Arizona starts to see nativist fallout

Barron's magazine predicted that Arizona's move to impose tough sanctions on employers who hire illegal immigrants would result in an "Arizona apocalypse," and while it's too early to know if that dire forecast will come to pass, something is certainly in the works. Facing a ten-day suspension of their business licenses after a first offense, and a permanent revocation of licenses after a second transgression, companies are laying workers off, reassessing their ability to do business and even moving out of state.

Reports Agence France-Presse:

A crew leader who worked for Rick Robinson's Phoenix landscaping company left the state because his wife is an illegal worker. The worker was scared his wife would be deported.

"I've talked to other companies who have said they can't find anybody," Robinson said. "I've heard they're going to Utah or Texas or New Mexico because they don't have a law like this. We and other landscape companies are uncertain as to how far-reaching it will be. People don't know what they can and can't do. The whole thing is confusing, gross, and unfair."

David Jones, head of the Arizona Contractors Association, said he knows of three construction companies which have laid off 30, 40, and 70 employees respectively since the beginning of the year.

Unable to find jobs, or fearful that their loved ones will be caught and deported, illegal immigrants and their legal friends and relatives are fleeing the state in what the press has dubbed "Hispanic panic." In a state where illegals make up better than 10% of the workforce, the exodus promises to have a major impact. The vacancy rate in Tucson-area apartment complexes favored by illegal immigrants has jumped dramatically since the law went into effect. According to the Arizona Daily Star:

The vacancy rate on Tucson's South Side jumped to 11.9 percent in the fourth quarter of 2007, up from 7.1 percent a year earlier, according to Phoenix-based RealData Inc., a real estate research and consulting firm.

That area of the city has more than twice the rate of foreign-born residents than the city as a whole, according to the U.S. Census Bureau.

On the Southeast Side, 10.7 percent of apartments were empty, up from 5.9 percent a year before. That part of the city has a lower percentage of foreign-born residents.

As a whole, the metro area vacancy rate grew 1 percentage point to 8.3 percent, according to RealData.

Of course, advocates of the sanctions law will say that this is exactly the result they were hoping for; they want Hispanics to flee the state (usually, they'll claim that they just want the illegal ones to leave). But with workers leaving Arizona, taking their rent money, mortgage payments and shopping dollars with them, and with state employers facing rising labor costs -- if they can even find workers -- the economy is likely to take a major hit. In fact, the University of Arizona predicts a $29 billion economic loss if illegal workers are successfully purged from the state (full report here in PDF).

Of course, the law won't be universally successful. Faced with a damned-if-you-do, damned-if-you-don't choice, many businesses will just take their chances with illegal workers, and many will slip under the radar. At least one immigration expert -- Marc Rosenblum of the University of New Orleans -- predicts major growth in the underground economy, with more workers than ever before getting paid off the books.

Black markets have dulled the economic effects of stupid policies in the past, and will likely do so this time around too. But off-the-books workers will have less security and less money than they would if allowed to function in the official economy, and they'll contribute less than they would otherwise. That's especially true since workers have the option of going where they're welcome -- already there are reports that Mexicans intent on seeking work in the U.S. are bypassing the increasingly unfriendly border states. Why take an uncertain cash job in unwelcoming Arizona when you can get a job with benefits in Oregon or Virginia?

The real losers will be the people of Arizona -- the nativists tightening the screws, the workers and employers getting the shaft and the disinterested rest who find making a living increasingly treated as a privilege to be withdrawn at the whim of government officials.