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?

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