Executive Director, Center for Immigration Studies
Before the U.S. House of Representative Small Business Committee
Subcommittee on Workforce, Empowerment and Government Programs
The key to controlling illegal immigration is to change the incentive structure that illegal aliens face. The most important part of this is to make it as difficult as possible for an illegal alien to find a job, since easy access to employment is the main incentive for illegal immigration.
More than half a century ago, in 1951, the Presidents Commission on Migratory Labor recommended that employers be prohibited from hiring illegal aliens, a prohibition we now refer to in shorthand as employer sanctions. But instead of prohibiting the hiring of illegal aliens, Congress inserted the Texas Proviso into the 1952 immigration law, which specifically permitted the employment of illegals.
The Select Commission on Immigration Reform in 1979 again called for employer sanctions, and after seven years of legislative wrangling, Congress passed and the president signed the Immigration Reform and Control Act of 1986. It repealed the Texas Proviso and established a system for employers to verify the legal status of new hires, centered on the I-9 form, and instituted various civil and criminal penalties for violators.
Unfortunately, opponents of the law ensured its failure by basing verification solely on paper documents and by preventing the requirement that pilot programs be developed to test how best to verify immigrants claims to be eligible to work.
The result was eminently predictable. Even legitimate employers had no way of determining the legal status of new hires because of an explosion in false documents and paper documents were all that employers had to gone on. And those employers who looked too closely at possibly false documents could and were investigated by the Justice Department's Office of Special Counsel for Immigration-Related Unfair Employment Practices. The situation with employer sanctions was similar to the old Soviet joke: the illegals pretend to be authorized to work and the employers pretend to believe them. And the INS pretended to enforce the law.
Because of this, illegal immigrants had no trouble finding work, and as word got back to Mexico and to immigrant-sending communities around the world that the United States was not serious about enforcing its laws, illegal immigration soared, now amounting to some 12 million people, with around 800,000 more illegal aliens settling here each year.
In 1991, President George H.W. Bush authorized a small telephone-based pilot program with nine participating companies to see how verification of employment eligibility might work. Then, in 1995, the Clinton administration launched a larger experiment with about 1,000 volunteer employers nationwide. That same year, Congress acted on the recommendations of Barbara Jordan's Commission on Immigration Reform and required three pilots to be launched, and the largest of which continues today and is referred to as the Basic Pilot, a mainly internet-based system with almost 9,000 companies participating.
A consensus appears to have developed that mandatory verification is needed; both the House and Senate immigration bills call for the development of such a system, along the lines of the existing Basic Pilot. There are some significant differences between the two bills the Senate bill, for instance, is likely to stretch out the implementation of the new system longer than the House bill, its penalties for noncompliance are weaker, and it does not provide for the verification of existing workers.
But more important is the very concept of mandatory, universal verification of new hires eligibility to work Is it practical? Is it burdensome? Is it good or bad for small business?
Practical. Because there were 56 million hiring decisions made in the United States last year, a nationwide, mandatory verification system would be a large undertaking, much more extensive than the current voluntary pilot program. But putting it in context shows that there is no reason to think implementing it would be unachievable, or even that difficult, so long as there are adequate resources and political support. There are about 260 business days in a year, so there are an average of 215,000 hires made each day. But customers download nearly 1.3 million songs each day from i-Tunes; Wal-Mart conducts more than 10 million transactions per day at its 3,700 stores in the United States; and Visa processes more than 100 million transactions each day.
Of course, improvements will have to be made in the system. In 2004, according to the GAO, there were 657,000 queries run through the Basic Pilot, about one percent of the total number of hires nationwide; while the system is currently operating at only 2 percent of capacity, it will obviously have to be expanded to handle the increased traffic. Furthermore, the Department of Homeland Security needs to continue to speed up the process of data entry on aliens newly authorized to work. Also, DHS needs to further automate the work currently done manually by immigration status verifiers on the relatively small number of cases that are not handled by the automated system. In other words, in 2004, there were 657,000 queries made through the system; about 596,000 (91 percent) resulted in employment authorization, 90 percent of them by the Social Security Administration. Of the 10 percent referred to DHS for verification (because the employees with problems were non-citizens), 85 percent were authorized by automated means but the remaining 15 percent (i.e., about 1 percent of the total number of authorizations) had to be checked manually in other databases by DHS staff. Though it would certainly be possible to hire an adequate number of status verifiers to continue this practice, it would make sense (for a variety of reasons) to better integrate DHS's databases to streamline this process.
Furthermore, although the system reduces fraud by verifying the information presented by an employee, it is still possible for the same legitimate Social Security number and name to be used fraudulently by multiple workers in different sites. This is why any full-scale verification system needs to include criteria for flagging potential identity theft; in other words, if the same Social Security number is used more than a certain number of times within a certain time period, and in a wide variety of locations, those facts need to be brought to the attention of employers, for re-verification, and to enforcement personnel, for investigation.
Not Burdensome. This is all very interesting, but of immediate concern to business is whether a verification system would represent an additional burden that makes it harder to do their jobs. Small business, in particular, lacks the infrastructure to deal with the proliferating mandates coming from all levels of government. As a small businessman myself, I appreciate the multitude of regulations small business faces; just looking at posters on the wall in my Center's work room, I see references to the Civil Rights Act, the Occupational Safety and Health Act, the Family and Medical Leave Act, the Employee Polygraph Protection Act, the Drug-Free Workplace Act, the Youth Employment Act, the Older Americans Act, and the Uniformed Services Employment and Reemployment Rights Act among others. As even George McGovern learned, legislators and government regulators must more carefully consider the economic and management burdens we have been imposing on U.S. business.
Which is why it's a good thing that mandatory employment-eligibility verification would not be especially burdensome to employers. The information that is to be verified all has to be collected anyway as part of the normal hiring process. The only way employers would no longer have to collect a news hire's name, date of birth, and Social Security number is if Congress abolished the Social Security system and income tax withholding which I don't see on the horizon. That being the case, verifying (at no cost to the business) the information that employees have to provide anyway is hardly a new mandate.
A survey in April of members of the national Federation of Independent Business, the association of small businesses in our country, found that more than 90 percent of the small-business owners surveyed believed illegal immigration is a problem, 70 percent ranking it as a very serious or serious problem. Furthermore, 78 percent of the small-business owners surveyed supported increased penalties for employers who knowingly hire illegal aliens. And while respondents thought that verifying the ID of new hires might represent a moderate burden, that burden would be reduced by a centralized verification system like the Basic Pilot.
Nor is this simply theoretical; my own small (very small) business participates in the Basic Pilot, and it represents no extra burden at all. A growing number of businesses seem to agree, as is clear from the rapid growth in participation; from 2,300 employers in 2003, there are now nearly 9,000 participating employers. And further rapid growth is likely; starting this month, Dunkin Donuts began requiring all 5,000 of its franchisees to enroll in the Basic Pilot.
If there had been vigorous worksite enforcement of the immigration laws in recent years, you might be able to argue this growth in participation wasn't really voluntary; in other words, businesses caught employing illegals being told by immigration authorities to enroll in the system, or, at the very least, businesses enrolling out of fear of possible enforcement. But, of course, worksite enforcement of immigration laws has been all but abandoned until recently; in 1998, 1,023 employers were issued notices of intent to fine by the INS, a number which fell to three (3) in 2004. And most of that collapse in enforcement came before 9/11, and so had nothing to do with a new focus on terrorism. Given the complete lack of enforcement, businesses would not be flocking to this program if it represented a significant impediment to their operations.
Were Congress to make verification mandatory for all businesses, it would also create a market opportunity for entrepreneurs to further simplify the process and integrate it into a firm's operations. And, in fact, such entrepreneurs are already stepping forward. DHS has approved the first of what are likely to be many Designated Agents companies in the business of conducting the Basic Pilot for other firms. The first such firm, Form I-9 Compliance in Newport Beach, Calif., http://www.formi9.com/, offers a web-based, paperless I-9 form linked to the Basic Pilot, and includes extra services as well, such as reminders of the upcoming expiration of an alien worker's employment authorization. Such services do what TurboTax does for tax filing eliminate paper, reduce errors, and file (or in this case verify) electronically. And like TurboTax, they are likely to be available at a reasonable cost, especially when economies of scale come into play. I don't know what Form I-9 Compliance charges, but I use an outside payroll service for my small business and payroll is obviously a much more complex process than one-time verification of legal status and I pay only about $130 a month.
Good for Business. But it's not just that a verification system would sit lightly on the back of business; it actually makes good business sense to participate. Many small businesses might well be alarmed by all the talk they've been hearing of penalizing employers as an immigration-enforcement strategy. While crooked, faithless employers deserve whatever penalties they receive, the point to an employer-verification system is not to penalize employers, but to empower them. By taking the guesswork out of hiring a legal workforce, the system that grows out of the Basic Pilot can help firms build a workforce on concrete rather than sand, a workforce that will have no reason to run away if there's an immigration raid, a workforce that won't be arrested when the inevitable and I believe it is inevitable crackdown comes.
In fact, I would submit that public companies that are not participating in the Basic Pilot are neglecting their fiduciary responsibility to their shareholders through imprudent labor practices that will jeopardize the stability of their labor force. Privately held businesses, while not answerable to stockholders, nonetheless have a moral responsibility to their employees and customers and creditors to conduct due diligence in hiring.
A legal workforce is a business imperative, and this helps explain the popularity of a site such as www.SmartBusinessPractices.com, which provides information for small businesses interested in the Basic Pilot and offers a listing of participating businesses, organized by city or state or business name. What's more, even companies that are not in the Basic Pilot are voluntarily exerting themselves to ensure that their employees have valid Social Security numbers on a separate track from the Basic Pilot. For instance, AMC Entertainment, the nation's second-largest movie-theater chain with 415 sites and 24,000 employees, uses the Social Security Number Verification System to ensure that it employs only people with valid SSNs. Upon acquiring the Leows theater chain, AMC verified the information of its newly acquired workers, and at one multiplex in suburban Maryland, 11 employees resigned after after they could not rectify discrepancies that arose during the screening i.e., they were illegal aliens.
As beneficial as many firms find it to verify their workers, it is important for Congress to make participation mandatory not for punitive reasons, but rather to protect legitimate, patriotic businesses. I was told of a landscaper in Orange County who recognized the advantages of hiring only legal workers, and enrolled in the Basic Pilot. He had no trouble finding labor, though he had to offer a dollar an hour more than his competitors and that was the problem. His competitors, still hiring illegal aliens, were underbidding him on commercial landscaping contracts and he was forced to drop out. Congress has a responsibility to level the playing field and ensure that civic-minded, law-abiding firms eager to participate in the Basic Pilot are not put at a disadvantage for doing so.
A verification system is an idea whose time has finally come it is a practical, pro-business measure whose eventual implementation is inevitable. Small business all business would do well to get on board now and incorporate these new practices sooner rather than later.
Theater Chain Routinely Checks Social Security Numbers of Staff
By Cameron W. Barr
The Washington Post, April 30, 2006
Small Biz Screens for Work Status
By Jeffrey Gangemi
BusinessWeek, June 1, 2006
Immigration Enforcement: Weaknesses Hinder Employment Verification and Worksite Enforcement Efforts
U.S. Government Accountability Office
GAO-05-813, August 31, 2005
NFIB Survey: Small-Business Owners View Illegal Immigration as Serious Problem
National Federation of Independent Business, April 4, 2006
Statement of Patrick P. O'Carroll, Jr., Inspector General of the Social Security Administration
Senate Finance Committee hearing on Administrative Challenges Facing the Social Security Administration, March 14, 2006
Mark Krikorian is Executive Director of the Center for Immigration Studies (www.cis.org), a non-profit, non-partisan research organization in Washington, D.C. which examines the impact of immigration on the United States. The Center is animated by a pro-immigrant, low-immigration vision which seeks fewer immigrants but a warmer welcome for those admitted.
Mr. Krikorian frequently testifies before Congress and has published articles in The Washington Post, The New York Times, Commentary, National Review, and elsewhere, and has appeared on 60 Minutes, Nightline, the NewsHour with Jim Lehrer, CNN, National Public Radio and on many other television and radio programs.
Mr. Krikorian holds a master's degree from the Fletcher School of Law and Diplomacy and a bachelor's degree from Georgetown University, and spent two years at Yerevan State University in then-Soviet Armenia. Before joining the Center in February 1995, he held a variety of editorial and writing positions.