July 18, 2017 9:46AM

North Carolina and Other States Should Reconsider E‐​Verify

Many states are considering an E-Verify mandate for all employers and employees in their states. E-Verify is a taxpayer funded federal government run system that is supposed to exclude illegal immigrants from the workforce. In practice, E-Verify imposes high economic costs and does little to dampen the wage magnet that attracts illegal immigrants to the United States.

State attempts to mandate E-Verify have run into serious roadblocks in at least three states this year and are likely dead there. For instance, Illinois’ HB 3415 is still stuck in committee and is very unlikely to become law. In fact, Illinois is so averse to E-Verify that it even tried to prohibit its use of that system by any employer in the state. New Jersey’s A 3249 is extremely unlikely to pass in a state government dominated by Democrats. Maine HP 904 is effectively dead as that legislator has more pressing matters to attend to.

However, a watered-down form of mandatory E-Verify has an excellent chance of becoming law in North Carolina. The Protect North Carolina Workers Act (HB 35) passed the House and will likely be taken up by the state Senate when it returns in late August. The Protect North Carolina Workers Act would require mandatory E-Verify for every new employee hired by a firm with 15 or more employees. Legislators have exempted domestic and farm workers from E-Verify, likely because they believe those sectors of the economy would be devastated if they also had to comply with the mandate. 

E-Verify’s cheerleaders sell the system as a silver bullet that will resolve illegal immigration with little help from other government programs. E-Verify takes personal identity information that workers must provide on I-9 tax forms and then checks the validity of their Social Security Number against information held in Social Security Administration (SSA) and immigration status against Department of Homeland Security (DHS) databases. If both databases decide that the identity information is valid then E-Verify approves the employee for work. If E-Verify encounters an error then it returns a tentative non-confirmation that requires the employee and employer to sort out the error. In 2012, 46.5 percent of contested E-Verify cases took longer than eight working days to resolve. If the error is resolved then the employer can permanently hire the worker. If the error is not resolved then E-Verify issues a final non-confirmation whereby the employer must fire the worker.

That whole system can only work well if E-Verify and the information in government databases is reliable and accurate. Unfortunately for workers and employers, that information is wrought with errors. The last major survey of E-Verify’s accuracy rates in 2012 found that it incorrectly approved 54 percent of illegal immigrants to work legally in the United States. E-Verify approved them because it relies on documents presented by the workers themselves. The biggest hole in E-Verify is that it checks the validity of documents but does little to check whether they belong to the actual person who presents them. For example, E-Verify flags a blatantly false Social Security number but it will not flag a valid one when it is paired up with the right name even if neither belong to the correct worker.  Any problems created by a nationwide E-Verify mandate will lead to calls for a national biometric identity card to fill the gaps.

E-Verify also forces some employers to fire some legal workers. Around 0.15 percent of E-Verify queries result in a false final non-confirmation, locking out otherwise legal citizens and permanent residents from employment. Even more absurd, about half of all new hires in states that require mandatory E-Verify for all new hires are not run through the system. The goal of E-Verify is to disincentivize illegal immigration by denying workers employment but mandatory E-Verify in Arizona only lowered wages of Mexican illegal immigrants by about five percent. That hardly counts as demagnetizing the wage magnet. Enforcing E-Verify is about as difficult as enforcing the current I-9 system except that it adds another layer of bureaucracy for employers and employees to overcome. 

A North Carolina E-Verify mandate for firms with 15 or more employees will have little effect on unlawful immigration but will increase the cost of hiring new workers. North Carolina has grown rapidly over the last few decades. Its relatively low taxes, tolerable administration of justice, and manageable regulation environment have made it a magnet for workers and firms from around the world. Imposing a new, costly, and ineffective labor market regulation like E-Verify is a bold strike against the other wise policies that have made North Caroline an economic success.