Policy Analysis No. 709

The Economic Case against Arizona’s Immigration Laws


LAWA’s mandate of E-Verify, a federal electronic employee verification system, and the “business death penalty,” which revokes business licenses for businesses that repeatedly hire unauthorized workers, raise the costs of hiring all employees and create regulatory uncertainty for employers. As a result, employers scale back legal hiring, move out of Arizona, or turn to the informal economy to eliminate a paper trail. SB 1070’s enforcement policies outside of the workplace drove many unauthorized immigrants from the state, lowered the state’s population, hobbled the labor market, accelerated residential property price declines, and exacerbated the Great Recession in Arizona.

LAWA, E-Verify, and the business death penalty are constitutional and are unlikely to be overturned; however the Supreme Court recently found that some sections of SB 1070 were preempted by federal power. States now considering Arizona-style immigration laws should realize that the laws also cause significant economic harm. States bear much of the cost of unauthorized immigration, but in Arizona’s rush to find a state solution, it damaged its own economy.

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