Although some Alabama lawmakers credit the state’s overall drop in unemployment to their new immigration law (HB 56), the reality is that many industries and sectors in the state are losing workers and jobs. This week, the Birmingham News reported that Alabama’s construction industry is losing jobs faster than nearly any other state—a loss experts say is due in part to HB 56’s draconian provisions. To make matters worse, Alabama’s crackdown on those who look or sound foreign (a Honda employee stopped this week and the arrest of a Mercedes executive last week) is causing many to fear Alabama’s anti-immigrant reputation will detract foreign investors from doing business in the state. In fact, according to the Tuscaloosa News, “the law is becoming the greatest threat to the state’s economy and job creation, overshadowing even the record-setting bankruptcy of Jefferson County.”

This week, the Associated General Contractors found that construction-related employment in Alabama fell from 85,900 in June (when the law passed) to 80,700 in October. Construction employment also fell in the Birmingham-Hoover metro area from 24,900 in June to 23,800 in October according to the group. Henry Hagood, head of Alabama Associated General Contractors chapter, said that although there are many reasons for the drop, “some of it has to do with the immigration law. Crews have left the state. That’s not the only reason for the numbers. Our market is down at the bottom. Every little thing, when you don’t have as much work, contributes to it.”

Samuel Addy, an economist at the University of Alabama, estimated that Alabama’s economy will shrink by $40 million if undocumented workers are driven from the state since U.S. workers are unlikely to fill those jobs.

“Only a small number of jobs vacated by illegal workers will be filled by legal residents,” Addy said, “so the state will suffer a net loss in productivity. It reduces demand … the economy will contract.”

And the law’s broad enforcement requirements aren’t helping the state’s reputation either. Following the ticketing of Honda employee this week and the arrest of Mercedes executive last week, experts worry that Alabama’s law will damage the state’s prospects for future investment. Mercedes—as well as Honda, Toyota, and Hyundai—currently have manufacturing plants in Alabama which create thousands of jobs and generate billions in economic benefits.

Leading business consultant Mark Sweeney—whose job is to scout locations for companies such as Boeing, Caterpillar, Mercedes and Michelin for future invest—however, said Alabama’s immigration law isn’t doing the state any favors.

“There’s nothing good about it. I can’t see any positives in terms of economic development … Alabama has worked so hard to reinvent itself as a destination for global manufacturing. It’s really been a remarkable transformation,” he said. “Unfortunately, this law really is counter to that effort.”

Although concerns such as labor costs, tax rates, and land availability often factor into companies investment decisions, “softer measures” like quality of life, business climate, schools and welcoming environments also play a roll, Sweeney said.  “It all matters. It could come into play at the end, when they’re trying to make a final decision and it’s a very close call … The scary thing is, you may be losing prospects that you never even know about.”

Just this week, in fact, the Tuscaloosa News reported that a Chinese company is thinking twice about putting a $100 million plant in Thomasville, Alabama because “they feel they aren’t welcome because of the immigration law.”

While Alabama lawmakers have discussed “tweaking” the law to account for its effect on businesses, they are adamant about not repealing it. Further enforcement of HB 56, however, will only continue to paint the state as anti-immigrant and drive business elsewhere. Apparently, appearing tough on immigration is more important to Alabama legislators than the economic well-being of their state.