The Government’s plan to crack down on undocumented workers could cost employers in excess of $1 billion a year and could cost legal workers billions in last wages, a study commissioned by the US Chamber of Commerce says.

Those costs are enough to trigger a federal law that would require the Department of Homeland Security to analyze more thoroughly the effect of its proposal, said Richard Belzer, a consultant hired by the chamber to do the study.  The results were made available to The Associate Press last week.  The most notable response by the chamber is its opposition to the proposed "no match" rule which would require employers to fire workers who can’t resolve mismatches between their name and Social Security numbers.  Belzer’s study will be among public comments submitted to the DHS on the proposal.  The department could adopt the proposal after reviewing the comments. 

With regards to opposing the "no match" rule, the letters are sent from Social Security to employers they suspect may be using undocumented workers.  The letters can frequently stem from mismatches from typos, misspellings, and name changes.  When implementing the "no match" rule, DHS issued what they estimated to be the average costs, well below the latest study’s findings.

Belzer, a former economist with the Office of Management and Budget, looked at overall costs and multiplied the average costs by number of employers in each category.  He also used DHS estimates that 2 percent of legal workers a year would lose their jobs because they would be unable to resolve a Social Security mismatch.  That adds up to between 37,000 and 137,000 unable to get work.  Belzer estimated their lost wages would range from $8 billion to $37 billion annually.  He also added that the crackdown could cost employers who have to carry out administrative paperwork when their employees are affected.  The loss of employees would also affect a company’s ability to produce and distribute their goods. 

The study’s cost estimates are based on DHS’ now-suspended plan to enforce the no-match rule after the government sent 140,000 employers no-match letters, each with about 10 or more names.  A US district judge blocked the plan last October after groups opposed to it sued.  The department is appealing. 

A federal law in place since 1981 requires agencies to do a comprehensive study of proposed regulations if the cost exceeds $100 million, said Belzer, and independent consultant.  "This is 10 times that," he said of the DHS rule.  "They haven’t done the level of analysis that for almost 30 years would be commonplace."

NOTE: The US Chamber of Commerce report is available online at: http://www.uschamber.com/publications/reports/0802_finding_balance.htm