(This column originally appeared on The Hill)
On July 1, a new law is set to go into effect in Florida that aims to reduce the number of illegal immigrants in the state.
Among its most significant — and controversial — provisions is a new requirement for businesses with more than 25 employees to use the federal government’s E-Verify system to confirm that the employee is eligible to work in the country. The bill also expands reporting requirements as well as penalties for employers who fail to comply, including the possible suspension and revocation of employer licenses and the imposition of specific penalties on employers that knowingly employ illegal aliens.
According to immigration advocates, the law will hurt the state’s economy.
“The change will likely have an impact on Florida’s agriculture, construction and hospitality sectors,” Samuel Vilchez Santiago, Florida’s director of the American Business Immigration Coalition, said in a recent NPR report. “These are industries where immigrants make up the vast majority of workers, and not allowing businesses to be able to utilize these workers will have a really big impact on our economy and their ability to create jobs.”
The same NPR report cites The Florida Policy Institute, a nonprofit policy research group, in warning that the loss of undocumented workers could cause a drop of as much as $12.6 billion in Florida’s GDP in just one year alone.
I understand that the new legislation could have economic consequences, but just to be sure: Are these immigration advocates saying that it’s OK for businesses to employ illegal, undocumented workers because they “have a really big impact on our economy”?
Maybe I’m missing something in this argument. But I know what I’m not missing, and that’s how Florida’s new law actually strikes at the heart of one of the biggest problems that many lawful businesses across the country face: price undercutting by competitors who are able to lower their costs by hiring illegal immigrants.
In Pennsylvania, where I live, there’s no such immigration reform on the agenda from our state government. And yet my small-business clients in the construction, agriculture and hospitality industries endure the same unfair competition that their counterparts have to deal with in Florida.
“My competitor hires illegal immigrants all the time,” said one landscaping client of mine who chose to remain anonymous for this column. “Not only does he pay them less than what they should be rightfully making but he offers them no benefits like health insurance or retirement plans. They are forced to work long hours and have no worker protections.”
But that’s not the worst part he says.
“For me the worst part is that my competitor then charges lower rates because his costs are lower, so he wins more jobs than me,” he complains. “My headcount and profits suffer.”
The problem with Florida’s law is that it doesn’t go far enough. Big companies, facing huge fines, lawsuits and unfavorable press, have more to lose by hiring illegal immigrants. We all know that some do, of course, but the risks are high. These are not the only organizations that the law should address.
According to the nonprofit American Immigration Council, illegal immigrants make up as much as 6 percent of Florida’s workforce — and I’m betting that number is even higher, given the challenges in gathering this data. These illegal immigrants are taking jobs from legal immigrants; more importantly, they’re being exploited.
The real culprits of this are the smallest of businesses — those that fly under the media’s radar and don’t have the money to pay those big fines and are willing to absorb the risks of breaking the law. Small businesses account for almost half of the workers in the country and less than 20 percent of workers are at companies with fewer than 20 employees. Limiting this law only to businesses with more than 25 employees isn’t going to have as much of an impact as people may think.
Expanding this law to cover all businesses, and providing the necessary enforcement teeth — a big question mark, considering that other states like Arizona and Arkansas have implemented similar laws and experienced many enforcement challenges would:
- provide better, higher paying jobs for legal immigrants and help their employers retain them for longer periods (good companies pay for good talent);
- level the playing field for law-abiding businesses and boost their revenues and profits;
- punish and then weed out the small businesses that have been breaking the law and provide opportunities for their competitors;
- further incentivize industry groups to push their legislators toward better immigration reform solutions to help ease labor shortages — perhaps (gasp!) compromise and allow certain illegal immigrants legal status so they can work?
And what about those illegal immigrants that suddenly find themselves without a job to support their families? Some will likely turn to crime in desperation. Others will seek help from the government. These inevitable and potentially tragic consequences will surely push politicians into making tough decisions.
No solution will be completely popular. And, like so many other countries throughout human civilization, no solution will completely solve our country’s immigration challenges. But to really have an impact, Florida’s immigration laws should be expanded to all businesses, regardless of size. It’s the smallest of businesses that are causing the biggest immigration problem. In its current form, the law just doesn’t go far enough.
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.