Washington Wants More E-Verify. It Still Doesn’t Work.

The Trump administration is quietly pushing employment verification across much of the economy. But the system still can’t tell a legal worker from a forged document.

For nearly thirty years, Congress has debated whether to make E-Verify—the federal system that checks whether new hires are authorized to work—mandatory for every employer in the country. It has never been able to bring itself to do it. The Trump administration has found a workaround.

The White House Office of Management and Budget has released draft regulations that would require every recipient of a federal grant to enroll in E-Verify. That grant money reaches almost everywhere—hospitals, universities, state parks departments, local child-services agencies, the small nonprofits that hold communities together. By extending the requirement to their “subrecipients”—a term the draft never defines—the reach grows wider still. Layered on top is a separate proposal from the Department of Homeland Security that would force certain immigrants to work only for E-Verify employers just to renew their permission to work.

It’s the largest expansion of employment verification in decades—a long step toward the de facto mandate Congress has never been willing to pass. And it rests on a system that has never reliably done what it was designed to do. Worse, making E-Verify mandatory wouldn’t just fail to stop illegal hiring. It would make the underground economy bigger, not smaller.

As I’ve written before, E-Verify’s shortcomings aren’t subtle. The system works by comparing the information on a worker’s I-9 form against Social Security and immigration databases. That may sound rigorous, but it only checks documents, not people. And documents are easy to fake.

Social Security cards are forged cheaply and convincingly. Some undocumented workers use the numbers of their American-born children. Others buy numbers from prison inmates, or borrow them from residents of Puerto Rico, who carry legitimate numbers and often have Hispanic surnames. The most famous demonstration came courtesy of Todd Davis, the founder of LifeLock, an identity-protection company now owned by Norton. Davis printed his own Social Security number on billboards to advertise how effective his company’s service was. His number promptly turned up on thousands of fake cards that sailed through E-Verify. Houston labor attorney Jacob Monty documented 165 undocumented workers using Davis’s number in the Houston area alone.

This is the paradox at the center of the system: it doesn’t catch the people breaking the rules. It catches the employers trying to follow them.

Companies that do the right thing, that collect I-9s on every hire, carry full workers’ compensation, and pay payroll taxes on every employee become easy targets simply because they keep records. That gives the government something to audit and makes it easier to identify workers whose identities don’t match their employment records. But those discrepancies exist because E-Verify is easily fooled by forged documents, and companies, which don’t generally employ forgery experts, have no way of knowing.

E-Verify checks the very same documents the I-9 process relies on—the same forged Social Security cards that clear the system every day. Running a fake number through a database doesn’t make it real. The result is that E-Verify becomes a tool for punishing employers, rather than protecting them or their workers.

That is the perverse logic E-Verify enforces. The honest employer who documents his workforce becomes the easy target. The contractor who pays cash through a labor broker and keeps no records stays invisible. Compliance becomes a competitive disadvantage, and a worker’s precarious legal status becomes a margin subsidy for the businesses willing to exploit it.

In speaking with employers who actually live with these rules, a bigger flaw, ignored in Washington, becomes apparent. E-Verify has no guardrails against the simplest way to evade it: not classifying workers as employees at all. An employer who doesn’t want to run a name through the system can pay workers as independent contractors, route them through a labor broker, or pay cash—and never trip the system in the first place. Those practices are already widespread in construction and other low-margin industries, and a mandate would supercharge them. The unscrupulous employers the rule is meant to stop would bypass it the same way they bypass the I-9 process now. The result wouldn’t be less illegal hiring. It would be more misclassification, more off-the-books labor, and a steeper penalty for the law-abiding firms that keep everyone on the books.

And when work moves off the books, the costs don’t vanish—they shift onto the rest of us. Our economy depends on immigrant labor, both legal and undocumented, and pushing those workers out of the formal economy doesn’t make the work disappear. It just makes it invisible. Employers who misclassify stop paying unemployment taxes, Social Security and Medicare withholdings dry up, and the companies still doing it right are undercut by the ones that don’t. A policy sold as enforcement ends up starving the very public systems it claims to defend.

Even the people who sell E-Verify services concede it isn’t foolproof. The error rate has fallen over the years, and the government has made improvements, but the system still can’t reliably detect identity theft. Even worse, its false negatives fall hardest on workers who are here legally. Applied across the entire economy, even a tiny error rate means thousands of legal workers wrongly flagged and barred from working until they untangle a federal database error on their own time.

Now multiply that across every grant-funded hospital, university, and nonprofit in America. The employers who already use E-Verify tend to be large organizations with human-resources departments built to absorb the paperwork. The small businesses the new rule would affect most often have no such infrastructure, and they could now face stiff penalties. A faulty I-9 form can draw a fine of anywhere from $288 to $2,861. Grant recipients would have to report every final “non-confirmation” to their funding agency or risk losing the award.

Attorney Jessica Abrahams of Faegre Drinker, told Bloomberg Law she worries that the new rule will turn a verification record into an enforcement lead—a data point the government can use to go looking for people.

Mandatory verification carries one more cost that rarely comes up: it shrinks the pool of people willing to apply for a job at all. Distrust of government databases runs deep right now, and it’s growing. Legal immigrants—green-card holders, visa workers, naturalized citizens—are especially wary, watching an enforcement dragnet cast wide enough to catch people who are here lawfully. And it isn’t only immigrants. Plenty of American-born workers are quietly declining to apply for jobs that would enroll them in a federal system. In a labor market already short of workers, a policy that drives away the willing isn’t enforcement. It’s self-sabotage.

Even when E-Verify “works,” it mostly just sweeps the problem into the shadows. Workers flagged and fired at a law-abiding company don’t leave the workforce. They move to a less scrupulous employer who never bothered with E-Verify in the first place. The system doesn’t shrink the shadow economy. It feeds it.

This is the lesson Washington keeps refusing to learn. Dan Tichenor, who has studied immigration reform for decades, points out that the 1986 immigration overhaul failed for exactly this reason: it punished employers for hiring the undocumented without building a credible way to verify anyone. Nor did it create a legal channel for the workers the economy plainly needed. A market in fraudulent documents appeared within weeks. We’re about to run the same experiment again, only bigger.

None of this is an argument against verification. A functioning immigration system needs a reliable way to confirm who is authorized to work. But E-Verify only makes sense as the complement to a legal supply of workers—not as a tool for erasing workers while offering them no lawful way back in.

The fix isn’t complicated, even if the politics are. Pair a unified verification system with a real, tamper-proof worker ID. Let the undocumented who pass a criminal background check earn legal status and step into the system rather than around it. Cushion the cost for the small businesses and nonprofits least able to bear it and phase the requirements in over time. Treat verification as one piece of a working system instead of a substitute for one.

Expanding a tool that can’t tell a real worker from a forged document doesn’t fix anything. It just multiplies the errors and calls the result enforcement. The question was never whether to verify. It’s whether we’ll finally give people a legal way to be verified accurately.

Loren Steffy is the author of the forthcoming Reconstructing Immigration: How to Rebuild America’s Economic Advantage, now available for preorder from Stoney Creek Publishing. Subscribe to this newsletter for more exclusive content ahead of the book’s release in October.