Wednesday, July 04, 2007

Governor surprises legislature, signs tough employer-sanctions bill

This week, Governor Napolitano citing the failure of the Federal government to address the issue, signed the new employer sanctions bill (House Bill 2779), which makes Arizona the toughest state in the nation against employers who hire undocumented workers. Employers will be mandated, starting in January, to check job applicants against an existing database which contains the names of workers authorized to work legally in Arizona. If a business hires someone illegally then the new law would put a business on probation for a first offense and permanently revoke their business license for a second offense.

On balance, I agree with the Governor. I've always said that the problem is not the undocumented aliens themselves, the large majority of whom after all have only done what generations of American pioneers have always done, and come looking for opportunity-- and the argument that they are 'illegal' could be reversed in a few minutes with the stroke of a pen adjusting the numbers of legal immigrants to something bearing a resemblance to the market based reality that we now see, with hundreds of thousands of Arizonans here illegally but also working. Rather the problem is with illegal employment, in that employers who knowingly hire undocumented workers often do so in order to gain a competitive advantage by exploiting laborers who cannot complain (for fear of deportation) about abusive work standards, below minimum wage pay, sexual harrassment and other types of exploitation. The new bill goes a long way towards protecting workers against that kind of stuff by putting those who engage in it at risk of losing their business.

There are some problems with the bill though. The Governor also cited the need to call a special legislative session in her signing message in which she identified five problems with the legislation. There is also one other that conservatives will certainly try to address, once they realize what they've just done to one of their own pet causes, private schools.

The first issue cited by the Governor is that there is no exemption for utilities, hospitals, nursing homes and other businesses critical to infrastructure. Clearly such an exemption will have to be written into the law since if a single mistake is made, it could, in a worst case scenario lead to large numbers of people going without electricity, gas or water for extended periods of time (though one benefit is it might make people understand a little better how life is for other Americans who still don't have basic utilities courtesy of fiscal conservatism, specifically when Ronald Reagan shut down the Rural Electrification Administration beginning in 1986 in order to save a few bucks.) Another result of this oversight, if it is not corrected is that it could cause hospitals to shut down with patients presumably being forced to walk out of there and go to other hospitals. One other area that the Governor did not specifically recommend but which needs to be dealt with-- state contractors. Though the state itself does not have a business license and so is effectively immune from making bad decisions under the law, if a state contractor, say providing prison guards or working on a state highway project were suddenly shut down by this provision the results could still be disastrous.

On the other hand, it appears that the proponents of the bill (led by anti-immigrant Godfather Russell Pearce who wrote the legislation) probably expected a veto, because it also doesn't exempt private schools, many of which do have a business license. This added requirement on private schools will help level the playing field (since the state presently makes public schools jump through all kinds of hoops that many private schools do not have to jump through.) And you can be sure that there are advocates of public schools, especially teachers unions, who will now have and will certainly use this as a weapon to bludgeon private schools with and maybe put some out of business.

Her fourth point is my second one: the concern that the law could be discriminatory. Certainly it is true that employers are less likely to take a chance on people whose names suggest they might be immigrants from parts of the world where that is controversial (especially Latin America, the Middle East and China.) And this is a legitimate concern. There are many legitimate workers, legal immigrants, or people who were in fact born right here in the good ol' U.S. of A. named Pedro or Mohammed. But most businesses are still more likely now to want to hire Peter and Moe. True, the supply of jobs is large enough that there will still be some openings when the supply of Peters and Moes is used up (in fact that is why we have so many undocumented immigrants in the first place) but asking that Pedro and Mohammed move to the back of the line means that they are still less likely to be hired, and if they are they will be hired for the jobs that Peter and Moe turned down in favor of a better one that is no longer available.

Further, the database that employers are supposed to check prospective hires against is unreliable. This week, the Arizona Republic reported that there is a 4% error rate in the database. This means that tens of thousands of legal workers, even U.S. citizens, may discover all of a sudden that they can't work in Arizona. This represents 1 out of every 25 legal workers in the state (think of it this way-- if you work at, say, a small to midsized company that employs 200 people, what would you think if eight of them were suddenly told they were fired and could not even get another job in the state, because a computer someplace didn't list them as authorized to work? Heck, you might even be one of the eight.

Clearly this database is flawed. My own suggestion would be to throw it out and go back to the traditional way of checking eligibility-- with social security cards, etc. Yes, this is subject to fraud, and yes some errors will still be made, but the documented error rate of the present system in the past is actually less than in the state database, and continuing to use the present system will be no more discriminatory than it is today. The main thrust of the bill was the employer sanctions, and getting rid of the database and continuing to require verification of documents as grounds for deciding who to hire would have nothing to do with that. In any case, it appears as though opponents of the database plan to take it to court, so even if the legislature doesn't fix this one, I'd be really surprised (and dismayed) if the database was used next January 1 as scheduled.

Another problem that the Governor cited had to do with the fact that a single bad hiring decision at one location could put a business with multiple locations out of business. Personally, I am not all that upset about this-- if only because as regular readers of this blog know, I don't think much of the way Wal-Mart, in particular conducts its business, and having been guilty of hiring illegal aliens in the past, this law may have its intended effect and limit the ability of Wal-Mart to knowingly exploit its workers in a major way. The prospect of having to shutter every store in the state should be sufficient to make Wal-Mart comply with the law (protecting its own, as well as its competitor's employees). However, I'd think that the prospect of even having to close them one at a time would be good enough to make Wal-Mart comply with the law. And I would agree, that to force for example, a statewide chain (or a national chain with many outlets in Arizona) to close all its locations because the manager at one of them screwed up is a bit Draconian. I have to admit though, that the thought of Wal-Mart not only being forced to close every store in Arizona, and then never being able to open another one, almost made 'Draconian' sound good (though clearly if that happened tens of thousands of people would be thrown out of work in a day, so I still don't favor it covering all locations.)

A third problem that the Governor cited (the fourth one I am addressing) is simply the lack of funding. Again, it appears that the authors of the bill expected a veto, so they put only token amounts into it to cover enforcement and education for the whole state. So during the special session the Governor will ask them to pony up the funds. And here is an interesting twist: She now has the high ground on the issue, and may insist that the funds be provided without taking them from elsewhere in the state budget (which has already been allocated.) She might even force the legislature to raise taxes for the first time in years-- and without even specifically calling for a tax increase, just in effect telling them they need to find a way to fund it.

The fifth change she recommended had to do with an incorrect citation of Federal law, and I doubt if changing it will be controversial.

As I said, looking at the private school issue and the funding issue, I am sure that Pearce and the GOP legislature expected the Governor to veto this bill (as she vetoed a record 43 bills last year, and could be expected to veto pretty much anything that Russell Pearce wrote,) presumably so they could use it against her in the future. Instead it seems as though she played chicken with them and won, so it will be interesting to see during the special session that she calls how they plan to address these and the other issues that she raised.

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