The Federation for American Immigration Reform (FAIR) released a report claiming that E-Verify lowered unemployment rates in states that implemented it. FAIR’s report is deeply flawed. The first section of this blog will catalog FAIR’s errors and show that states with mandatory universal E-Verify typically had higher unemployment. The second portion of this blog will use the synthetic control method to look at E-Verify’s effect on unemployment in Arizona after the E-Verify mandate. The flaws in FAIR’s report are important to highlight as more states are considering a universal E-Verify mandate. There is little evidence that E-Verify mandates lower unemployment but much evidence that they raise it.
Criticisms of FAIR’s Report
E-Verify is a taxpayer funded federal government run system that is supposed to exclude illegal immigrants from the workforce. The system would be used at the point of hire to verify that any new worker is actually authorized to work in the United States. FAIR attempted to show that states with E-Verify have higher employment growth relative to other states. This is likely an attempt to overcome one of the stronger criticisms of E-Verify: It is an expensive labor market regulation that will increase unemployment by raising the cost of hiring new workers among other problems. However, FAIR excluded the first state to mandate E-Verify and made numerous other silly methodological choices that make their results unreliable.
First, the FAIR authors excluded Arizona from their report. Arizona was the first state to mandate E-Verify for all new hires. Unemployment rates as measured by U3 were lower in Arizona than in the rest of the United States prior to the implementation of E-Verify and they shot up afterward, remaining consistently above the rest of the United States (Figure 1). The result is even more extreme for the U6 unemployment rate that the FAIR report insisted on using (Figure 2). Narrowing the comparison to the southwestern states of California, Colorado, Nevada, New Mexico, Oklahoma, Texas, and Utah shows similar results whereby Arizona had relatively lower unemployment prior to mandating E-Verify and higher unemployment afterward (Figures 3-4). Utah mandated E-Verify for some employers during this time but excluding that state does not affect the results. Mandatory E-Verify did not appear to improve employment in Arizona.
Arizona Unemployment Rate (U3) vs. United States Unemployment Rate (U3)
Source: Bureau of Labor Statistics.