POSTED BY REGINA CANTU
An investigation into Chipotle Mexican Grill’s hiring practices has served as a wake-up call for the nation’s nearly 580,000 restaurants, many of whose investors are becoming nervous.
Chipotle is one of the highest-profile employers to come under the scrutiny of Immigration and Customs Enforcement (ICE) in recent years, and this could have implications for the fast-food industry as a whole. Investors worry that the $300 billion U.S. restaurant industry— known to be heavily dependent on immigrant labor—is now getting squeezed by higher costs for everything from beef to produce.
The rapidly expanding burrito chain saw its shares fall more than 4.5 percent in February. Analysts have attributed the downgrade in Chipotle stock to uncertainty about the liabilities and costs related to immigration audits. Following the ICE probe, Chipotle fired 450 people in Minnesota, nearly 40 percent of its 25,000 workers in 1,084 locations nationwide.
While some experts estimate that legal and illegal immigrant workers account for around one-fourth of the restaurant industry work force, 40 percent of workers surveyed by Restaurant Opportunities Center for a 2005 report said they did not have legal status to work in the United States.
ICE fines are not the primary worry because they totaled a paltry $7 million last year. ICE will not give any clues to its next moves and has not publicly acknowledged it has audited Chipotle.
Experts say ICE does not necessarily crack down harder on employers in states or cities where illegal laborers are more prevalent. Instead, ICE works on leads rather than targeting specific industries where it believes there is a high risk of hiring unauthorized workers.
This is because U.S. immigration enforcement has shifted considerably over the decades and most recently the Obama administration has chosen to crack down on employers rather than the illegal workers themselves.
Many employers complain government guidance on how to comply with immigration law is unclear and burdensome. They question the effectiveness of enforcement as the country struggles with its 12 million illegal immigrants and the growing anger in the electorate about the jobs they take.
Chipotle, meanwhile, is publicly contrite, but confident it can turn the corner and get back to living by its motto “Food With Integrity.”