Immigration law prohibits the hiring of illegal immigrants. Over 100,000 of these so-called no-match letters have been sent to business owners every year for some time now, but they were openly ignored until recently. If any business owners were found guilty of employing illegal immigrants, they faced, at most, administrative penalties. The fines were modest and Immigration and Customs Enforcement (ICE) rarely carried out follow-up raids.
It is important to stress that the law did not stipulate that employers would have to fulfill police functions. Even though they knew that they could not hire illegal immigrants, they were still not required to check the legitimacy of their workers' documents. All they had to do was make sure that the worker had a [valid] Social Security Number (SSN) or permission to work.
The rules of the game changed this past September 14. Upon receiving a no-match letter, business owners are now required to ask their employees for proof that their documents were issued by the Social Security Administration (SSA), and not by an underground workshop. If an employer does not want to do this, then the only option is to fire the workers who are under suspicion. The problem is that non-action with regard to a no-match letter is enough to initiate a criminal case.
“Employers who do not obey the new rules will have to pay fines of up to $12,500 for each violation, and they will also be subject to criminal prosecution," said Secretary of Homeland Security Michael Chertoff.
Several companies have already taken action in response to the Secretary’s threatening words. Crain’s, the magazine of business circles, gives the example of Aramark, a giant retail food industry that operates in the greater New York area. Managers at the company recently fired over 60 illegal workers. The magazine points out that these workers received warnings over a year ago, but that Aramark managers have only now decided to fire them.
Experts cited in the Crain’s article believe that it is likely that other companies will follow Aramark's lead. As a result, tens of thousands of illegal workers in New York will lose their jobs. Mass firings will primarily affect sectors of the economy that have traditionally employed a high number of illegal immigrants, like factories and the tourism, restaurant and hotel industries. Unofficial statistics show that up to 500,000 illegal immigrants work in New York.
The Department of Homeland Security (DHS) requirements have been temporarily suspended. On October 1, a federal court in San Francisco will hold a hearing on a lawsuit brought by immigrant rights organizations.
“If the efforts of immigrant advocates prove unsuccessful and the court finds that the Secretary’s orders are legal, then the economic situation in our city will worsen,” noted a large New York employer in an interview with Crain's.
This businessman asked that his name be withheld because he was afraid of drawing the ICE’s attention to his company. He admitted that he was forced this month to order his HR department to pay particular attention to the documents of foreigners who want to work at his company.
Many experts share this businessman’s opinion regarding the difficulties that will emerge on the labor market of the world’s capital. They say that at under 5 percent, the Big Apple’s unemployment rate will make it much more difficult to find workers to replace the illegal immigrants who have been fired. Experts warn that the after-effects of forced firings will have a huge impact on the economic stability not only of New York City and New York State, but of many other states as well.
“Any building contractor in Arizona will tell you that his company cannot function normally without legal and illegal laborers from Mexico,” said Judith and Robert Alers, owners of the construction company Mesa, in an interview with Forbes. “We are not afraid to admit that there are illegal workers among our 70 employees. If construction companies start getting rid of these people, we won’t be able to find anyone to replace them. The impact will be felt by restaurants, agricultural enterprises, lawn care companies, and other businesses that use foreign workers."
The owners of Mesa expressed their opinion of the DHS’s strict measures in an open letter to the editor of a local paper. Copies of this letter were also sent to state and federal officials.
“We ended up having to speak for all Arizona business people, many of whom are quite simply scared to speak up. People are frightened of becoming the objects of heightened interest from the ICE or leading conservative radio hosts,” they said.
Forbes notes that business people are not satisfied with the actions of Washington politicians, believing that they have been treated unfairly. After all, the Bush administration promised that sanctions against companies that hire illegal immigrants would be tightened only after an immigration reform bill was passed. The bill, of course, was never passed, but authorities have already started after businesses. Experts believe that the campaign to prosecute business people could cause serious financial damage for both specific businesses and the country’s economy as a whole.
As noted in The Wall Street Journal, the majority of the 8 million working illegal immigrants are paid by check, not in cash. According to data from the Mexican Migration Project, joint research by specialists at Princeton University and the University of Guadalajara, it has shown that no less than 65 percent of Mexicans working in the United States are paid by check. Data from the Social Security Administration’s Earnings Suspense File show that at the beginning of the 2007 fiscal year, the taxable income of people whose Social Security numbers did not match any numbers in the Social Security database amounted to $586 billion. Five years ago this sum equaled $463 billion. Financial analysts have warned the White House and Congress that following Secretary Chertoff’s directives could lead to a significant decrease in revenue for federal and local budgets. And this is at a time when the country is teetering on the edge of a recession.
Pia Orrenius, a senior economist at the Federal Reserve Bank of Dallas, points out that employers will suffer the most in California, New York, Texas, Florida, Arizona and Illinois. Over 4 million illegal immigrants work in these six states combined. She is also convinced that Secretary Chertoff will not be able to force employers to stop hiring illegal workers.
The problem is that instead of being paid by check, these workers will be paid in cash, which means less money for their work. If the Bush administration goes ahead with Secretary Chertoff’s plan, it will give a powerful jolt the underground economy.
Meanwhile, the financial situation of illegal immigrants will significantly worsen. After all, these people own houses and have credit card debt. An interruption in their salaries will have serious consequences for credit and financial institutions in this country.
Experts are convinced that Secretary Chertoff’s orders making it mandatory for employers to check the status of their workers after receiving a no-match letter from the Social Security Administration will not have the expected effect. After being fired, illegal workers will move from one company to the next using their fake documents. Checking their authenticity is practically impossible until the company receives its next letter from the Social Security Administration.
The SSA will not send no-match letters to businesses employing less than 10 people. In an interview with Forbes journalists, one expert said that his acquaintance, who employs only illegal workers (for a total of 18 people), called him recently wondering if he should divide his company into two seemingly independent companies, each with nine employees.
This expert believes that obviously business people will start trying to find any way possible to pull the wool over the eyes of Secretary Chertoff and his ICE agents.
“The federal government needs to stop the crackdowns and come up with a well-thought-out program to bring foreign workers that U.S. businesses need to the United States,” stresses Orrenius. “What they absolutely should not do is turn business people into immigration officers. This will do nothing but harm the U.S. economy.”
