As the political debate raged when SB 1070 was being contemplated, Arizona’s business community figured the matter was a non-issue and largely stayed on the sidelines.

Then hotels reported conventions were canceling, with an estimated loss of anywhere from $15 million to more than $140 million. Boycotts made it tougher for some Arizona companies to get contracts. And Arizona’s tolerance of minorities came into question.

So when the Legislature eyed five additional illegal immigration bills this year, 60 CEOs took the unusual step of signing a letter of opposition. They feared the state’s image would take another hit and hurt the economic climate, said Glenn Hamer, president of the Arizona Chamber of Commerce.

“What we did not see when (SB 1070) was moving forward was the significant national and international reaction during a really difficult economic time in this state. There was simply no way to expect that level of reaction,” Hamer said. “It’s now clear to the mainstream business community that there are consequences to going it alone on immigration.”

A goal of SB 1070 was to cut taxpayer-funded services to illegal immigrants, but business leaders say the law hasn’t helped Arizona grow. Studies vary and themselves are controversial. A study commissioned by the Center for American Progress found a $141 million hit to the convention and tourism industry in the four months after SB 1070 was signed. The liberal group funded the study, conducted by Elliott D. Pollack & Co., which has produced other respected economic studies.

The study, the CEO opposition and further pushback from numerous chambers of commerce were key in blocking this year’s illegal immigration measures from succeeding in an increasingly conservative legislature, Hamer said. Businesses are speaking out in other states based on what happened in Arizona, he said, noting many states have rejected their versions of SB 1070.

“It seems pretty clear that across the country, business groups have expressed concerns about the economic impacts and that has been a major reason why these bills have not been enacted into law in these states,” Hamer said.

The tourism and convention industry took a hit shortly after SB 1070 became law, said Kristin Jarnagin, vice president of the Arizona Hotel & Lodging Association. Some booked conventions cancelled for fear some attendees would not attend.

“We had companies paying $60,000 just to cancel their meetings and not have it here,” Jarnagin said. “It wasn’t because of cost savings. It was a perception problem that had a devastating effect on our industry.”

The total impact is tricky to calculate, Jarnagin notes, because it’s impossible to know how many people decided against Arizona before they had made a reservation or even picked up the phone to inquire.

The downturn for hotels has been bigger than people might think, she said, noting tourism is Arizona’s second largest industry with a $2.4 billion economic impact.

The industry is seeing brighter days now, with hotel occupancy up 6.3 percent between February of 2010 and the same time this year.

“We feel like as long as we can continue to stay out of the negative national spotlight, that we can continue to bring back visitors to the state,” Jarnagin said.

A boycott was encouraged by activists and even by Democrat U.S. Rep. Raúl Grijalva, who came under fire for what some saw as harming Arizona’s economy. He later said he shouldn’t have called for a boycott.

The boycott stirred memories of another called when Gov. Evan Mecham rescinded the state’s new Martin Luther King Jr. Holiday in 1987. The state lost millions as entertainers and conventions cancelled events, and the National Football League took the Super Bowl from Arizona in 1993.

The economic impact of boycotts are difficult to quantify, said Jim Haynes, president of Phoenix-based Behavior Research Center, a marketing and public-opinion research firm.

“It’s easy to talk about boycotts, but historically, boycotts don’t do very much,” Haynes said. “People do things for their own reasons, not someone else’s. It’s kind of like herding cats. It’s easy to get people talking about it, harder to get them to do things.”

SB 1070’s enforcement provisions have hurt many industries struggling to hire workers, said Todd Landfried of Arizona Employers for Immigration Reform. The enforcement-only aspect of SB 1070 doesn’t address the labor shortage in some industries and creates uncertainty, he said. He points to a freeze this winter that destroyed much of the lettuce crop around Yuma. The lettuce was ripe and ready to be harvested, but farmers couldn’t get enough workers to pick it before the freeze, causing a huge loss and a spike in prices. Farmers continue to worry, he said.

“They’re nervous about how much to plant this year because they don’t know what kind of labor force they’re going to have to bring in the crops,” Landfried said.

Construction companies also worry about having enough workers to submit bids for projects, and some suppliers have told him they’ve lost bids to other cities or companies that participated in the boycott of Arizona products.

SB 1070 supporters tend to see opponents of the bill as supporters of low-cost labor, Landfried said. The real issue is there’s no legal way to get the workforce of various industries, he said.

“Part of the problem is people say, ‘Why don’t these people who work in hotels or work as landscapers come here legally?,’” he said. “The reality is there’s no visa for hotel workers. There’s no visa for landscapers.”

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