Can Business Solve the Immigration Mess?

After the federal government failed to pass immigration reform, states and cities are looking to companies to address the issue

by Chi-an Chang

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Michael Francis is getting worried. At this time of year, the 56-year-old Arizona farmer is usually gearing up for his busiest season, culminating between December and February when workers harvest the potatoes, barley, alfalfa, and other crops he plants. But this year, he's concerned that some $4 million worth of crops could rot under the sun because of a lack of workers. Earlier this month, Arizona approved one of the toughest anti-illegal immigration laws in the country and he fears it will send workers fleeing from the state. "My whole life savings is in the fields, and I may not be able to harvest it," he says.

There are similar laments being heard around the country. Arizona is one of more than 100 states and cities that have passed their own immigration rules, even as the federal government has failed in its efforts at immigration reform. Most of the state and city initiatives are aimed at stemming the influx of illegal immigrants, now estimated at 12 million in the U.S.

One common theme among the initiatives is the increasingly prominent role of business. Politicians are asking companies such as Francis' to take on the task of determining who is a legal resident and who is not, particularly as they hire new employees. The idea is that most illegal immigrants come to the U.S. for work and they won't be motivated to enter the country if they can't get jobs. "The flow of illegal immigration into our state is due to the constant demand of some employers for cheap, undocumented labor," said Arizona Governor Janet Napolitano when she signed the state's new law.

In some cases, municipalities are going even further than asking companies to verify the status of new employees. The city of Hazleton, Pa., passed an ordinance that would have required landlords to prove that people staying in their housing were legal U.S. residents. The legislation was ruled unconstitutional by a federal court judge on July 26, but Hazleton Mayor Louis Barletta has vowed to appeal (see BusinessWeek.com, 7/26/07, "Small-Town Quarrel, Big Implications").

Employer Backlash

In Arizona, Francis and other businessmen say that expecting them to solve the problem that Congress couldn't is simply unfair. They say that government should bear responsibility for stopping illegals from entering the country, and they should be able to concentrate on operating their companies. "Instead of the government stepping up and dealing with [the immigration issue], they are expecting businessmen to become document specialists and to be their enforcement tool," says Kevin Rogers, president of the Arizona Farm Bureau and a farmer of cotton and alfalfa. "It's not fair to punish businesses."

Now, a legal battle is breaking out. A collection of Arizona business leaders are seeking a preliminary injunction to block the state's bill before it goes into affect on Jan. 1. In the suit, the Arizona Contractors Assn. and the Arizona Employers for Immigration Reform, a coalition of local businesses, argue that the law violates the U.S. Constitution, the state constitution, and the right to due process.

Arizona's law may be the toughest in the country for businesses. Under the new Employers Sanctions Bill, companies that hire illegal immigrants would see their license to operate suspended after the first offense. A second offense would result in what Napolitano calls the "business death penalty"—permanent revocation of a company's license to operate in Arizona.

Business owners say the measure is far too extreme for what they consider a relatively minor infraction. "It's like getting a death penalty for running through a stoplight," says Doug Pruitt, chairman and chief executive of Sundt Cos.