Alabama immigration law could hurt area economy
by Patrick McCreless
Jun 22, 2011 | 9172 views |  35 comments | 7 7 recommendations | email to a friend | print
Some economic observers and employers suspect Alabama’s strict new immigration law could end up hurting business in the state.

The new law, signed by Gov. Robert Bentley earlier this month, is supposedly designed to free up jobs for Alabama citizens and cut down on costs to taxpayers by denying illegal immigrants access to any state or local benefits or to public colleges.

However, some economists, business owners and immigration experts say Americans do not want the jobs held by illegal immigrants and the law will cost businesses in terms of increased regulation, possible legal fees and in having to find more workers, all of which will be passed on to consumers in the form higher prices.

“It will mean some local businesses will have to hire documented workers and will have to pay more,” said Andreas Rauterkus, an assistant professor of finance at the University of Alabama at Birmingham. “There is a reason why businesses use migrant and not documented workers … they can be hired for less. That cost will be transferred to consumers.”

Rauterkus also said he found it unlikely that many Americans would agree to work jobs typically held by illegal immigrants.

“With the recession, it depends on the desperation … but I believe it will be a lot more difficult for Americans to do jobs that illegals do,” he said. As an example he mentioned picking fruits and vegetables for long hours in hot weather.

Among its many stipulations, the new state law criminalizes dealing with falsified identification documents and requires businesses to verify employees’ immigration status through the federal E-Verify system.

Bill Caton, spokesman for Alabama Associated General Contractors, said the requirements of the law would not impact construction businesses that do big jobs under contracts with the federal government.

“I think the non-residential construction industry, such as commercial, highway … have complied with those already,” Caton said. “A lot of businesses that do federal jobs have been using E-Verify already.”

Caton said Associated General Contractors’ concern is that the law could stifle business through legal fees and regulation.

“We are concerned this law is potentially punitive and repressive,” Caton said. “Litigation is almost certain with this bill and it is not helping businesses run more efficiently. How can this be good for business if you have to pay more for state regulations?”

The Arizona law has faced legal challenges since it was enacted, and the American Civil Liberties Union recently announced its intentions to file suit against the Alabama law.

“This law is not what our industry preferred, certainly,” Caton said.

Joe Morris of Morris Building Construction in Anniston said he could see how the law could adversely affect some in the construction business.

“I think in certain segments of construction, it might have some effect,” Morris said.

Morris said he did not currently use the E-Verify system and was not sure how much it would cost him to implement. He added, however, that he has had many of the same employees for years and does not currently employ immigrant workers.

“But we will certainly do it the legal way and follow the rulebook,” Morris said.

He added that many construction businesses like his own would have a hard time hiring American workers right now anyway due to the sluggish economy.

An Oxford construction company owner, who asked to remain anonymous since he employs documented workers but fears boycotts from customers who are against immigrants, said he was not pleased with the new law.

He said his immigrant workers all provide documentation, but he has no real way to tell if the documents are forged or not.

“If the documentation is forged, will I be held liable under this law?” he asked. “How am I supposed to know if it’s a forgery? The state will need to do lots of education for businesses.”

Elena Lacayo, immigration field coordinator for the National Council of La Raza – the largest national Hispanic civil rights and advocacy organization in the United States – said her organization has kept tabs on Arizona since its law was passed and it has cost that state business and revenue.

“There has been a negative effect of people not wanting to visit the state … a cost for a loss in investors,” Lacayo said. “And Alabama passed an even more extreme law. These things don’t come without a price.”

According to an economic report funded by the Center for American Progress, a progressive public policy research and advocacy organization, the impact of the Arizona law could worsen the economy and business for that state.

“We had an economist compare the cost of deporting all the illegals to legalizing them,” said Angela Kelley, vice president for immigration policy at the Center for American Progress. “We were trying to show what the two policy options are.”

The economic analysis report showed when undocumented workers are taken out of the economy, the jobs they support through their labor, consumption and tax payments disappear as well.

The report estimated a total deportation of all illegal immigrants in Arizona could decrease employment in the state by 17.2 percent, eliminate 581,000 jobs for immigrant and native-born workers alike, shrink the state economy by $48.8 billion and reduce state tax revenues by 10.1 percent.

Conversely, the report states that based on the historical results of the last legalization program under the Immigration Reform and Control Act of 1986, a similar program in Arizona would increase wages not only for immigrants but also for their native-born co-workers. It would generate more tax revenue and more consumer and business spending, supporting additional jobs throughout the economy.

The report estimates legalization would increase total employment by 7.7 percent, add 261,000 jobs for immigrants and native-born workers, increase labor income by $5.6 billion and increase tax revenues by $1.68 billion.

Kelley suspected a study of Alabama would produce similar results.

“Frankly we haven’t looked at the state yet because the ink of the law is barely dry, but I think an Arizona-style law will have a similar affect in Alabama,” Kelley said. “I think the law does create a hostile climate.”

Contact staff writer Patrick McCreless at 256-235-3561.

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