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 Business News | August 2007 
New Immigration Rules Will Force Undocumented Workers to be Fired
 Carolyn Lochhead - SF Chronicle
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 |  | In certain industries and in certain states, there will be a very significant impact on the functioning of businesses or entire sectors.
- Deborah Meyers |  | |
Washington - People clamoring for a crackdown on illegal immigration got their wish with the Bush administration's announcement Friday of sweeping new enforcement measures that will force employers to fire the millions of illegal workers they now employ.
"We strike at that magnet" of jobs, said Homeland Security chief Michael Chertoff, announcing a new rule holding employers liable for workers whose Social Security numbers do not match government records. The new rule takes effect in 30 days.
No state stands to feel the effects more than California, which has more illegal immigrants - an estimated 2.5 million - than any other state. California farmers are expected to be among the hardest hit with their heavy reliance on Mexican field hands, the vast majority of whom are undocumented. But service businesses will be heavily affected too, from hotels and restaurants to cleaning services and nursing homes.
California Sen. Dianne Feinstein predicted a "catastrophe" in the state's $32 billion agriculture industry as the new rules become effective with the fall harvest. But the proposal met no opposition from House Speaker Nancy Pelosi, D-San Francisco, who issued a statement saying, "Securing our border remains a top priority for the New Direction Congress."
The rule that will require employers to fire employees unable to clear up problems with their Social Security numbers 90 days after they've been notified or face sanctions and a fine of at least $2,200 for a first offense. Up until now, employers have routinely ignored what are called no-match letters.
"In certain industries and in certain states, there will be a very significant impact on the functioning of businesses or entire sectors," said Deborah Meyers, a senior policy analyst at the Migration Policy Institute, a nonpartisan think tank. "Some employers are going to find themselves having to fire significant portions of their workforces, and I think there will be employees - some who are authorized and some who are not - who will find themselves out of a job."
Meyers predicted the fallout to be quite visible within six months.
Business groups pointed out that a significant fraction of no-match letters - including 11 percent for the work-authorized foreign born - are in error because of name changes and clerical mistakes, and could cause trouble for legal workers. Immigrant rights groups said the rule could drive millions of illegal immigrants who are now paying taxes underground and drive businesses who depend on them to relocate overseas.
The system also has a big loophole that some experts warn could lead to more identity theft. Social Security does not catch numbers that are valid but have been stolen and used by another person, increasing the incentive to steal valid Social Security numbers.
Hiring undocumented workers has been illegal for two decades, but until now, employers were not held liable for fraudulent documents.
"This is going to cause a lot of pain, but that pain I hope will be an impetus for our nation to get realistic and fix our broken immigration system," said Larry Rohlfes, assistant executive director of the California Landscape Contractors Association. "In the meantime, people are going to be hurt."
Rohlfes predicted that many workers would not leave the country but go underground as unlicensed contractors, where they will not pay taxes. "It's going to hurt our remaining workers because the underground economy competes with us and because they have much lower costs," Rohlfes said.
Much will hinge on how effectively the administration enforces the new rules.
"If you look at what ICE (Immigration and Customs Enforcement) has been doing, they've been pretty busy," said Karen Maarouf, director of product marketing for Workforce Logic, a Sonoma company that sells worker verification software. Maarouf said employers have to report Social Security withholding on all workers, so the new rules will affect everyone.
The new crackdown follows a year of stepped-up workplace raids focused on criminal enforcement, as well as a significant tightening of the border with Mexico, including the addition of National Guard troops, new fencing in urban areas and a rapid expansion of the Border Patrol.
Until last year, only a handful of employers had been sanctioned for hiring illegal workers, and the chances of getting caught were for all practical purposes zero. The administration came under intense attack from both parties for lax enforcement.
President Bush threw all that was left of his political heft into passing a broad overhaul measure that would have coupled an employment crackdown with broader avenues for businesses to obtain workers legally, through more permanent immigration slots, a special program for farmers, and a new guest worker regime.
To build support and allay charges that it was failing to enforce existing law, the administration ratcheted up enforcement across the board.
But fierce opposition by a Senate minority, led by Republicans but joined by some Democrats, and a powerful political backlash against those Republicans who led the effort, sank the legislation in late June.
Now the crackdown will occur without offering businesses a way to get more foreign workers.
Commerce Secretary Carlos Gutierrez said the aging of the U.S. workforce means the economy lacks the workers it needs, but the administration will try to streamline current temporary worker programs to make them easier to use.
Those include the visa program for temporary farmworkers known as H2A, as well as another program for nonfarm seasonal workers who work everywhere from ski resorts to crabmeat processors.
This may prove little consolation to California businesses, however, who complain the programs are bound by red tape and in any event cannot admit enough workers to meet their needs.
Gutierrez said he would also be looking at changes to the temporary programs for highly skilled workers, the H-1B visa, heavily used in Silicon Valley, a category under the U.S. Immigration and Nationality Act by which noncitizens can enter the United States for three years if they work in a specialized field and their employers cannot fill the position locally. That program admits 85,000 workers a year, and this year the quota was met for the next fiscal year on the first day applications were accepted.
Much of the crackdown until now has focused on criminal enforcement against employers who knowingly hire illegal workers, and is up to 742 cases this year.
"We do get a lot of tips; we get a lot of informants," Chertoff said. "It's amazing, the number of people who come forward and tell us about illegality in the workplace." The new rules essentially expand the definition of "knowingly" to include failing to fire anyone whose Social Security number does not match government records.
About 12 million people are estimated to be in the country illegally, and about half a million more have been arriving each year. They have moved beyond traditional immigrant states like California and Texas and into the South and Midwest, where their presence has created a voter backlash and spawned state and local laws intended to make it difficult for illegal immigrants to work and even find housing.
Illegal immigrants make up about 5 percent of the civilian workforce, according to the Pew Hispanic Center. Most have arrived since 1990. Many have children born in the United States who are citizens - which adds up to about 64 percent of the children in unauthorized families, or 3.1 million children, Pew estimates. Most illegal migrants crossed the border from Mexico and farther south, but about 40 percent arrived legally from all other parts of the world and overstayed their tourist or student visas.
Illegal workers tend to be concentrated in agriculture and other low-wage industries, including household help, food packing and manufacturing, construction, food service and hotels. These industries are likely to face the most scrutiny.
The new crackdown could put pressure on Congress to at least pass piecemeal immigration legislation - especially a farmworker legalization program known as AgJobs and strongly backed by Feinstein and other California politicians, and the DREAM Act, which would offer children brought into the country illegally a path to permanent residency if they enroll in college or the military.
As part of the stepped-up enforcement, the Department of Homeland Security said it would expand an electronic verification system called "Web Basic Pilot" to all federal contractors, as well as continue to train state and local law enforcement to help enforce immigration laws.
The number of Border Patrol agents is expected to rise to 18,300 by the end of the year; there will also be 370 miles of fencing along with other technology such as vehicle barriers and camera and radar towers that are now being constructed.
Also, the administration announced that it would implement a long-delayed exit verification system at border crossings to find out who is overstaying their visas. That program, called US-Visit, has been hampered by the cost and technological problems. The administration said it would plow ahead with plans to require all travelers to use passports, despite the enormous backlogs that delayed travel by U.S. citizens earlier this year.
The new rules of enforcement
What happened: New rules proposed Friday by the Bush administration will require employers to fire employees unable to clear up problems with their Social Security numbers 90 days after they've been notified of such discrepancies in what are called no-match letters.
What it means: Hiring undocumented workers has been illegal for two decades, but until now, employers were not held liable for fraudulent documents. Employers who fail to comply will face fines and sanctions.
What's next: The new rules take effect in 30 days.
Email Carolyn Lochhead at clochhead@sfchronicle.com. |
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