Contrary to Smith’s claims, there is no such thing as a “free” government regulation. It’s true that employers do not have to pay a direct fee for using E‑Verify, but all Americans pay taxes to support it and employers pay for it by having to comply with its rules. Employers and state governments that have mandated E‑Verify know how expensive the program is. Beyond the costs, E‑Verify simply does not turn off the jobs magnet.
My colleague Jim Harper and I document these regulatory costs and more in a new Cato Institute study . We find E‑Verify is not only expensive and difficult to use, it will fail to enforce immigration laws and its failure will likely lead to political support for a biometric national identity program. Rather than blindly reauthorizing the program this year, we should take a step back and consider whether we really need an ineffective and expensive immigration enforcement system.
The Labor-Market DMV
E‑Verify is basically a Department of Motor Vehicles for the labor market. In states where E‑Verify is mandatory, all new hires must hand over their identity information to prospective employers, who then check it against government databases via the Internet. Currently, workers have to give that information to all employers on a government form called the I‑9 that lacks an instantaneous electronic check. E‑Verify is supposed to close the gap, checking all employees’ identity information when they get a new job.
Most of the time, the information comes back correctly and legal workers are allowed to work. In a minority of cases, however, legal workers are falsely identified as potentially “illegal”—delaying their hiring. This could lead to persistent unemployment for hundreds of thousands of Americans under a national mandate as employers will prescreen applicants, refusing to waste time or money interviewing workers who are flagged as potentially illegal.
Defenders of E‑Verify fire back, “Under the E‑Verify law employers are only allowed to check workers after a job offer. They can’t prescreen!” Who are they kidding? One reason there are so many unlawful immigrants working in the United States is that some employers are willing to look the other way or break the law when hiring. Faced with another expensive government regulation like E‑Verify, many of these employers wouldn’t hesitate to break yet another regulation.
Rather than turning off the jobs magnet, E‑Verify will make it harder for hundreds of thousands of legal Americans to get a job. The most recent audit of E‑Verify found that between 0.3 to 0.7 percent of all E‑Verify queries erroneously flagged legal workers as illegal—a so-called tentative nonconfirmation (TNC). If 150 million American workers are run through E‑Verify tomorrow, somewhere between 450,000 and slightly more than 1 million American would be granted TNCs. They would then all have to identify their incorrect identity information and correct it with the federal government or their new employers.
The TNC rate for American citizens is only 0.2 percent, but the error rate for permanent lawful residents on green cards and visa holders is 2 percent—up over the few years prior to the last audit. To E‑Verify’s credit, the TNC error rate for American citizens has improved over the years, but what is the acceptable number of Americans that we should subject to such a nightmare?
E‑Verify is so simple to use that it only requires an employer to read and understand an 88-page government manual on how to properly run it. American business owners have more important things to do than read another government manual telling them how to run their businesses. If a program that requires businessmen to read an 88-page manual fits Smith’s definition of “easy to use,” we should all begin to wonder what he considers difficult.
E‑Verify Won’t Reduce Illegal Immigration
E‑Verify may hurt some legal American workers and be difficult to use, but does it at least turn off the jobs magnet? No. Mexican immigrants receive a 253 percent wage bump by working here. To turn off the jobs magnet, E‑Verify will have to lower that economic gain to about zero, so that the costs of immigrating to the United States are at least as great as the benefits.
Arizona mandated E‑Verify in 2008. It lowered the expected 253 percent wage increase to a mere 240 percent, barely diminishing the powerful incentive to immigrate unlawfully. This fact alone should dissuade E‑Verify’s biggest champions from continuing to support the program.
E‑Verify fails to turn off the jobs magnet for myriad reasons. The most prominent is that states with mandates for all new hires don’t enforce it. In 2013, only 58.5 percent of all new hires were even run through the system in Arizona—and that number assumes each new hire was only checked once. Since each new hire could’ve been checked multiple times through E‑Verify, the actual percentage of new hires checked could be a fraction of that.
As dismal as Arizona’s E‑Verify numbers are, Arizona produced the highest enforcement rate for any state that mandates the program. Alabama, Mississippi, and South Carolina, states that all mandate E‑Verify, all had lower compliance figures than Arizona in 2013. If those states cannot or will not enforce mandatory E‑Verify, what hope is there to force a federal mandate in states that will resist, such as Illinois and California?
E‑Verify only identifies a bare majority of unlawful immigrants who are actually run through the system. Combined with off-the-books illegal hiring and other paperwork scams that can insulate employers and workers from being detected by E‑Verify, it’s no surprise the system is ineffective when mandated on the state level.
If E‑Verify were ever mandated nationwide, its only saving grace would be its failure to force millions of workers and consumers out of the United States. But that economic salvation will lead to a political conundrum. The political reaction to E‑Verify’s failure to enforce our immigration laws will be support for a national biometric ID card. Only such a system as that can hope to plug the gaps in E‑Verify—but at a cost so great that it far outweighs any potential benefits.
Policymakers consider E‑Verify to be a fait accompli. From President Barack Obama to Congress, few oppose expanding the program to include all new hires in the United States. E‑Verify’s reputation rests on a foundation of misperceptions and an assumption that it will turn off the jobs magnet that attracts so many unauthorized immigrants here. At best, E‑Verify will only force more unauthorized immigrants deeper into the black market and create the political will for a biometric identity system. Rather than reauthorizing E‑Verify, Congress should reconsider its existence in light of its failures.
