Immigration Policy and Workplace Enforcement: Lessons from California

Background and Purpose:  Immigration reform is at the center of public debate and a top priority for Congress and President Obama.  In November 2014, President Obama announced a series of executive actions aimed at addressing what is often referred to as our “broken immigration system.”  The 113^th Congress made multiple immigration-related proposals and the 114^th Congress has already introduced immigration bills in both the House and the Senate. 

Federal legislation that mandates use of an electronic employment eligibility verification system for all employers is a key component, sometimes referred to as the “lynchpin,” of immigration reform efforts. In the context of comprehensive immigration reform, E-Verify is the current form of “workplace enforcement.” This study evaluated the impact of E-Verify implementation in two California counties on key economic indicators.

Methods:   This study utilized secondary data to conduct an interrupted time series design and compared the time-series pattern pre- and post – E-Verify implementation in both Orange and Riverside Counties. Quarterly Workforce Indicator (QWI) data are a publicly available data set accessed through the U.S. Census.  For this study, county-level data was collected, including pre-E-Verify implementation, beginning in the first quarter of 2000 through the fourth quarter of 2011, which is when state-level legislation took effect.

Orange County and Riverside County were chosen as study counties.  The five industry categories chosen for this study were (a) All Industries; (b) Accommodation and Food Service; (c) Agriculture, Forestry, Hunting and Fishing; (d) Construction; and (e) Manufacturing.  The eight indicators chosen for this study were: (a) beginning of quarter employment counts; (b) counts of reference quarter employment or “flow” employment; (c) counts of new hires (d) estimated number of workers whose job with a specific employer ended; (e) rate at which stable jobs begin and end (f) estimated number of jobs gained; (g) average monthly earnings of employees who worked on the first day of the reference quarter; and (h) average monthly earnings of newly stable employees.

Results:  The most significant finding in this study was in the Orange County industry categories of All Industry and Manufacturing. With p <.001 in both cases, loss in estimated jobs gained was significant. In other words, firms in those categories lost jobs at a significant rate after E-Verify went into effect; firm growth declined.  Though this study did not find that E-Verify legislation had an impact on the workforce in Riverside County, it is suspected that significance would have been detected if there were more observations available in this county.

Conclusions and Implications:  This study underscores that E-Verify is an unproven program.  This is important, given the program’s current significance in policy debate around immigration reform.  This study points to two possible reasons for “firm growth” decline post-E-Verify implementation: (a) employers who were “on-the-books” went “off-the-books” and began running their businesses without any government oversight and/or (b) employers/employees chose to leave the area in search of a place without an E-Verify law to conduct business/participate in the workforce.  Economic and human rights implications are discussed.