Florida HB 1617/SB 1718: Potential Economic and Fiscal Impact

Below are Florida Policy Institute’s (FPI’s) estimates of the economic and fiscal impacts of CS/CS/SB 1718 and CS/HB 1617.

For ease of reading, the bills will be referred to as “SB 1718” and “HB 1617,” as there are no more committee substitutes to be introduced ahead of the impending floor votes. Given vague language around provisions in both the Senate and House versions, which are identical as of April 26, 2023, these estimates likely underestimate the true impacts to Floridians, businesses, state agencies, and Florida’s economy as a whole. Kentucky considered similar legislation, SB 6B, in 2011. Its Legislative Research Commission determined the fiscal impacts were vast and unquantifiable; the bill ultimately died. FPI analysts used publicly available data to provide the following conservative estimates and social implications of SB 1718 and HB 1617.

Section 6: Employment of Undocumented Floridians

Both bills would make it unlawful for any person to knowingly employ, hire, or recruit a person for public or private employment who is not authorized to work under federal immigration law–either for oneself or someone else (for verbatim language, see Section 6 in either bill). Noncompliance carries several penalties for employers:

Repayment of any economic development incentives,
One-year probation period with quarterly reports to the Department of Economic Opportunity (DEO), and
Added penalties if an employer has a second violation within two years, tiered based on the number of workers without documentation.¹

Additionally, any worker who uses false documentation to get hired would be subject to a third-degree felony, resulting in a fine of up to $5,000 or five years in prison. It may not be reasonable to assume that most people would pay the $5,000 fine in lieu of imprisonment, because that amounts to almost 10 percent of Floridians’ median household income. Many undocumented immigrants earn even less than U.S.-born workers and naturalized citizens, so revenue from resulting charges under this provision might not meet state expectations.

Section 7: Employment Verification (a.k.a. Use of E-Verify system)

Both bills would require businesses to verify employment eligibility for each new employee within three business days of starting work. The “E-Verify system” is an internet-based system operated by the U.S. Department of Homeland Security that allows employers to verify if someone is legally authorized to work in the country.²

This system is already mandatory for public employers; this legislation would also require it for private employers with 25 or more employees. Additional penalties were removed from the original bills proposed by each chamber, but one noteworthy one remains:

If the state determined an employer failed to use E-Verify three or more times within two years, the DEO would have to fine the employer $1,000 per day and suspend all applicable business licenses until the employer provided proof of compliance.

This could cost Florida’s economy $12.6 billion in one year, which would have widespread impacts throughout the state.³

While this mandate does not apply to past hires/existing employees, future penalties could push Floridians without a documented immigration status out of the workforce.

Industries That would Be Most Impacted by E-Verify Provisions

The six industries that would be most impacted represent the top industries for employment for undocumented workers in Florida: (1) Construction; (2) Professional, Scientific, Management, Administrative, and Waste Management Services; (3) Accommodation and Food Services, Arts, Entertainment, and Recreation; (4) Retail Trade; (5) Other Services; and (6) Agriculture.

The industries above employ 391,000 undocumented workers, who make up nearly 10 percent of employment in these industries.
Undocumented workers made $12.6 billion in wages in these industries in 2019 (which provides the most robust recent data, due to collection issues during COVID-19).
Estimates show that immigrants without a documented status spend 7.3% of their income paying taxes, contributing close to $923 million to state and local taxes in 2019 alone.

The six industries accounted for 25 percent of Florida’s gross domestic product (GDP) in 2019, producing $275 billion.

Without undocumented workers, employers in these industries would lose 10 percent of their workforce and the wages they contribute along with them. As a result, Florida's GDP could drop by $12.6 billion in a single year, or 1.1 percent. Cutting these workers’ spending power means state and local tax revenue would drop as well.
This would significantly impact one of Florida’s top industries — Agriculture, Forestry, Fishing and Hunting — since it is estimated that undocumented workers make up 47 percent of its labor force. Florida’s agricultural industry would face significant challenges in particular, as farmers must fill jobs quickly in geographically isolated areas, making them reliant on a high density of foreign-born migrant workers. After Georgia passed its E-Verify law in 2011, one farmer alone witnessed 300 field workers flee, which he anticipated would force him to “abandon about 25 percent of his 125 acres, at a projected loss of $250,000 [that] season.”

Policy Implementation Would Be Expensive, Uphill Challenge

DEO currently does not have a robust enforcement section and would incur costs to establish positions and enforce the provisions of this section, resulting in significant costs.
The system’s flaws are costly. CATO Institute found within states that mandate E-Verify, employers and employees alike are “widely ignoring the mandate.” Even in states with much more aggressive enforcement than HB 1617/SB 1718 would require, only half of employers are willing or able to comply.
Due to errors in the government databases that support E-Verify, the system may incorrectly reject a U.S. citizen or other person legally authorized to work. Based on these error rates, FPI estimates that 11,053 Florida workers could receive an error.⁴ Additionally, documented immigrants and green card holders (lawful permanent residents) are over 27 times and 4 times more likely, respectively, to be subject to an E-Verify error than U.S. citizens. As a result, companies will hire workers, put them through E-Verify, and then be forced to fire them rapidly or risk additional punishments and fines. Turnover is also expensive for businesses.

Section 10: Human Smuggling

SB 1718 and HB 1617 define “human smuggling” as any person who knowingly and willfully transports an undocumented person into the state, who had known or who “reasonably should have [known]” that person’s immigration status. (See Section 10 in both bills for verbatim language.)

Scenarios Where Floridians Could be Charged With Felonies

Both bills would establish the punishments below for people who knowingly and willfully transport an undocumented person into Florida⁵:

Scenario 1: Third degree felony for someone’s first offense, with fewer than five immigrants transported.

Separate count per each undocumented immigrant transported
Up to a $5,000 fine (in lieu of imprisonment) or five years in prison per count

Scenario 2: Second degree felony (punishments may include up to a $10,000 fine [in lieu of imprisonment] or 15 years in prison) for anyone who:

Commits scenario 1 a second time
Transports five or more people without documentation during a “single episode”
Transports an undocumented child (under age 18) into the state

According to the bills, a person who is arrested for “human smuggling” must be held in custody until brought before the court for admittance to pretrial release.

Potential Cost of Incarceration

Enforcement would cost the state between $152,000 and $481,000 per person convicted, depending on the felony type.⁶

Third degree felony– would cost the Department of Corrections up to $152,000 to incarcerate each person, or $129,000 if they serve 85 percent of their sentence.‍
Second degree felony– would cost the Department of Corrections up to $481,000 to incarcerate each person, or $408,000 if they serve 85 percent of their sentence.

Groups Most Likely To Be Impacted by Human Smuggling Provision

Countless Floridians could be charged with “human smuggling” under SB 1718/HB 1617’s vague and far-reaching provisions. While the true impacts cannot be comprehensively assessed, FPI included in its estimate two of the groups most likely to be impacted. The original versions of each bill would likely have impacted many more Floridians, so this narrowed scope is a significant improvement.

Married couples

‍Approximately 130,000 undocumented immigrants are spouses of U.S. citizens in Florida. A U.S.-born spouse could be subject to a third degree felony for transporting their husband or wife when traveling out of state and returning home with their loved one.

Farm workers and their travel companions

‍There are 150,000 to 200,000 seasonal and migrant farm workers that travel (often with their families) from other states to work in Florida each year. As previously mentioned, 47 percent of agricultural and related workers in Florida lack a documented immigration status.⁷

Anyone who transports (e.g., drives) one of these undocumented migrant workers into Florida — like a family member, friend, employer, or coworker — could be subject to a third degree felony.
It is also common for agricultural workers to carpool or caravan for seasonal work in small groups. So if a person drives to work with five or more undocumented coworkers even one time, they could be charged with a second degree felony.

‍Unauthorized "Alien" Transport Program will cost an additional $12 million

Currently, the state appropriates $12 million from interest received from the federal government for COVID-19 recovery to “facilitate the transfer of unauthorized aliens out of the state,” including subcontracting to private transportation companies to do so. Despite national outcry, the Legislature made this initiative permanent (the “Unauthorized Alien Transport Program”) in this year’s special session with SB 6-B, which is now law.

Both bills call for an additional $12 million for the program for FY 2023-24.⁸Targeting immigrants — regardless of their documentation status — and diverting any revenue to this program is harmful not only for immigrants, but for all of our communities.

‍

Notes

¹The tiers are as follows: 1 to 10 undocumented workers, suspension of all business licenses for up to 30 days; 11 to 50 workers, suspension of all business licenses for up to 60 days; more than 50 workers, revocation of all business licenses.

²Note that this is an expansion of E-Verify legislation passed in the 2020 session, SB 664. Private employers had a second option to verify employment under that bill, which became law in 2021. SB 664 only required public employers to use the system. This attempts to rectify that by requiring private employers to use E-Verify exclusively.

³To approximate the number of Floridians without a documented immigration status, FPI used data from the Migration Policy Institute, based on their analysis of U.S. Census Bureau data from the pooled 2015-19 American Community Survey (ACS) and the 2008 Survey of Income and Program Participation (SIPP), weighted to 2019 unauthorized immigrant population estimates provided by Jennifer Van Hook of The Pennsylvania State University. Then, FPI used U.S. Bureau of Labor Statistics’ (BLS) employment and wage data to determine the number of workers in the six industries provided and their total annual wages. Assuming workers without documentation were left out of BLS data, FPI added the number of estimated workers without documentation to the labor pool. Then, FPI divided total annual wages by the new labor pool to establish average annual wages (about $30,810) for all workers across the six industries, including those without documentation (ranging from $17,701 in Agriculture, to $44,320 in Construction). The findings are comparable to those from the Institute on Taxation and Economic Policy (ITEP). Then, using ITEP’s estimates that workers without documentation spend 7.3 percent of their income paying state and local taxes in Florida, we multiplied our estimated total wages for undocumented workers (about $12.6 billion) in these industries by 7.3 percent, to derive an estimate of $923 million state and local tax contributions. A limitation in our methodology is that it assumes no workers without documentation were counted in BLS data and that they are paid comparable wages to other workers.

⁴E-Verify Performance, FY 2022, available at https://www.e-verify.gov/about-e-verify/e-verify-data/e-verify-performance. USCIS reports 0.12 percent erroneous tentative nonconfirmation (TNC) rate. There are currently about 9,210,870 workers employed in Florida: https://www.bls.gov/oes/current/oes_fl.htm#00-0000. 0.12 percent of 9,210,870 Florida workers is approximately 11,053.

⁵The original chamber versions would have also imposed harsh penalties for those who transport immigrants within the state, which would have made an immeasurable number of everyday Floridians subject to felonies. See FPI’s decision tree of the Senate version of this, prior to the Legislature narrowing the scope of the legislation.

⁶To establish a cost estimate, FPI used the results of the March 27, 2023, Criminal Justice Impact Conference’s “DOC Per Diem and Bed Costs.” A third degree felony can lead to imprisonment not to exceed five years. Therefore, FPI used the conference’s full operating costs per inmate forecast for FY 2022-23 through FY 2026-27. A second degree felony can carry an imprisonment sentence not to exceed 15 years. FPI used the conference’s full operating costs per inmate for the 10-year period of FY 2022-23 through 2031-32. To account for the additional 5 years, FPI used the average for the ten-year period ($32,036) and multiplied it by 5.

⁷See endnote #3

⁸As of April 26, 2023, the Conference Committee on Transportation, Tourism, and Economic Development are consolidating differences between the Florida Senate and House of Representatives budget offers. According to line 575 of the offers, the House and Senate have yet to establish an amount for the “Unauthorized Alien Transport Program.” However, both bills (see Section 21) appropriate “sum of $12 million from the General Revenue Fund … to the Division of Emergency Management within the Executive Office of the Governor for the Unauthorized Alien Transport Program.”