Legal Workforce Act Would Delay or Cost 1.7 Million Jobs for U.S. Citizens and Legal Workers

E-Verify is a government-run national identification system that some U.S. employers currently use to verify the employment status of their new hires on a voluntary basis or a compulsory basis if they are federal contractors or operate in states with an E-Verify mandate. The Legal Workforce Act (LWA), which has passed the House Judiciary Committee on three occasions since 2012, would mandate that all employers use the program. In scope, LWA would surpass all other regulations in U.S. history, applying to every single employer and every single worker—illegal and legal—with deleterious consequences for both.

Proponents see E-Verify as an inexpensive silver bullet to end illegal immigration. But naturally, this technocratic dream fails to fit reality. As my colleagues’ recent study shows, E-Verify does slightly reduce unauthorized immigrant wages, but not nearly far enough to “turn off the jobs magnet.” Unsurprisingly, the market finds a way to connect willing workers with willing employers. However, while E-Verify fails to separate illegal workers from their jobs, it does manage to do exactly that for many legal workers—U.S. citizens and work authorized immigrants.

E-Verify salesmen neglect to mention that the program applies to all workers, not just those here illegally, and that U.S. citizens and legal workers can end up caught in the system. I have previously explained how, from 2006 to 2016, legal workers already had 580,000 jobs held up due to E-Verify errors, and that of these, 130,000 lost their jobs completely. These shocking numbers would grow worse under mandatory E-Verify. Under the most conservative estimate, if applied to all employers, E-Verify would delay at least 1.7 million jobs for legal workers and eliminate nearly half a million jobs over 10 years.

How E-Verify already harms U.S. workers

LWA requires employers to submit the information employees provide them on the I-9 forms to E-Verify. If the information fails to match the records of the Department of Homeland Security or Social Security Administration, E-Verify issues a “tentative nonconfirmation” (TNC). Under LWA, people who receive a TNC would need to challenge it within 2 weeks or it would become a “final nonconfirmation” (FNC), which requires an employer to immediately terminate their employment or face major fines or jail time.

Errors can occur because employers enter the name incorrectly. This mistake is particularly common for people with multiple or hyphenated last names or names with difficult spellings. They also happen when bureaucrats incorrectly enter information into their databases or when employees fail to fully update their information after a name change.

To sort out the problem, employees then have to visit in person the Social Security Administration or U.S. Citizenship and Immigration Services (USCIS)—the new DMVs for employment. Employees and employers have to stumble through this process in the dark because E-Verify is unable to tell them the origin of the problem. Workers may need to file Privacy Act requests to access their records and fix the issue. In these cases, it can take more than three months to even obtain a response. LWA allows employers to delay hiring a worker until they clear this bureaucracy.

Even worse, E-Verify can cause legal workers to lose their jobs entirely. Authorized job seekers can receive an FNC if they fail to challenge the TNC or if their employer fails to notify them. According to a USCIS-commissioned study, 17 percent of FNC errors were the fault of the employee not following the regulations. The other 83 percent were the result of employers not informing the worker about the TNC, so they could challenge it.

E-Verify’s boosters tout its 99.8 percent accuracy rate, implying that U.S. workers have little to fear. But even a low rate applied to a population as large as the U.S. workforce would result in hundreds of thousands of errors. Indeed, in 2016, under voluntary use of the system, E-Verify caught up 63,000 legal workers in its regulatory scheme. It will become much worse if Congress mandates it for all employers.

Legal Workforce Act will harm even more U.S. workers

In order to project the number of errors under LWA, we need to know the number of hires that employers will make through the system and the rate at which E-Verify will wrongly not confirm a job applicant.

The Census Bureau reports the number of new hires, almost 100 million in 2015, but LWA would also allow employers for the first time to voluntarily check their existing workers, a practice that the current regulations prohibit. This means that the number of E-Verify checks will exceed the number of annual hires that the Census records. Unfortunately, we cannot know by how much because it depends on the desire of employers to use this procedure, but it could raise the estimated number of new checks by tens of millions. For this estimate, I took the most conservative position and assume no company will check any of its existing employees.

The future error rate is more difficult to assess. The E-Verify system’s accuracy has improved over time, so this trend will likely continue as the bureaucracy, employers, and employees figure out the system. However, there is likely a natural floor beneath which the system cannot improve—perfect accuracy is almost certainly impossible (especially considering the causes of the errors). For this reason, it is unlikely that the error rates will continue to improve at the current rate indefinitely.

On the other hand, the rates could grow much worse, especially following the initial rollout, because LWA would flood it with new employers who have no desire or ability to use the program. For the last 10 years, the system has mostly incorporated larger employers. About 90 percent of employers have less than 15 employees, compared to only 8 percent of E-Verify businesses, as another USCIS-commissioned study found. Smaller employers have less human resource staff to implement these types of regulations, and there will certainly be a learning curve regardless.

LWA would also likely incorporate a large new population of employees who are more likely to be the victims of E-Verify errors. According to the USCIS-commissioned study, this group includes legal immigrants and Hispanics. Because many Hispanics and legal immigrants live in states where E-Verify is not currently mandatory at the state-level, it is likely that LWA's national mandate would increase errors for them. Given the uncertainties, this estimate takes the conservative assumption that the E-Verify improvements would continue at the same pace that it did under the Obama administration (2009-2016), an 8.5 percent reduction in the error rate annually, even though this is unlikely to continue.

Finally, LWA will definitely increase the rate of job loss due to E-Verify. FNCs currently only happen to legal workers if they fail to challenge or an employer fails to notify them about a TNC. LWA would introduce a new way to receive a FNC: inability to resolve the issue in time. LWA requires that a person prove their right to work in less than 10 working days or be fired. The bill allows a single one-time extension at the discretion of the Secretary of Homeland Security (p. 36). Yet as explained above, we know that it often takes much longer than that to resolve a TNC error.

Unfortunately, USCIS only provides case resolution details in groups: such as, less than 3 business days, 3 to 8 days, or more than 8 days. In 2012, the last year for which we have data, 36 percent of all erroneous TNCs took more than 9 or more days to resolve. If we assume that the full 36 percent cannot obtain an extension of the 10-day limit, then roughly 57,000 legal workers would lose their jobs due to this one provision of LWA alone.

However, for this estimate, I will assume that all of these workers will receive the one-time extension. If we further assume that the daily number of TNC resolutions in the 3 to 8 day period continued at the same rate thereafter, then 13.3 percent of all TNCs currently take more than 20 business days to resolve. The true share is likely higher than this because if someone cannot sort the error out in 8 days, it likely has a more complicated origin than those resolved in the first week. Nonetheless, this projection assumes that this share will continue into the future.

Estimate of the number of job delays and losses due to E-Verify

The Legal Workforce Act imposes the mandate on all U.S. employers in stages based on the size of the firm over a 2-year period. The table below begins the year in which E-Verify becomes fully mandatory for all employers. Year 1 uses the 2016 error rate as the starting point. Under these assumptions, nearly 1.5 million legal workers over 10 years would receive erroneous TNCs, and of these, nearly 430,000 would lose their jobs completely.

Table
Projection of E-Verify Errors Under Mandatory E-Verify

Sources: Author’s calculations based on: Total hires: Census Bureau; TNC share overcome (2011-2016): U.S. Citizenship and Immigration Services (USCIS) USCIS archived pages; E-Verify Erroneous TNC and FNC rates (2006-2010): Westat; LWA Job Loss From TNC Delays: Cato Institute. (Note FNC error rate in Westat expressed in terms of share of FNCs. See here for how the FNC rate was calculated for years without data.)

The number of TNCs reported above come from public numbers from USCIS, but the non-public numbers in USCIS in response to Cato’s 2013 Freedom of Information Act request for years 2008 to 2012 show 50,000 more TNCs during this period. Again, this means that this estimate is the lowest possible outcome for mandatory E-Verify.

LWA also increases the consequences of a TNC for a legal worker relative to current law. The legislation would allow the employer to delay hiring the job applicant until after they clear this process, which means that people would lose wages throughout the job delay period. Moreover, anyone who is attempting short-term employment could lose their job completely, even if they ultimately cleared E-Verify (p. 20). This provision highlights how E-Verify purports to be pro-U.S. worker legislation, but actually is anti-U.S. workers.

Congress should reject mandatory E-Verify. It’s a big government waste of resources. It won’t accomplish its intended goal, but it will punish Americans seeking jobs.