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The Top 5 Reasons Why S.B. 1070—and Laws Like It—Cause Economic Harm

Arizona’s Anti-Immigration Law Has Significant Economic Consequences for the Nation

SOURCE: AP/Rich Pedroncelli

California State Sen. Gil Cedillo (D-Los Angeles) calls on lawmakers to approve his proposed resolution calling on California to begin an economic boycott of Arizona over its controversial immigration law, S.B. 1070, at the State Capitol in Sacramento, California, Wednesday, June 23, 2010.

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Today the Supreme Court struck down three parts of Arizona’s anti-immigration law, S.B. 1070, while allowing Arizona to implement the “papers please” provision that will inevitably lead to racial profiling. Section 2(B) of the law mandates that police check the papers of anyone they suspect is in the country without legal status.

S.B. 1070 and laws like it significantly harm our nation’s wellbeing and have destroyed the economies of the states in which they have been imposed. Here we review the top five areas where S.B. 1070 and its copycats cause economic harm.

Five areas where S.B. 1070—and laws like it—cause economic harm

Tourism

Arizona’s law triggered a fierce national backlash against the state and led many national organizations and opinion leaders to call for economic boycotts. Arizona’s convention industry felt the effects of this backlash immediately when major groups and associations canceled events in the state. In the first year after passing S.B. 1070, Arizona saw an estimated $141 million in losses from conference cancellations.

The impact on Arizona’s tourism industry in the first year after S.B. 1070 went on the books included the loss of an estimated $253 million in economic output, $9.4 million in tax revenues, and 2,761 jobs.

Agriculture

Alabama and Georgia have also suffered deep economic harm due to their own restrictive copycat laws, especially in agriculture.

In Alabama, where the agricultural sector brings in a whopping $5.5 billion per year, damages to the $1.6 billion tomato sector are already mounting. Chad Smith, an Alabama tomato farmer, estimated that he would lose $300,000 last year alone due to the lack of workers to pick ripe produce.

Even before the new Georgia law was scheduled to take effect on July 1, 2011, an estimated 30 percent of both documented and undocumented farmworkers had fled the state. The Georgia Agribusiness Council estimates that the state faces a $1 billion loss from a shortage of immigrant labor that resulted in spoiled and unpicked produce rotting in the fields in 2011. This does not include losses from the state’s pecan, cotton, and peanut crops.

Business

Divisions between states as a result of restrictive immigration laws can also result in distorted competitive advantages in attracting new business. A St. Louis Post-Dispatch editorial foreshadowed this dynamic by soliciting business from a prominent auto manufacturer whose visiting executive was detained in Alabama because he lacked the right papers:

Hey, Mercedes, time to move to a more welcoming state. … we are the Show-Me State, not the “Show me your papers” state. … you’ve got two choices. Either ask your executives to carry their immigration papers at all times, or move to a state that understands gemüchlichkeit.

Education

Higher-education leaders in Arizona have said that their colleges and universities have already lost students, including out-of-state honors students, who don’t want to be subject to the racial profiling law. According to Arizona’s Maricopa Community College Chancellor Rufus Glasper:

… the many Latino citizens and lawful immigrants who attend college now face the offensive and discriminatory prospect of incessant demands to show their documents. … we can expect that some will find this prospect discouraging and will discontinue their pursuit of education and training as well.

Population loss

The economic impact of these harsh new immigration laws can also be measured in population loss. These losses result in fewer workers for the state’s economy as well as lower tax revenues, lower property values, less consumption, and fewer customers for local businesses and services.

One study estimated the economic impact on Arizona if S.B. 1070 were fully implemented and all undocumented immigrants were driven from the state: Employment would drop by 17.2 percent, 581,000 jobs would be eliminated for immigrant and native-born workers alike, the state economy would shrink by $48.8 billion, and state tax revenues would be reduced by 10.1 percent.

But it is not only the undocumented who are fleeing. Citizens and lawful residents who are part of mixed-status families (families with some undocumented immigrants and some legal or citizen members) or who simply don’t want to undergo the scrutiny mandated under the new law are also leaving Arizona, further hurting the state’s economy.

Conclusion

Although the Supreme Court narrowly allowed the racial profiling section of Arizona’s S.B. 1070 to stand, Arizona’s law is not and should not be the end of a discussion over how to fix our nation’s immigration system. Instead of enacting 50 state immigration laws, Congress must come together to pass a national immigration reform policy that helps our economy, is realistic, and serves our nation’s best interest. After all, real comprehensive immigration reform, instead of harsh state-level bills, would add a cumulative $1.5 trillion to the U.S. GDP over 10 years.

David Hudson is an Assistant Managing Editor at the Center for American Progress.

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