Blocking Employment for Illegal Immigrants Doesn’t Necessarily Create Job Opportunities for Citizens

Supporters of tougher immigration laws frequently argue that if unauthorized immigrants are prevented from getting employment, the jobs they would have had will instead be filled by legal residents. The idea is that the economy has a fixed number of jobs available, and blocking immigrants from taking those jobs will leave them open for others. 

In reality, however, when laws make it harder for employers to hire unauthorized immigrants, the jobs they would have had simply disappear. Everyone loses. 

That's exactly what happened in Arizona, as Cato Institute immigration expert Alex Nowrasteh explains in new paper on Arizona's immigration restrictions, previously noted by Reason's Shikha Dalmia this morning

In 2007, the state passed the Legal Arizona Workers Act (LAWA), which required that all new workers be subjected to E-Verify, an electronic identification system intended to verify the employment status of new hires. The system is costly — employers pay $147 for each query — as well as buggy: Norwestah notes one instance in which a restaurant owner tried to hire his own, American-born daughter, only to find her rejected by the E-Verify system. But employers who hired unauthorized workers faced the potential for harsh penalties. The second time an employer knowingly or intentionally hired an illegal immigrant, the state reserved the right to yank its operating licenses, essentially shutting it down, a punishment that became known as the "business death penalty." 

After LAWA passed, employers in Arizona's construction business, where many unauthorized immigrants are employed, changed their practices. Employment went down in constrcution for legal and illegal workers, but the bulk of the reduction came from noncitizen immigrants. In 2006, 8.7 percent of the state's native born population was employed in construction, a figure that decreased to 7.4 percent in 2010. But over the same period of time, the percentage of the state's noncitizen immigrant population working construction jobs dropped from 27.9 percent to 20.4 percent. 

Unauthorized immigrants, in other words, bore the brunt of the decrease. Did that create employment gaps that could be filled by Americans? It doesn't look like it. Nowrasteh compares Arizona's new construction hires to new construction hires in California and New Mexico — surrounding states that didn't have E-Verify laws. All experienced a drop in new construction jobs coinciding with the recession. But Arizona's drop was far steeper. 

Nowrasteh comments: 

After E-Verify went into effect, the foreign-born population bore the brunt of the employment decline in the construction industry, but native employment in construction did not increase to fill the gap, contrary to the claims of E-Verify supporters. From the time E-Verify went into effect in January 2008 until January 2009, construction employment decline accelerated. Employment for new construction declined more in Arizona after LAWA was passed than in the neighboring states of New Mexico and California (see Figure 2 and Table 3). E-Verify is not to blame for the entire decline in construction jobs in Arizona, but by raising the costs of hiring, it is one major reason that the construction employment decline in Arizona was greater than neighboring states that did not mandate E-Verify. 

This should be a lesson, and a warning, to other states looking to pass similar verification requirements. It might be possible to decrease employment of unauthorized workers. But rather than freeing up work for legal residents, it may simply mean that the jobs go away. 

Read Reason's Mike Riggs on E-Verify in other states

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  • ||

    Blah, not again. We just did this argument a couple hours ago.

  • Proprietist||

    If you give them 350 posts on a topic, they will likely be talking about it for the next week, since it is obviously of interest to their readers.

  • Peter Suderman||

    Again! This time with a graph!

  • Tulpa Doom||

    A poorly interpreted one.

  • ||

    It's not Suderman's fault when you misinterpret it.

  • Randian||

    [street fighter]

    ROUND TWO....

    FIGHT!

    [/street fighter]

  • sarcasmic||

    Free up all the low-skilled, low-wage jobs you want, and as long as there is more incentive to collect than there is to work, Americans will sit at home.

    Hello? McFly? Anyone in there?

    /rant

  • wigglwagon@gmail.com||

    Wake up simpleton. Unemployment is double what it was just a few years ago. Don't let hatred for those who abuse the system make a fool out of you.

  • Azathoth!!||

    So...using 'new construction hires' as your metric in one of the worst 'new construction' markets in history? How convenient!

  • ||

    A decline is a decline, whether it's in good times or bad.

  • Lost_In_Translation||

    While I agree with the argument (that illegal immigrate are complimentary workers not substitutary), a bit of a mea culpa is necessary for these declines.

    The problem in the end is the US's immigration policy (which is ludicrously restrictive) than with Arizona's law with regards to illegal immigration (it's civil liberties issues aside).

  • Randian||

    So...using 'new construction hires' as your metric in one of the worst 'new construction' markets in history? How convenient!

    Another brain-dead dope who doesn't understand how math works.

  • VG Zaytsev||

    Bragging again?

  • ||

    You must have missed this part:

    Nowrasteh compares Arizona's new construction hires to new construction hires in California and New Mexico — surrounding states that didn't have E-Verify laws. All experienced a drop in new construction jobs coinciding with the recession. But Arizona's drop was far steeper.
  • Lost_In_Translation||

    Different RE markets. I'd say a comparison to Nevada would be fairer given their similar real estate bubbles.

  • SIV||

    ^ ^ ^

  • Tulpa Doom||

    CA had a real estate bubble too, but it is of course a much more heavily populated state. Which will dampen the effects of all sorts of economic shocks.

  • VG Zaytsev||

    Squirrels at my first response and I'm to lazy to redo all of it so:

    AZ post LAWA experienced a precentage decline 10% worse than the percentage decline exerienced by CA in the same time frame. Which is more likely to be the result of a larger bubble in new construction in 2006 than due to any effects from LAWA.

  • Pro Libertate||

    Sneakers?

  • Lyle||

    No, but it could affect wages.

  • Lost_In_Translation||

    Higher wages = less work. Supply/Demand curve.

  • Lyle||

    Yes, less work for illegals, and higher wages for the American who competes against immigrant labor.

  • Lost_In_Translation||

    Don't forget less jobs and more native unemployment. Anti-illegal immigrant advocates are reallyjust anti immigrant advocates.

  • XM||

    "Anti-illegal immigrant advocates are really just anti immigrant advocates."

    Yeah, I don't think so.

    They might helping parts of the economy, but that's a result of agreeing to arrangement with employers that's in violation of more than just immigration laws.

    "Natives" (admittedly) aren't interested in the kind of jobs illegal aliens do, but if you're burdened by student loans, other debts, and high taxes, then those jobs were never really an option to begin with. You can't work 10 years at an office or earn a MFA BA and expect to land dish washing or construction jobs.

    Wouldn't you call illegal alien labor "exploitation"? In many cases, it's exactly what it is.

  • ||

    Wouldn't you call illegal alien labor "exploitation"? In many cases, it's exactly what it is.

    How dare those companies exploit those aliens into higher wages than they can get back home. How dare they! We also need to make sure no factories operate overseas, to prevent people there from being exploited into higher wages.

  • VG Zaytsev||

    Creating a class of people that live in the shadows without the legal protections and obligations that apply to the overwhelming majority of people is exploitative of both the shadow minority and the larger majority.

  • ||

    Creating a class of people that live in the shadows without the legal protections and obligations that apply to the overwhelming majority of people is exploitative of both the shadow minority and the larger majority.

    That's is exactly what our immigration laws do.

  • ||

    I don't think so either. This may be true for some people, but I don't think it's true for all. The more common issue is a reluctance to revise our immigration laws.

  • Lost_In_Translation||

    BS otherwise the argument for relaxing immigration requirements would be the prelude to immigration reform

  • ||

    You're confusing applying a quick, politically beneficial fix with a desire to undergo actual reform. Democrats talk about it more, but that's not saying much.

  • Tulpa Doom||

    For those who want wide gates and high fences, the order in which those should be implemented is debatable. One could make an argument that we have to get control over the border before we start increasing legal immigration. Another could make the opposite argument...it's complicated.

    And more fundamentally, you really should assume good faith unless there's strong reason to do otherwise. The motivations in the depths of anti-illegal-immigration advocates' souls really don't matter to the debate, so accusing them of being racist or xenophobe or anti-immigrant or whatever serves no purpose but to poison the well.

  • Lost_In_Translation||

    There is no discussion about immigration reform because the xenophobes have already poisoned the well beyond recovery. Politicians can only hazard a pragmatic solution as to what to do with those already here (and genocide is off the table thankfully). Mass deportations are the most worthless waste of money ever conceived and destroys basic constitutional rights to boot. We're surrounded by idiots and they get the representation.

  • ||

    And more fundamentally, you really should assume good faith unless there's strong reason to do otherwise

    It's sort of hard to assume good faith on the part of politicians. You assume bad faith on the part of politicians all the time, except when it comes to your pet issues. And noting that there's not real discussion of immigratio reform beyond politically expedient "amnesty" leads to a fair assumption that it's just politics.

    The motivations in the depths of anti-illegal-immigration advocates' souls really don't matter to the debate

    Of course they do. Knowing the extent that different people dislike immigration, and why, helps to understand how and on what sort of issues they can be reasoned with.

    I wouldn't approach someone against just illegal immigration the way I'd approach someone who wants less immigration period. And I wouldn't talk to someone who dislikes illegal immigrants but isn't necessarily happy with our immigration system differently than I'd address someone who dislikes illegal immigrants and things our current immigration setup should stay the way it is.

  • ||

    so accusing them of being racist or xenophobe or anti-immigrant or whatever serves no purpose but to poison the well.

    Also, who EXACTLY am I accusing of being "racist or xenophobe or anti-immigrant or whatever"? My comment says nothing of the sort. And elsewhere, my mention of motivations has been a broad statement that people have different reasons for opposing immigration. I never accused specific people or groups (aside from Joe Arpaio). Also, I wouldn't accuse anyone of being racist, unless they dislike immigrants because they think immigrants have significant biological differences that set them apart as a separate class of human. THAT would be "racist". "Racist" is way overused.

  • Lyle||

    This is true somewhat. I think immigration is super complicated issue that's almost impossible to handle.

    I'm all for immigrants, especially well educated entrepreneurial people, but I'm also interested in seeing the native born working class not have their wages eroded by immigrant competition, if it could be helped.

    And with agriculture apparently a lot migrant work exists simply because the agribusiness doesn't want to invest in technology to eliminate much of its migrant work force.

  • Tulpa Doom||

    Anti-illegal immigrant advocates are reallyjust anti immigrant advocates.

    You know who the most passionately anti-illegal-immigration people I know are?

    Legal immigrants.

    I guess they suffer from self-hate or false consciousness or some other label you guys are borrowing from the leftists.

  • MWG||

    Wow, that hasn't been my experience AT ALL. I'm married to an immigrant and know plenty of others. In fact, going through through the process on behalf of my spouse was a major reason I stopped calling myself a conservative and started calling myself a libertarian. Every time I hear someone say that illegals need to get in line I think 1) there is no magic line and 2) that person knows shit about the LEGAL immigration process.

  • CampingInYourPark||

    "Every time I hear someone say that illegals need to get in line I think 1) there is no magic line...."

    When you sent your I-130 to USCIS your application entered the queue behind every other I-130 assigned to the bureaucrat tasked with adjudicating those applications. While, you or your spouse may not have actually been physically present in a line, your application was, and the subsequent interview was scheduled in the same manner.

  • MWG||

    Yes, that's true, but what I mean is, there isn't some magic line where one can go (particularly poor migrant workers) and simply wait their turn to enter the country.

    People come here illegally precisely because there is no legal avenue for them, hence, no line.

    See the chart in my 11:19 comment.

  • Tulpa Doom||

    Bullshit. We have guest worker programs for Mexicans to come here legally. They are also full of red tape but it's not like Mexicans are uniquely prevented from coming here and that justifies them breaking the law. (which wouldn't be justifiable even if there were no way to come here)

  • MWG||

    Lol... I find it funny that while you call bullshit by citing a guest worker program while admitting its FULL OF RED TAPE. Gee ya think?

    I nevere claimed Mexicans were uniquely prevented from coming here. What is true, is that poor unskilled workers are prevented from coming here. What we have now is essentially a prohibition and therefore a massive black market. The economics of this prohibition are no different than those of any other prohibition both past and present.

    Teh law is teh law, right Tulpa? Do you support full enforcement of the nations drug laws? Would you support full enforcement of Jim Crow? Seriously this is tony-grade stupid.

  • Tulpa Doom||

    And of course most employers of illegals don't want to use the guest worker programs because they have to pay the workers a decent wage and be subject to labor law inspections. They'd rather have desperate fugitives working for them than people who have a legal status.

  • MWG||

    Define 'decent wage'. Relative to what? Are illegals working in the US dumb? I mean they're accepting these less than decent wages, right? They must be really stupid to risk their lives crossing the desert for less than decent wages.

  • MWG||

    Seriously Tulpa, you have seen this chart, right?

    http://reason.org/files/a87d15.....116079.pdf

  • Tulpa Doom||

    I agree that we need to streamline the legal immigration process. I support increasing legal immigration, which is why I find it insulting beyond measure to be called a racist xenophobe by people who know nothing about me other than that I disagree with them.

    If anything the convolutedness of the process would make those who tough it out more angry at those who cut in line, and those who cheer them on at Cato and Reason and others.

  • MWG||

    "...which is why I find it insulting beyond measure to be called a racist xenophobe by people who know nothing about me other than that I disagree with them."

    I never called you racist, though there is no doubt a certain amount a xenophobia within the ranks on your side of the argument.

    "If anything the convolutedness of the process would make those who tough it out more angry at those who cut in line"

    Again the line analogy is bullshit. As someone who has family who have been denied fucking tourist visas, I can tell you coming to the US is NOT simply a matter of waiting in some line for your turn.

  • Azathoth!!||

    Denied tourist visas? There's something you're not saying.

  • MWG||

    Nope. My sister in law was denied a tourist visa as a result of her age and the fact that she was unmarried. It's a concern of the US government that she might come to the US and (GASP!) meet someone.

  • XM||

    I don't think Reason writers understand why employers hire undocumented aliens. Which is strange, because they understand exactly why companies outsource jobs.

    Tough immigration laws mean employers won't be able to hire someone who they can just pay in cash and keep off the books. They won't be in a rush to replace them with legal citizens for the same reason why they hired the illegals in the first place.

    I'm actually convinced that most citizens will not actively seek most of the jobs taken up by undocumented aliens. But surely, some of them will be interested in a good paying construction jobs. I suspect that these construction companies fear additional costs, potential unionization and lawsuits by replacing masses of illegal alien workers with legal ones.

  • Lost_In_Translation||

    I don't understand. If you're paying in cash and hiding money, how does e-verify stop that. You simply don't report your workforce. Only if you're trying to do other things right (like do withholding and insurance for your company) does e-verify kick in for employees. It makes a criminal of an otherwise lawful employer, not criminalize sketchy practices.

  • XM||

    E-verify would make it tougher to hire illegal aliens (or at least that's how I understand it), who more readily agrees to that kind of arrangement.

    I was paid in cash to work somewhere as a legal citizen, so that practice isn't limited to illegal aliens. But that's more for a temp work. Illegal aliens have incentive not to make too much noise if their bosses are a bit too demanding or insist on some "flexibility". Your typical "natives" aren't likely to oblige. If they agree to get paid in cash and they have grievances later, they'll get busted too.

    Illegal aliens ARE a plus for the economy, but for some unsavory reasons.

  • ||

    I agree, the regulatory burden on businesses is MUCH too higher. Pretty unsavory.

  • Tulpa Doom||

    You simply don't report your workforce.

    If you do that, when the ICE busts your place you're going to get the full-blown sandpaper condom treatment.

  • VG Zaytsev||

    That's not even the main reason to 'report' your workforce, see my post below.

  • VG Zaytsev||

    I don't understand. If you're paying in cash and hiding money, how does e-verify stop that. You simply don't report your workforce. Only if you're trying to do other things right (like do withholding and insurance for your company) does e-verify kick in for employees.

    You don't get it dude.

    Unless your business is mowing lawns or some such thing, you can pay in cash only to a limited extent, (try withdrawing tens of thousand s of dollars from you bank on a regular basis) and you absolutely cannot expense the cash wages paid. Meaning that your income tax will be artificially inflated.

  • JeremyR||

    They do, I'm sure, they just ignore it.

  • Robert||

    Why is E-Verify so costly? $147/query? That's the real story buried in the above. What do they do, send data to hire a local private dick to tail the applicant?

  • The Late P Brooks||

    By all means, let's increase costs and reduce the marginal return of workers.

  • Old Johnnie Goggabie||

    Given that the market for construction, like everything else, is driven by supply and demand, I'd be interested in knowing the practical consequences of this drop in employment. Is there a demand for construction in Arizona that's not being met? In what particular market is demand dropping? Commercial or residential? Upscale or low-cost? If the demand for construction is dropping due to a decline in population, why is that necessarily a bad thing? Has the per capita income of Arizonians decreased? If not, what's the problem?

  • Tulpa Doom||

    Suderman apparently missed the fact that the AZ increase in construction before the 2007 crash was also much steeper than CA's and NM's, meaning it's likely they had an even bigger glut of newly-built homes. Might that have been a factor in the steep decline after the crash? Who knows. There's an ideology to push.

    Also, it's odd that considering Las Vegas has seen an even steeper housing price reduction, NV isn't included in the survey (but NM, a state which experienced much less of a bubble-burst, is).

  • ||

    There's an ideology to push.

    And you're not very good at it.

  • wigglwagon@gmail.com||

    The employers of illegal aliens and the so called 'immigrant rights' groups And think tanks who are funded by those same employers will say and do anything to keep immigration law from being enforced in any way, shape, or form.

  • Lost_In_Translation||

    Mainly because our immigration laws since the 60's have been retarded and xenophobic. Anyone without a criminal record should be welcome here.

  • Tulpa Doom||

    That's your opinion. (check out the immigration laws for non-Europeans from before the 60s, btw)

    Just because someone disagrees with your opinion doesn't make them racist or xenophobic. I know it's very courageous to call illegal immigration opponents those names here on Reason [/sarcasm] but it makes you look like a douchebag to anyone on the outside.

  • ||

    Just because someone disagrees with your opinion doesn't make them racist or xenophobic.

    He never said racist. And "we don't want outsiders immigrants, they're bad for us" certainly seems xenophobic to me.

    I know it's very courageous to call illegal immigration opponents those names here on Reason [/sarcasm] but it makes you look like a douchebag to anyone on the outside.

    I'm not sure the complimentary views that immigration should be restricted based on where people come from, that we shouldn't have foreign companies here, and that we shouldn't allow "American dollars to go overseas" make people racist (I don't see that accusation here; using the term "brown people" doesn't make it racial, just noting a feature people use to distinguis who's "illegal"), but I'd say that's pretty xenophobic. And I'd say our gallivanting military "strategy" of war, war, killer robots, and more war sort of corroborates the idea that there's some xenophobia going on.

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