Thursday, May 27, 2010

Arizona's Bill Is Bad For Business

There has been a lot of media attention placed on the effects of Arizona’s new immigration law and the impact on local residents. However, the bill also includes strict new immigration requirements for business owners. As this article from explains, the law is likely to make doing business in Arizona much more difficult.

SB 1070 is the most extreme anti-business law in recent history. For instance, sections 7 and 8 set out punishments for employers who knowingly or intentionally hire undocumented workers. In both cases for a first offense, the employer has to fire all undocumented workers, sign an affidavit attesting to that and promising not to repeat his mistake, and have all his business licenses suspended.

Additionally, and perhaps most gallingly, the business is then put on a three-year probation (five years for those that intentionally hire undocumented workers) and must file quarterly records to prove that it has not since broken the law again. This would amount to businesses being presumed guilty and being forced to prove their innocence. It will hurt entrepreneurship and endanger the economic recovery.

Most egregiously, if a business commits a second such offense and hires an undocumented worker, all of its business licenses are permanently revoked. Because it is illegal to operate a business without a state-sanctioned license in the state of Arizona, that amounts to the government forcibly shutting down someone's business.

Adam Smith, the father of modern economics, warned against business licensing because it is used to limit competition and entrench politically sanctioned monopolies. It accomplishes that by limiting entry or destroying businesses already in existence. A simple administration revocation of a piece of paper can be used to destroy someone's livelihood. This is not only destructive to business in the short term but sets a dangerous precedent.

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