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Talent Management Perspectives

Published September 2007

Supply and Demand: The Illegal Worker Equation

Tegan Jones

New federal regulations regarding illegal workers are scheduled to take effect at the end of next week. The rules will require employers to identify and fire employees who are using false Social Security numbers. Government officials hope the rules will help them crack down on the employment of illegal immigrants, but critics say they will only create problems for companies.

In the current system, employers have no defined legal obligation to act on Social Security Administration notices that identify employees whose names and numbers don't match their records. The new rules, effective Sept. 14, will require companies to investigate those notices, known as no-match letters, and allow for civil fines or criminal charges when businesses fail to comply with the law.

Although most employers know what to do with no-match letters and can easily implement the new regulations, many businesses are worried they won't be able to replace the workers they are forced to fire, said Eric S. Bord, director of Morgan Lewis Resources' Immigration and Nationality Services practice and counsel in the Labor and Employment Law practice.

"The bigger concern for employers is how this affects their retention," he said. "By definition, if somebody is working in a job, there is an employer's need and a worker's supply of that labor. And we're upsetting that equilibrium without coming up with an alternative."

Without offering a way for in-demand workers to become legal, either temporarily or permanently, businesses in low-skill industries that depend on that labor will suffer, Bord said.

Because there are not enough high school students who don't go on to college to fill all the low-skill manufacturing, agricultural and service jobs available, businesses in many areas are struggling to fill those types of positions with nonimmigrant workers.

Further restricting that necessary labor source will force many otherwise honest organizations to turn to the black market to meet their needs, Bord said.

"It will create pressure on smaller employers who need the labor to pay workers off the books, and it will create more of a cash economy and a gray market in labor as people who had been employed are pushed out of their jobs," Bord said. "I think we will see honest employers being hurt the most and desperate or disreputable, and those aren't necessarily the same thing, as employers trying to find ways to stay under the government's radar."

Marc Rosenblum, a fellow at the Migration Policy Institute, said another problem with no-match letters is they don't necessarily indicate that a person is in the country illegally — name changes, marriages and divorces are just a few of the circumstances that can create errors in the Social Security Administration's database, and a great deal of the no-match letters reflect this kind of mistake.

Additionally, many employers are upset because they feel they are being unfairly deputized to help the government fix its records and enforce its laws, Rosenblum said.