E-Verify

E-Verify Is Not an Effective Immigration Enforcement System, as Mississippi ICE Raids Show

Last week, Immigration and Customs Enforcement raided many meat processing plants in Mississippi and arrested 680 suspected illegal immigrants. The raids were front page news as some of their children were pleading on television for the government to release their parents. Political pundits were busy excusing the raids and calling for more or highlighting the plight of the families left behind and the supposed hypocrisy of immigration enforcers who aren’t targeting President Trump’s properties. 

Although the plight of families and discrepancies in enforcement based on possible political sensitivities is worth investigating, the long-term lesson from the Mississippi raids is that E-Verify does not stop the hiring of illegal immigrants. Mississippi passed a mandate that required all firms to run all new hires through E-Verify at the point of hire as of July 1, 2011. According to the promises made by E-Verify proponents, there should have been zero illegal immigrants employed in Mississippi – yet ICE had to raid some plants there. Rather than showing the strength of government immigration enforcement efforts, the raids in Mississippi show that E-Verify mandates are incapable of preventing illegal immigrants from working. 

This post will explain how E-Verify functions (I won’t say “works”), how illegal immigrants get around the system, how immigration restrictionists want to reform E-Verify, and why the real solution is increasing legal immigration.

House Republicans Consider E-Verify Mandate as Part of “Compromise” Bill. What Will Happen When E-Verify Fails to Deliver?

House Republicans worked over the weekend to revise the Ryan immigration “compromise” bill in an attempt to bring enough Republicans on board to pass it.  Many restrictionist Republicans in Congress voted against the harsher Securing America’s Future (SAF) Act last week because it granted a path to legal status without citizenship for some Dreamers.  Although SAF did not offer a path to citizenship for Dreamers, some House Republicans voted against it because they consider a grant of legal status of any kind for Dreamers to be amnesty.  The political problem is that Ryan’s “compromise” bill enhances the charge of amnesty because it offers a path to citizenship for a small number of Dreamers.  As a result, House Republicans are considering a national E-Verify mandate to get the restrictionists on board with the Ryan “compromise” bill (they are also considering an agricultural guest worker visa program so Republicans from agricultural districts aren’t dissuaded by E-Verify). 

This political horse-trading won’t likely work but E-Verify has some serious problems today that could grow into worse ones tomorrow.  People must consider these problems before getting on the E-Verify bandwagon.

E-Verify is a federal electronic eligibility for employment verification system for employers to check the identities of new hires against government databases to guarantee that they are legally eligible to work.  The system is intended to exclude illegal immigrants from the workforce to reduce the incentive to immigrate here in the first place.  E-Verify is mandated for all new hires in a few states and some other categories of employers but not nationwide.  If Congress ever mandates E-Verify nationwide then all native-born Americans would also have to be run through E-Verify and get government permission to work in order for E-Verify to have a chance of meeting its objective.  Any interior immigration enforcement system that seeks to reduce the employment of illegal immigrants, including E-Verify, will have to be used against legal immigrants and native-born Americans too. 

E-Verify has severe systematic problems and will not do much to turn off the wage magnet that attracts illegal immigrants.  This is a problem for several reasons but what worries me the most is what would happen after Congress mandated E-Verify and then they realize that it doesn’t work.  What steps will Congress then take to make electronic verification for employment “work” as they intend? 

Mandatory E-Verify will Increase Identity Theft

Nancy Berryhill, an Acting Commissioner of Social Security, recently testified in front of the House Subcommittee on Social Security on the widespread use of Social Security Numbers (SSNs) beyond their intended function.  Most of her testimony concerned the history of SSNs, past security procedures, and proposed future ones.  In a bizarre sentence that contradicts much of the rest of her testimony, Berryhill stated that, “Mandatory use of E-Verify by employers would help reduce the incidence of fraudulent use of SSNs.”  That is exactly backward.  Mandatory E-Verify will greatly expand the fraudulent use of SSNs.

E-Verify is an electronic employment eligibility verification system run by the federal government that is supposed to check the identity information of new hires against government databases to verify that they are legally eligible to work.  Congress created E-Verify to deny employment to illegal immigrants and reduce the incentive for them to come and remain in the United States.  E-Verify is not yet mandated nationwide but several states have mandated its use, to various degrees, and many large employers currently use it.

E-Verify builds on the current rudimentary employment verification known as the I-9 form that every new employee must fill out thanks to the 1986 Immigration Reform and Control Act (IRCA).  An E-Verify mandate would add another layer on top of the I-9 whereby employers, after collecting I-9 forms, would enter the information on them into a government website.  The E-Verify system then compares that I-9 information with information held in the Social Security Administration (SSA) and Department of Homeland Security (DHS) databases.  The employee is work authorized if the databases decide that the information is valid.  A flag raised by either database returns a “tentative non-confirmation,” requiring the employee and employer to sort out whatever error has been flagged.  If the employee and employer cannot sort out the errors then the employer must terminate the new employee through a “final non-confirmation.”  The I-9 form and E-Verify have serious problems, including the encouragement of rampant identity theft, but those problems would only grow with an E-Verify mandate.

Democrats and Republicans Should Both Oppose E-Verify

Florida’s Constitution Revision Commission, a group that meets every 20 years to recommend changes to Florida’s state constitution, yesterday rejected a proposal to add mandatory E-Verify to the ballot next November.  The American Business Immigration Coalition and Immigration Partnership & Coalition Fund led the fight against the proposal (full disclosure: those groups used Cato’s research in their efforts to stop E-Verify and I did have contact with them during the Florida debate).  The most convincing arguments against E-Verify were those that highlighted its inaccuracies, potential damage to the economy, and that it would not even effectively restrict illegal immigrant access to employment

Just to recap, E-Verify is a federal electronic eligibility for employment verification system whereby employers are supposed to check the identities of new hires against government databases to guarantee that they are legally eligible to work.  Four states have mandated E-Verify for all new hires, several other states have mandated it for some hires, and the federal government requires it for some occupations. 

Democrats and Republicans have both embraced E-Verify for different reasons in recent years.  Republicans did so because they believe that it is a useful enforcement mechanism and Democrats because they believe that they can trade it for a more generous legalization or other reforms to the legal immigration system.  Indeed, increasingly bitter partisan disagreements over immigration policy have not affected support for E-Verify.  Perhaps they should. 

There are many good reasons for Democrats to oppose E-Verify nationally and on the state level.  The first is that E-Verify is an immigration enforcement tool that disproportionately returns incorrect results for legal immigrants, Hispanic Americans, and those who have hyphenated last names (most likely to be women).  An incorrect result can temporarily bar a worker from working or, if the proper legal procedures aren’t followed, push the worker afflicted into long-term unemployment.  Democrats increasingly argue that they represent those three groups so they have political incentives to remove regulatory barriers that keep them from gaining employment.

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.

Serious Problems with South Carolina’s E-Verify Mandate

E-Verify is a federal government program that allows businesses to check the identities of new hires against federal databases to judge whether they are eligible to legally work in the United States.  The goal of the program is to deny illegal immigrants work in the United States.  E-Verify has serious problems as it misidentifies a small portion of legal workers as illegal immigrants, imposes a serious regulatory burden on employers and employees, increases employee turnover costs, is expensive, stimulates black market document forging and identity theft, might increase crime, and fails in its primary function of turning off the wage magnet

Despite all of those problems, the best thing about E-Verify is that many employers do not use it in states where it is mandated and workers have many ways to get around the system, reducing the cost of the mandate.  Government data on the number of E-Verify checks that run in each state are sketchy and seem to change with each new FOIA but the most recent one I received from the Department of Homeland Security revealed that my previous work likely overestimated the rates of E-Verify compliance in South Carolina. 

South Carolina mandated E-Verify for all employers in 2011 but delayed the start date until January 1, 2012, because (surprise) the system was more complicated than its proponents claimed and the state government did not want to punish every small employer in the state for noncompliance.  Despite that, proponents of mandatory E-Verify point to South Carolina as a model system because the state Department of Labor, Licensing, and Regulation (DLLR) conducts random audits of employers to guarantee that they use the system for all new hires. 

Figure 1
South Carolina E-Verify Compliance

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

E-Verify Could Have Increased Crime in Arizona

Illegal immigrants who can’t work are more likely to commit crimes in order to support themselves, according to a superb new paper by Matthew Freedman, Emily Owens, and Sarah Bohn that is forthcoming in the American Economic Journal: Economic Policy.  They examined administrative data from Bexar County, Texas and found an increase in felony charges filed against residents who were most likely to be illegal immigrants after the Immigration Reform and Control Act made it unlawful for illegal immigrants to work in the United States.   

Their finding is especially relevant for the current debate over E-Verify, an electronic eligibility for employment verification system that is supposed to exclude illegal immigrants from the workforce.  The goal of E-Verify is to turn off the wage magnet that attracts illegal immigrants to the United States and open up jobs for American workers.  Although E-Verify fails to lower unemployment and only has a very small effect on dimming the wage magnet, the paper by Freedman et al. points to another possible unintended consequence of mandating E-Verify: higher crime.

Arizona provides a wonderful opportunity to test whether an E-Verify mandate affected crime.  In March 2007, the Arizona House passed the Legal Arizona Workers Act (LAWA).  The state Senate passed it in May and governor Napolitano signed it in July.  Among other things, LAWA mandated E-Verify for all new employees beginning on January 1, 2008. 

E-Verify Has Low Compliance Rates in States Where It Is Mandated

E-Verify is the supposed silver-bullet of immigration enforcement. Despite its serious and unsolvable problems, the House Judiciary Committee was going to have a markup today on the Legal Workforce Act (LWA) that would mandate E-Verify for all new hires in the United States. Although they canceled the markup at the last moment, this is still a wonderful opportunity to explore the main reason why E-Verify is ineffective: employers ignore it.

E-Verify is a government system whereby employers enter the identity information of new hires via an online portal. The system compares these data with information held in the Social Security Administration (SSA) and Department of Homeland Security (DHS) databases. The employee is work authorized if the databases decide that the data are valid. A flag raised by either database returns a “tentative non-confirmation,” requiring the employee and employer to sort out whatever error has been flagged. If the employee and employer cannot sort out the errors then the employer must terminate the new employee through a “final non-confirmation.”

The states of Alabama, Arizona, Mississippi, and South Carolina have mandated E-Verify for all new hires in their states. Arizona was the first to mandate it on January 1, 2008, South Carolina mandated it on July 1, 2010, Mississippi on July 1, 2011, and Alabama on April 1, 2012. In those four states, the law demands that every employer must run every new hire’s identity information through the E-Verify system. The response to a Freedom of Information Act (FOIA) request filed by Cato shows that there are far fewer E-Verify cases or queries than there are new hires in these states, which means less than 100 percent of new hires are actually being run through the system (Table 1).

E-Verify Does Not Lower Unemployment

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. 

Figure 1

Arizona Unemployment Rate (U3) vs. United States Unemployment Rate (U3)

Source: Bureau of Labor Statistics.

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