States Rush to Fill Immigration Law Void

Employers will feel the pain as local officials crack down on illegal immigration.

By Mark Willen, Senior Political Editor, The Kiplinger Letter

July 17, 2007

With Congress stymied, look for state and local governments to take the initiative on immigration legislation, passing a bevy of bills that run the gamut from denying benefits to illegal immigrants to imposing penalties on their employers.

The immigration bills will have a common theme: tough sanctions. The aim of most bills is to make life more difficult for both illegals and the companies that hire them. Unlike the federal legislation, the state bills don't provide an alternative supply of labor, such as through a guest worker program.

Arizona's new law is the prime example, with sanctions even tougher than those passed recently by Georgia and Oklahoma. The Arizona law calls for the suspension of the business license of any firm that knowingly hires illegal aliens, with permanent revocation for a second offense. Democratic Gov. Janet Napolitano reluctantly signed the bill just days after Congress' effort at a national law collapsed. Napolitano, who vetoed a similar bill last year, says Congress' failure left her no choice. She'll call a special session of the legislature to make some changes in the law before it is set to take effect on Jan. 1.

Several more states will follow suit in 2008. Most state legislatures have already adjourned for the year.

Local governments are also cracking down. Prince William County in Virginia, for example, is curbing access to public services and giving police more leeway to ferret out illegals.

Some targeted legislation is still possible from Congress. Most likely to pass: funding to add border security staff and equipment plus an effort to make more foreign temporary farm help available.

More problematic is a hike in H-1B visas for high-tech workers. Support is broad, but backers of a comprehensive bill want to use H-1Bs as a carrot to help win support for the more controversial provisions.

All this leaves some employers in a terrible bind. States can crack down on firms, but they can't give them what they need: a guest worker program and better tools to check a worker's legal status. States also can't fix the legal immigration system, which is a real mess, burdened by cumbersome rules, bureaucratic snafus and costly delays.

Firms that can will send more jobs abroad. Microsoft, for one, will open a new center in Canada because it can't get enough H-1B visas to hire foreign computer programmers.

But the service sector is looking at significant labor shortages. Facilities in remote areas, where labor is scarce, are hit hardest. Construction firms are also beginning to run short of skilled laborers.

And there's no relief in sight. Employers will have to make do until at least 2009, the next real opening for a guest worker program.

For weekly updates on topics to improve your business decisionmaking, click here.