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Alabama’s Anti-Immigrant Law HB 56 Proving More Costly Every Day

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alabama mercedesIt’s been a little while since we’ve mentioned Alabama’s HB 56, the harshest state immigration law in the land.  With the state legislature coming back into session February 7, however, you’ll be hearing more about attempts to repeal this terrible law.  And boy, are there reasons to push repeal.

We’ve covered the humanitarian aspects of the law extensively.  Today we wanted to highlight how HB 56 is hurting Alabama economically.

The Economist last week wrote this amazing post on HB 56’s unintended consequences for foreign businessmen in the state—recall how two foreign auto executives were detained in November for driving without an Alabama state license:

[HB 56] is not, however, designed to introduce visiting executives from Mercedes-Benz, which employs thousands at its factory in the state, to the pleasures of Alabama’s jails.  But that is what happened to Detlev Hager, who was caught in November driving in Tuscaloosa with only German ID on him…

Samuel Addy, an economist at the University of Alabama, estimates the law’s total cost—taking into account productivity declines, increased enforcement cost, and declines in aggregate consumer spending and tax revenue since so many workers have left—in the billions…

Foreign companies have flocked to Alabama in recent years; they employ over 54,000 Alabamans. How many more will want to come if their employees risk being treated like Mr Hager, or worse? 

An article in the Montgomery Advertiser this weekend underscores how the law might be making foreign businesses think twice about investing in Alabama:

An economic developer for Etowah County expressed concern Thursday that some foreign companies may be removing Alabama from their lists of possible locations for new facilities because of the state’s tough new immigration law.

Mike McCain, executive director of the Gadsden-Etowah County Industrial Development Authority, spoke at a meeting of the House Economic Development and Tourism Committee, which was discussing proposed bills for the 2012 legislative session designed to help bring new jobs to Alabama.

Committee member Democratic Rep. Rod Scott of Birmingham asked McCain if he had sensed from any reluctance from foreign businesses because of the immigration law.

McCain said no companies have said they won’t come to Alabama because of the law, but he’s concerned some foreign businesses “may be crossing us off their list.”

Later in the meeting, Birmingham attorney Alex Leath who works on economic development issues, told committee members it has been his experience that other states are using the immigration law against Alabama when recruiting new businesses.

“We did kind of hand them a stick so we shouldn’t be surprised they are hitting us with it,” Leath said.

More about why anti-immigrant laws such as HB 56 result in the opposite of economic benefits:   

If there is such a thing as consensus among economists, it can fairly be said that they have concluded that illegal immigrants are a net plus for the U.S. economy. The stories of native Americans not filling jobs that illegals will do are legion, and indeed we have many “natural experiments” where a factory or farm was emptied of foreign workers by a federal raid and could not be replaced by American citizens.

But the evidence runs much deeper than anecdote. Recent studies, in fact, suggest that immigrants — including “out of status” workers — actually increase jobs for native workers as a result of reducing “offshoring” (sending jobs overseas) and making firms more efficient.

Some economic activity is simply forfeited by the loss of illegal workers. Consider the case of Alabama. Like Arizona and a number of municipalities and states passing laws empowering police, schools, and other state agencies to demand proof of legal status, Alabama enacted one of the most far-reaching laws to dissuade illegals from coming to or remaining in the state. This is what Mitt Romney recently called “self-deporting.” And, in a sense, it works, because the small fraction of the Alabama workforce — one half of one percent — that was comprised of illegal immigrants up and left.

Well, it turns out that the agricultural sector in Alabama is suffering mightily as a result. Reportedly, crops are rotting in the fields and attempts to hire native workers have failed. The tens of thousands who fled not only provide labor that is otherwise hard to find, but they spend their paychecks at the local grocery, pay rent and utilities, and so on — the “multiplier effect” that creates economic growth. If taxes are withheld from their paychecks, they will never be able to file for refunds (like the majority of taxpayers), meaning that they are subsidizing schools and hospitals and such at a higher rate than many Alabamans.

By the way, undocumented immigrants in Alabama paid about $130 million in state and local taxes in 2010.  That’s a few million tax dollars the state won’t be collecting this year.