Arizona's Immigration Law Comes With a Price

Several days before Gov. Jan Brewer signed Arizona's controversial immigration bill, Congressman Raul Grijalva called on the rest of the nation to boycott his home state if the new proposal became law. National organizations, Grijalva said, should cancel upcoming conventions slated to be held there.

"If the state follows through with this, the cost will be high," Grijalva warned.

Turns out, he was right: so far, the state has lost between $6 million and $10 million in projected business revenue, with 23 group hotel bookings--from small meetings to large conventions--having been canceled in protest since the stroke of Brewer's pen, according to the Arizona Hotel & Lodging Association.

Hotels don't want to disclose which clients have canceled, for fear of alienating businesses. So far, the most widely publicized cancelation has come from the American Immigration Lawyers Association.

"It's clear that the bill has had an economic impact on the state. It's impossible to say that it hasn't," says Glenn Hamer, CEO of the Arizona Chamber of Commerce.

The business community--and the hotel and lodging industry, in particular--has been put in something of an awkward position by this development. Businesses were agnostic about the bill before Brewer signed it; now, they're feeling its backlash.

The hotel industry had no position on the bill as it came through the legislature, and, now that it's been passed, it sees little point in taking one now. The point is moot, the group says.

"It wasn't even on our radar screen," says Kristen Jarnagin, VP of Communications for the Arizona Hotel & Lodging Association, the trade group for the hotel and tourism industry in Arizona. "It was never considered a tourism issue."

It's quickly become one, and that's an important thing for the state. Tourism is Arizona's number-one industry, off and on, vying for that title with the technology industry, according to Jarnagin. It's a $12 billion industry in the state, and it contributes $1.4 billion in tax revenues.

The boycott calls have only grown, with the National Council of La Raza and assorted labor and civil rights groups joining in. (This in addition to calls for Major League Baseball to pull its 2011 All-Star Game from Phoenix, and a wave of criticism from the sports world.)

The Arizona business community, predictably, isn't too pleased with Grijalva--or anyone else calling for a boycott. It's misguided to damage one industry and its employees, when the real political enemies of the boycotters reside in the state house and the governor's mansion.

"You don't hurt the legislature, you don't hurt the management of the hotel, really," Jarnagin says. "But the people who will immediately and drastically lose their jobs and lose their health benefits ...are the hourly associates on the front lines of this issue, and, again, largely the Hispanic people that you're trying to stand up for, usually, by making a political statement like this are the ones that get hurt immediately."

And there's the rub: in canceling a big convention, a group can cost a hotel hundreds of thousands of dollars in logging, food, beverage, and entertainment revenue. Which means Hispanic service workers can get their hours cut when the hotel's budget takes a hit, and if they fall to part-time status, they lose their health benefits. Which seems a bit counterproductive to the boycotters' aims. The hotel and restaurant industries mirror state demographics on the whole, Jarnagin says, meaning at least 30 percent of hotel and restaurant workers are Hispanic, including management.

The Arizona Chamber of Commerce finds itself in a similar predicament.

"It's a wildly inappropriate reaction to that bill to call for a boycott. In terms of peaceful protests, in terms of making the case that this law has problems and needs to be addressed, there are appropriate ways to deal with laws, and we just strongly believe that any sort of call to boycott is just wrong and is going to harm a lot of people," Hamer, the Chamber of Commerce CEO, told me.

The Chamber didn't have a stated position on the bill as it came through the legislature, either.

A note about the business community and immigration law, in general: they typically don't like immigration restrictions, the same way other conservative constituency groups do. Businesses like being able to hire labor, and they like cheap labor; any demagoguery against letting immigrants into this country seems unproductive, to them, when they need people to work. A front-line of the immigration debate has been employee verification--an electronic records system, e-Verify, was implemented under President Bush--and, generally, businesses don't like to be held to higher-than-reasonable standards. If it's difficult to verify that an employee is here legally, either because records are hard to come by or because identity theft is rampant, they don't want to be penalized for failing to do so.

But now that the law is posing a problem for businesses, what can they do?

Their response, so far, has not been to lobby for the bill's repeal. They have, on the other hand, spoken out against the boycotters. Beyond that, it gets a bit murky.

The Hotel & Lobbying Association has made its problems known to Brewer and state legislators.

"We voiced those concerns, and we continue to work closely with the governor's office and the legislature to let them know what's happening to our associates," Jarnagin said.

It is not, however, pushing for a repeal of the law. Since it's already been signed, Jarnagin says, the point is moot. And AZHLA insists its lobbying clout is weak, citing the state legislatures' decision to cut funding from the tourism office last year, reducing one of its revenue streams (from taxes on hotels themselves) to zero, and bringing the overall state tourism budget down from $26 million to $8 million.

The Hotel & Lodging Association is planning to tell prospective visitors that they can feel safe visiting Arizona, without harassment. There's confusion, right now, as to what the bill actually mandates: what people need to be able to present to police if stopped, and whether they can be randomly stopped on the street and asked for driver's licenses. AZHLA says it's getting a flood of phone calls with prospective visitors asking what will happen if they head across the street from their hotel to a convenient store, and they forget their driver's license.

As a result, the AZHLA plans to put FAQ's on its website about what people can expect. There's no massive ad campaign in the works, Jarnagin says, citing AZHLA's low budget.

But in providing information to visitors--and doing its job to try to convince them Arizona is a safe and wonderful place to visit, in the face of this new law--puts the AZHLA in a borderline position of having to defend the policy. It says it has to be careful about this, and wants to just give people the facts. It doesn't want to take sides in a divisive political issue.

"I think we're trying to walk the fine line of providing the facts and information and letting people know who a boycott really hurts," Jarnagin says. "But I can definitely tell you that in doing that we are receiving a lot of feedback from people on both sides."

The Chamber, meanwhile, seems content with the law itself. It would entertain changes to it that would make it clearer, Hamer says, that it is not intended to target Hispanics--but Hamer says Gov. Brewer has already made that clear. Hamer notes that the law is popular. It doesn't seem, from talking to him, that the Chamber is inclined to stand in the way of something that, from this CBS/New York Times poll, appears to enjoy a majority of public support.

When asked if there's anything the Chamber can do, in response to the economic hit, Hamer says it's a good question.

"I think, and this isn't really us so much as it's probably the governor continuing to explain what the law does and doesn't do, and I believe where we can be helpful is continuing the call, which we will continue to do, for a federal solution once and for all for our immigration mess," Hamer says.