The Washington Post has a story summarizing the Supreme Court's decision in Chamber of Commerce v. Whiting, regarding whether federal law pre-empts an Arizona law that provides for the revocation or suspension of business licenses as a penalty for knowingly employing illegal immigrants.
I am not an expert on pre-emption, but as I understand the relevant doctrines, the majority of the Court got this right. I am more troubled by the outcome as a pure policy matter. Consider the bizarre comments by Arizona Governor Jan Brewer that appear in the Washington Post article about employers taking down "Help Wanted" signs. It's a rather striking visual, so much that if I were working for a group that is opposed to this law, I'd avoid pulling out such a stark image right away. It would feel too emotional and sensationalistic. Yet... someone who actually supports this thing is using this image. Perhaps she meant to suggest that only employers who hang up signs that say "Help Wanted, Illegal Immigrants Only" signs will have to take them down. This would be kind of silly because nobody ever actually hangs up such a sign, for obvious reasons. I suspect the vast majority of employers are happy to take as many applicants of whatever immigration status that they can get. But Brewer's weird misstep does, however inadvertently, underscore an important truth: some firms are going to take down Help Wanted signs, period, because of this law. Businesses are really, really afraid of litigation. Some might look at this law and conclude that making sure that someone is legally in the country requires work and trouble. They face a really, really big risk of punishment -- losing their license, what Chamber provocatively called the "business death penalty" -- if they get it wrong. Loss aversion comes into play. And on the other hand, if an employer appears to be discriminating against people of a certain race or ethnicity, the specter of liability under Title VII and state anti-discrimination laws arises. One might very well rationally conclude that getting all of this right is just too much time and trouble and that it's just easier and safer not to hire right now. So this law will hurt lots of people seeking employment who aren't illegal immigrants -- people whose families have lived in America for many generations.
The argument made in the second half of Brewer's quote is more subtle, but still wrong. It boils down to, "Only the bad guys want to hire workers who aren't legal, and the law won't hurt the good guys." I don't think the bit about the law not harming good guys is true, for the reasons I just spelled out above. But I would frame the issue regarding the bad guys differently. There is some group of employers who are choosing not to hire legal workers because it's too expensive and too difficult. So they're resorting to hiring illegals instead because they can pay them lower wages and avoid entanglements with a complex regulatory and legal system. In other words, the real issue is that minimum wage laws and the regulatory and legal system prevent some legal workers from being hired. Rather than cracking down on illegal immigrants, would not the simpler solution be to let American employers hire native-born and legal immigrant workers at lower wages than they can currently and/or lessen the regulatory burdens on them? Yes, libertarian as I am, I'm willing to concede that some of our current wage and hour and health and safety laws are useful. But if these laws make hiring so expensive that lots of employers are looking outside the system to avoid them, then that is a huge cost that must be weighed against the other benefits created by such laws. (It may be worth noting here that even Barack Obama -- far from being a crazy libertarian as he is -- agrees with me at some level of generality about how to do cost-benefit analysis.)
Jim Harper has a good post at Cato-at-Liberty that covers some of this same ground.
Finally, I'm sort of puzzled that the employment parts of the Arizona law don't attract more attention and outcry relative to the "papers please" sections of it. I actually think the employment sections are far worse in terms of their potential for collateral damage to the broader national economy. Is this just a function of modern coalition politics -- i.e. liberal civil rights groups and business interests just don't work well together and are bad at attracting attention to their shared issues? Or is something else going on?
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