Editor’s note: This is a continuation of a strand of guest blog articles about the growing schism between the states and the federal government written by guest blogger James Williamson, an Ohio native and current Alaska resident. Here’s a link to the first of his articles, “Imminent Rebellion: States vs the Federal Government.” His prior post, “Imminent Rebellion: The Tar Pit,” left loose ends that are wrapped up in what is written below. As you may recall, Fort Sumter, South Carolina, is where our nation’s Civil War began, back in the 1860’s. Will the the friction between states and the federal government reach a breaking point? Will there be a new Fort Sumter? The focal issue of this post is illegal immigration.
Imminent Rebellion: The New Fort Sumter
At the end of “Imminent Rebellion: The Tar Pit,” we reviewed the sticky situation which immigrants and employers find themselves trapped in. This is largely because of the inadequacy of current immigration laws and the shortcomings of enforcement (i.e. weakness of I-9 requirements). As time goes on and more and more employers become dependent upon immigrants to maintain their workforce they find themselves in a very precarious position. They can crackdown and lose a large part of their labor force or they can ignore the problem and stay profitable. The latest stage of the awkward predicament of unauthorized labor is a very sneaky one. Employers faced with the huge liability of hiring unauthorized workers are less and less willing to hire anyone they suspect does not have work authorization for fear of immigration raids, and perhaps even more damaging, bad publicity.
I work in the construction industry, and the drywall contractors were the first to figure out that there was a way around the law: Don’t pay W-2 wages. Pay 1099 wages. There is (as far as I know) no requirement to verify work authorization for a subcontractor or consultant. These are considered independent business entities and are responsible for their own verification of work authorization and the payment of taxes. Simply put, hire them as self-employed contract workers and let them worry about employment eligibility and payroll taxes. So the drywall industry started paying by the sheet of drywall hung and/or finished. Officially, on their accounting, they will show dozens or hundreds of subcontractors generally consisting of a single worker. Sometimes, though, subcontractors with multiple workers will surface where the owner doesn’t have work authorization either. Since the drywall industry began this new and improved technique it has since spread to many other trades and is being practiced by larger and larger companies who are more and more desperate in an ever more competitive market.
The irony of this situation is that this new arrangement actually is a revenue killer for the government. When it was easy to get a W-2 wage, most aliens didn’t file tax returns for fear of being caught (although some of the more brazen ones would anyway and file many more dependents than they really had). Now those same aliens are not filing on their 1099’s for the same reason. Since there isn’t any withholding on a 1099, the government gets less revenue that they are not likely to ever recover.
Think of the pre-Civil War south, when plantation owners practiced slavery. There are some parallels that are striking. We now have a division among the states (and cities) on the question of immigration much like we did on the question of slavery. States and cities that profit from the current situation favor leniency and in some cases amnesty. Note the reaction of Los Angeles to the recently enacted Arizona law, for example. States and cities that do not profit from large populations of unauthorized alien workers are generally on the other side of the argument calling for stricter laws and the “abolition”, if you will, of such employment practices and securing the border. The reasons for ending illegal immigration and slavery are quite different but the end result is the same: Tension exists between the states and the federal government that is fueled by economic pressures. For the deep south, the slaves kept the cotton machine going, and consequently kept the southern political influence alive until the resolution of the Civil War. For states like California, New York, and Texas, immigrants dominate the service, construction, and agriculture industries.
John C. Calhoun, in his final address to the U.S. Senate in 1860, argued that it was not slavery but the imbalance of power that caused the tension between the states. It was the north imposing its will upon the south by reason of it’s population growth. Growth increased the representation in congress and economic influence over the country. He argued that to preserve the union, the balance of power would need to be restored or the south would be forced to separate to protect its interests from what was perceived as a hostile north. This, of course, was on the eve of the Civil War, and with the election of Abraham Lincoln, who was viewed by the south to be a threat to the status quo, the south began to take their exit. Now we have the opposite situation with the federal government favoring the status quo by doing nothing, but again the end result is the same: There are many unhappy states that view the federal government as a problem, not a solution.
Congressman and senators are reluctant to take any real action. After all, if you are a congressman or senator with a large population of illegal immigrants in your district, what greater boon can you have than a large portion of your constituency that can’t vote? More power + less accountability = a politician’s dream. Business owners who rely on illegal immigrant labor are reluctant to push for legislative change because they don’t want to see large portions of their workforce disappear. Since business is still the largest source of cash for the political machine there is double the reason for politicians to do nothing. This appears to be a nice arrangement: Talk about change but don’t actually deliver the change, while campaign money keeps flowing, and then repeat, with more talk about reform, do nothing, etc. There is only one problem with the model though: State politicians don’t get any of the benefit from this arrangement since they don’t regulate immigration but they have to deal with the problems it creates. Hence Arizona Senate Bill 1070, its aftermath, and the new political Fort Sumter…