Thread: Why Arizona's Controversial Immigration Law Is Bad For Business

Why Arizona's Controversial Immigration Law Is Bad For Business
4/27/2012 @ 1:57PM

Whether or not the Supreme Court upholds Arizona’s controversial immigration law, the bill is bad news for business leaders and entrepreneurs.


WASHINGTON, DC - APRIL 24: Russell Pearce (R), sponsor of the controversial immigration law Arizona SB 1070, testifies before the Senate Judiciary Committee on Capitol Hill. (Photo by Win McNamee/Getty Images,)

The architect of Arizona’s controversial anti-immigration law, Republican state senator Russell Pearce, was voted out of office in a historic recall election last November. The conservative immigration hawk represented the deep red legislative district 18 that spans across most of Mesa, AZ.

Pearce had previously served as a sheriff’s deputy under Sheriff Joe Arpaio, where he received a Medal of Valor after being shot by gang members. He also served as the Director of the Arizona Motor Vehicle Devision prior to being elected to the State Senate in 2000. He was serving as the Senate President when he was ousted from office by Republican Jerry Lewis in 2011.

At the heart of the recall election was the controversial bill SB 1070 which, if upheld by the Supreme Court, will require police officers and other law enforcement officials to check immigration documents on all suspected undocumented workers in the state.

Business and community leaders in Mesa disagreed with Pearce’s draconian approach to immigration reform, and quietly helped push the lawmaker out of office, replacing him with Lewis, a conservative more friendly to the business community.
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There are good reasons business leaders and other community leaders in Arizona and across the country should be concerned about SB 1070, and whether it will be upheld by the Supreme Court.

Some Arizona law enforcement officials are worried that the law could strain precious department resources, especially since police and other law enforcement agencies have seen budget cuts since the start of the 2008 recession. The law could also lead to “civil unrest or to increased lack of safety because of lack of cooperation,” according to Tucson Police Chief, Roberto Villasenor.

SB 1070 is written broadly and targets anyone law enforcement agents suspect might be an illegal immigrant.

“Who is the target of 1070? If anyone tells you it is only the drug-and-gun-trafficking criminals, they are mistaken. SB 1070 targets those with brown skin. And in my state, those are my neighbors, my friends,” former Arizona Senator Dennis DeConcini said of the bill at a US Senate hearing on the matter. “Whenever you mix politics and law enforcement, you create a toxic environment, and that is what’s happened.”

Pearce, who also attended the hearing, countered: “”In SB 1070 we prohibit racial profiling, in SB 1070 we say you have to have legitimate contact, in SB1070 we say you have to have reasonable suspicion.”

Law enforcement concerns aside, how would the controversial anti-immigration law impact businesses?

Arizona’s immigration law hurts the labor market, and especially the agricultural industry

Since SB 1070 was voted into law, over 100,000 undocumented workers have left Arizona, either to return to their native countries or to find work in other U.S. states. The agriculture industry in particular has faced hardships as fewer and fewer immigrant workers remain.

“[M]y industry and others need legal access to labor pools that are seasonal, short- and long-term. These pools will not be sourced from this country. This is an essential fact,” said Kevin Rogers of the Arizona Farm Bureau. “You can tell me to pay more, to use convicts, to hire more students and you can tell me technology will solve my problems.”

A 2006 report [pdf] by the American Farm Bureau Federation on the impact of restrictive immigration policies to the agricultural sector found “that if agriculture’s access to migrant labor were cut off, as much as $5-9 billion in annual production of primarily import-sensitive commodities most dependent on migrant labor would be lost in the short term. Over the longer term, this annual loss would increase to $6.5-12 billion as the shock worked its way through the sector. This compares to an annual production average for the entire agricultural sector of $208 billion over the last decade.”

Arizona farmer, Tim Dunn told Bloomberg News that he was already feeling the pinch. “As the economy improves, it will be harder and harder to get the labor we need,” Dunn said. “1070 has stopped the debate as far as what we really need: a way for people to come here to work legally.”

But labor in other sectors would also be impacted negatively by a loss of migrant workers. Workers in retail, manufacturing, construction, the food service sector, and a number of other important industries have also left the state.

SB 1070 and other anti-immigration laws lead to lower consumer spending, and a decrease in business investment.

Immigration opponents often claim that illegal or undocumented workers drain resources from local economies. What they forget to mention is that all those workers spend money as well, on housing, food, entertainment, and a number of other consumer goods. When immigrants pack up and leave for greener pastures, they not only take their human capital with them, but also their consumer dollars.

As those consumer dollars drain from the state, landlords, retailers, and other local businesses suffer the consequences.

But workers aren’t the only people impacted by restrictive and punitive regulations. Business owners and investors can face being shut down if they fail to comply with immigration law in Arizona.

B.J. Hernandez, owner of three Havana Cafes in the Phoenix area had planned to open another restaurant until confronted with the new immigration law.

“I would say it’s off for at least a couple of years until I see a light at the end of the tunnel,” said Hernandez. “I feel the environment in Arizona has become so anti-entrepreneurial. If I could leave here, I would.”

Meanwhile Chicago-based restauranteur, Richard Melman, has also recently scrapped plans for a new Scottsdale restaurant.

“I was a little concerned about the law being passed regarding immigration,” Melman said. “You put in $3 million or $4 million, and you can be shut down for a mistake. Why take a chance? I want to see how it plays out.”

As consumer dollars and business investments dry up, this also hits state coffers. The loss of sales tax dollars, as well as income tax revenue, has already eaten into the struggling state budget. Meanwhile, undocumented immigrants tend to use fewer state services than US citizens largely due to fears of deportation.

A report from the American Center for Progress estimates that the Arizona immigration law could eventually decrease employment in the state by 17.2%, eliminating 581,000 jobs for both immigrant workers and US citizens, and shrink the state’s economy by over $48 billion, reducing the state tax revenue by 10.1%.

More immediately, the passage of SB 1070 led to a widespread boycott of Arizona and its vital tourism industry. The boycotts led to the cancellation of a number of conventions planned in the state, and the loss of hundreds of millions of dollars, not to mention a tarnishing of Arizona’s reputation, especially among business leaders that AZ gov. Jan Brewer has spent several hundred thousand dollars to repair.

Why Arizona's Controversial Immigration Law Is Bad For Business - Forbes

Only 370,000 out of 7 million businesses are currently using E-Verify
there are over 7 million illegal immigrants working in NON-AG JOBS Forums for Justice - View Single Post - 7 Million Illegal Immigrant Workers http://bit.ly/hnHEbs;
Mandatory E-Verify would provide jobs for 7 million Americans.

These businesses that hire illegal labor, think we're going to forget who they are! I bet it is bad for business when they are being boycotted for being criminals!