Researcher Offers Preliminary Analysis on Impact of Legal Arizona Workers Act

The law went into effect Jan. 1, 2008.
Jan. 13, 2009
Judy Gans, program manager for Immigration Policy at the Udall Center for Studies in Public Policy
Judy Gans, program manager for Immigration Policy at the Udall Center for Studies in Public Policy

A University of Arizona researcher has begun the task of measuring the impact of the Legal Arizona Workers Act on Arizona's economy. The legislation has been in effect since Jan. 1, 2008.

The Legal Arizona Workers Act, also known as LAWA, prohibits a person or entity from knowingly hiring, recruiting or referring for a fee an unauthorized immigrant. In addition, the law classifies as a Class 3 felony the taking of another person's identity for employment and requires the suspension or revocation of the Arizona Business License of any business found to have knowingly hired an unauthorized immigrant after Dec. 31, 2007.

Judith Gans, the program manager for Immigration Policy at the Udall Center for Studies in Public Policy, has written a report on the role of immigrant workers on the Arizona economy and the preliminary impact of the workers act.

"The purpose of LAWA is to reduce the number of illegal immigrants in Arizona by making it difficult for them to obtain employment. Two central concerns inform this purpose: first, violation of U.S. immigration laws by illegal immigrants undermines the rule of law; second, there is widespread perception that illegal immigrants are a fiscal burden to Arizona's taxpayers and LAWA seeks to eliminate that burden by inducing illegal immigrants to leave the state," Gans said.

The report was sponsored by the Communications Institute and the Thomas R. Brown Foundation and was presented to Arizona county and city leaders in December. The report includes preliminary data and analysis in preparation for further analysis when the law has had sufficient time to be in force and make an impact.

"We don't know yet whether there have been economic costs or losses. Assessing LAWA's impact is directly dependent on economic conditions. We can expect its impacts to be more severe during periods of high economic growth and low unemployment," Gans said.

"The extent to which these (economic losses) occur will depend on the extent to which illegal immigrants are a source of labor that is relatively scarce in the native-born population. To the extent that illegal immigrants are filling gaps in the labor force, they are making possible economic activity that wouldn't otherwise happen. In this case, eliminating these workers will result in economic losses. But labor markets are dynamic and, especially during periods of economic downturn and higher unemployment, more native-born workers are available," Gans added.

Gans gathered data key demographic trends within the state but, she said, definitive impact analysis is limited by the shortness in time since the passage of the law and by employment trends in Arizona that mirror the economic downturn throughout the U.S. economy.

Gans said the economic downturn creates a central challenge in understanding LAWA's impact.

"The disentanglement of trends in the economy and impacts of any reductions in workforce caused by the enactment and enforcement of the statute can be done", Gans said, "once sufficient time has passed for 'before and after' data to be collected."

Foremost, she said in the report, is "determining whether Arizona's illegal immigrant population is declining," a task that requires analysis of U.S. Census Bureau data and other indirectly related indicators such employment trends, the number of children enrolled in English Language Learner programs in Arizona public schools, sales tax receipts and housing vacancies in communities with large immigrant populations.

Current data show Arizona's unemployment rate has grown from 3.9 percent in January 2007 to 5.9 percent in September 2008.

Data from industries with large immigrant workforces such as construction, manufacturing, leisure and hospitality found that construction was the hardest hit with employment dropping 23 percent from September 2007 to September 2008.

"There is anecdotal evidence that, faced with an increasingly hostile environment, illegal immigrants are leaving Arizona, but it is not yet clear whether they are returning to their home countries or relocating to other parts of the United States. It is premature to conclude that this results from LAWA or from an economic downturn in sectors such as construction and various service industries that have traditionally employed illegal immigrants," Gans said.

Gans also found a slight decline in Arizona's English Language Learner program enrollment which fell from a high of 15.9 percent in fiscal year 2004 to 13.2 percent in fiscal year 2008. Again, she cautioned against attributing the decrease to LAWA and instead may be caused by the overall economic downturn or by normal fluctuations in enrollment.

Gans also examined the enforcement mechanism of the act, which rests in the hands of Arizona's 15 county attorneys.

Investigation of a possible violation of the law depends on whether a complaint has been filed by a member of the public suspecting that an employer knowingly hired an undocumented immigrant. And the development of sufficient evidence to file an action in Superior Court must be done absent the access to company records. Since the law began Gans found that no actions have moved forward to Superior Court. Forty complaints have been made thus far and 19 of those are currently under investigation.

The law requires employers to use the newly created federal E-Verify program to verify the employment eligibility of every employee hired after Dec. 31, 2007. Gans found that 5.6 percent of Arizona businesses were enrolled in the program with Yuma County showing the largest share of firms enrolled, with 7.2 percent of its businesses enrolled.

Gans also addressed the impacts on the underground economy and said that illegal immigrants may resort to informal ways of making money which would go unreported and untaxed.

"A central objective of the report is to deepen our understanding of issues relating to immigration and enforcement of immigration laws so that we are better able to make the policy tradeoffs involved in this complex and contentious issue," Gans added.

"Only through careful and systematic inquiry and open discussion can we hope to find effective policy solutions to the challenges facing Arizona and the nation as a whole," said John E. Cox Jr., president of the Communications Institute.