their firing:

Losing your job over an erroneous TNC or FNC has real consequences: If the Social Security Administration deems you to be an ineligible employee, you would also be
ineligible for unemployment benefits.

SYSTEM DOES NOT WORK: All of these costs and lost jobs for a system which only catches 46% of illegal immigrant workers. The report findings suggest:

The system has far poorer results when it comes to unauthorized workers, catching only 46 percent of such workers. That means that more than half of all unauthorized workers have no problem getting through E-Verify, a finding Westat chalks up to identity fraud. E-Verify only has the capacity to match legal records with those submitted by the employee—it does not detect identity theft. If a worker submits a valid Social Security number, but not his or her own number, the system returns a work authorization.  We as a nation have to ask ourselves: can we accept three-quarters of a million Americans losing their jobs for a system that catches unauthorized workers less than 50 percent of the time?

So far, of the six seven judges to review and issue injunctions against the anti-immigrant laws, three four have been Republican and three have been Democrat:

  • Ninth Circuit Court of Appeals Judge John T. Noonan, Jr (Reagan appointee)
  • Ninth Circuit Court of Appeals Judge Richard Paez (Clinton appointee)
  • Ninth Circuit Court of Appeals Judge Carlos Bea (Bush appointee)
  • District Court Judge Susan Bolton (Clinton appointee)
  • District Court Judge Sarah Evans Barker (Reagan appointee)
  • District Court Judge Thomas Thrash (Clinton appointee)
  • District Judge Clark Waddoups (Bush appointee)

Gotta keep an eye out for those radical leftist appointees from Reagan and Bush!

UPDATE: I had forgotten that the Utah immigration bill had been enjoined last month, too. While it is not exactly an Arizona-copycat statute, it is still a state-level anti-immigration law with some similar provisions. Accordingly, I have added Waddoups to the list.

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