Arizona Immigration Laws (and Joe Arpaio) Called Out by Cato Institute for Economic Woes

The Cato Institute -- a libertarian think-tank -- needed just seven words to sum up its report today on how Arizona's immigration laws are affecting business, and put those words right at the front of its analysis: "Arizona's immigration laws have hurt its economy."

Not only that, but the Maricopa County Sheriff's Office and Sheriff Joe Arpaio got special recognition for helping hurt business in Arizona.

See also:
-Why Janet Napolitano Should Read the Cato Institute Report on Immigration Reform

The report takes a look at the 2007 Legal Arizona Workers Act -- which came with an E-Verify mandate for businesses to make sure everyone's hiring authorized workers -- as well as SB 1070, and how the state's economy is doing with those laws in effect.

The Legal Arizona Workers Act -- which also includes a "death penalty" for businesses hiring undocumented immigrants -- has businesses hiring fewer workers, moving out of Arizona, or just operating off the books, according to the Cato Institute.

The think tank blames 1070 for "exacerbat[ing] the Great Recession in Arizona," among other things.

"States now considering Arizona-style immigration laws should realize that the laws also cause significant economic harm," the report says. "States bear much of the cost of unauthorized immigration, but in Arizona's rush to find a state solution, it damaged its own economy."

An example of that can be found in the report's section on workplace raids. Of course, that's where Arpaio becomes a prime example, with his "employer sanction operations"/immigrant roundups. Arpaio fancies himself as a job-creator with the workplace raids, but as you can imagine, the economic analysis says that's false.

Noting that MCSO is the "biggest user and proponent" of [workplace] raids, and uses press releases and the media to multiply their deterrent effect," the Cato Institute points out what happens after a couple of these raids.

Using E-Verify does not prevent the disruption and closure of the "guilty" business locations. For example, the March 4,2011, raid on the Pei Wei chain restaurant locations in Tempe, Phoenix, Fountain Hills, and the corporate headquarters in North Scottsdale eventually shut down eight different Pei Wei restaurants in Arizona. The economic loss was an estimated $1.3 million in business revenue for the chain. PeiWei used E-Verify to confirm the work status of its employees, but the system's inaccuracies and loopholes allowed the chain to hire unauthorized workers. Twenty-seven people were arrested in the raid, and according to an MCSO investigation, 121 of Pei Wei's 800 employees in Arizona were unauthorized immigrants. Other raids on Golfland Sunsplash in Mesa and Waterworld Safari in Phoenix on June 10, 2008, netted 9 arrests. The raids took place despite the fact that the water parks checked their employees' identifications through E-Verify.

The analysis also mentions the MCSO raid of the Scottsdale Art Factory in 2009. Prosecutors sought the "business death penalty" after the raid, which is the third time that's happened. The other two "death penalties" weren't fought because the companies ended up going bankrupt anyway. The report says the Scottsdale Art Factory -- which has been in business since 1913 -- is still fighting the case in court.

Later in the paper, the Cato Institute suggests it's also possible that Arpaio and MCSO helped drive up housing-rental rates in the Phoenix area.

"Rental vacancy rates in Tucson and Phoenix moved in the same direction prior tothe passage of LAWA but immediately after LAWA they diverged, with Tucson's ratesfalling while Phoenix's rose," the analysis states. "This could be because many unauthorizedimmigrants and as well as authorized Hispanics left the harsher enforcement of the Phoenix area MCSO and moved to Tucson, which is known for its more lax enforcement of Arizona's immigration laws."

Of course, there are several factors related to immigration law affecting the economy that aren't related to Arpaio and MCSO.

You can see the report here -- there doesn't seem to be much money to be made with the nativist attitude.

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Matthew Hendley
Contact: Matthew Hendley