Legal Issues

Alabama's Immigration Law Could Cost Billions Annually


Alabama's Immigration Law Could Cost Billions Annually

Photograph by Peter van Agtmael

Alabama’s harsh immigration law has stirred controversy since it went into effect in September. The statute, which among other things requires police to question people they suspect of being in the U.S. illegally, has prompted thousands of immigrants to flee the state. The law’s backers believed out-of-work Alabamians would snap up the jobs those immigrants once held.

It hasn’t turned out that way. A new study details the economic impact of harsh immigration laws such as those passed by Alabama and five other states. Published by the Center for Business & Economic Research at the University of Alabama, it’s the first economic cost-benefit analysis (PDF) of the state’s immigration statute. Dr. Samuel Addy, an economist and director of the Center, found that the law, known as HB 56, will annually shrink Alabama’s economy by at least $2.3 billion and will cost the state not less than 70,000 jobs .

Most of the damage will come from reduced demand for goods and services provided by Alabama businesses patronized by immigrants. Addy projects that 40,000 to 80,000 immigrants will vacate their jobs. (It’s not possible to know exactly how many will leave; his calculation is derived, he says, from a combination of state labor-force data and data from the Pew Center on the States.) Those positions support other jobs, leading to a net employment loss of 70,000 to 140,000. As a result, Addy estimates, the state’s gross domestic product will decline by $2.3 billion to $10.8 billion for every year the law is in effect and will cost $56.7 million to $264.5 million in tax revenue.

“The economy can still grow, but it will be on a lower growth path than would have been the case without the law,” Addy concludes.

Many Alabamans have rejected hard, dirty, low-paying jobs that immigrants once performed: picking tomatoes, working in chicken plants, and gutting catfish. Now employers struggle to fill those positions. Despite the state’s 8.1 percent jobless rate, the four job categories that once hired most of the state’s immigrants—agriculture, construction, food service, and hospitality—employ fewer people than they did before the law went into effect.

Dwoskin is a staff writer for Bloomberg Businessweek in Washington. Follow her on Twitter: @lizzadwoskin.

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