The Economic Costs of E-Verify

December 2, 2013

An electronic employment verification system (or E-Verify, as it is known) is widely considered to be an essential component of immigration reform. It shouldn't be. E-Verify is an expensive and wrongheaded labor market regulation that will force every American employer to ask the federal government for permission to employ workers. To add insult to economic injury, E-Verify is also ineffective at deterring unauthorized immigration, says Alex Nowrasteh, an immigration policy analyst at the Cato Institute's Center for Global Liberty and Prosperity.

E-Verify requires employers to feed the identity information of prospective employees into a federal online database that then verifies the information with that stored in the Department of Homeland Security and state DMVs.

In reality, E-Verify will make it harder for hundreds of thousands of legal Americans to get a job.

  • According to a recent independent audit of E-Verify conducted by the firm Westat, between 0.7 to 0.3 percent of all E-Verify queries produced erroneous TNCs, meaning they were issued to legal workers.
  • If 150 million American workers were run through E-Verify tomorrow, somewhere between 450,000 and slightly more than 1 million American workers would be notified that if they do not address the problem then they will lose their jobs.
  • Those Americans would then have to correct any inconsistencies before the government gave them clearance to be employed full time. That hardly seems fair for these legal workers.
  • Because so many workers would be stopped from working due to red tape and system errors, the Congressional Budget Office estimated in 2008 that mandatory nationwide E-Verify would decrease federal tax revenue by $17.8 billion dollars over the course of a decade.

In addition to the economic costs, E-Verify is not effective at forcing unauthorized immigrants out of the labor market. One of the major flaws of the system is that only about half of all unauthorized immigrants checked through E-Verify are flagged as unauthorized. Half are confirmed to work.

Since E-Verify checks the documents given by the employee to the employer, an unauthorized immigrant just has to present a stolen identity to get legally confirmed to work. If E-Verify were mandatory for all hires, it would actually incentivize more identity theft as we've seen in states that have mandated E-Verify for all hires.

E-Verify is supposed to make enforcing immigration law easier, but it imposes an enormous economic cost on Americans while incentivizing black market hiring -- it should be scrapped.

Source: Alex Nowrasteh, "The Economic Costs of E-Verify," The Federalist, November 11, 2013.


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