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The Impact of E-Verify on Minnesota’s Economy

Some members of Congress have proposed making it mandatory for all employers to use E-Verify—the federal, web-based program through which U.S. businesses can verify the work authorization of new hires.  However, mandatory E-Verify without immigration reform is not a solution to the problem of unauthorized immigration.  Addressing the reality of a workforce that relies on unauthorized immigrants requires a more comprehensive package of reforms—including a legalization program that brings unauthorized workers out of the shadows, and the creation of sufficient legal visas for the immigrant workers America needs.  Mandatory E-Verify alone is likely to harm the economy and U.S. workers.

Immigrants in Minnesota

  • Minnesota was home to 357,561 immigrants in 2009.  The foreign-born share of Minnesota’s population rose from 2.6% in 1990 to 6.8% in 2009, according to the U.S. Census Bureau.
  • Immigrants comprised 7.9% of the state’s workforce (or 234,457 workers) in 2009.   Unauthorized immigrants comprised 2.1% of the state’s workforce (or 60,000 workers) in 2010.

Mandatory E-Verify without immigration reform will result in lost tax revenue for Minnesota.

  • Households headed by unauthorized immigrants in Minnesota paid $82 million in state and local taxes in 2010, according to estimates prepared for the IPC by the Institute for Taxation and Economic Policy.
  • If E-Verify is made mandatory, unauthorized workers will move into the unregulated, underground economy where they will be paid under the table.  As a result, Minnesota will lose $16 million in income tax revenue from these workers.

Unemployment in Minnesota will likely INCREASE as a result of mandatory E-Verify.

  • Minnesota’s civilian labor force is 2,977,400 workers, and its unemployment rate is 6.6%. 
  • Surveys of E-Verify have found that between 0.8% and 2.3% of workers received an erroneous response from E-Verify, meaning they had to either correct their records or lose their jobs.  Applying the error rates to Minnesota, we estimate that between 23,819 and 68,480 U.S. citizens and legal workers in Minnesota would either have to correct their records to keep their jobs.
  • An estimated 0.5% of workers receive an erroneous final non-confirmation.  In Minnesota, up to 14,887 U.S. citizens and lawful workers would receive an erroneous final non-confirmation and lose their jobs.

E-Verify without comprehensive immigration reform will burden Minnesota businesses.

  • Currently only 4,047 businesses in Minnesota are enrolled in E-Verify, which amounts to 3.3% of all Massachusetts businesses.  Mandatory E-Verify would mean a 2,900% increase in the number of businesses using E-Verify in a short time period.
  • Small businesses would be hardest hit.  In Minnesota, there are 118,391 small businesses, and 98% of all state employers are small businesses. 
  • Bloomberg estimated that E-Verify would cost small business $435 per year.  That amounts to more than $51.5 million per year paid by small businesses in Minnesota to use E-Verify.

Published On: Wed, Jul 20, 2011 | Download File