Arizona Small Businesses Fret After Immigration Ruling

WALL STREET JOURNAL (June 26, 2012)  Article by Emily Maltby:  Monday's Supreme Court ruling is igniting fresh fears among some local officials that Arizona might be boycotted, dealing an economic blow to local business and employees.

The high court ruled that it's not a crime for illegal immigrants to seek work and it rejected warrantless arrests. The court, however, upheld part of the law allowing police to check immigration status of people they stop, however.

After the law initially passed in 2010, many businesses and tourists—especially in California—boycotted the state. The law, in part, required law enforcement to detain individuals until their legal status was verified and also to check the immigration status of people stopped for traffic violations or other infractions.

Phoenix mayor Greg Stanton repeatedly appealed to outsiders to refrain from boycotting the city and the state as officials plan to implement the enforcement rule. "Don't punish small businesses," he said, during a community forum Monday night.

"We are [a] state and city that embraces diversity," Mr. Stanton said at another press conference Monday. "Just because a few people passed a bill that is not reflective of the state, don't stop doing business with us," said Mr. Stanton, who opposed the law.

But small business owners are also concerned about any longer-term impact on the local economy.

A negative perception about the state, they say, could push immigrants out of Arizona or deter them from coming. And that could mean fewer consumers to buy goods and services and a smaller workforce from which to hire.

David Jones, president and chief executive at the Arizona Construction Association, based in Phoenix, says there's already a labor shortage. In his opinion, whether immigrants now leave the state "depends on the professional law enforcement agencies and how they apply the law."

He adds: "We are relying on their professional conduct. We want to create an atmosphere where the public will feel welcome."

Generally, immigrants "are not here in the numbers they were when construction was white hot," he says. "What would motivate them to come back to Arizona?"

Rod Luker worries that his firm may have trouble filling certain positions as activity in the construction market continues to recover. Many people in the U.S. workforce today aren't willing to take the blue-collar jobs his industry offers, he says.

Mr. Luker is executive vice president at Superstition Mountain Builders, a residential construction firm, and its sister company, Superstition Mountain Properties, a commercial construction firm, based in Phoenix.

Access to labor is at the heart of the immigration problem, says Todd Landfried, executive director for the Arizona Employers for Immigration Reform, because the visa process is complicated and expensive. His organization, comprised of more than 350 members, was against Arizona's immigration law because it is in favor of federal immigration reform rather than state-by-state policies.

"The vast majority of businesses are law-abiding and only want access to the labor that they need when they need it," he says. "[Current] laws do nothing to facilitate that."

Tim Dunn Farms Inc., a 1,500-acre specialty crop farm in Yuma, Ariz., hires some 30 seasonal contract workers each year to help plant vegetables, beans and grain. Tim Dunn, who runs the business with his wife and father, says he hopes the federal government will tackle visa reform.

"Americans expect produce on their shelves," he says. "Either we will grow it or Mexico or Brazil will grow it. We want to make sure we can continue to produce in the U.S."

The Supreme Court ruled that illegal immigrants can now freely job hunt. But that doesn't mean employers can freely hire. Employers can still face penalties for hiring undocumented workers.

"Arizona tried to police its labor market," says Robert Destro, a law professor at The Catholic University of America in Washington, D.C. "Congress didn't make it a crime to work, but it's a crime to hire [undocumented workers]," he says.

Regardless of how the Supreme Court ruled, he says, "the small-business owner wants clarity. Business owners don't want to take time out to figure out the vagaries of immigration."

"In a way, for the employer, nothing has changed," adds Nancy-Jo Merritt, head of the immigration group at Fennemore Craig, a law firm in Phoenix. "The onus has always been on them."

Ernie Tercero is worried that people may continue to leave their communities for fear of being profiled. If that happens, sales at his meat distribution firm could slip.

"As an employer, it's more a problem about the people who buy," he says. "People already have gone to New Mexico and California." Mr. Tercero co-owns Devine Wholesale Provisions, which serves more than 100 grocers in Hispanic neighborhoods around Arizona.

But Ms. Merritt, of Fennemore Craig, says she is seeing a "slow shift to a more gentle attitude" that is easing both the level of enforcement and the kind of enforcement. The Supreme Court's decision to strike down much of Arizona's law is a part of that shift, she says, as is the Obama administration's recently announced Dream Act, which would halt deportations of illegal immigrants who were brought to the country at a young age.

That will give work authorization to a group of people that don't have work authorization, she says. "That broadens the base of workers in places like Arizona."