A report released this week by an economics professor states that Alabama’s immigration law could potentially be more costly than supporters imagined.
The cost-benefit analysis, written by Dr. Samuel Addy of the University of Alabama’s Culverhouse College of Commerce and Business Administration, found the law could mean Gross Domestic Product losses of $2.3 billion to $10.8 billion, income and sales tax losses of $56.7 million to $264.5 million, and local sales tax losses of $20 million to $93.1 million.
Addy said the law’s economic costs also include: implementation, enforcement and litigation expenses; increased costs and inconveniences for citizens, legal residents and businesses; fewer economic development opportunities; and the economic impact of reduced aggregate demands as immigrants leave and no longer earn and spend in the state.
The report is based on 40,000 to 80,000 illegal immigrants leaving the state and also leaving behind jobs that pay $15,000 to $35,000 per year, leading to job reductions of 70,000 to 140,000 jobs. Those jobs, the report said, constitute $1.2 billion to $5.8 billion in earnings.
A sponsor of the immigration bill, Republican Rep. Micky Hammon of Decatur, called the report “baloney.” He said it doesn’t account for jobs that will become available when illegal immigrants leave the state.
While the report paints a grim economic picture, Addy’s findings also include benefits of HB56, including a savings in public benefits, increased safety for citizens, increased business, education and employment opportunities for legal residents and “ensuring the integrity of various governmental programs and services.”
However, the report points out that while supporters claim illegal immigrants took jobs away from legal residents, farmers and other businesses “should not have complained about the law,” given the state’s high unemployment rate.
“There was very little worker substitution and most of the few that considered the jobs previously performed by unauthorized immigrant workers did not have the requisite skills and productivity,” the report says. “With a focus on preparing the workforce for high-skill, high-wage and fast-growing jobs, it is unreasonable to expect people to flock to lower wage jobs that are performed under tough conditions.”
State Sen. Bill Holtzclaw said Alabama’s steadily decreasing unemployment rate is proof the law is working. Though he had not yet read the report, he said a jobless rate of 8.1 percent is hard to argue against.
“I’m not an economist, but there are numbers that we can capture and those we can’t,” he said. “What we’re not looking at are the unknown costs of illegal immigration on the state that can be factored into health care and overcrowded schools because no one is tracking those variables.”
When asked if the state would be looking at ways to track those costs, Holtzclaw said it may be impossible after a federal judge ruled school systems will not be able to obtain immigration information from students. He said the state did not seek the names of students, only numbers.
While the state’s jobless numbers spiked following the April 27 tornadoes, Holtzclaw said, they began to level out over the summer and nosedived when the law was upheld in September.
Since January 2011, Alabama gained 35,400 jobs, according to the Alabama Department of Industrial Relations. The majority of the gains came from the sectors of trade, transportation, and utilities; professional and business services; leisure and hospitality; and manufacturing. Declines were recorded in the government and information sectors.
Addy’s report, however, jobless rate drops cannot be credited to HB56 “except when more previously-held by illegal immigrant jobs than the unemployment rate would cover are taken up by unemployed legal residents and citizens.” He said this is because the unemployment rate is a ratio of the number of unemployed to the number of people in the labor force.
The report said if the unemployment rate is 9 percent, then the law can be said to have provided employment opportunities only if unemployed legal residents and citizens fill more than 9 of every 100 jobs vacated by illegal immigrants at the same skill and productivity levels.
“Anecdotal evidence to date seems to point to less than 9 of every 100 vacated jobs being filled by unemployed legal residents and citizens,” the report says. “Also, recent data show employment falling in the four sectors (agriculture, construction, accommodation, and food and drinking places) that are often alleged to employ migrant and unauthorized workers.”
Holtzclaw said even though an undocumented worker may have earned a wage and spent money in the economy, he questioned if the financial effects of that person leaving the state outweighed jobless benefits for an unemployed Alabamian.
“That’s a factor we can’t quantify, but we know there’s a cost there,” he said. “There is statistical proof that this bill is a jobs bill and did create jobs in Alabama.”
Rep. Dan Williams, R-Athens, said the drop in unemployment claims is a good indicator of the law’s effectiveness, but added HB56 might get an additional overhaul when the legislative session begins on Feb. 7. He and other Republican lawmakers have said they don’t want the law to be the primary topic of discussion, but Williams admitted it will be hard to avoid.
“I know there’s a lot of pressure to repeal the bill or make changes, but most legislators may wait to see what the Supreme Court decides,” he said. “There may be some changes made on situations where it’s putting too great a burden on some companies. One of my main concerns will be if it’s going to hurt smaller businesses.”
To read Addy’s report in its entirety, visit http://www.scribd.com/doc/79981193/Costs-and-Benefits-Analysis-of-Alabama-Immigration-Law.
— The Associated Press contributed to this report.