Immigration hard-liners cheer, but economic fallout begins
PHOENIX (By Daniel Gonzαlez, Arizona Republic) August 26, 2007 Undocumented immigrants are starting to leave Arizona because of the new employer-sanctions law.
The state’s strong economy has been a magnet for illegal immigrants for years. But a growing number are pulling up stakes out of fear they will be jobless come January 1, when the law takes effect. The departures are drawing cheers from immigration hard-liners and alarm from business owners already seeing a drop in sales.
It’s impossible to count how many undocumented immigrants have fled because of the new law. But based on interviews with undocumented immigrants, immigrant advocates, community leaders and real-estate agents, at least several hundred have left since Democratic Gov. Janet Napolitano signed the bill on July 2. There are an estimated 500,000 illegal immigrants in Arizona. Some are moving to other states, where they think they will have an easier time getting jobs. Others are returning to Mexico, selling their effects and putting their houses on the market.
The number departing is expected to mushroom as the January 1 deadline draws closer. After that, the law will require employers to verify the employment eligibility of their workers through a federal database.
Immigration hard-liners say the exodus is a sign the employer-sanctions law is working, even before it becomes official. The law is aimed at shutting off the job magnet by imposing harsh penalties on employers caught knowingly hiring unauthorized workers. Violators face a 10-day suspension of their business license for a first offense and could lose their license for a second offense.
“This is exactly what it is supposed to do. Illegal immigrants have no business being here, none,” said Rep. Russell Pearce, R-Mesa, the main architect of the employer-sanctions law. “Shut off the lights, and the crowd will go home. I hope they will all self-deport.”
The ripple effect
Immigrant advocates, business groups and analysts say the exodus is having a ripple effect that could add to an already-tight labor market and dampen the state’s economy.
“Nobody is going to be untouched by the ramifications of this law,” said Ann Seiden, spokeswoman for the Arizona Chamber of Commerce and Industry. The chamber is one of a dozen business groups that have filed a lawsuit seeking to block the law on the grounds that it is unconstitutional.
Despite a slowdown in job growth, including the immigrant-dependent construction industry, Arizona’s labor market remains tight with just a 3.7 percent unemployment rate in July, according to the state Department of Economic Security. An unemployment rate below 5 percent is considered full employment, meaning anyone who wants a job can have one and employers must compete for workers.
Illegal workers leaving the state could make the labor market tighter, which could lead to higher wages but also higher costs for goods and services, said Don Wehbey, the department’s senior economist.
Analysts say it’s too early to measure the effect the employer-sanctions law is having on the economy. But it could be severe if a large number of undocumented immigrants leave the state.
“If these workers leave, it’s going to hurt the economy and put the state at an economic disadvantage with other states,” said Judith Gans, program manager for immigration policy at the University of Arizona’s Udall Center for Studies in Public Policy.
A study released by the center in July concluded that economic output would drop annually by at least $29 billion, or 8.2 percent, if all non-citizens, which include undocumented workers, were removed from Arizona’s workforce. About 14 percent of the state’s 2.6 million workers are foreign-born, and about two-thirds to three-fourths of non-citizens are undocumented, she said.
Several key industries in Arizona, including construction, manufacturing and agriculture, depend heavily on immigrants, legal and illegal, to fill gaps in the workforce, especially in low-skill jobs, she said.
The labor shortages are due to a native-born population that is aging and more highly educated and therefore doesn’t produce enough low-skilled workers to meet growing demand. As a result, immigrants are doing jobs that Americans won’t do and that Americans aren’t available to do, she said.
“The frustration with illegal immigration is understandable,” Gans said. But Arizona risks shooting itself in the foot “when it tries to take matters into its own hands.”
Pearce doesn’t buy that. He believes the state can easily do without undocumented workers. Although there may be some short-term economic disruptions, the free market will adjust in the long run, he said.
“Whatever adjustment takes place in the market, it will be worth it,” Pearce said.
Sen. Robert Burns, a Peoria Republican who helped craft the employer-sanctions law, said what’s also needed are more channels for immigrants to enter legally.
But only the federal government can do that, and Congress failed to pass immigration reform. Meanwhile, the state was forced to take action because people are “fed up with illegal immigration,” he said.
“I wouldn’t wish hardship on anybody and I don’t want the economy to go south, but maybe we need a jolt to show people what’s going on,” Burns said.
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Looking to leave
Abel Ledezma, a 31-year-old telephone technician from Chihuahua state in Mexico, has a work permit, but his fiancee, Cecy, a waitress, is undocumented. Ledezma put his house on the market in July after the governor signed the law. The two plan to move to Albuquerque, which Ledezma thinks is more welcoming of immigrants, legal and illegal.
“I feel like the people’s attitudes towards not only immigrants but also Hispanics has become very rude” in Arizona, Ledezma said.
For example, Ledezma said, a man recently slammed the door in his face when Ledezma arrived to fix his phone.
“He said to me, ‘Speak to me in English,’ ” Ledezma said. Ledezma speaks fluent English, though with an accent.
Adrian, a 34-year-old undocumented immigrant from Sonora, plans to move back to Mexico as soon as he can sell a 2-acre tract he owns in Tonopah.
“Yes, we are desperate to leave the moment I sell my property,” said Adrian, who rents a house in Goodyear. He asked that his last name not be used because of his immigration status.
Adrian said his sister also is selling her house with plans to return to Mexico. He knows other undocumented immigrants who are refinancing their houses and getting cash out so they can return right away rather than waiting for their houses to sell.
Adrian said he plans to use the profits from the sale of his property to open some sort of business in Rocky Point, a booming beach resort in Sonora. He also is considering moving to Canada, where he heard jobs are plentiful and getting a work visa is easier than in the U.S., where Adrian has been unable to legalize his status in 13 years.
Adrian, a foreman for a major Valley homebuilder, was planning to construct a house for his wife and three U.S.-born children in Tonopah. But with the employer-sanctions law about to take effect, he is afraid he could lose his job any day: He works with fake documents, something Adrian said his employer suspects. Finding another job will be that much harder once the law’s verification requirements kick in.
“There is a lot of uncertainty,” Adrian said. “I supervise five workers, and the boss told us they are going to be checking the documents of each worker. If the papers are no good, they are going to get rid of those workers.”
Impact on housing
Adrian has been calling his real-estate agent every day to see if there are any potential buyers for his property.
But Guadalupe Sosa, the agent, said this is a bad time to be selling. Undocumented immigrants are putting their homes up for sale when there is already an abundance of houses on the market, adding to a glut. Mortgage defaults and foreclosure also are rising.
In July, the Arizona Regional Multiple Listing Service listed 52,336 homes for sale in the Valley, up 17 percent from a year earlier. The average time on the market for houses sold in July was 95 days, compared with 65 days a year earlier.
What’s more, Sosa said, many immigrants are not buying homes because they are worried about losing their jobs under the law. That has made it even harder to sell homes in immigrant neighborhoods.
She pointed to three of her West Valley listings that are owned by illegal immigrants who want to leave Arizona.
One was a brick four-bedroom selling for $167,000 in the historic district of Avondale. Another was a beige stucco house selling for $210,000 in a new subdivision in southwest Phoenix. One was a blue townhouse selling for $95,000 in west Phoenix.
“A lot of people are selling because of the uncertainty,” she said. “They have one or more family members who are undocumented, and without that extra money, they can’t make the mortgage.”
Other areas of the economy also are taking a hit because of the employer-sanctions law.
Rosa Macias, vice president of Muebleria Del Sol, said projected sales are down 30 percent since the governor signed the law. The Phoenix-based furniture business has five Valley stores, and 85 percent of its customers are Hispanic immigrants. She said immigrants aren’t buying because they are worried about losing their jobs or already have been let go.
“We have been noticing sales are really, really low,” she said.
The drop in sales forced the company to lay off 10 of its 75 employees, Macias said. Macias is also telling suppliers not to deliver more inventory until sales pick up.
“I am very worried,” she said.