CAP en Español
Small CAP Banner

Top 10 Reasons Alabama’s New Immigration Law Is a Disaster for the State’s Economy

Workers Fleeing the State Are Also Taxpayers and Customers

SOURCE: AP/Dave Martin

A row of Hispanic-owned businesses are closed in Albertville, Alabama, Wednesday, October 12, 2011. Dozens of businesses across the state shut down as Hispanics took a day off from work to protest against Alabama's tough new immigration law.

    PRINT:
  • print icon
  • SHARE:
  • Facebook icon
  • Twitter icon
  • Share on Google+
  • Email icon

The immigration law is much worse than Jefferson County’s bankruptcy as far as industrial recruiting. At some point, Jefferson County [the most populous county in the state] will come out from bankruptcy. But we may be stuck with this destructive immigration law from here on.

- David Bronner, chief of Alabama Retirement Systems.

Alabama’s new immigration law, H.B. 56, will destroy the state’s economy. Its “show your papers” provisions are causing both lawful and undocumented workers to flee the state, crippling businesses. An economist at the University of Alabama estimates that the state economy would lose $40 million if only 10,000 undocumented immigrants stopped working in the state.

As if that weren’t enough, both the loss of tax revenues and the new costs imposed on the state by the law’s unfunded mandates will batter Alabama’s bottom line.

Under Alabama H.B. 56:

1. Businesses are losing workers. Undocumented workers as well as lawful resident workers are fleeing the state for fear that their undocumented family members will be arrested. And businesses that rely on undocumented workers cannot bring in “legal” immigrant workers because the U.S. immigration system provides no lawful visas for workers essential to many parts of the U.S. economy. Businesses simply cannot survive without their workforce.

2. Businesses are seeing fewer customers. The new immigration law’s economic damage also has to be measured in terms of the customer base that businesses are losing as both undocumented and lawful immigrants leave the state. Business owners report sales are down by 60 percent and dropping by the day in some parts of the state.

3. Key sectors of state economy are suffering irreparable damage. Alabama’s state Agricultural Commissioner John McMillan stated that the new immigration law “could have an enormous adverse economic impact on agricultural business in Alabama. It is unquestioningly going to drive up food prices…How are we going to rebuild Tuscaloosa [after the April tornados] without roofers and construction workers?”

4. The agriculture sector is already experiencing major losses. Commissioner McMillan stated, “The economic hardship to farmers and agribusiness will reverberate throughout Alabama’s economy, as one-fifth of all jobs in our state come from farming.” The Alabama Farmers Federation estimated the sector would suffer $63 million in losses as the result of the new law going into effect.

5. The state tourism industry is threatened. The new law took effect near the end of this year’s tourism season. But the impact is already being felt as tourism-related businesses lose workers and as people cancel plans to vacation in Alabama. Charles Manswer, an information technology businessman, cancelled a 10-day golf vacation to Alabama with 11 associates. One of his associates was born in Puerto Rico and another is a British citizen, and they were concerned about being hassled about their legal status. “Whether it’s legitimate or not, that’s the message seen by people who might come to Alabama,” Manswer said.

6. The overall costs of doing business in Alabama are higher. Businesses are required by the new law to use a costly and inaccurate electronic verification system, E-Verify, to check whether prospective employees are authorized to work. And the cost of hiring and training new workers to replace the current experienced workers who are leaving the state is another new cost of doing business. “There is an understanding that it is going to be a difficult transition for employers as far as cost and that it will be a lengthy transition,” said state Sen. Arthur Orr (R-Decatur).

7. New businesses are already canceling projects in Alabama. Reports are coming in about businesses that decided not to locate projects or plants in Alabama. BBVA Compass, owned by the Spanish megabank BBVA Group, is said to have cancelled plans for an $80 million tower in Birmingham for the bank’s U.S. headquarters. And state officials are reporting that Golden Dragon, a Chinese copper pipe manufacturer that had announced it planned to build a $100 million plant in Alabama, is having second thoughts.

8. The state is losing taxpayers.The entire undocumented population is estimated to pay $130 million annually in state and local taxes, including income taxes, property taxes, and sales taxes. Alabama is already losing residents as the result of its new immigration law. These losses will undeniably hurt a state in which its most populous county, Jefferson County, has already declared bankruptcy.

9. The costs of defending the new law are significant. The U.S. Department of Justice and several other state and national organizations have already sued the state of Alabama to prevent the new immigration law from going into effect. The federal district court and the 11th circuit court temporarily halted parts of the new law while they consider the significant legal and constitutional questions raised by this broad new law. While the legal costs have not been tallied, the lessons from Arizona are instructive. In the first year alone, Arizona spent $1.9 million just to defend its own new law, S.B. 1070, in preliminary court cases. In Farmers Branch, Texas, and Hazelton, Pennsylvania, the costs of defending their own restrictive immigration laws are expected to top $5 million for each town.

10. The state is facing new costs from an unfunded mandate. The new Alabama law will cause new economic losses for the state, but its unfunded mandates will also add to the state’s bill. New costs will come from the training required for all state law enforcement officials, the new data collection and reporting required of all public schools, and the additional work that all state, county, and municipal employees will have to do to verify the immigration status of every person seeking state services or doing business with the state.

See also:

 

To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund, women's issues)
202.741.6285 or kpeters@americanprogress.org

Print: Tom Caiazza (foreign policy, health care, LGBT issues, gun-violence prevention, the National Security Agency)
202.481.7141 or tcaiazza@americanprogress.org

Print: Chelsea Kiene (energy and environment, Legal Progress, higher education)
202.478.5328 or ckiene@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Rachel Rosen
202.483.2675 or rrosen@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org