Thursday, March 13, 2014

Five Things The Cato Institute Got Wrong About E-Verify

To see the Cato Institute's Policy Analysis, click here.

1. The only reason labor-intensive farming exists is because there are migrants willing to work for low wages.

Especially in the era of NAFTA. What happens is a company, say, Milwaukee Tools, relocates to Mexico, taking the jobs with them. There, they hire Mexican nationals who either already possess some, albeit, rudimentary skills, or are deemed capable of assimilating said skills quickly.

While this is happening, the U.S. Federal government is subsidizing corporate grain producers in the U.S., making it cheaper for the Mexican government to import (duty free) grain from the U.S., undercutting their own farmers.

Those farmers, being forced off the farm in their own country, lack sufficient skills to get hired by the recently relocated U.S. manufacturers, flee to the U.S. in order to find work, displacing U.S. citizens due to the immigrants' willingness to work for less.

This becomes self-fulfilling. The farmer (and by ‘farmer’ I mean the large corporate farms) knows that migrants (especially illegal migrants) will work the fields for a lower wage than a non-immigrant will. This has always been the case, but since the advent of NAFTA, its never been more true.

The farmer decides that he will only hire illegal immigrants, in many case knowing they are illegal, and at times blatantly hiring them even while being audited by ICE.[1].

These unsavory employers don’t even try to recruit legal workers.The Cato Institute would have you believe that farming would cease if it weren’t for illegal immigrants.

2. E-Verify is too expensive and should be abandoned.

In its ‘Policy Analysis’, which is more marketing than analysis, Cato asserts that E-Verify can cost as much as $147 to the employer. If there are employers who spend that much to administrate a free program, then there are some people running businesses that are not very good at it.

Here, Cato uses a very old tactic: taking the most inefficient employer's costs and labeling them as standard. The tactic has been used in minimum-wage issues, regulations, etc.

Since E-Verify is provided free[2] from the federal government, the costs mentioned in the Cato analysis are “internal costs"[3] which are entirely in the control of the employer. Besides, there are always some costs in hiring that employers will temporarily shoulder – temporary because as we all know, costs are passed on to the customer.

3. Unauthorized immigrants lift everyone’s wage.

In fact, the opposite is true. In a study by George Borjas, a Harvard economist, immigration (and that would include illegal immigration) drives down the average annual wages of native workers by 4%, and by those native workers without a high school diploma, by 7.4%.[4,5]

While making this claim, Cato engages in bald-faced stereotyping racism:

Natives have a comparative advantage in jobs that require communication, while low-skilled immigrants have a comparative advantage in brawn…[6]

Hmmm. The statement speaks for itself.

4. E-Verify drives illegal workers to break the law.

The paper’s author claims that E-verify forces illegal workers to steal legal workers identities in order to gain work or to work ‘under the table’.

That’s like saying that drugs laws force drug dealers to lie about where their income comes from.When an illegal immigrant commits further crime, in this case identity theft, in order to earn money while here illegally, that simply reinforces the fact that illegal workers aren’t necessarily just ‘trying to better their lives’. They may be trying exactly that, but that’s not ‘all’ they’re doing.

Stealing the identity from someone who is legally employable only makes it harder for that legally employable person to work. And that may take food off their table or force them into homelessness, or to accept any low-paying job they can get, squaring the circle...

E-Verify doesn’t compel someone to steal someone else’s identity. It does, however, incentivize an illegal worker to commit more crime, thus proving that illegal workers aren’t too awfully concerned about our laws to begin with.

But, we already knew that.

5. If, in fact, all the claims made by CATO were true, then why would many U.S. companies voluntarily use E-Verify? 

Put a fair market wage on the job, an honest day's pay for an honest day's work, and there will be plenty of native born workers willing to do the job.

The only logical reason for the resistance to nationally mandated E-Verify is to provide a mechanism for unsavory business people to exploit illegal workers for their own financial gain.

It’s not about opportunity, it’s not about being unable to find native workers willing to do the work.

It's about greed.

The Cato Institute would have you think that E-Verify will destroy business and cripple the economy. It won't, but crying 'the sky is falling' is the last tool left for unscrupulous employers who feel they have a right to game the system.

[3]Cost Per Hire, American National Standard. Society for Human Resource Management.
[5]Steven Camarota 1998. "The Wages of Immigration: The Effect on the Low-Skilled Labor Market," Washington D.C.: Center for Immigration Studies. Camarota, Steven A. 1997. "The Effect of Immigrants on the Earnings of Low-skilled Native Workers: Evidence from the June 1991 Current Population Survey," Social Science Quarterly, Vol. 78.