Would Mandatory E-Verify Boost Wages and End Illegal Hiring? What the Data Shows

For more than two decades, the centerpiece of conservative proposals to curtail unauthorized immigration has centered on a single administrative mechanism: mandatory workplace eligibility verification ^[4]. Known as E-Verify, the web-based system operated by the Department of Homeland Security (DHS) allows employers to cross-check newly hired workers' Form I-9 information against records maintained by the Social Security Administration (SSA) and the U.S. Citizenship and Immigration Services (USCIS) ^[2].

Proponents of immigration enforcement argue that federal worksite enforcement—specifically making E-Verify compulsory nationwide for all private and public employers—is the single most effective tool to "turn off the jobs magnet" ^[4]. Conservative lawmakers contend that as long as unauthorized workers can readily secure employment, border enforcement alone cannot stem illicit migration flows ^[4]. Furthermore, advocates argue that shrinking the pool of unauthorized workers removes a source of low-wage labor competition, forcing employers to raise compensation and improve working conditions for native-born Americans and legal residents ^[4].

Opponents and skeptical economists counter that universal E-Verify acts as an uncoordinated tax on small businesses, creates administrative hurdles for authorized workers caught in database errors, and fails to stop illegal hiring because the system cannot detect identity fraud ^{[3], [6]}. Moreover, research on state-level mandates demonstrates that without expanded legal guest-worker pathways, mandatory E-Verify often shifts unauthorized employment out of tax-paying formal jobs and into cash-in-hand informal arrangements ^{[1], [5]}.

System Mechanics and Systemic Accuracy

Understanding the impact of E-Verify requires examining how the platform functions in practice ^[2]. When an individual is hired, the employer submits the employee's name, date of birth, Social Security number (SSN), and citizenship status into the E-Verify portal ^[2]. The system automatically cross-references these details against SSA earnings databases and DHS immigration databases ^[2].

According to official DHS performance statistics, the vast majority of queries—approximately 98.7%—result in immediate confirmation of employment authorization ^[2]. The remaining 1.3% of cases trigger a Tentative Nonconfirmation (TNC), indicating that the information entered does not match government databases ^[2]. A TNC notice requires the employee to either contest the mismatch within eight federal workdays or face termination ^[2].

DHS data indicates that the erroneous TNC rate—where a legally authorized worker is incorrectly flagged by the system—stands at roughly 0.15% of total queries ^[2]. While 0.15% appears small in percentage terms, applying that error rate across a nationwide workforce of 160 million annual hires would result in approximately 240,000 legal American workers facing temporary employment disruptions and bureaucratic remediation requirements each year ^[3]. These discrepancies disproportionately affect naturalized citizens and married women whose legal name changes have not yet fully updated across Social Security records ^[3].

What the Data Shows: Wage and Employment Effects of State Mandates

Because federal law currently only mandates E-Verify for federal contractors, economists rely on state-level natural experiments to measure the real-world impact of universal mandates ^[1]. Between 2007 and 2023, several states—most notably Arizona (2007), Mississippi (2008), Alabama (2011), Georgia (2011), and Florida (2023)—enacted broad E-Verify mandates covering all or most private employers ^{[1], [5]}.

Landmark econometric studies conducted by Federal Reserve Bank of Dallas economists Pia Orrenius and Madeline Zavodny provide granular empirical findings on how labor markets adjust to E-Verify mandates ^[1]:

• Impact on Likely Unauthorized Workers: Mandatory E-Verify leads to a substantial decline in formal employment for likely unauthorized immigrants ^[1]. In Arizona, the 2007 Legal Arizona Workers Act reduced the population of unauthorized Mexican immigrants in the state by an estimated 11% to 17% relative to non-mandate states ^[1]. Hourly earnings for likely unauthorized male workers fell by 7% to 12%, as workers were forced to accept lower-paying off-the-books positions or move to sub-contracting roles ^[1].
• Impact on Competing Native Workers: The Dallas Fed research identified clear, positive wage spillovers for specific native demographic groups ^[1]. Naturalized male Mexican immigrants and native-born Hispanic men experienced average hourly wage gains of 2% to 4% following the passage of state mandates ^[1]. This supports the economic hypothesis that reducing unauthorized labor supply increases bargaining power for legal workers in similar occupational niches ^{[1], [4]}.
• Impact on Non-Hispanic White Workers: The studies found virtually no statistically significant change in wages or employment levels for native-born non-Hispanic white workers, reflecting low occupational overlap with unauthorized immigrant labor ^[1].

The Full Picture: Identity Fraud, Underground Economy, and Small Business Burden

Evaluating mandatory E-Verify requires examining structural vulnerabilities that limit the system's effectiveness as a standalone enforcement tool ^{[3], [6]}.

1. The Identity Fraud Loophole: The single greatest weakness of E-Verify is its inability to detect identity theft ^{[3], [6]}. E-Verify confirms that a Social Security number belongs to a legally authorized person and matches the name provided ^[2]. However, if an unauthorized worker presents authentic documents belonging to a legal worker (such as a borrowed or purchased birth certificate and SSN card), E-Verify approves the worker instantly ^[3]. A comprehensive audit conducted by Westat for DHS estimated that over 50% of unauthorized workers verified through E-Verify were mistakenly cleared due to identity fraud ^{[3], [6]}.

2. Expansion of the Underground Economy: Rather than causing all unauthorized workers to depart the country or stop working, mandatory E-Verify incentivizes a structural shift toward informal employment ^{[1], [5]}. In Florida, following the implementation of Senate Bill 1718 in July 2023, policy analyses by the Florida Policy Institute noted that while large corporate construction and agriculture firms strictly adopted E-Verify, smaller sub-contractors and independent cash-based crews expanded rapidly ^[5]. This informalization reduces payroll tax collections for state and federal governments while leaving workers without statutory injury protection ^{[3], [5]}.

3. Sectoral Labor Disruption in Agriculture and Construction: In labor-dense sectors like agriculture, fruit picking, and roof framing—where unauthorized workers comprise 40% to 50% of the workforce nationwide—mandatory E-Verify without expanded guest-worker visas (such as H-2A or H-2B reforms) creates acute labor shortages ^{[4], [5]}. Following Georgia's 2011 E-Verify mandate, the Georgia Department of Agriculture reported over $140 million in unharvested crop losses due to severe farm labor shortages that native workers did not fill ^{[1], [5]}.

Conclusion

The empirical evidence surrounding mandatory nationwide E-Verify presents a nuanced policy trade-off rather than a silver-bullet solution ^{[1], [4]}. The conservative argument contains a verified core of economic truth: mandatory E-Verify successfully suppresses unauthorized formal employment and yields tangible, modest wage increases (2% to 4%) for low-skilled native and naturalized workers who directly compete with unauthorized labor ^[1].

However, framing E-Verify as a frictionless mechanism that automatically eliminates illegal employment overlooks fundamental labor market realities ^{[3], [6]}. Without biometric document verification, mandatory E-Verify drives a thriving black market for stolen identities ^[3]. Furthermore, without corresponding reforms to legal workforce channels, E-Verify pushes undocumented labor into the unregulated shadow economy, raising compliance costs for legitimate businesses while creating localized shocks in agricultural and construction supply chains ^{[1], [5]}.