Bloomberg News

Arizona Businesses Brace for Pain Over Immigration Ruling

April 27, 2012

Protesters opposed to Arizona's Immigration Law SB 1070 march through downtown Phoenix on April 25, 2012. Photographer: Jonathan Gibby/Getty Images

Protesters opposed to Arizona's Immigration Law SB 1070 march through downtown Phoenix on April 25, 2012. Photographer: Jonathan Gibby/Getty Images

As several dozen workers weed his fields hugging Arizona’s border with Mexico, farmer Tim Dunn worries how he’ll augment his workforce if the U.S. Supreme Court upholds parts of the state’s immigration law.

In hearing arguments this week, justices signaled they might be prepared to uphold the core of Arizona’s crackdown on illegal immigrants -- known as S.B. 1070 -- that requires police officers to check the immigration status of anyone they suspect is in the U.S. illegally. Lower courts blocked the provision from taking effect.

At Dunn’s 1,500-acre Yuma farm, where workers are preparing to pick broccoli and cauliflower seed crops, that prospect is a threat to his plans for growth, he said.

“As the economy improves, it will be harder and harder to get the labor we need,” Dunn said. “1070 has stopped the debate as far as what we really need: a way for people to come here to work legally.”

Employers across the state concurred yesterday, saying they were concerned that a Supreme Court ruling in Arizona’s favor might spark renewed boycotts and prompt Hispanics who play a large role in the state’s economy to flee, whether or not they’re illegal immigrants.

“When S.B. 1070 first went into effect in 2010, we saw a significant drop in sales-tax revenues and an increase in the unemployment rate,” said Todd Landfried, executive director of Arizona Employers for Immigration Reform. “There’s no reason to think this won’t happen again if the law is fully implemented.”

Landfried’s group submitted a brief to the high court opposing the law.

Recession to Blame

In interviews yesterday, proponents countered that it’s unfair to pin economic troubles on S.B. 1070, saying Arizona’s businesses struggled largely because of the nationwide recession.

“We don’t believe there was a significant impact to the economy from the first round of boycotts after S.B. 1070 was signed into law,” said Matthew Benson, a spokesman for Republican Governor Jan Brewer. “We did see a downturn in tourism and employment, but it’s impossible to factor in how much of that was due to the larger recession.”

Arizona posted the second-highest percentage change in home prices in 2011, with values dropping 7.4 percent from the prior year, according to the Bloomberg Economic Evaluation of States, or BEES.

State lawmakers passed S.B. 1070 in 2010, contending that the border state had the right to clamp down on immigration to cope with an influx of illegal residents. Arizona had 360,000 unauthorized immigrants in 2011, of about 11.5 million nationwide, according to the Department of Homeland Security.

Net Zero

While millions of Mexican immigrants arrived in the U.S. in the past four decades, the wave has been offset in recent years by an equal number of migrants returning home, according to a report released April 23 by the Pew Hispanic Center in Washington, a nonpartisan research group. Net migration may have fallen to zero, the report said.

Weakened U.S. job and housing construction markets, heightened border enforcement, a rise in deportations, and the dangers associated with illegal border crossings contributed to the decline, the center said.

In the case before the Supreme Court, the central legal question revolves around whether federal law governing immigration, the U.S. Immigration and Nationality Act, pre-empts S.B. 1070.

Unfriendly Image

With the law tied up in the courts since its enactment, the economic effect in Arizona was largely due to a perception that the state is unfriendly to immigrants, some state business leaders say. If the law is put into place, its impact will be stronger, said James Garcia, a spokesman for the Arizona Hispanic Chamber of Commerce.

“When we talk with people who run hair salons or auto- repair shops or local grocery stores that cater to immigrants, they say that a lot of their customers left in 2010,” Garcia said. “A lot of mom-and-pop Latino-owned businesses are operating on a pretty small margin; if people are simply packing up and leaving, that’s going to hit them hard.”

In Phoenix, Hispanic consumers spent $7.8 billion in 2010 and are projected to spend $11.5 billion in 2015, according to a study to be released next month by the Hispanic chamber.

Arizona business leaders also point to studies conducted shortly after the law passed in 2010 showing that convention organizers shied away from the state, taking millions in economic benefits with them.

Convention Losses

The state lost $141 million in direct spending by attendees whose conferences were canceled, and another $253 million in economic output from conventions that otherwise would have occurred in the next two to three years, according to a study by Elliott D. Pollack & Co., a Scottsdale economic research firm, commissioned by the Washington-based Center for American Progress.

The law’s supporters say that the economic impact of undocumented immigrants taking advantage of Arizona’s services makes S.B. 1070 necessary.

“As former treasurer of Maricopa County, I saw firsthand how my state and my community were bearing the crushing financial burden of so many services for those that were here illegally: health care, education, incarceration,” U.S. Representative David Schweikert, a Republican, said in an e- mail. “I am concerned for the continued financial ramifications if this law is not upheld.”

To contact the reporter on this story: Jennifer Oldham in Denver at joldham1@bloomberg.net

To contact the editor responsible for this story: Jeffrey Taylor at jtaylor48@bloomberg.net


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