Tag: mandate

Businesses Don’t Comply with E-Verify Mandates

E-Verify is an electronic eligibility for employment verification system run by the federal government. It is supposed to check the identity information of new hires against government databases to see if they are legally eligible to work. The government created E-Verify to deny employment to illegal immigrants as a means of turning off the wage magnet that attracts so many here in the first place, but it has serious and unsolvable problems. Four states have mandated E-Verify for all new hires: Arizona, Alabama, South Carolina, and Mississippi. Barely a majority of new hires in those four states are run through E-Verify currently.  A federal mandate would probably have even lower compliance rates.  

E-Verify compliance rates are very low. In the second quarter of 2017, only about 56 percent of all new hires in states with E-Verify mandates were actually run through the program even though the law in those states mandates that 100 percent of them should have been checked against E-Verify (Figure 1).  It doesn’t get much better when looking at the individual states although I only have data going back to the fourth quarter of 2009 (Table 1).  Over the course of E-Verify’s mandate on the state level, compliance with the program has not improved (Figure 2).  The peak compliance rate for each state was 67 percent in Arizona in the third quarter of 2015, 66 percent in Alabama in the first quarter of 2016, 62 percent in the first quarter of 2015, and 53 percent in the third quarter of 2013.  That is a low level of compliance for a program that is supposed to stop the hiring of illegal immigrants. 

This blog shows lower compliance rates for E-Verify than in previous publications of mine.  That is because the most recent FOIAs actually exclude the number of E-Verify self-checks and are guaranteed to be tied to the location of the hire rather than the location of the E-Verify check.  In previous FOIAs, the government did not specify that hires in some states were run through E-Verify in other states.  This most recent data corrects for that confusion and allows for a more accurate comparison. 

It is time that policymakers in Washington, DC look at the states where E-Verify is mandatory to judge how it works in reality rather than relying on Pollyanish odes about its intended effects. The low E-Verify compliance rates in states where the program is mandated point to serious problems that its cheerleaders must directly address.

Figure 1

E-Verify Compliance Rates in States with Mandated E-Verify

Sources: Department of Homeland Security and Longitudinal Employer-Household Dynamics Survey

 

Figure 2

E-Verify Compliance Rates by State, Fourth Quarter of 2009 through Second Quarter of 2017

 

Sources: Department of Homeland Security and Longitudinal Employer-Household Dynamics Survey

 

 

Table 1

E-Verify Checks as a Percent of All New Hires

Year.Quarter Arizona Alabama South Carolina Mississippi
2009.4 38% NM NM NM
2010.1 59% NM NM NM
2010.2 61% NM NM NM
2010.3 65% NM NM NM
2010.4 46% NM NM NM
2011.1 61% NM NM NM
2011.2 56% NM NM NM
2011.3 61% NM NM 45%
2011.4 44% NM NM 41%
2012.1 59% 40% 52% 44%
2012.2 62% 54% 50% 45%
2012.3 63% 60% 57% 51%
2012.4 49% 48% 46% 45%
2013.1 61% 58% 58% 50%
2013.2 61% 57% 54% 48%
2013.3 65% 60% 60% 53%
2013.4 45% 47% 46% 37%
2014.1 61% 61% 57% 47%
2014.2 62% 58% 54% 43%
2014.3 66% 62% 59% 48%
2014.4 50% 51% 49% 40%
2015.1 62% 64% 62% 47%
2015.2 60% 59% 57% 43%
2015.3 67% 65% 60% 47%
2015.4 45% 53% 46% 36%
2016.1 59% 66% 60% 48%
2016.2 60% 60% 53% 45%
2016.3 59% 62% 55% 45%
2016.4 49% 53% 45% 42%
2017.1 61% 63% 56% 47%
2017.2 59% 61% 55% 46%

Sources: Department of Homeland Security and Longitudinal Employer-Household Dynamics Survey

Note: NM means “no E-Verify mandate.”

Note: The Author made some corrections to statistics and figures on April 26, 2018 based on new federal government information.

Sen. Grassley’s Proposed E-Verify Mandate Is an Expensive Dud

Senator Chuck Grassley (R-IA) recently introduced S. 179, known as the Accountability Through Electronic Verification Act (ATEVA), to mandate E-Verify in the United States.  The bill would mandate E-Verify for all employers in the United States while also mandating civil penalties for non-compliance of $1000 to $25,000 per violation.  ATEVA also includes criminal penalties of $15,000 per illegal immigrant hired and/or a 1 to 10-year prison sentence for repeat violators.  The bill also includes a good faith clause to prevent punishment of the businessman in case E-Verify makes an error.

If ATEVA were to become law, the mandatory E-Verify portion would go into effect one year after the President’s signature.  Most worrying though is that ATEVA would require all employers to verify their existing employees no later than 3 years from the date of enactment.  The identity of unlawful immigrants who are granted final non-confirmations would then be transferred to Immigration and Customs Enforcement (ICE) for removal.  Of course, ICE would have to locate the person but that is still a worrying increase in enforcement coordination.

ATEVA does not resolve the real and persistent problems with E-Verify. 

The first big problem is that E-Verify is expensive.  Oftentimes it is labeled a “free online system” but nothing supplied by the government is free to the taxpayers who pay for it.  E-Verify is also not free because of the opportunity cost of employers and workers who use the system.  The current I-9 form costs employers about 13.48 million man-hours each year to process.  ATEVA would add to that even if the I-9 is eventually replaced by E-Verify.  Those are a lot of hours that employers could otherwise spend on growing their businesses but instead must waste complying with government rules.

About 46.5 percent of contested E-Verify cases in 2012 took DHS eight work days or more to resolve.  During that time, employers are justifiably reluctant to train new employees who might not be work authorized.  Employers will likely avoid that cost by pre-screening job applicants to exclude those who come back as tentative non-confirmations.  Workers could thus get rejected from every job they apply for but not know that a simple and correctable error in the E-Verify database is the reason.  ATEVA makes prescreening illegal except with the expressed permission of the employee but we shouldn’t expect that to prevent unlawful prescreening by employers who don’t mind breaking labor market regulations in the first place.

The second problem is that E-Verify is ineffective at detecting illegal immigrant workers and the system’s accuracy rates are notoriously difficult to judge.  An audit of the system by the firm Westat found that an estimated 54 percent of unauthorized workers were incorrectly found to be work authorized by E-Verify because of rampant document fraud.  E-Verify relies upon the documents presented by the workers themselves.  Frequently, identity information comes from deceased Americans – a loophole the government seems incapable of closing.  For instance, SSNs for roughly 6.5 million Americans who are 112 years old or older do not have a death date attached which means they can easily be used by illegal workers and nobody would complain.  An illegal worker using the SSN of a deceased American would likely end up work authorized.

Employer avoidance of  E-Verify’s is even more difficult to fix.  Many employers ignore E-Verify even when it’s mandated, just like they ignore other government immigration enforcement rules.  Alabama, Arizona, Mississippi, and South Carolina all mandate usage at the state level, yet usage and enforcement have been lax.  In 2014, only 56 percent of employers in Alabama, 57 percent in Arizona, 43 percent in Mississippi, and 54 percent in South Carolina used E-Verify for new hires despite their state laws mandating that 100 percent of employers must use the system.  ATEVA tries to solve this problem by placing high civil and criminal penalties on employers who break the rules.  Violating I-9 rules currently opens up employers to serious criminal and civil penalties but that hasn’t incentivized many to comply even in states where E-Verify is mandated.  It’s also hard to believe that the government will fine to death many small businesses for failing to use E-Verify properly.   

The third problem is that some Americans would be kicked out of the labor market due to E-Verify.  E-Verify’s inaccuracy rate means that Americans will be barred from work due to false positives.  Roughly 0.15 percent of all E-Verify queries currently result in a false “final non-confirmation.”  While that is an admittedly small percentage, if applied nationwide to an American labor pool of roughly 125 million workers, it would result in 187,500 wrongly issued FNCs to American workers each year.

The fourth problem is that E-Verify is supposed to help curb illegal immigration by turning off the jobs magnet.  In the real world, E-Verify barely altered the wages of suspected illegal immigrants.  In Arizona, the E-Verify mandate lowered the expected wage gain of immigrants from Mexico from 253 percent to 241 percent – hardly diminishing the strength of the wage magnet.  That small effect could even overstate E-Verify’s effectiveness because it includes a period of time before employers and employees learned how to circumvent the system. A national mandate in the near future would confront many millions of employers and illegal immigrants who now know how to get around the system thanks to their experience Arizona and other states.

The fifth problem is that ATEVA will incentivize identity theft.  A huge cottage industry of forged identity documents sprung up after the government first mandated that employers check the identification of new hires in 1986 through the I-9 form.  Just as IRCA gave a big boost to the black market 31 years ago, nationally mandated E-Verify would subsidize it even further regardless of the anti-identity theft provisions in ATEVA.         

The sixth big problem will be the reaction to mandatory E-Verify.  The system’s errors and loopholes mean that it will be quickly rendered useless as an employment verification system – which is the most positive thing I’ll say about E-Verify.  Congress will not react to E-Verify’s failure by throwing up it hands and calling it a day.  Congress would instead integrate other biometric information like fingerprints or perhaps even DNA into a national identity system to close the E-Verify “loopholes” to make the system more effective.  Such a beefed up E-Verify system could easily be used for other purposes like creating a national gun registry.  It is unwise to mandate participation in a new government identity tool that will expand in the future, especially in an era of serious privacy scandals.  

ATEVA is another in a long line of bills introduced to mandate E-Verify in an attempt to force employers to help enforce federal immigration law.  The government should enforce its own laws rather than conscripting employers.  If the government cannot enforce its own laws then that is a signal that its laws should change.  Americans should not have to ask government permission to work from a federal government database.  If ATEVA were to ever become law, it would be an expensive new scheme that would fail to help enforce our immigration laws and likely lead to more invasive forms of national identification.

Special thanks to Scott Platton for his help in writing this.

Grubergate, the Mini-Series

Health Care Ruling a Victory for Federalism and Individual Liberty

Today’s ruling vindicates the constitutional first principle that ours is a government of delegated, enumerated, and thus limited powers. Like Judge Hudson in the Virginia case, Judge Vinson recognized that the individual mandate represents an unprecedented and improper incursion beyond those powers: the federal government, under the guise of regulating commerce, cannot require that people engage in economic activity.

And this is as it should be: if the only limit on congressional power were Congress’ own assessment of the wisdom of each assertion of such power, the Constitution would be obsolete – as would any conception of checks and balances. James Madison, the author of the Federalist Paper (51) explaining how man’s non-angelic nature requires explicit limits on those who govern, would spin in his grave. As even would Alexander Hamilton – perhaps the Framer most favorably disposed to strong central power – who cautioned that courts should not be in the business of evaluating the “more or less necessity” of a piece of legislation but rather define judicially administrable rules to guide (but also limit) Congress’s actions.

And so today’s ruling, in a lawsuit that now has 26 states as plaintiffs – with two others challenging the health care “reform” separately – represents the latest and most significant victory for federalism and individual liberty. This will not end until the Supreme Court has its say, but the tide is clearly running in freedom’s favor.

I will comment further once I’ve had a chance to read through the ruling.

ObamaCare Comes Up against the Constitution

Today POLITICO Arena askes:

How badly does today’s ObamaCare ruling set back the Democrat’s signature domestic achievement? Should Tenth Amendment enthusiasts take heart that other federal laws with which state officials disagree can be struck down?

My response:

A quick reading of Judge Henry Hudson’s opinion today striking the “individual mandate” provision of ObamaCare gives hope to those of us who have long urged, more broadly, for a restoration of limited constitutional government. As Judge Hudson put in granting summary judgment to Virginia, “the legislative process must still operate within constitutional bounds.”

The administration had argued that Congress had authority to enact and enforce the individual mandate to buy health insurance under its power to regulate interstate commerce. But Judge Hudson responded that “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.” Indeed, he noted, the administration’s reasoning could apply to “transportation, housing, or nutritional decisions. This broad definition of economic activity [to include inactivity] subject to congressional regulation lacks logical limitation.” The federal government remains, in short, one of delegated, enumerated, and thus limited powers, notwithstanding the leviathan that surrounds us today.

This is a significant setback for the administration, not least because Judge Hudson cites to a similar argument set forth by federal district Judge Roger Vinson in Vinson’s October 14 opinion denying the administration’s motion to dismiss the ObamaCare suit brought against it by 21 states, with more to follow. There will be more litigation on these issues, of course, but for today, at least, the Tenth Amendment and the limited government it implies are alive and well.

Federal Court Declares ObamaCare’s Individual Mandate Unconstitutional

ObamaCare has always hung by an absurdity.  ObamaCare supporters claim that the Constitution’s words “Congress shall have the Power…To regulate Commerce…among the several States” somehow give Congress the power to compel Americans to engage in commerce.  This ruling exposes that absurdity, and exposes as desperate political spin the Obama administration’s claims that these lawsuits are frivolous.

This ruling’s shortcoming is that it did not overturn the entire law.  Anyone familiar with ObamaCare knows that Congress would not have approved any of its major provisions absent the individual mandate.  The compulsion contained in the individual mandate was the main reason that most Democrats voted in favor of the law.  Yet the law still passed Congress by the narrowest of all margins – by one vote, in the dead of night, on Christmas Eve – and required Herculean legislative maneuvering to overcome nine months of solid public opposition.  The fact that Congress did not provide for a “severability clause” indicates that lawmakers viewed the law as one measure.

Despite that shortcoming, this ruling threatens not just the individual mandate, but the entire edifice of ObamaCare.  The centerpiece of ObamaCare is a three-legged stool, comprised of the individual mandate, the government price controls that compress health insurance premiums, and the massive new subsidies to help Americans comply with the mandate.  Knock out any of those three legs, and whole endeavor falls.

Moreover, the individual mandate is not the law’s only unconstitutional provision.

These lawsuits and the continuing legislative debate over ObamaCare are about more than health care.  They are about whether the United States has a government of specifically enumerated powers, or whether the Constitution grants the federal government the power to do whatever the politicians please, subject only to a few specifically enumerated restraints.  This ruling has pulled America back from that precipice.

The Likelihood of Repealing ObamaCare

The political science blog Rule 22 has a post discussing the likelihood of repealing at least some part of ObamaCare.  Author Jordan Ragusa finds:

  • If “the Republicans regain only the House in the upcoming election…the estimated likelihood of at [least] some repeal during the 112th Congress is 52 percent.”
  • If “Republicans regain both chambers in the upcoming midterm…the estimated likelihood of at [least] some repeal is 59 percent.”
  • If “Republicans regain unified control of government in 2012…the estimated likelihood of some repeal in the 113th Congress is 69 percent.”

Ragusa is predicting only that the odds are better than 50-50 that Congress will repeal some part of the law, such as the expanded 1099 reporting, which House Democrats have already moved to eliminate because small businesses find it so onerous.  He is not laying odds on whether Congress will repeal the entire law or its most important and unpopular provisions (i.e., ObamaCare’s individual mandate).

His post does shed light on the likelihood of repealing the individual mandate, however.  As the below graph shows, the probability of repealing any provision of major legislation rises in each of the next five Congresses (i.e., over the subsequent 10 years).  After that point, the probability of repeal begins to fall.

Note that this graph shows the instantaneous probability of repeal.  The cumulative probability is the area under the curve, and increases monotonically over time.  Thus the probability that Congress will repeal some part of ObamaCare by 2020 is more than 13 percent.

Ragusa therefore concludes:

the newly enacted law will be most “at risk” not in the next Congress, but a decade from now.  So sit tight.

Also noteworthy is that Ragusa presents only the probability of legislative repeal.  The prospect that the courts may invalidate all or part of the law increases the probability that some day, ObamaCare will no longer be on the books.

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