Experts predict employer sanctions will hurt AZ

A quick glance at the masons who work for Rhino Masonry in Mesa reveals an interesting quirk about the company’s work force — nearly every block layer on the payroll is Hispanic.

Business owner Robert Ahlers said he’s comfortable with his company’s demographics. It simply reflects those of the region’s construction industry in general, he said.

However, he has no idea what impact the state’s stringent new employer sanctions law will have on his company next month.

“I don’t know if come Jan. 1, when this goes into effect, I’m going to wake up on a Monday morning and half the people working for me are going to be gone,” Ahlers said.

Hispanic workers elsewhere have been walking off their jobs in anticipation of the Legal Arizona Workers Act taking effect New Year’s Day. The law is intended to change the way Arizona companies conduct business. Specifically, it’s intended to prompt business owners to purge illegal immigrants from their payrolls.

Businesses knowingly employing illegal immigrants face corporate death penalties.

The first offense can result in a 10-day suspension of a company’s business license. The second offense can mean loss of the business license altogether. The law is widely viewed as the toughest of more than 100 passed by states and municipalities nationwide since the summer to crack down on illegal immigration.

State and local governments jumped into the immigration enforcement business when Congress failed to pass federal immigration reform legislation.

In Arizona, coalitions of businesses have filed a series of lawsuits to halt the employers sanctions law, but so far those challenges have been unsuccessful. On Friday, both a federal district judge and the 9th U.S. Circuit Court of Appeals rejected requests to delay implementation until those lawsuits run their legal course.

ONE IN 10 WORKERS

Meanwhile, the law already is producing results, not all of which were anticipated.

Business owners are changing the way they hire, moving to an electronic, federal system called E-Verify, which checks job applicants’ Social Security numbers to confirm their employment eligibility.

Also, an uncounted number of illegal immigrants living and working in Arizona are moving to other states or back to Mexico to avoid detection, according to Hispanic community leaders.

However, the law also is causing Arizona is lose its appeal among business investors, according to business leaders.

Arizona clearly is dependent on immigrant labor.

Of the state’s nearly 2.5 million workers, close to 300,000 are not U.S. citizens, according to a University of Arizona study released in October. That equates to more than 10 percent of the total work force.

Ahlers is worried about maintaining his own work force at Rhino Masonry, 722 W. McLellan Road in Mesa. The company typically employs between 50 to 100 at between $15 to $25 an hour, plus benefits.

Ahlers always has been careful to check documents for new hires, and believes every employee on his payroll is eligible to work in the United States. Still, the new employer sanctions law is forcing him to act like an immigration agent, he said.

“It’s making me mad, because I object to having to do someone else’s job for them,” he said. “The federal government has failed miserably to do their job — or we wouldn’t have a bunch of illegals wandering around our country.

“Now our government says, ‘Look employers, you’ve got to fix it because we can’t. You’ve got to do extra work. You’ve got to do things. If you don’t do it, we’re going to fine you or put you out of business,’” Ahlers said.

GRAY AREAS IN LAW

There’s widespread misunderstanding among business operators over the new law, said labor attorney Julie A. Pace, who has lectured at more than 50 seminars about the topic since July.

“Some have been paying attention and some understand different things about the law. I think many feel it’s unconstitutional and are waiting for the court to rule. Others are not familiar with it at all,” she said.

To make matters worse, the law is filled with ambiguities and is subject to different interpretations, said Pace, of the Phoenix law firm Ballard Spahr Andrews & Ingersoll. For example, no one has ruled definitively how the law will be applied to franchised businesses.

If violations are discovered at a single location of a statewide chain of gas stations, restaurants, banks or department stores, does that mean every outlet statewide will be shut down, leading to hundreds of layoffs?

Pace is operating under the legal assumption the entire chain can be closed. “Everybody loses their jobs,” she said.

With that in mind, business owners statewide are rushing to restructure their business operations, making each location a separate corporate entity. Also, some business owners are postponing Arizona expansion plans while waiting to see how the law will be enforced.

“A lot of clients of ours have already moved their operations out of state for any expansion,” Pace said. “They’re not going to open any businesses here.”

TROUBLE ON THE FARM

The law already is cutting into Arizona’s agricultural industry, which employs the state’s highest percentage of noncitizen workers.

“We already were having problems getting workers,” said Joe Sigg, director of government relations for the Arizona Farm Bureau Federation, a nonprofit association of 3,000 agriculture-related businesses.

The impact is twofold: Immigrant workers without documentation are leaving to avoid deportation, and immigrant workers with documentation are relocating because they fear discrimination.

Consumers nationwide could see the impact as early as next month.

Nearly all of the country’s supply of iceberg lettuce from November through March is grown in and around Yuma, just north of the U.S.-Mexico border. The harvest requires 50,000 laborers a day, but farm owners are uncertain whether enough workers will be available to pick the lettuce before it rots in the fields, Sigg said.

“The law, in our view, has lost proportionality to the problem,” he said.

“There is no question that immigration — legal and illegal — causes a host of problems. But the economic side of this is: How do you unplug a work force that you can’t possibly replace?” he asked.

Farmers also are encountering new difficulties in securing business loans, because lenders recognize they may not be able to bring their crops to market. Private sector investors similarly are holding back, Sigg said.

The law is certain to cause the entire state’s economy to slow, said Ann Seiden, spokeswoman for the Arizona Chamber of Commerce and Industry.

KEEPING UP WITH GROWTH

“Our rap over the past several years has been growth — this population has been booming, our economy has been doing well. Granted, there are some other factors that have caused our economy to backslide a little, but we think this is going to further that,” she said.

The now-slumping housing industry is closely tied to the immigrant labor pool.

Approximately 22 percent of all construction trade workers are noncitizens, according to the UA study.

Noncitizens account for 56 percent of plasterers and stucco masons, 41 percent of roofers, and 38 percent of drywall and ceiling installers.

Plus, naturalized U.S. citizens account for an additional 6 percent of plasterers, 7 percent of roofers and 8 percent of drywall installers.

The only question is how much impact the law will have on the state’s economy, Seiden said.

Economic development officials are hearing business owners are reluctant to move into or expand in Arizona while business licenses remain at stake, she said.

“When you’re going to invest in something, you pretty much want to invest in a sure thing. Uncertainty doesn’t lend itself to that kind of positive investment and growth,” she said.

One certainty is that the law will be enforced, said Maricopa County Attorney Andrew Thomas. Employer sanctions are an important component of halting the “border crisis,” and sheriff’s deputies and county prosecutors are prepared to launch investigations next year, he said.

“These are complex investigations. I would compare them to white-collar cases, fraud cases. These are not your simple cut-and-dried robbery or burglary cases,” he said. The first cases are likely to take months to get to court.

And while prosecutors have had months to develop a strategy on how to pursue their first cases, which are certain to attract national attention, they haven’t done so, Thomas said.

He dismissed the idea prosecutors have weighed whether to first go against a corner taco shop or similar small business in a quest for quick legal victory, or to first move against a larger and wealthier enterprise to score a strong victory.

“We have no preconceptions about that. We’re going to wait to see what kind of evidence and information we have,” Thomas said. “The resources of the company will have no bearing on our decision.”