By Laura DeKoven Waxman
July 18, 2011

Texas Representative Lamar Smith, Chair of the House Judiciary Committee, introduced legislation June 14 that would make the federal government’s Internet-based system that verifies work eligibility—E-Verify—mandatory for all employers in the United States. The bill is expected to move quickly through the Committee.

H.R. 2164 would phase in mandatory E-Verify participation for new hires in six-month increments: Within six months of enactment, businesses with more than 10,000 employees would be required to use E-Verify. This requirement would extend to business with 500 to 9,999 employees within 12 months after enactment, to those with 20 to 499 employees within 18 months, and to those with one to 19 employees within 24 months.

The bill also would require re-verification of the current workforce for federal, state and local government employees; workers assigned to a federal or state contract; critical infrastructure employers; and workers with expiring employment authorization. This requirement would not apply if the worker has already been verified by the employer through E-Verify. It would, however, impose a significant unfunded mandate on local and state governments.

An analysis of the bill by the Center for American Progress finds that “E-Verify is too expensive to make mandatory” and that “the system’s high error rates will keep many Americans from working, while catching less than half of all undocumented workers.” Specifically in the area of cost the analysis reports that:

• If made mandatory, E-Verify would decrease federal tax revenue by $17.3 billion over 10 years, according to the nonpartisan Congressional Budget Office.

• Mandatory E-Verify would cost small businesses $2.6 billion a year, according to a recent Bloomberg Government study.

• The Department of Homeland Security estimates it would require $765 million to $838 million over four years to operate E-Verify, an estimate the nonpartisan Government Accountability Office called “minimally credible.”

• The Social Security Administration estimates it would require $281 million over five years to operate E-Verify, but this figure does not take into account any of the new mandates in the Legal Workforce Act, such as a provision that SSA block misused Social Security numbers, or issue letters to both employers and employees when Social Security numbers are used by multiple people.

  Regarding the impact on legal and illegal workers, the analysis reports that:

• 770,000 legally authorized Americans would lose their jobs because of errors in the system.

• Another 1.2 million to 3.5 million Americans would have to visit a Social Security Administration office to fix erroneous information to avoid losing their jobs, which CAP estimates will cost $190 in lost wages and transportation per person.

• Naturalized citizens are 30 times more likely than the native born to receive an error from E-Verify.

• Those workers caught by E-Verify do not simply leave the country, but rather end up in the informal economy, where their earnings are not taxed, and as such are not part of government revenue.

• E-Verify has an accuracy rate of only 46 percent for undocumented immigrants, meaning more than half of all unauthorized workers have no trouble making it through the system.

E-Verify was created in the Illegal Immigration Reform and Immigrant Responsibility Act of 1996. It allows employers to electronically verify that newly-hired employees are legally authorized to work in the United States. Specifically, the Social Security numbers of new hires are checked against Social Security Administration and Department of Homeland Security records in order to eliminate fraudulent numbers and help ensure that new hires are genuinely eligible to work.