Health Care and Economy and Education & Workforce Development and Government

Alien hirers rarely busted: Law doesn't force employers to verify that workers are legal

April 24, 2006

Despite a high-profile raid against IFCO Systems on April 19, Indianapolis employers have little to fear in hiring undocumented aliens or those who present questionable identification.

Rarely do immigration cops bust an Indianapolis-area workplace.

Until federal agents led away about 40 allegedly undocumented Mexicans and Guatemalans at the south-side pallet plant this month, the last high-profile raid was more than a decade ago. In 1995, customs officials raided the former Simpson Race Products shoe factory in Speedway, nabbing 66 illegal aliens and their family members.

"There really have not been any actions against employers to speak of" in Indianapolis, said Gail Montenegro, a spokeswoman for the Chicago office of U.S. Customs Immigration and Enforcement, or ICE.

ICE has been focusing mostly on workers in security-sensitive areas such as at airports. It also targets drug trafficking and other crimes involving immigrants. The businesses ICE targets typically are suspected of transporting illegal aliens into the country for commercial purposes-as it has alleged in the IFCO case.

In addition to hauling away workers at several IFCO plants around the country, ICE arrested seven U.S. executives of the German company.

Still, the giant newspaper headlines and dramatic TV news images of immigrants being rounded up is an aberration to the reality in Indianapolis. Employers have had little to fear-other than not having enough workers to win business in a robust local economy.

Employers often are enticed by the potential to hire illegals to cut costs and pad profits, regardless of consequences involving national security or the drain on social services posed by a flood of undocumented workers.

And that flood is so large-11.5 million undocumented workers in the United States, by some estimates-that employers understand the odds are in their favor.

"It's a bit like speeding. Travel around on highways in less-populated areas and you're likely to find that the traffic hews fairly close to the speed limit. Travel around I-465 or the Dan Ryan Expressway in Chicago and the speed limit is more or less a forgotten number," said Justin Heet, associate fellow at the Sagamore Institute for Policy Research and lead author of "Beyond Workforce 2020".

"Catching renegade businesses would, overnight, become one of the largest, if not the largest, law enforcement undertaking of the federal government. In a time of tremendous budget crises at the federal and state levels, this is neither practicable nor feasible," Heet added.

Thus, immigration law has become a joke in the eyes of some employers.

"It's sort of like the old Indiana fireworks law. You could buy all these fireworks, if you set them off out of state. It's one of those situations. Wink. Nod," said Patrick Barkey, an economist at Ball State University in Muncie.

Sensitive subject

Abandoning that status quo could put many businesses in peril, especially those that traditionally hire large numbers of immigrants, such as lawn care firms and construction companies, observers say.

"There are many contractors that are concerned about limiting or hindering the labor supply of Hispanic workers," said J.R. Gaylor, president of the Associated Builders & Contractors of Indiana.

But that doesn't mean business owners are eager to voice their concerns publicly. Many local employers known to employ immigrants didn't return calls, and those that did would say little.

Six years ago, The Indianapolis Star ran a glowing account of how Nu-Tec Roofing Contractors was a friend to Hispanic workers. Company officials spoke proudly of their efforts to help the city's new visitors by hiring a bilingual personnel administrator, payroll administrator and foremen.

Today, Nu-Tec's human resources manager isn't so forthcoming. He refers questions about hiring policies to Otis Burdine, head of Nu-Tec's Indianapolis operations.

"I'm not in charge of hiring," responded Burdine, declining to elaborate.

The sensitivity of the subject doesn't surprise Barkey.

"The dumbest thing any employer could do is rock the boat and talk about it openly," he said.

One reason: Businesses are finding themselves in the middle of the raging debate between national security issues and matters of hiring, said David Holt, vice president of work-force development policy at the Indiana Chamber of Commerce.

"Businesses are stuck in between them. We're basically a ping-pong ball," Holt said.

But proponents of immigration reform say it's just the opposite-businesses aren't pawns but are the enablers of illegal immigration.

In other words, if businesses won't hire them, they won't come.

"For [business], this is a subsidized labor force," said Ira Mehlman, spokesman for the Federation for American Immigration Reform, or FAIR.

The Washington, D.C.-based group argues that while businesses enjoy labor cost savings, U.S. citizens cover illegals' tab for health care, education and other public services.

Among the tougher proposals percolating in Congress are those making an undocumented presence a felony-and requiring employers to check the status of their workers.

FAIR wants employers to be required to access a Social Security search system, which would be established by the federal government, that could verify the identity of the immigrant job applicant.

Mehlman said that if Visa and Master-Card can process millions of sensitive financial transactions per day, there's no reason the government can't do so with identity "other than the fact that there hasn't been the political will."

Lack of verification

There already is a system in place to detect stolen and borrowed Social Security numbers job applicants present to employers, known as the Employee Verification Service, or EVS. It matches numbers with Social Security Administration records.

But, according to a report by the Washington, D.C.-based Center for Immigration Studies, only 6,000 of 6.5 million American employers were registered to use EVS, and even fewer use it because many employers "prefer ignorance."

Added economist Barkey: "You could always say employers weren't skeptical enough."

Current law requires employers to ask for valid identification numbers from employees, on the W-4 withholding form. But employers have no legal requirement to validate the information provided to them, said Pat Brummer, spokeswoman for the Internal Revenue Service.

"They may rely in good faith on the information the employee provides and use it to complete the employee's Form W-2," she said.

Those forms are processed by the Social Security Administration, which looks for mismatches of Social Security numbers, and reports the information to the IRS. The SSA found about 8 million W-2 mismatches in 2004 involving $53 billion in wages.

The SSA can send letters to employers and employees in an attempt to reconcile the mismatch. But according to IRS testimony in Congress in February, employers receive letters only if they submit a wage report containing more than 10 W-2 Forms that SSA can't process.

More than half the mismatches come from four states with heavy immigrant populations-California, Texas, Florida and Illinois. And 75 percent of all mismatched W-2s reported wages of less than $10,000, suggesting that workers may have moved from job to job during the year.

When the IRS notifies an employer of an incorrect Social Security number, that employer must make an "annual solicitation" for the correct number by year-end. But by then the worker in question often has moved on, Brummer said.

The IRS can slap employers with a penalty for inaccurate identification numbers of up to $250,000 a year-unless the employer makes an initial and, if necessary, annual request for the correct number.

"I am unaware of [the] IRS sustaining any penalty against an employer for failure to provide an accurate SSN for an employee. The fact that we have not ... probably shocks many of you. To some extent, it shocks me as well," IRS Commissioner Mark Everson told the House subcommittee on Social Security in February.

Of course, the IRS is quick to point out that its jurisdiction does not extend to immigration reform-only tax collection.

Narrow enforcement focus

U.S. Customs Immigration and Enforcement has conducted a handful of high-profile cases against employers, including an $11 million settlement with Wal-Mart Stores Inc. in 2005 for immigration violations involving contract janitor firms it hired to clean its stores.

A dozen janitorial firms agreed to pay an additional $4 million, some involving undocumented workers from Eastern Europe.

But in Indianapolis, most of ICE's busts have involved unauthorized immigrants from Mexico and Central America who've committed street crimes.

Last year, for example, ICE, along with several other federal and local agencies, nabbed a half dozen men living in Indianapolis on cocaine trafficking charges.

ICE during the year also rounded up 103 members of the street gang Mara Salvatrucha, better known as MS-13, including one accused of committing gang activity and a burglary in Noblesville.

In the workplace, "We really focus more on industries that fall within critical infrastructure and national security" such as at airports, nuclear power plants and on those who transport hazardous materials, said ICE spokeswoman Montenegro.

The agency does go after businesses that have a role in the illegal recruiting or importation of workers, she added.

While work-site enforcement is practically non-existent, some in the business community are starting to worry after hearing tough talk in Congress.

"There's a huge amount of concern, absolutely," said the Chamber's Holt.

That's because not only do immigrants fulfill a need for labor, they also spend millions of dollars that help keep the Indianapolis economy humming.

State numbers murky

It's not clear how many undocumented immigrants hold jobs in Indiana. The number is likely "much higher" than the 45,000 estimated by the Bureau of Citizenship and Immigration Services, according to a study last year by the Indiana Commission on Hispanic/Latino Affairs.

The report cited federal census estimates that the overall Hispanic population in Indiana is also likely much higher than the 242,518 estimate by the U.S. Census Bureau in 2004.

A 2005 report by the University of Georgia estimated that population in Indiana last year pumped in $4.9 billion-much of it flowing to local businesses.

Pull out many of those workers and "it's going to be a huge impact on the state of Indiana," Holt said.

Too big, here and throughout the United States, to expect Congress to pass anything extreme, say observers.

"We can't force businesses to pay so much in penalties that it would threaten the business's viability if they are caught," Sagamore fellow Heet said.

"There is also a tremendous silent cost with this approach. If we make the penalties potentially crippling, business would be forced to dedicate considerable human resources time to determining whose documentation is valid and whose documentation is invalid. Human resources departments are not private detective outfits."

Thus, he doesn't anticipate businesses will significantly change hiring practices despite the specter of new legislation.

Indeed, Sergio Aguilera Beteta, consul general of Mexico's Indianapolis consulate, said he continues to receive positive feedback from local employers about the performance and reliability of Mexican immigrants working here.

And he said he's heard nothing to suggest businesses are cutting back on hiring of immigrants.
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