A new study from economist Dr. Samuel Addy, director of the Center for Business and Economic Research at the University of Alabama, provides evidence that "HB 56 has been, and will continue to be an economic disaster for the state of Alabama." Dr. Addy concludes that "Instead of boosting state economic growth, the law is certain to be a drag on economic development even without considering costs associated with its implementation and enforcement."

Among Dr. Addy’s key findings:

  • By driving some immigrants out of the state and others underground, the law will damage the economy by shrinking demand for the goods and services that Alabama businesses provide. Dr. Addy estimates that HB 56 will shrink the state’s GDP by at least $2.3 billion (1% of the state’s 2010 GDP), and possibly as much as $10.8 billion (6% of 2010 GDP).
  • Supporters of HB 56 have misleadingly pointed to the declining unemployment rate among Alabamians to argue that the law is "working." However, Dr. Addy points out: "recent data show employment falling in the four sectors (agriculture, construction, accommodation, and food and drinking places) that are often alleged to employ migrant and unauthorized workers." Dr. Addy estimates that the law will ultimately cost Alabama 70,000-140,000 jobs.
  • The supporters of HB 56 who deny that immigrants pay taxes might be surprised to learn that HB 56 is costing the state $57-$265 million in state taxes, with an additional $20-$90 million loss in local sales taxes. This is a staggering cost to the state budget even without considering the costs of enforcing the law and defending it in court all the way to the U.S. Supreme Court, which will cause the cost to balloon even more.

Addy also lays out common arguments among HB56  supporters and goes on to dispel the so called "economic benefits" of the law:

  • Saving funds used to provide public benefits to illegal immigrants
    The two most common benefits that illegal immigrants are said to enjoy are healthcare services at emergency hospitals and clinics and educational services (mainly for their children). No one knows for sure how much savings will be generated because of the significant uncertainty regarding the hard data required. However, as unauthorized immigrants try to avoid notice as much as possible any such savings is likely to be small.
  • Increased safety for citizens and legal residents
    This benefit depends on whether illegal immigrants commit crimes and endanger public safety at a higher or lower rate than citizens and other legal residents. There is a benefit only if the rate is higher for illegal immigrants. Considering that most illegal immigrants are seeking to better their lot, it is more likely that the rate would be lower for them.

  • More business, employment, and education opportunities
    It is generally accepted that unauthorized immigrants work for low wages. As such, the absence of illegal immigrants is likely to improve competitiveness for businesses that found it extremely difficult to compete because they do not use such labor. This might make the business climate attractive for out-of-state businesses that do not use illegal immigrant labor to consider relocating to the state. Such benefits for some businesses do not translate into a benefit for the aggregate economy because they cannot fully make up for the reduced demand caused by the absence of unauthorized immigrant workers.
  • Ensuring the integrity of various governmental programs and services
    This can only be a benefit of the immigration law if illegal immigrants use governmental programs and services dishonestly. Because they wish to remain undetected, illegal immigrants usually apply for services for their legal children when required to by state and national laws; sometimes these laws specify provision of the services to children.

The full report "A Cost-Benefit Analysis of the New Alabama Immigration Law" is available below. [PDF]
New AL Immigration Law – Costs and Benefits