E‑Verify is systematically unable to enforce workplace immigration laws. E‑Verify, which is an online government program that allows employers to check the work authorization of their new hires to supposedly exclude illegal immigrant workers, “was promised as the silver bullet to immigration problems” according to former Arizona Republican state senator Rich Crandall. “E‑Verify was going to solve our challenges with immigration,” Crandall said. Or at least, that’s what the advocates told him. Now advocates and U.S. Senators like Tom Cotton (R‑AR) and Mitt Romney (R‑UT) have introduced a national E‑Verify mandate that would force all businesses to use the system when making a new hire.

As it often turns out, the advocates and the politicians they influence are wrong. E‑Verify doesn’t work because it is a very easy-to-fool system – to say nothing of its errors in falsely identifying illegal immigrants and the huge regulatory cost that it imposes. Businesses take the risk of getting around E‑Verify by not using it in states where it is legally mandated. They also look the other way when the documents are questionable – often for good legal reasons. The government cannot expect every business to become specialized at identifying whether particular documents are actually owned by the applicant holding them.

An illegal immigrant worker who presents somebody else’s legal work documents gets approved because E‑Verify only checks paper, it doesn’t check the person holding it. This obviously incentivizes identity theft. Making scarce government documents necessary for certain market activities creates a black market for those documents. It’s no coincidence that Arizona, which mandated E‑Verify for all new hires in 2008, had the highest rate of reported identity theft in the United States. Nor is it a coincidence that identity theft really took off nationally after the 1986 Immigration Reform and Control Act required employment verification via the I‑9 form.

Illegal immigrant workers also “rent” legitimate documents from legal workers. One survey-based paper found that immigrant farmworkers estimated that 50 to 70 percent of their coworkers used loaned documents whose procurement is usually arranged by a supervisor, friend, colleague, or a fourth party. It turns out, that fourth party likely includes staffing agencies hired by businesses to administer E‑Verify and other employment requirement schemes for new hires.

Currently, some shady staffing agencies hire illegal immigrants by lending legitimate identifications to them. They try to avoid using E‑Verify but it’s easy to see how this business model will expand dramatically if E‑Verify were to become mandatory. Even if the business owners themselves don’t want to dip their toes into this black market, many employees will be tempted if they could make $300 for each identification they lend. If Congress were to ever mandate E‑Verify nationwide, one should expect that price to rise along with surging demand created by that government system.

E‑Verify and employment verification are effective subsidies of identity theft and identity loans in myriad ways that we are just beginning to understand. Hopefully, Congress won’t ever give us a reason to fully understand how adaptive shady operators in a black market can be.