E-Verify and the unintended consequences of immigration reform

The push to root out undocumented workers is feeding an underground economy -- and starving the public treasury

Published June 21, 2010 11:01AM (EDT)

EAST PALO ALTO, Calif. — About seven of them are idly kicking the curb of the Home Depot parking lot on a Sunday. The lot is empty except for a few cars parked in the spaces near the entrance. They scan pickup trucks for wooden planks, tools, and a rolled-down window through which they can call, What are you building? Do you need help?

Alejandro (who asked to be referred to by his first name only, because he’s an illegal immigrant) is sitting on the curb, letting his flannel shirt rattle in the breeze. His baseball cap hides his eyes, but the unease is in his voice. His life is difficult enough as it is, he says; he hasn’t gotten a job in two weeks. "I have three sons and I’m stone broke," but anything, he says, is better than returning to his home in the poverty-stricken, war-torn state of Sinaloa.

He used to earn $9 a day working at a local restaurant, for three years, until his employer started using E-Verify, a computer system provided by the Department of Homeland Security meant to detect illegal immigrants. Employers run a query with an employee’s name and Social Security number, and E-Verify matches it with information on government databases. Alejandro’s query delivered a message of "tentative non-confirmation," so his employer asked him to provide a valid set of documents or to go to a Social Security office to solve the glitch.

The next day, he was at the Home Depot parking lot, waiting for a contract job. After Alejandro broke the ice, the rest of the day laborers began volunteering stories of their own encounters with E-Verify and how it had delivered them here.

E-Verify became a requirement for all federal contractors last September — but any business can use it. Already, more than 200,000 of the country’s 7 million employers are enrolled in the program, according to DHS, and approximately 1,400 new employers are registering per week. And its use could expand significantly in the near future: E-Verify is an essential component of the immigration-reform proposals unveiled by congressional Democrats in April.

There are plenty of holes in the E-Verify authentication system, but that doesn’t seem to matter all too much. Westat, a contract-based research organization, found that 54 percent of illegal immigrants were not flagged by E-Verify when their information was run. Roberto, a day laborer at the East Palo Alto Home Depot, said he was informed of the system during his job interview and was asked to consider whether he wanted to continue to the next level. He didn’t return, lest his true status was detected. Others who have heard of E-Verify through other means simply don’t apply.

E-Verify has left millions without proper, tax-paying jobs — either because immigrants are flagged or because it deters them from applying. According to figures from the Pew Institute, an estimated 11.9 million unauthorized immigrants were in the U.S. in 2008. In some states, they make up more than half of the workforce in construction and other service industries.

An expansion of E-Verify would put many of these workers on the street or in jobs where they won't be paying taxes. Friedrich Schneider’s 1996 calculation that the underground economy accounts for 8.8 percent of the national gross domestic product is still considered authoritative by academics.

The increasingly violent drug war across the border is deterring illegal immigrants who want to return to Mexico. "Rather than self-deporting, some illegal immigrants are resorting to more informal forms of earning money," wrote Judith Gans, who manages the Immigration Policy program at the University of Arizona, in a 2008 report. This means getting paid in cash as day laborers or buying and reselling whatever products they can get — puppies, strawberries or garage-sale paraphernalia — or taking on jobs where, due to their illegal status, they receive little or none of the benefits of their regular co-workers.

Marie Sebrechts, spokesperson for the U.S. Citizenship and Immigration Services, thinks extending E-Verify may not have as dire consequences as the data suggests. After all, none of these issues is new. "The best scenario would be for employers to petition to get appropriate work visas for valuable employees," she said.

But others have a more pessimistic forecast. “If E-Verify were expanded nationally, some sectors of the economy would have some serious labor problems,” says Gans. “The pool of labor available would be smaller.”

“Nothing would work,” says Ted Lewis, human rights director for Global Exchange, a San Francisco group that supports workers' rights. “When people chose to go out and march in 2006, it was meant to show what it would be like with no immigrants. No one could work, because the support services provided by the immigrant, mostly illegal, population are integral to the economy.”

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In 1986, President Ronald Reagan signed the Immigration Reform and Control Act (IRCA) into law, making it illegal for employers to hire undocumented immigrants. But lobbying from the business sector killed or weakened the verification methods originally proposed in the bill, among them a national ID card and a national call-in system. Under the act, employers are required to review one or two documents and record the information on the I-9 form.

"While the Act requires employers to check workers’ documents, it also undermines their ability to do so," wrote Marc Rosenblum, a researcher at the International Policy Institute, a nonpartisan D.C. think tank for immigration issues, on the organization’s website. "To prevent discrimination, the Act established a long list of documents acceptable for providing work authorization. It also prohibited employers from questioning the authenticity of documents that 'appear to be genuine.'"

This sparked a large market for fake IDs, which employers had little choice but to accept. Others simply chose not to gamble. According to a 1990 Government Accountability Office report, one in five employers was selectively screening identity documents of prospective employees according to their countries of origin.

In 1996, Congress established the Basic Pilot Program — the precursor to E-Verify — to allow employers to check the status of their employees using government databases. The program would not only help employers stick to the law, but would also resolve the issue of selective screening; employers no longer had to make any assumptions — they could just run a query. However, it was never designed to detect identity fraud.

In 2006 and 2007, Congress failed to pass immigration reform legislation. In lieu of it, the Bush administration allocated more resources to worksite enforcement. The Basic Pilot Program was extended and rebranded as E-Verify. But, like the Pilot Program, identity fraud continues to be its Achilles' heel. According to the Center for Immigration Studies, an independent research center, in 2009, "approximately 75 percent of working-age illegal aliens use fraudulent Social Security cards to obtain employment."

Electronic employment verification is an important part of the immigration proposals issued in April by Senate Majority Leader Harry Reid, Senate Immigration Subcommittee chairman Charles Schumer and Sen. Robert Menendez, as well as the earlier bipartisan plan from Schumer and Republican Lindsey Graham.

"Congress has acknowledged the importance of E-Verify on immigration reform proposals," says Sebrechts. "E-Verify is the only service that verifies employees' data against millions of government records and provides results within seconds."

In the climate of controversy created by Arizona’s most recent anti-immigration law, E-Verify stands out as a more benevolent political alternative. But Sebrechts explains that Congress considers E-Verify “as part of a more comprehensive immigration reform.” Yet many high-level officials, including President Barack Obama, doubt reform will be considered this year, since the healthcare overhaul took its toll on Congress' appetite.

Just as we saw during George W. Bush's presidency, the lack of comprehensive reform is causing piecemeal developments. Over the last three years, Congress has provided $297 million to develop and operate E-Verify, and on May 5, the program was extended for three more years.

As of now, 12 states have adopted E-Verify beyond the level that is federally mandated, and four have made it obligatory for all businesses. (Some cities have also moved forward on their own.) These state laws, Gans says, simply prompt immigrants to move to more accommodating states; they don't address the roots of the problem, and they ignore the burgeoning underground economy. The Congressional Budget Office estimated in 2007 that making E-Verify mandatory without legalizing the existing unauthorized workers would lead to $17 billion in lost payroll taxes over 10 years.

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Arizona was the first state to require all businesses to use E-Verify for new hires, at the peril of losing their business licenses. That was in January 2008, when the U.S. economy was struggling, so the results of the experiment were considered tainted.

"People claim there is a greater mix of people getting jobs,” says Sebrechts, who has lived in the state for many years, “including students, retirees and immigrants," but she says it's impossible to pinpoint the reasons for this.

“We have evidence of immigrants leaving the state, but we don’t know how many of those are leaving because of the economy,” says Gans, who has extensively studied the impacts of the mandatory E-Verify in the state.

“Immigrant population is very mobile,” she adds. “They’ve already left home, and it’s well understood that through social networks, they can find places that are more accommodating.” And then there are those who decide to stay and work for cash or sell goods on the street. “You got to figure it happens,” Gans says. “People who are trying to survive are resourceful.”

Many companies also decided to set up shop elsewhere, according to local media reports, while others fired their foreign-born workers before the bill was signed into law, out of fear of prosecution.

Lancaster, in Los Angeles County, one of the first cities in California to make E-Verify mandatory for all businesses (not just federal contractors), reports happier results. More than a third of the 45,000 residents of Lancaster are Hispanic.

Monique Edwards, of the Work Management and Analytics division at Lancaster’s Finance Department, said in a telephone interview that the city conducted a random audit of local businesses before mandating E-Verify in October 2009 and found many were not compliant with the Immigration Reform and Control Act. “We did it to ensure that businesses comply with the law,” she says.

But Mayor R. Rex Parris cited economic reasons as well. "It is absolutely essential that our local businesses comply with the law when choosing who to employ," he said in a press statement. "Difficult economic times have made jobs scarce, and 17 percent of Antelope Valley residents are currently struggling with unemployment. We are working to ensure that all available jobs in our City go to hard-working, law-abiding citizens."

Edwards says the city held several open council meetings before mandating E-Verify, and there was no resistance from the community. She claims she hasn’t heard any complaints from businesses since January, when the law went into effect, and can’t say if there has been a significant change in hiring practices. The city has staff to take complaints, and business license personnel to make sure all businesses comply with the new law, but Edwards said she has received no reports of businesses failing to check their employees against E-Verify.

But E-Verify cannot prevent off-the-books employment, and a considerable chunk of Los Angeles County's population works informally — 15 percent, according to a 2005 study from the nonprofit Economic Roundtable. State coffers, in turn, have taken a hit. In 2004, the California Franchise Tax Board estimated a loss of $6.5 billion a year to tax cheating, costing “the honest taxpayer nearly 20 percent more in taxes.”

The 2010 unemployment rate for Lancaster is 11.4 percent, according to U.S. News and World Report, but Edwards has no new information about whether E-Verify has effectively opened up jobs for legal citizens, or whether illegal immigrants have left the city, though, she says, there is actually no major enforcement of the law.

“The business sector doesn’t really want to upturn the system,” says Lewis, of Global Exchange. The U.S. Chamber of Commerce was one of the plaintiffs in a suit against the expansion of E-Verify in 2008. “They just want to have a nice steady flow of immigrants, disempowered immigrants feeding into the system,” he says. If finding a proper tax-paying job is difficult, he adds, illegal immigrants are more likely to have lesser bargaining power when it comes to benefits and salary.

Marc Rosenberg, of the Immigration Policy Institute, says E-Verify “would create incentives for bad-faith employers to move some or all of their production off the books.” This is partly because, in some states, wrongful use of E-Verify may be sanctioned but also because illegal immigrants have more limited employment options and may be more inclined to take whatever job is presented to them.

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"There aren’t many companies anymore that give us an opportunity," says Javier Jiménez, as he stands next to the curb at the Home Depot parking lot. Wearing jeans, a buttoned denim shirt and a camel-colored carpenter's belt, he lets the potential employers driving through know he’s a professional. His graying hair is combed back, but the Oaxacan mane never really settles and is gradually spiking back up. "They allow us to apply for the job but never call back. Employers can rapidly check their computer to see if your Social Security corresponds to the person who carries the card."

He has come to the U.S. three times for two-year intervals. He says he works so his two children, aged 12 and 14, living with his mother in Mexico, can go to school and eat “at least twice a day,” but he likes to return home often so he can be with them.

He worked for a contractor located in Mountain View, Calif., doing both janitorial and construction work. His employers were fully cognizant of his legal status. At the end of his time there, he sued the company for worksite abuse and settled for $10,000. “Javier Jiménez” is a pseudonym; one of the conditions of the settlement is that he not speak to the media.

"I was standing here in the Home Depot parking lot when they came to pick me up. They took two or three people from here," he says. "I was working there for a year and a half but they never really hired me. They didn’t hire anyone, even if your documents were in order, because that meant they would have to pay taxes."

At the end of each month, he would get a check for $1,440. It said he had worked 40 hours a week, when, in fact, he worked 60 to 70. They didn’t pay him overtime.

"Many times I asked my boss to raise my salary," he says. "I cleaned the toilets, arranged the materials — everything. They said they were happy with my work but they couldn’t raise my salary and much less hire me, because my Social Security and documents are fake. When I asked for a raise, she told me I didn’t have rights to benefits and vacation time because I wasn’t a hired employee. The days I was sick were paydays lost. Many times I got sick because work was too tough or I was contaminated by chemicals there. I could get sick for five days, and for five days I wouldn’t get paid."

"It’s easy to get fake papers," says Roberto Sánchez, a thin young man with a scruffy moustache, as he adjusts his beanie. His plan was to come to work in the U.S. for a year and then head back home to his wife and children in Puebla, a colonial town four hours northeast of Mexico City. He ended up staying for three years.

Monday through Sunday, Roberto stands in the Home Depot parking lot waiting for a potential employer with a pickup truck. With his fake Social Security number, he tried his luck at the Four Seasons hotel nearby and never got a call back. "Now that employers are getting fined for hiring undocumented workers, they think twice about hiring immigrants," he says.

Before E-Verify came into the picture, employers using the I-9 form to verify employment have long faced potential fines for employing unauthorized workers. But if they use E-Verify, they face fines for every failure to terminate an employee who is found by the system not to be authorized for work. There is no longer a safe haven for employers who just don't know.

Living illegally is precarious and uncomfortable. A 2008 Pew Hispanic Center survey shows that nearly six in 10 Latinos said “they worried that they themselves, a family member or a close friend may be deported.” According to the study, one in 10 Hispanics reports being asked by police or other authorities about his or her immigration status.

“Migrants here usually stay around five years,” says María Marroquín, director of the Mountain View Day Labor Center. “The majority spend a lot of money to come here in the first place, by paying whoever transports them across the border, and they have to start by paying off that debt. Then they have to send money to their families. Many never really manage to save enough money.”

Marroquín said around 90 percent of the immigrants at the Day Worker Center return to their homes, but many find they have to cross the border north once more because they have spent all their savings.

"There are jobs in my town," says Jiménez, "but they’re very badly paid. I don’t make enough money to give my children food. They go to school and they need to eat. That’s why I’m here."

"Migrants come here for a reason," says Michele Waslin, a senior policy analyst at the Immigration Policy Center. "They will continue to exist even if their life is made more difficult for them in the U.S. They have to weigh their lives here with their lives back home."

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Poverty has always been a cause for immigration, but now the drug war is making it difficult for some to return home. Since Mexican President Felipe Calderón began his offensive on drug traffickers, 22,700 people have been killed. In April, the New York Times reported that “over the last three federal fiscal years, immigration judges heard 9,317 asylum requests due to Mexico’s drug war across the country,” though they granted only 183.

Many migrants, upon returning home, are mugged or targeted for kidnapping because they have dollars, or because they’ve been away for so long that the gangs that call themselves the towns’ vigilantes don’t recognize them. Strangers are not welcome in these towns.

Most Mexican immigrants in California were born in Michoacán, a state caught in the middle of a turf war between La Familia and Los Zetas, two of the most powerful drug cartels in Mexico. The violence that isn’t directly related to the rivalry stems from the institutional vacuum they’ve created.

María has been working as a janitor at Stanford University for seven years. A few months ago she drove to her hometown of Tumbiscatío, Michoacán, with her partner and one of her four children. She’s a legal immigrant but uses a pseudonym because she doesn’t want to reveal her real identity for fear of the gangs in her town.

“Everything was fine until I was driving on the road that led to my town,” she says. “Some cars started cutting our path and they made us drive slowly, checking who we were.” Relatives told her not to drive a car with American license plates because it would either get stolen or gangs would think she was a stranger.

“We were about to get to the town and it was very dark,” she continues. “There is no light in the roads there like there is here. Suddenly, some people in motorcycles came out and surrounded us and told us to drive slowly and told us to scroll down the car windows so that they could see that we weren’t armed, that we were family."

She heard from her relatives that many are disappearing. “If a person is not ‘part of the family,’ they’ll take them to a room, hit them to get them to say the truth, to say what they’re doing there,” Maria says. As soon as her escorts recognized her, they welcomed her into the town. Still, she has no desire to go back. Her daughter, who recently had a baby, is also wary of returning to the town where she was born. "They take your children and then ask you for ransom. And where am I going to get money to pay them their ransom?"

"When there’s a situation of such insecurity, everyone becomes a suspect," says Roberto Chavarría of the Michoacán Club in Texas, a support and resource group for migrants. "So I don’t recommend that people return home just yet."

“They’re scared of putting up businesses. They wouldn’t invest easily," offers Rigoberto Castillo of Club Patzimbaro for Michoacán immigrants in Northern California. "Kidnappers are looking to see who has money. Migrants don’t want to show they have money.”

But the drug war does not affect only those who return. Ted Lewis believes the drug war has created a sense of rejection toward immigrant communities in the U.S.

"The drug war is an added element," he contends. "It’s part of the climate that’s creating the laws like the one that has just passed in Arizona. Now it’s not just the swine flu; it’s the drug war. The reaction is fear, exclusion: ‘I don’t want to know more about it, I just know that I don’t want people like that coming into my neighborhood.'"

A 2009 survey by the Pew Research Center found that nearly one in four Americans believes Hispanics are discriminated against "a lot" in society today. Lewis believes E-Verify is a product of this.

"They make me feel different here, I think, in a bad way,” says Jiménez. "I have the same routine every day. I go to the Home Depot parking lot every day, and at five I go home to an empty room." He wants to go Mexico but he hasn’t made enough money for a plane ticket.

It’s raining and Jiménez has been staring out his window for an hour, two hours, three hours. He’s waiting for the rain to stop so he can stand outside and scan pickup trucks for rolled-down windows and a nod, but at the same time, he wishes it would rain the whole day. He hasn’t gotten a job in over three weeks and is not feeling especially lucky this afternoon. "You caught me off guard today,” he says, “I’ve spent all day looking out the window and thinking about my children."

By Miranda Simon

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