Sunday, April 27, 2008

How to Further Mess Up This Economy

I consider the U.S. Chamber of Commerce (USCC) to be a pretty credible organization as far interests groups go.  The main value of their efforts is in serving as a reality check for governmental "initiatives" designed to "help".  For this reason, the results of their recently commissioned study caught my eye, and it is yet another glaring revelation of just how oblivious Washington is to the precarious state of our national economy, Wall Street bailouts notwithstanding.



According to the study, performed by former OMB economist/now-consultant Richard Belzer, the USG's proposed plan to crack down on illegal workers could cost employers more than $1 billion a year and legal workers billions in lost wages.  The study will be among public comments submitted to the Homeland Security Department on the proposal. The department could adopt the proposal after reviewing the comments. The deadline for comments is Friday.  The CRITICAL issue revealed by Belzer:  based upon a somewhat-forgotten-by-this-administration 1981 law, agencies are REQUIRED to do a comprehensive study of proposed regulations if the cost of implementation exceeds $100 million.



The buzz, of course, is all about those now-infamous "no-match letters" the SSA sends to employers. They often occur because someone is working illegally, but a mismatch can also take place because of typos, misspellings and name changes, among other reasons.  Prior studies have documented that the USG's official assessment of an error rate of 10% is twice that.  Naturally, in keeping with the long-standing policy of establishing delusional assessments of the impact of yet another regulation/form on employers, the DHS determined there would not be a heavy cost to employers.



The funny/sad part is that Belzer didn't even dispute the USG's given numbers, which are no doubt hopefully optimistic: he accepted as a given the Homeland Security's estimate that 2 percent of legal workers a year would lose their jobs because they can't resolve the Social Security mismatch. But unlike the government, he did the math, concluding that this adds up to between 37,000 to 137,000 unable to get work. Belzer estimated their lost wages would be from $8 billion to $37 billion.



His cost estimates are based on the department's original plan to enforce the no-match rule after the government sent 140,000 employers no-match letters, blocked by U.S. district judge last October after groups opposed to it sued. The department is, of course, appealing...stay tuned.



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