[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FULL COMMITTEE HEARING ON
IMMIGRATION POLICIES AND
THEIR IMPACT ON SMALL BUSINESS
=======================================================================
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF
REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MAY 10, 2007
__________
Serial Number 110-21
__________
Printed for the use of the Committee on Small Business
Available via the World Wide Web: http://www.access.gpo.gov/congress/
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA M. VELAZQUEZ, New York, Chairwoman
WILLIAM JEFFERSON, Louisiana STEVE CHABOT, Ohio, Ranking Member
HEATH SHULER, North Carolina ROSCOE BARTLETT, Maryland
CHARLIE GONZALEZ, Texas SAM GRAVES, Missouri
RICK LARSEN, Washington TODD AKIN, Missouri
RAUL GRIJALVA, Arizona BILL SHUSTER, Pennsylvania
MICHAEL MICHAUD, Maine MARILYN MUSGRAVE, Colorado
MELISSA BEAN, Illinois STEVE KING, Iowa
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
DAN LIPINSKI, Illinois LYNN WESTMORELAND, Georgia
GWEN MOORE, Wisconsin LOUIE GOHMERT, Texas
JASON ALTMIRE, Pennsylvania DEAN HELLER, Nevada
BRUCE BRALEY, Iowa DAVID DAVIS, Tennessee
YVETTE CLARKE, New York MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana VERN BUCHANAN, Florida
HANK JOHNSON, Georgia JIM JORDAN, Ohio
JOE SESTAK, Pennsylvania
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
______
STANDING SUBCOMMITTEES
Subcommittee on Finance and Tax
MELISSA BEAN, Illinois, Chairwoman
RAUL GRIJALVA, Arizona DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana STEVE KING, Iowa
HANK JOHNSON, Georgia VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania JIM JORDAN, Ohio
______
Subcommittee on Contracting and Technology
BRUCE BRALEY, IOWA, Chairman
WILLIAM JEFFERSON, Louisiana DAVID DAVIS, Tennessee, Ranking
HENRY CUELLAR, Texas ROSCOE BARTLETT, Maryland
GWEN MOORE, Wisconsin SAM GRAVES, Missouri
YVETTE CLARKE, New York TODD AKIN, Missouri
JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
(ii)
Subcommittee on Regulations, Health Care and Trade
CHARLES GONZALEZ, Texas, Chairman
WILLIAM JEFFERSON, Louisiana LYNN WESTMORELAND, Georgia,
RICK LARSEN, Washington Ranking
DAN LIPINSKI, Illinois BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois STEVE KING, Iowa
GWEN MOORE, Wisconsin MARILYN MUSGRAVE, Colorado
JASON ALTMIRE, Pennsylvania MARY FALLIN, Oklahoma
JOE SESTAK, Pennsylvania VERN BUCHANAN, Florida
JIM JORDAN, Ohio
______
Subcommittee on Urban and Rural Entrepreneurship
HEATH SHULER, North Carolina, Chairman
RICK LARSEN, Washington JEFF FORTENBERRY, Nebraska,
MICHAEL MICHAUD, Maine Ranking
GWEN MOORE, Wisconsin ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana DEAN HELLER, Nevada
HANK JOHNSON, Georgia DAVID DAVIS, Tennessee
______
Subcommittee on Investigations and Oversight
JASON ALTMIRE, PENNSYLVANIA, Chairman
CHARLIE GONZALEZ, Texas LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona LYNN WESTMORELAND, Georgia
(iii)
C O N T E N T S
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OPENING STATEMENTS
Page
Velazquez, Hon. Nydia M.......................................... 1
Chabot, Hon. Steve............................................... 2
WITNESSES
PANEL I
Gutierrez, Hon. Luis, Member of Congress......................... 3
PANEL II
Johnson, Benjamin E., American Immigration Law Foundation........ 16
Silvertooth, Craig, National Roofing Contractors Association..... 18
Torrey, Maureen, Torrey Farms, Inc............................... 20
Folz, Ralph J., Molecular........................................ 22
Rector, Dr. Robert, Heritage Foundation.......................... 24
Krikorian, Mark S., Center for Immigration Studies............... 26
APPENDIX
Prepared Statements:
Velazquez, Hon. Nydia M.......................................... 46
Chabot, Hon. Steve............................................... 48
Altmire, Hon. Jason.............................................. 49
Gutierrez, Hon. Luis............................................. 50
Johnson, Benjamin E., American Immigration Law Foundation........ 53
Silvertooth, Craig, National Roofing Contractors Association..... 62
Torrey, Maureen, Torrey Farms, Inc............................... 75
Folz, Ralph J., Molecular........................................ 77
Rector, Dr. Robert, Heritage Foundation.......................... 83
Krikorian, Mark S., Center for Immigration Studies............... 103
Statements for the Record:
Meisinger, Susan R., Society for Human Resource Management....... 110
(v)
FULL COMITTEE HEARING ON IMMIGRATION
POLICIES AND THEIR IMPACT
ON SMALL BUSINESS
----------
THURSDAY, MAY 10, 2007
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:00 a.m., in Room
2360 Rayburn House Office Building, Hon. Nydia Velazquez
[Chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Jefferson, Cuellar,
Clarke, Ellsworth, Sestak, Chabot, Westmoreland, and Davis.
OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ
ChairwomanVelazquez. Good morning. I call this hearing on
immigration policies impacting the small business workforce to
order.
Our economy faces many obstacles in fostering small
business growth, but one of the forgotten challenges has been
the economic effects of our broken immigration system. Whether
it is a visa system that doesn't meet industry needs, or a
verification system that is unworkable, the failures of our
current immigration policies are weighing down our nation's 26
million small businesses.
As we will hear today, immigration plays an enormous role
in providing that necessary workforce. U.S. small business
owners are responsible for employing many of the million
immigrants to fill their workforce needs, and yes, some of
these 37 million workers are undocumented, many of them
unbeknownst to their employers. These documented and
undocumented workers can be found in nearly ever sector of the
economy. It is clear their services are needed, but with the
current system it is hindering entrepreneurs ability to grow
and is creating enormous paperwork burdens.
As job creation increases at a pace faster than our
workforce, small businesses will require even more immigrants
to continue innovate and develop their companies. In the coming
decades worker shortages are expected to grow across the
economy and impact sectors that are vital to the health of our
society. The businesses that produce and harvest our food
already rely heavily on millions of immigrants. There is a
critical sector that is here only temporarily to fill seasonal
needs during harvest time and others that are part of a
permanent workforce.
In the high tech industry, H-1B visas provide a pipeline
for needed highly-skilled workers. However, demand for these
visas routinely outstrip the limited supply. For proof of this
shortage, one only has to consider that the application cap for
H-1B visas was reached this year in only the first few hours of
the process. The current visa system is clearly not
accommodating the needs of small businesses. Visa programs are
not only failing to direct enough workers to the right
industry, they have also become so bureaucratic that small
firms cannot compete with larger businesses for those
employees.
Large firms are better equipped to navigate the complicated
system that ask companies to predict their staffing needs
months in advance and to pay high compliance costs and fees.
For some industries, it is clear that a temporary workforce is
an inadequate solution to their labor shortage. Those sectors
such as the construction and health sectors that need
additional permanent workers to be successful must also be part
of the discussion. Small construction companies rely heavily on
immigrant labor to meet the demand for their services, but the
industry still faces an inadequate labor supply.
Although entrepreneurs share national concerns about the
witnesses of our immigration system, they cannot be its primary
policing mechanism. Small businesses don't have the resources,
the technology, and frankly, the responsibility to be that
first line of defense. Instead, we need a sensible employment
verification system. It must not place an undue regulatory or
financial burden on them, nor can it create so much uncertainty
that small firms will choose not to participate and therefore
not expand.
Unfortunately, under this broken system many small
companies know they are up against competitors who are breaking
the rules. As the broader immigration debate continues, small
businesses must have a seat at the table because they face
unique workforce challenges and make enormous contributions to
the economy. Small companies need reforms to take into account
the rate at which they're growing and will address their need
for short and long-term employees.
Entrepreneurs are ready to work with a fair and accessible
system. I look forward to hearing from the witnesses before us
today about what can we do as the debate over comprehensive
immigration reform moves forward. We must ensure that willing
workers are matched with employers who need them to expand
their businesses, develop their communities and create even
more jobs.
I thank all the witnesses for taking time to be here today
and I yield to Mr. Chabot, for his opening statement.
OPENING STATEMENT OF MR. CHABOT
Mr.Chabot. Thank you, Madam Chair, and thank you for
holding this important hearing on immigration policies and
their impact on small business, and thanks to our witnesses,
both on the first and second panels who have joined us or will
be here later. I'm eager to hear their thoughts and like my
colleagues, very much appreciate their taking the time from
their schedules to be here this morning.
America has an honored tradition of being a melting pot,
welcoming immigrants from around the world who have come to
America in search of a better life. Legal immigrants, through
their hard work and ingenuity, have made important
contributions to our nation. However, there's a significant
difference between legal and illegal immigration which is too
often overlooked. Illegal immigration is by definition against
the law. Illegal immigration is an issue to be taken very
seriously. It affects citizenship, our economy, and our
national security.
I strongly believe that those who come to the United States
legally should have every opportunity to work and support their
families and contribute to our nation as any American citizen
would. However, those who enter illegally and bypass those who
have played by the rules and waited their turn, should not be
afforded the same opportunities as those who follow the law. It
is also important to ensure that those immigrants who arrive
here legally, on a temporary basis, return to their home
countries when their visas expire. America remains the land of
opportunity. Just as immigrants through the last three
centuries were willing to give up the lives they knew for
promises of a better life, there remain many who dream of being
able to call America home.
Those who choose to take the legal avenues to come here
should, of course, be welcomed here, to live and work. Those
who choose who do so illegally should forfeit that opportunity.
Welcome again to our witnesses and I think we all look
forward to hearing their testimony this morning about
immigration policies and their impact on small business and I
yield back the balance of my time.
ChairwomanVelazquez. Thank you, Mr. Chabot, and on the
first panel I want to welcome our colleague, the Honorable Luis
Gutierrez from Illinois. He is one of the leaders in this
Congress regarding immigration reform working on a bipartisan
basis with another colleague, Mr. Flake. They are the main
sponsors of the STRIVE Act.
Mr. Gutierrez, welcome, and you'll have more than five
minutes to make your presentation. Thank you.
STATEMENT OF LUIS V. GUTIERREZ, A REPRESENTATIVE FROM THE STATE
OF ILLINOIS
Mr.Gutierrez. Thank you, Chairwoman Velazquez and Ranking
Member Chabot and Members of the Committee for the invitation.
I introduced, with Congressman Jeff Flake, the only
bipartisan comprehensive immigration reform bill in the House
of Representatives, the STRIVE Act, which provides for a number
of reforms to our nation's immigration system and would greatly
benefit small businesses and our economy.
STRIVE is a comprehensive bill. It proposes enhancing our
border and interior enforcement efforts, a robust employment
verification system, a tough and fair earned adjustment for the
estimated 12 million undocumented individuals in the U.S., a
new worker program to provide for future flow of workers to
fill jobs that require little training or skill and for which
Americans cannot be found, and extensive reforms of the
employment-based and family-based immigration systems.
In particular, I believe that earned legalization, new
worker programs, and visa reforms will provide significant
relief to small businesses who often struggle under the current
broken bureaucracy. Together, these provisions will ensure a
legal workforce well into the future and provide significant
stability and longevity to small businesses.I would be happy to
further discussion these important provisions if Members have
an interest.
I would like to focus my remarks today on how the nation's
family immigration system could impact the creation and
stability of small businesses in the U.S. This connection
between family immigration and entrepreneurship is not often
made in the broader immigration debate, but it is an important
one. We know that families are often the ones who start and own
new businesses from local hardware stores to restaurants to Mom
and Pops, family-owned businesses are the backbone of our
economy.
We also know that immigrant entrepreneurs are the fastest
growing segment of small business owners today and they form
small businesses at a much higher rate than non-immigrant
Americans. Given the preponderance of immigrant families in the
community of small business owners, our nation's family
immigration system could have a significant impact on the state
of the American small businesses' future job creation and U.S.
economy.
Promoting family unit has been a major feature of our
immigration policy for decades. This does not only promote
strong family values for our nation, but also provides an
influx of entrepreneurs who start and grow family businesses
that generate tax receipts, property ownership, and new jobs
essential to keeping our cities and neighborhoods strong.
However, as we know from our constituent casework, the current
backlog in family visas are causing lengthy waiting times for
families to immigrate legally to the United States.
The STRIVE Act addresses these problems in our family-based
immigration system by significantly increasing the availability
of family visas to reduce the backlog of visas within six
years. In the context of the immigration debate, President Bush
has repeatedly said and I quote, ``family values don't stop at
the Rio Grande.'' I could not agree with the President more.
However, I am concerned that his moderate and compassionate
views are being abandoned in recent Senate negotiations on
immigration reform. Senators are considering eliminating most
of the family-based immigration categories and replacing them
in favor of employment-based system with a point and merit
system.
The argument to justify abandoning our nation's historic
commitment to preserving family values in our immigration
system is not allowing immigrants to join their U.S. citizen
brothers and sisters, parents or adult children, is not in the
national interest. If moral arguments to preserve a robust
family immigration system do not compel us, the economic facts
should. It might sound attractive to recruit only the most
highly skilled and educated to the U.S., but I assure this
would be not in the national interest. Let me explain why.
Although the initial earnings of family-based immigrants
are below those of employment-based immigrants. The earning
differences dissipate over time. Family immigrants also benefit
the U.S. economy by starting businesses that would not
otherwise be developed. And given that immigrants do not come
in with a focused set of skills for a particular job, they are
more likely to be flexible to respond to real-time gaps in our
economy and willing to take a chance to start up new
businesses. In other words, it is precisely because family-
based immigrants lack specific skills that are able to more
readily seize upon the opportunities presented by a dynamic
economy.
I see no legitimate economic rationale for eliminating
family immigration categories and the idea is politically
divisive.
Having a robust family employment immigration system are
not mutually exclusive. In fact, the reforms and increases in
family and employment-based visas in the STRIVE Act allow for
both. These are essential elements of comprehensive immigration
reform as they reduce illegal immigration and strengthen our
economy.
Thank you, Madam Chair. It's a pleasure to sit here before
you in this wonderful Committee and I look forward to answering
all of the questions of the Members of the Committee.
[The prepared statement of Mr. Gutierrez may be found in
the Appendix on page 51.]
ChairwomanVelazquez. Thank you, Mr. Gutierrez, for a great
presentation. For the work you do in addressing an important
issue that is impacting every--so many sectors of our economy
and our society.
I would like to ask you, Mr. Gutierrez, how different is
the new record-keeping requirement in the STRIVE Act for
employers from the current law?
Mr.Gutierrez. Well, currently, after the 1996 Immigration
Reform and Control Act, it became illegal to hire someone that
wasn't legally in the United States with employment ability. So
the I-9 is simply changed because we're going to use a
biometric system. That is, when an employee goes before an
employer, you're going to fill out the form, but we're going to
use computers. We're going to use the telephone. We're going to
use electronic equipment in order to verify whether that
employee is eligible.
The Department of Homeland Security, Mr. Chertoff, has
indicated to me and to others that within one year of passing
any comprehensive immigration reform package here in the House,
they will be ready at the Department of Homeland Security.
Now, let me stress that not everybody will be under the
system immediately. We will first go to critical infrastructure
in our economy. That's to say our--those who supply our energy,
nuclear plants, our banking community, large infrastructure,
employees will be the first ones. It will take about seven
years to roll out the program. We have to make their
benchmarks, make sure it's reliable information. But I would
say to the Chairwoman, it should take one day. The employee, if
he doesn't get verified gets to continue working at that job
and still gets hired, but within a 30-day period, because they
have the ability to appeal a decision in case a decision comes
back unfavorably, they get the ability to appeal that decision
and within 30 days everything will be wrapped up.
But I do want to stress to the Chairwoman, you know, we
leave a safe harbor for businesses. That is, if you use the
system, at DHS, to verify the employability of your employee,
you have a safe harbor and you're held harmless. So there are
no penalties. We want to go after the employers that knowingly,
willingly, violate the law and hire undocumented workers by
putting penalties against them. And I'll end with this. When I
got a Social Security card, it was the same technology that my
dad had when he got his Social Security card.
My daughter is 19. The same technology that I got 40 years
ago is the same technology and her children. It's time that we
have a biometric system with readable information through a
magnetic strip on the back of the card so that we know. And
once we get that system in place, I would suggest to the
Chairwoman, you come in with your biometric Social Security
Card, you can swipe it. It will say much like a credit card,
approve or disapprove and the federal government will be the
one holding those records.
ChairwomanVelazquez. If the Department of Homeland Security
or Social Security Administration cannot confirm the identify
of an individual, what is an employer to do?
Mr.Gutierrez. What the employer to do is number one, he
employs the person. The employment continues with that
employee. And that process continues. That employee has 15 days
to go to the Department of Homeland Security and to get from
the Department of Homeland Security a correction. Systems make
mistakes each and every day. Systems, especially large systems
that are going to have tens of millions of people's information
and they have 15 days, if at the end of those 15 days it isn't
corrected, the employee cannot get the job.
ChairwomanVelazquez. Thank you.
Mr.Gutierrez. And let me just say at the end, for paper
purposes, once DHS sends you a verification of employment,
that's the only piece of paper you have to keep in the file.
DHS, everything else, you can discard. So a lot less paperwork.
ChairwomanVelazquez. Mr. Chabot? Thank you, Mr. Gutierrez.
Mr.Chabot. Thank you very much, Madam Chair. Just a few
questions and first of all, I want to thank you for your
testimony. We may not necessarily agree on this issue or really
a whole lot of issues for that matter, Luis, but I think--and
probably everybody knows that after this year, the chair,
you're retiring, and I just wanted to say that it's been a real
honor to serve with you. I think you've done a commendable and
incredible job, really, for the people of your District and
you've worked extremely hard. So thank you very much, and
please convey our best wishes to the misses as well.
Mr.Gutierrez. And you do the same to your wife.
Mr.Chabot. I will certainly.
Mr.Gutierrez. We look forward to meeting with you outside
the context of the Congress--both you and your lovely wife.
Mr.Chabot. Maybe we can agree on something there.Just
kidding. Thanks, Luis.
First of all, relative to--there's a lot of us that believe
that the primary issue initially needs to be security at the
border. That that needs to be the number one priority. Once
that is accomplished, then we can deal with the rest of the
issues. But unless that's dealt with first, we wont' seriously
deal with that. And the people that are here will stay and
people will see that they got to stay and we'll have more and
more come over the border which has never been secured. That's
the concern that a lot of us have.
And would you comment on where you believe that security at
the border comes into the solution to the problem of illegal
immigration in the country?
Mr.Gutierrez. When Congressman Flake and I drafted the
STRIVE Act, if you go to the first section of the STRIVE Act,
it's border security. Then we went to interior enforcement. I
mean the first three chapters of our bill are about internal
enforcement and enforcement procedures. So obviously, as we
drafted the legislation, we prioritized that for the reading
and so that people when they looked at it.
Look, we need to secure our borders. Fences have been
established, without proper funding to build them. I didn't
vote. I didn't think you need that, but if you read our
legislation, I will tell you, Mr. Chabot, we build a virtual
fence between the United States of America and Mexico, by using
technology, by putting thousands of new border patrol agents on
that border.
But the other thing I think we do, Mr. Chabot, is let's ask
ourselves who really comes across that border? So we'll just
deal with the border for one second. People come looking for
job opportunities and the U.S. Border Patrol says about 90
percent of the people that they capture are coming here to seek
a new job, to seek employment opportunities. And about five
percent of them are coming to be re-unified with family
members, given the delays in our visa system.
Then we have another five percent which are alien
criminals, people with criminal backgrounds. They're not good
people. So we try to distinguish in our legislation between
while all immigrants are foreigners, not all foreigners are
immigrants. Immigrants come seeking job and family
reunification. Foreigners come here to cause damage and not
necessarily immigrants.
Second, and you made this point very well, Mr. Chabot, in
your testimony, 40 percent of all of those that are here
illegally in the United States never crossed that border, so
they came here on temporary visas, student visas, tourist
visas, H-1B visa. whatever visa they had and there are multiple
number of visas and then they overstayed their visas.
So I just want to go quickly back to what I shared with
Chairwoman Velazquez. That's why we need a biometric system and
an employment verification system at the federal level, so if I
come here on a student visa, I overstay it, if I don't have
that biometric with that swipe on the back, I can't get a job.
And the other thing, I won't stay because I can't get a job.
The only way you're going to be able to be employed in the
United States, ultimately, is by having a biometric card,
verifiable by the federal government.
Mr.Chabot. Thank you. In your view, does giving law
enforcement the authority to voluntarily assist in enforcement
of our immigration laws, is that helpful? Would you favor that?
Mr.Gutierrez. Let me tell you what we do in our bill. We
simply restate what the law is. And we state that look, if
you're committing a burglary, you should be arrested and
prosecuted and jailed.
If you're in an illegal activity, law enforcement should be
able to go after you regardless of your immigration status,
based on that action.
Mr.Chabot. But when you say illegal activity, you would not
include being here illegally as one of those activities?
Mr.Gutierrez. Let me suggest to you the following, and this
is how we look at it. Being here in the United States, not
under color of law, is a civil violation of our immigration
system. It's a criminal violation of our system. So we do think
nothing should happen to them? No. So let me try to make the
argument this way.
You're the judge, the American people. You and the American
people are the judge. What I say on behalf of the undocumented
is they violated a stipulation of our law, the immigration law.
And we agree that they did that. Then we say did they violate
any other law, and if they haven't, if for any other purposes
they're of good, moral character and never have had interface
with our legal system and they've been working, they're of good
moral character, then we say to them, pay a $2,000 fine. Learn
English. Learn civics. Pay all your back taxes. Work during
those six years. Do a touch back. That is, leave the country
and re-entry and re-boot legally, and at the end of six years,
we're going to take a look at you and see if whether or not you
should then be eligible for permanent residency. So we let them
earn, that is here was the violation of the law, here is the
corresponding punishment.
In justice, there should be a relationship between the
punishment and what you did and we think we do that in our
legislative.
Mr.Chabot. Madam Chair, I won't ask any more questions, but
if I could just conclude by stating, although I don't agree
with many of the parts of this bill, I at least commend you for
trying to deal with a very challenging issue that we face as a
nation. And I would just note that the last time the country
seriously looked at this issue was about 20 years ago. At that
time we had about two million people here illegally and they
said--Congress at that time said they were going to do two
things. One thing, they were finally going to get control of
our borders, and they were going to allow the people that were
already here, since there's nothing they could do about it were
going to give them amnesty. There were about two million people
here at that time. Well, they didn't get control of the
borders, never did.
And we still don't have control of the borders. The people
stayed and that really sent a message, I think, to a lot of
other people and now have 12 million people here and I believe
if we follow that same pattern, that the number 20 years down
the road or even 10 years down the road will be significantly
higher than the 12 million people that we have here now,
illegally, and that's why so many Americans, both Republicans
and Democrats, are very concerned about this issue, and I yield
back.
Mr.Gutierrez. Madam Chair, if I could quickly--I understand
1986. You're right. 1986 was an amnesty. We will find agreement
on that. They didn't pay a fine. They didn't go to the back of
the line. They weren't required to take English classes. They
weren't required to touch back. They weren't required to go
back and do all of their income taxes and show they didn't owe
any income taxes. I mean basically they went straight to the
front of the line. I understand that flaw in the 1986
legislation. We address it clearly in the legislation 2007.
Mr.Chabot. Luis has been around here long enough to know
that I didn't ask a question. I just made a statement, but he
got to answer it anyway. So that's why he's so good.
Mr.Gutierrez. Thank you, Mr. Chabot.
ChairwomanVelazquez. Mr. Westmoreland.
Mr.Westmoreland. Thank you, Madam Chair, and I want to
thank you, too, for all your hard work on this and I think
we're finally getting somewhere because it is very necessary
that we take a first step in the direction of solving this
immigration problem.
Let me thank you also for putting the language in your bill
that was in an amendment I had on the last bill that much
related to the safe harbor. I don't think it's right to
criminalize employers when they really don't have any document
verification skills out there and so I think that's great. And
I also think it's wonderful that we do make a distinction
between primary contractors and subcontractors and make sure
that we keep a distinction between those and make sure it's in
the law that provides for that because as most small
businessmen and I am a--was a small businessman, you know, you
have very little control over your subcontractors. And you
can't be responsible for everything they do. So I commend you
for doing that. And I think we're taking a great step.
The one question I had, you mentioned the swipe which I
very much agree with and it would come back instantly that
there was a problem. Are you going to have anything in the
legislation that would hold that employer harmless if there was
an error in that person being not eligible to be employed?
Mr.Gutierrez. Absolutely. We have safe harbor provisions
and if you use the technology and the technology incorrectly
gives you an approval, remember, you're going to get via--
you're going to be able to go on the Internet. Let's say you
hire somebody. You're going to be able to go on the Internet,
press print, and you're going to keep--you're going to have
something that says Department of Homeland Security says you
can hire Luis V. Gutierrez, right? And that's the only paper
you're going to have to keep and you're going to file that. You
don't have to file it, obviously, you can keep it in your
computer and as any smart small businessman, you'll probably
put a floppy disk in there in case the computer falls apart
later on, and you can retrieve that information.
But you will get a verification. As long as you use DHS
verification system, you are held harmless and you have a safe
harbor against any prosecution or penalties.
Mr.Westmoreland. Okay, but my question is if it comes back
and says that the employee is not ready to be hired, does it
hold the employer harmless from the employee?
Mr.Gutierrez. Yes.
Mr.Westmoreland. Okay.
Mr.Gutierrez. I understand, yes. The employee then has 15
days under our legislation, 15 days, because quite honestly
we've all--I mean I've certainly gotten stopped at the airport
and been asked for extra ID because I'm on some watch list,
maybe they know more about me than I do. And you know I've been
delayed, many of us have been delayed, and the government gets
our names and big government can make big problems for small
people.
So they have 15 days in which to clear that up. Everything
is cleared up within 30 days, so let's say at the end of 30
days, you are going to get from Homeland Security yes or no.
After the person appeals. So I come to you, you continue, you
want me. I have the skills. You continue to hire me. And I have
15 days to correct it. Within 30 days you will get a final
determination based on my appeal from them and no, I cannot sue
you. I can, however, I do have judicial review with the federal
government and with the bureaucrats at the federal government
should they be responsible for an action on my employment
opportunity, but not the employer.
Mr.Westmoreland. That's good.
Mr.Gutierrez. The person who runs the system is the one,
the government.
Mr.Westmoreland. Because you have to understand from a
small business perspective that sometimes those first two weeks
or three weeks are the most expensive part of hiring somebody
because you're filling out all the paperwork, you're
introducing them to any 401(k)s or retirement programs that
you've got; any insurance programs you're trying to them and
their family enrolled, and I do think the 30-day provision is
great. I would like to see it be an instant --
Mr.Gutierrez. It is instant.
Mr.Westmoreland. But you know, that 15-day period I just,
and I understand and I think it's a provision that has got to
be in there. It just does concern me from a small business
standpoint is that really you have to kind of make a decision
then where do you want to put the investment in this individual
to go ahead and hire him, let him be working there for 15 days
and then have 30 days invested in this employee that you don't
get any really resolve after 30 days.
Mr.Gutierrez. Let me suggest one positive thing about the
program. Because we're talking about small businessmen, they
will be the last people to be enrolled in the program and we're
not going to--there's 144 million Americans in our workforce.
Obviously, we're not going to enroll them all overnight. We're
going to go to critical infrastructure, the banking industry,
you know, those industries that are critical to our--and our
large industries. We're going to do them first. It will take
about seven years and there are benchmarks during the seven
years to check the accuracy. We have seven years.
I'll put it to you this way, we have at least five years
before we get to the small business people to help fix it, to
fix it, to mature it, and to redefine it so that it works
really well. So small business will be the last people entering
the program. Hopefully, by then we'll have it pretty good. But
it's critical to our security here in the United States.
Mr.Westmoreland. Sure.
Mr.Gutierrez. Because now we're going to know, everybody
who's hired, we're going to know--and it ends illegal
immigration. It truly ends it as we know it today.
ChairwomanVelazquez. The gentleman's time is expired.
Mr.Westmoreland. Can I do one--
ChairwomanVelazquez. Will you please be fast?
Mr.Westmoreland. I will be fast. Let me just say this, and
I appreciate it taking that long to get to small business, but
remember, small business probably employs 80 percent of these
people.
ChairwomanVelazquez. Mr. Ellsworth.
Mr.Ellsworth. I'll make mine very fast, Madam Chairwoman. I
appreciate you having this hearing. Congressman, I don't have
many questions, just a brief statement that as a newly-elected
Congressperson, going back and doing my first town halls in
February and I can remember vividly this is on people's minds,
the issue of illegal immigration. In fact, one of the gentlemen
asked me why we hadn't done anything yet about illegal
immigration. And I probably made the mistake and said well,
we've only been in there 52 days and he said, he used a couple
of expletives, he said that's no excuse.
So we won't try that one now that we've been in four
months, but there's a--I think we really have to look at the
practical side. We have illegal immigration laws and we didn't
do a good job of enforcing those. And I appreciate,
Congressman, you and all the hard work you're doing to do
something. I just implore us that when we do things that we do
them and we enforce what we put on the books and we do
practical things.
I was just thinking, Congressman Chabot, your question
about local law enforcement getting in on the act and as a
former sheriff and a person who ran a jail, I can tell you that
almost every jail in this country is suffering from
overcrowding and probably under federal lawsuits and to wave
the wand and let us start doing that, if we don't build into
things what we're going to do after we arrest those people,
just taking them to our local lockups will not work and the
local law enforcement will not do it. The sheriffs can't handle
the load if the rest of the story that goes with that.
Sometimes it sounds good to say let's let local law
enforcement and the local law enforcement would, in fact, be
glad to enforce whatever laws are on the books, but then we
have to go to the practical side. What are we going to do with
these people once we put them in our jails, how do we
adjudicate those, more judges, more prosecutors and more beds
and it's going to be an awesome responsibility to undertake.
They would try, but --
Mr.Chabot. Would the gentleman yield for just a moment?
Mr.Ellsworth. Absolutely.
Mr.Chabot. I thank the gentleman for yielding. I was down
at the border last summer and we were talking to some of the
folks down there and they were talking about they would pick up
illegal immigrants and they would basically rather than process
them, they'd take them back over at night across the Mexican
border to a town pretty far away from the border and they
always did it after dark and they'd let them out basically at
the town square, dozens or sometimes even hundreds and we asked
them why did they do it at night and they said because they
didn't want to embarrass the Mexican government is what they
said. It's a big problem, and obviously, the closer you are to
the border, the bigger the problem is, but even in your State
of Indiana and my State of Ohio, it's a real problem that we
have to face.
Mr.Ellsworth. It sure is. A lot of discussion. I appreciate
everybody's efforts in this problem. Thank you, Madam
Chairwoman, I yield.
ChairwomanVelazquez. Thank you. Mr. Jefferson? All right,
Ms. Clark?
Ms.Clarke. Thank you very much, Madam Chair, and I want to
thank Congressman Gutierrez for his efforts in this endeavor. I
think it's a defining moment for our nation quite frankly that
we approach homeland security in many respects and basically
the growth and development of this nation in a very humane way.
I come from New York City which is a gateway for many
immigrants, many waves of immigrants over many generations and
certainly we have felt the impact of what I consider quite
frankly a governmental problem. The infrastructure, the
bureaucratic infrastructure that should have been in place and
that needs to be in place today in order to really regulate
immigration to this nation has faltered.
And so my question really has to do with the capacity
building that needs to happen within our own government to
handle what we found ourselves in terms of a real quandary and
what we look at going forward. I think to a large extent your
legislation begins to address that, but I'd like to see the
nuts and bolts of it really put in place because that is what
we're going to inherit, the next generation is going to inherit
as opposed to some of the xenophobic types of reactions that
I've seen.
I don't live on the southern border. And so the types of
reactions that I hear from many of our colleagues, while I'm
sympathetic to it, I come from a totally different environment
where the reaction is not quite the same.
I want to just speak to you at a certain point about the
whole touch back provision because touch back on the southern
end is a lot different than touch back on the northern end and
there are a lot of folks who want to come into compliance with
what we're talking about it, but touch back for them is a
challenge because the way that they got here was either as a
visitor, as you said, or as a foreign student as you've stated,
and they came here legally usually by airline and not by foot.
And so just the whole idea well, you can maybe touch back in
Canada or you can maybe touch back in Mexico, I don't know how
those governments will feel about other folks from other
nations touching back or whether they would be in cooperation
with us regardless of where people come from about the touch
back provision. I think we need to take another look at that
and try to fine tune it to a certain degree to address the
nuances of the variety of immigrants that we have coming to our
nation or who have come to this nation and are not in
compliance with our laws.
I want to thank you once again. Your work has been
tremendous, tremendous, and I look forward to working closer
with you in terms of the fine tuning. We've got to deal with
homeland security. That is a key piece to this. The bureaucracy
of our federal government has to be dealt with. Thank you,
Madam Chair.
ChairwomanVelazquez. Thank you. Your time has expired. Mr.
Cuellar.
Mr.Cuellar. Thank you, Madam Chair, and Luis, I want to
thank you for the work. I know you've been working on this very
hard and I appreciate that we're looking at comprehensive
immigration reform in three parts. Being from the border,
living there, Laredo, understanding what's been happening
there, living there all my life, I understand exactly what's
going on, what's legal migration, what's illegal migration.
We've got to have a strong border security, part of it. I
know the bill has that. It's very strong and I appreciate that.
The second part is the guest worker plan or some sort of
control system to allow people in is important. The system that
we have now is one, I think it's a good start, but it's not
working, the HB-A and B and all that. I brought in some folks
that have gone over the process itself and it's just too
cumbersome. It's not big enough, in many ways, so the pools
that we're looking at and I appreciate the work that you're
doing in that part.
The third part, which is a difficult part which is what do
we do about the 11 and 12 million undocumented aliens is a
difficult part. And keep in mind that about 40 percent of the
folks that got in across the river, because everybody just
think they came in across the river, illegally, but about 40
percent of them came in through a legal permit or visa which
means that we did not tell them it's time for you to leave and
this is an important thing. This is why when people start
talking about building a wall and all that, it really doesn't
matter because 40 percent of them came over through a legal
permit, a visa.
So we've got to be smart on how we do this process and
certainly one of the things that we have to look at is looking
at putting the resources not only in homeland security and
we'll be handling part of this through our committee in
homeland security, but the other part is working with the State
Department. Because right now, it's so easy for them to just
say deny, deny, deny and for the people who are trying to come,
in a legal way, it has just become very, very difficult.
So I want to thank you for the work that you've done and I
appreciate the cooperation that you're showing the Committee
here.
Mr.Gutierrez. Congressman, I just want to thank you for
your help and your assistance being from the border. I think
you make an excellent voice because I listened to the colloquy
between my friend, Mr. Chabot, and my friend, Mr. Ellsworth,
about criminals. The fact is we put 20,000 beds in our
legislation, 20,000 beds that don't exist today. I mean we're
smart and we're tough in our legislation and we say prosecute.
The other thing we do in our legislation so that we
understand, we order that every person in a jail, every person
in a jail go through a security check on their immigration
status. That is every inmate has to go. And if you are not
legally in the United States, but in a jail, we make it
seamless, from your point, you don't like get out of jail and
be released back into society. Our legislation calls for a
seamless process from that jail cell, whether it's in Texas or
in Oklahoma or New York, straight to a facility, Department of
Homeland Security and deported. That doesn't happen today.
So I would hope that people would look at the enforcement
capacity that we put in our legislation. We're tough, but we're
fair and we want a solution to the problem. Thank you so much,
Mr. Cuellar.
Mr.Chabot. Would the gentleman yield? Thank you. I'll be
very brief. The gentleman, I think you're right. They don't all
just come across the border across the river illegally. Some
are already here about 40 percent and have overstayed their
visas. I would just comment relative to that. You had mentioned
that we don't tell them it's time to go back as if it's the
government's fault.
My understanding is the people know that the visa is for a
certain period of time and they failed to comply with the
existing law and so they've overstayed their visa so at that
point, they're illegal. We need, clearly, if they haven't gone
back, we need to follow up much better than we do now and I
think that's the point you're making.
Mr.Cuellar. Yes, I think that is the point and I'm sorry I
said it that way.
Mr.Chabot. That's okay.
Mr.Cuellar. We basically should know when somebody's time
is over, but then we've got to follow up on that because we
talk about 11 or 12 million undocumented aliens and 40 percent
of them overstay their time, that's a serious problem. Let me
just conclude with this, Madam Chair, just one last point. We
just got back from Honduras and we got back from Mexico City.
We've got to work with the Mexicans on securing their southern
border because if you look at what's happening, you've got so
many Central Americans and what they call, this is a jargon
that Border Patrol uses, I don't know it's a PC word, other
than Mexicans because they classify Mexicans coming in and
other than Mexicans. Central Americans, other countries are
coming in through our southern border and other parts of that.
So we've got to work with other countries on that.
Thank you.
ChairwomanVelazquez. Mr. Davis.
Mr.Davis. Thank you, Madam Chairman. Thank you for your
testimony.
Mr.Gutierrez. Thank you, Mr. Davis.
Mr.Davis. Just looking at the perceptions that are out
there across America right now, I know there's a perception
that jobs are being taken from Americans that would like to
have those jobs. Of course, there's discussions out there that
Americans won't do the jobs. I actually met with a lady on
Saturday back in Green County, Tennessee, and she's worked for
49 years. She lost her job last week and there is a high
frustration level out there across my District in east
Tennessee and I think probably across America. People are
concerned and they take illegal being exactly that, starting
with that premise, being illegal.
I know there's a study out there, one of the surveys of
NFIB, even small business owners that belong to NFIB say that
70 to 80 percent of the business owners see this as an issue
that we need to deal with. It's putting the burden on small
businesses. The small business owners they start jobs to be a
florist or a healthcare worker or whatever that small business
is and they didn't really get into the business to be an
accountant or be a lawyer or have a department to deal with
human resources. They really just want to go out and do that
job that they know how to do and create those jobs and grow
that business.
What is your thought on--how can we make it easier for
those businesses to do what they started that small business to
do? That's the number one thing. And then how can we either
perception or reality, get to that point where Americans
understand that either jobs are being taken, number one, we
need to answer that from--jobs that they would take or number
two, that that's not reality?
Mr.Gutierrez. Number one, I think small business people
need a reliable, simple system to verify the employee and
that's what we offer. We make it electronic. And if we have a
biometric Social Security card, if we--you know, the poor small
businessman, I mean he can use a driver's license. In Illinois,
our former Governor went to jail for seven driver's licenses
and there are people manufacturing driver's licenses and false
Social--he says oh good, this is something I can rely on. He
swipes it once or he goes on the computer and it says David
Davis and your photo shows up on the Homeland Security, simple
system, and then he gets--he sends it on the computer, he sends
it over the phone to DHS and he gets one simple piece of paper.
All the rest of the application form and all the other
verification he can put it away because it said David Davis is
good to go and he puts that in his file. You need something
reliable and quick, so you can get it done in one day.
Secondly, the best way I can answer your question is our
economy creates about 400,000 low-wage, low-skill jobs a year.
But we only offer 5,000 visas for low-skill, low-wage workers a
year. Here's an economy that's exploding in these low-wage,
low-skill jobs. Does that sometimes go over to other jobs?
Probably. Can we find anecdotal evidence of this person being
affected or that person? But in the totality, the immigrants
obviously buy cars, buy groceries, buy tires, buy clothes, rent
apartments, contribute to the economy. The Social Security
Trust Fund has tens of billions of dollars in an unaccountable
account. They have the money. Don't tell us as Members of
Congress, we have it, but they can't tell you who that money
really belongs to or how they're going to get it back to
someone for the simple reason they were using bad Social
Security cards and they're not identifiable.
Lastly, let's look prospectively. You were born between
1946 and 1964. That makes you a Baby Boomer, makes me a Baby
Boomer, right? There are 80 million Baby Boomers. In 20 years,
the youngest Baby Boomer is going to be 81. I mean the oldest
Baby Boomer will be 81 and the youngest will be 63. Eighty
million people. I'm not saying all of them will leave the
workforce because we're living longer, many of them will need
care, they'll be retired, our Social Security system is going
to be hurting, but the most important thing, think about those
tens of millions of people that are going to be leaving the
workforce.
At current rates, of birth rates here in the United States,
in the next 20 years, we will increase about 13 million people,
given current birth rates. Who is going to take over the jobs
of the tens of millions of people in the Baby Boomers as they
retire?
We're going to have to grapple with this issue, so we want
to do it strong and effectively and securely and we want to
make sure that people have a legal document to come here
because it's good for our economy too.
Mr.Davis. If your legislation were to pass, when would this
swipe card actually go into effect? How long are we talking
about?
Mr.Gutierrez. Much of it, the critical infrastructure would
happen rather quickly within the first to second year. But the
first--the other thing we do is we say until we get to that
biometric system, we say that you must have a driver's license
to get a job under the Real ID Act, a driver's license or we
say you have to bring your passport which is biometric and has
a swipe. So we limit the numbers immediately of kinds of
identification that an employer can use.
ChairwomanVelazquez. Time has expired. And we're going to
have a set of votes, so the Committee is in recess subject to
the call of the chair. I believe that we will be back here
around 11:30.
Mr.Gutierrez. Thank you, you've been very generous.
ChairwomanVelazquez. Thank you, sir, for your presentation.
[Off the record.]
ChairwomanVelazquez. The Committee will reconvene. I will
ask the witnesses of the second panel to take your seats.
We are going to start our second panel, and our first
witness is Mr. Benjamin Johnson. He is the Executive Director
of the American Immigration Law Foundation and has written
extensively on immigration law and policy. The Foundation is
dedicated to increasing public understanding of immigration law
and policy and the value of immigration to American society.
Mr. Johnson, you will be given five minutes to make your
presentation. You could either summarize it--and without
objection your whole testimony will be entered into the record.
STATEMENT OF MR. BENJAMIN E. JOHNSON, DIRECTOR, AMERICAN
IMMIGRATION LAW FOUNDATION
Mr.Johnson. Thank you very much, Madam Chair, and members
of the Committee for this opportunity to talk about the impact
of U.S. immigration policies on small businesses in this
country. Rather than trying to tackle all of the complex issues
that we have heard about today, I am going to focus my comments
on the economic and demographic realities that are making
immigration an important issue for hundreds of thousands of
small businesses around the country.
In the debate about the economics of immigration, I often
hear people recite the one lesson we all seem to have learned
from Economics 101, which is that it is all about supply and
demand. But after reciting this axiom, the conversation is
almost always focused exclusively on the issue of supply. The
argument I hear most often is that millions of immigrants are
coming to the U.S. for jobs, and that the arrival of all these
workers must be driving down wages and opportunities, because
everyone knows that if you have a large supply of something
then its value must go down.
But you don't have to look much further than your morning
cup of coffee to find evidence that just because there is a
large supply of something isn't a guarantee that its value is
going to go down. Coffee shops seem to be everywhere, on street
corners across America, and yet people line up out the door
waiting to pay more than they have ever paid for coffee.
And the reason is that the demand for coffee has kept pace
with the supply. These stores aren't just competing for a fixed
number of customers; they are expanding the customer base by
creating more and more coffee drinkers. The lesson here is that
we have to look at both supply and demand. Demand matters.
When it comes to immigration, we cannot focus only on the
numbers that are coming. We have to look at what kind of demand
is being created by our economy. I think that the evidence
strongly suggests that the--strongly supports the conclusion
that immigrants are drawn to our labor force because of
legitimate demands being created by our incredibly diverse and
dynamic economy.
In 2006, the net supply of immigrants into our workforce,
both legal and undocumented, was approximately 700,000 workers.
But when we look at demand, we find that in 2006 our economy
created 2.2 million new jobs. To put that in perspective, that
is more new jobs than were created by all of the European Union
and Japan combined. And those numbers reflect what almost
everyone agrees is a jobless recovery.
Evidence that immigration is a response to legitimate
demand can also be seen in the types of immigrants that we
attract. A majority of the new jobs in the last 10 or 15 years
have been in occupations at the extremes of the skill spectrum.
The highest growth rates have been in occupations that require
high levels of education, jobs like engineers, doctors,
geologists.
But in terms of sheer numbers, the vast majority of jobs
have been created in occupations that require very little
education, jobs like home health aides, landscapers,
construction helpers. And it turns out that in fact the
immigrants that are coming to the United States have skills
that match our demand. Most immigrants coming into the United
States either have very little education or very high levels of
education. That is happening because the majority of U.S.
workers are right in the middle of the skill spectrum, not at
the two extremes.
The result is that immigrants complement rather than
compete with the vast majority of U.S. workers. In other words,
immigrants are coming here to fill gaps in our labor market.
There has been a lot of controversy about immigrants coming
here to do jobs that Americans are less interested in. But the
truth is: it is not an insult to the American worker that the
number of people who are looking for jobs that require very
little education or training is getting smaller.
Our labor markets attract younger, less educated
immigrants, because our labor force is getting older and it is
getting better educated. In the early 1960s, somewhere around
half of U.S. workers were high school dropouts. Today, on about
12 percent of U.S. workers are high school dropouts. We should
be proud of this fact.
But this success means that we have fewer workers who are
looking for jobs that require no education or training. And we
shouldn't be surprised that employers are doing what they have
always done for the last 200 years, which is turning to
immigration to fill the gaps in our labor force. In fact, the
ability to use immigration to supplement and fill gaps in our
labor force across the skill spectrum is one of the principal
reasons the United States has been able to create the most
diverse, most dynamic, most flexible workforce the world has
ever seen.
Unfortunately, for the growing number of immigrant workers
and small businesses that turn to the immigration system for
help, dealing with the economic and labor force challenges they
face, the current system has failed them. The harsh reality is
that the current environment is one where a growing share of
the workforce is foreign-born, where large numbers of those
workers are undocumented, where there is no effective way to
discern which workers are legal and which ones are not, where
there is an increasing threat of immigration raids, and where
the legal system of immigration offers very few options to the
industries where immigrant workers are most often employed.
In this environment, small businesses are at serious risk.
Small companies are the least able to overcome the loss of a
large share of their workforce due to raids, or the inability
to pursue some innovative idea that requires a skill set not
readily available in our workforce. Small businesses are the
least likely to be able to afford or endure the delays and
bureaucracy that have come to define our immigration system.
Given the fact that the majority of workers in the United
States are employed by small- and medium-sized companies, and
that the health and vitality of our economy has always relied
on the success of small businesses, we cannot afford to put
these companies or their employees at risk because of our
dysfunctional immigration system. Congress must act to reform
all aspects of our laws, so that we can have an orderly,
regulated flow of workers that fits the legitimate demands of
our economy.
Thank you.
[The prepared statement of Mr. Johnson may be found in the
Appendix on page 54.]
ChairwomanVelazquez. Thank you, Mr. Johnson.
Our next speaker or witness is Mr. Craig Silvertooth. He is
the Director of Federal Affairs of the National Roofing
Contractors Association. NRCA is an active organization of
members who share a common purpose and interest to further
promote the art of roofing application through continual
education, professionalism, and adherence to the highest
standards.
Thank you. Welcome.
STATEMENT OF MR. CRAIG SILVERTOOTH, DIRECTOR OF FEDERAL
AFFAIRS, NATIONAL ROOFING CONTRACTORS ASSOCIATION
Mr.Silvertooth. Thank you, Madam Chair. I appreciate it,
and I appreciate you entering my prepared testimony into the
record as well. Members of the Committee, thank you as well.
I am testifying here today on behalf of the National
Roofing Contractors Association, but I am also testifying here
today on behalf of the Essential Worker Immigration Coalition,
which is a coalition of businesses spanning the spectrum of
American industry. I serve as a co-chair of that coalition as
well, and I would like to speak today about the intersection of
the small business community and our nation's current
immigration laws and how those might be changed in the coming
year, if we see successful immigration reform in this Congress.
My comments will break down broadly into four areas. First,
the demographic challenges we face; secondly, our current
system, focusing specifically on two initiatives by the
Department of Homeland Security's Immigration and Customs
Enforcement Division; then, I would like to talk about concerns
with certain proposals that are currently under consideration;
and, finally, our belief as to what a workable immigration
system would look like, particularly from the small business
community's perspective.
I understand that I have time constraints, so I will try to
be brief and touch just broadly on these topics. NRCA and
EWIC's members come to the table just like every other
business, frankly, in this country to the immigration debate,
from the perspective of meeting our workforce needs. Ben
touched upon what we are facing from the demographic
standpoint. I would like to focus on two industries in
particular. There are two of the largest private sector
employers in our economy--that is, the construction industry
and the roofing industry--or the restaurant industry.
Regarding the construction industry, this is what we are
seeing in the industry today. There was data released by the
Pugh Hispanic Center on March 7 of this year. They found that
construction employed 2.9 million Hispanic workers in 2006.
Total employment for the construction industry is 11.8, so
fully one-quarter of every employee in the construction
industry is of Latino or Hispanic origin.
2.2 million of the Hispanics in the industry were foreign-
born, and a staggering number of those were recent arrivals,
meaning that they came from--they have arrived in the country
since the year 2000. That is important to bear in mind, because
you need to keep in mind that this country only allows 5,000
green cards per year of essential worker visas, and that
translates into a waiting list of about 10 to 12 years. And,
frankly, the number would be a lot higher if employers decided
to take advantage of that program.
Then, we also have the H-2B program. That is a seasonal
visa, and that only allows for 66,000 a year. It is capped at
that level.
In 2006, the construction industry employed a total of
559,000 new workers, and of that number 372,000 were of Latino
origin. That translates into 66.5 percent of all new hires in
the industry last year were of Latino origin. About 60 percent
of the increase in industry employment, or 335,000, were
foreign-born Hispanics. And 255,000 of the total increase, or
45 percent, arrived in the country since the year 2000.
In total, nearly one-third of all recently-arrived foreign-
born Hispanics worked in the construction industry in 2006. So
clearly our industry is a big draw.
Regarding the restaurant industry, we are seeing that the
restaurant industry is going to need an additional 15 percent
of its workforce. They currently employ 13 million immigrants,
foreign-born, or they currently employ 13 million workers in
total, but we know that they are going to need an additional
two million over the next 10 years.
I see I am running a little short on time, so I am going to
skip over to what we are facing in the current system from the
small business perspective. There are two initiatives underway.
One is what is called a Social Security No Match proposal that
has been issued by the Department of Security's Immigration and
Customs Enforcement Division, came out last August. They are
signaling that they would like to prosecute employers for
continuing to employ workers that have been the subject of a
Social Security No Match letter. The second issue is this
ramped up enforcement of immigration and customs enforcement
that we are seeing across the nation.
I want to be very clear: our members are supportive of
adhering to immigration laws. They do their best to adhere to
them, but the system is broken. It is difficult, it is unwieldy
to manage, and what they are finding is that they are grappling
with a system where the rules are unclear. A good example is
this. If somebody comes through your front door and they
issue--they give you a form of identification, it might be one
of 27 different forms, because currently that is what the law
says that an employer has to accept.
If the person looks like they may not be a native-born
worker, you are not allowed to challenge them, and that is
probably a good thing. I think that would run afoul of what
this country is about. But it would violate employment
discrimination laws.
Under the proposal that we are considering now, an employer
would be held liable in the future even though they would be
prevented from asking these types of questions due to anti-
discrimination statutes that we have on the books. And so you
would have a drastic increase of what we see going on in the
workplace in terms of raids by ICE and them coming through the
front door, but you are not allowed to really question and
investigate whether or not your workforce is legal.
I see my time is up, and I will be happy to answer any
questions.
[The prepared statement of Mr. Silvertooth may be found in
the Appendix on page 63.]
ChairwomanVelazquez. Sure. During the time for question and
answers, I am sure that you will be able to share with us or
express any other ideas or comments that you may have.
Our next witness is Ms. Maureen Torrey. She is the Vice
President of Torrey Farms, Inc., family-owned in Elba, New
York. The Torrey family has farmed in upstate New York for 11
generations, where Ms. Torrey oversees marketing and business
management for her family's 10,000-acre farm.
Welcome, and thank you for being here.
STATEMENT OF MS. MAUREEN TORREY, TORREY FARMS, INC., ELBA, NEW
YORK
Ms.Torrey. Thank you, Madam Chairwoman, and members of the
Committee, for the opportunity to testify before you today
regarding the impact of immigration reform on America's small
business community, and specifically agricultural producers.
My testimony reflects my own experience as a life-long
farmer. I am also testifying on behalf of Agriculture Coalition
for Immigration Reform, the National Council of Agricultural
Employers, and the United Fresh Produce Association. ACIR is a
broad national coalition of agricultural groups working to pass
meaningful immigration reform. And I just concluded my term as
Chairman of United this past week.
My family and I farm vegetables and dairy in western New
York. Our farm is now being run by the eleventh generation and
the twelfth is on the way, if we are able to sustain the
business. However, the lack of farm labor, the lack of a
workable agricultural labor program, and immigration
enforcement without a complete solution constitutes an
immediate and absolute threat to the survival of farms like
mine across the country.
Some years ago, American farm families provided much of the
needed farm labor, and local communities turned out extra
workers for peak harvest needs. Times have changed. America's
labor-intense farming operations are now sustained by immigrant
labor. This is true of fruit, vegetable, farms, dairies,
ranches, nurseries, greenhouses, and Christmas tree farms.
Federal Government data shows that the majority of farm
workers lack proper work authorization and immigration status.
The U.S. Department of Labor's National Agricultural Workers
Survey, or NAWS, reports that 78 percent of seasonal
agricultural workers are foreign-born. There are about 1.6
million farm workers who perform 25 or more days of hired farm
work during the year. NAWS reported in 1998 that 52 percent of
farm workers lacked legal status. Experts suggest that
percentage now exceeds 70 percent.
This phenomenon is national in scope, not just a California
and border state problem. Data for the eastern half of the U.S.
presented by Dr. Dan Carroll of the DOL revealed that an
astonishing 99 percent of new labor force entrants into the
agricultural workforce in the eastern states in 1998 through
'99 were not authorized to work in the United States.
These statistics reveal what we already knew. Americans are
not raising their children to be farm workers. Domestic workers
rarely apply for farm jobs. And in the absence of a reliable
agricultural worker program, our industries will rely on
workers who present work authorization documents that appear,
but in fact are not legitimate. This unstable situation
threatens small business survival and economic prosperity,
especially in our rural communities.
My own story underscores how broken the system is. Since
1981, Torrey Farms has cooperated with the New York State
Department of Labor to recruit farm workers for our operation.
No one is hired in any position, whether college educated or
cut cabbage or milk cows without a referral from the New York
State Department of Labor.
The Department verifies the work eligibility of the
applicants in the same manner as most employers. It looks at
all the allowable forms of identification specified on the I-9
form, yet we know the high incident of false documents. We were
starkly reminded of that fact last October when agents of the
Department of Homeland Security's Immigration and Custom
Enforcement showed up at one of our farms.
The agents kicked in the door at one of our housing
facilities and proceeded to round up 34 workers at 6:00 a.m. in
the morning who had been referred by the State Department of
Labor. Referrals from the State Department of Labor to our
farms have been apprehended on more than one occasion. Put
simply, one arm of government recruits and refers our workforce
and another arm of government takes away.
It is a crying shame that our great nation has failed to
implement a rational legal system. If we do not see a solution
soon, much of our food production will move out of the country.
It will move to areas where labor is available--Canada, Mexico,
South America, China.
We are the largest employer in our town and among the
largest in our county. We have a $10 million payroll amongst
all our entities. This brings back over $70 million in our
community. That does not include all the work that we do with
suppliers and other small businesses.
I just need to touch on the needed solutions. First, we
need a reliable and affordable guest worker program. Second, we
need an opportunity for trained, experienced, and otherwise
law-abiding farm workers to have the chance to continue working
and to earn the right to become permanent legal residents of
the U.S. subject to strict conditions.
Growers and producers are conservative by nature. We work
hard, we pay our taxes, we care deeply about the security and
the future of our country. We care about the rule of the land.
We urge Congress to finally get the job done this year. We are
in a crisis.
Thank you.
[The prepared statement of Ms. Torrey may be found in the
Appendix on page 76.]
ChairwomanVelazquez. Thank you, Ms. Torrey.
Our next witness is Mr. Ralph Folz, CEO of Molecular. He
has been responsible for building this company into one of the
fastest-growing Internet professional services firms in the
United States. Prior to founding Molecular, Mr. Folz served as
an advisor of strategies and consultant to several of New
England's largest technology companies.
Welcome, and you have five minutes.
STATEMENT OF MR. RALPH J. FOLZ, CEO, MOLECULAR, WATERTOWN,
MASSACHUSETTS
Mr.Folz. Thank you. Madam Chairwoman, members of the
Committee, thank you for the opportunity to testify today. I am
Ralph Folz. I am the CEO of Molecular. We are an Internet
consulting company with 140 employees located in Boston,
Massachusetts. We help large firms such as Reebok and Coke and
Fidelity Investments build Internet sites to reach and service
their customers.
I testify today on behalf of Molecular and as a member of
the Technology Network, or TechNet. We are a network of CEOs
and senior executives of companies that are leading innovators
in the fields of IT, Internet, e-commerce, biotechnology,
venture capital, and investment banking. TechNet membership is
diverse. Some of us are leaders of the world's largest and
best-known technology companies, and other of us are just
starting out with small firms with promising innovations that
have enormous potential.
We are all entrepreneurs. We believe in the free market and
the power of ideas. We have turned innovation into high-paying
jobs, more than a million nationwide. TechNet's top priority is
to shape public policy impacting U.S. innovation and technology
leadership.
Recently, TechNet CEOs worked with Speaker Nancy Pelosi and
others in the development of the innovation agenda, a
comprehensive set of public policies designed to spur continued
growth and expansion of our innovation economy. It is a great
pleasure today to testify before Chairwoman Velazquez, who has
been a long-standing leaders in the policies that encouraged
the creation of growth of small business, truly the backbone of
this nation's economy.
I am very passionate about entrepreneurial ventures. I
started Molecular 13 years ago with a co-founder, an idea, and
$2,000 each. And we have been able to turn that into a $25
million company generating many high-paying jobs along the way.
Ensuring that we continue to attract and retain the
brightest, most talented people from around the world, who can
contribute to our U.S. innovation leadership, is fundamental to
supporting our global competitiveness. Highly skilled
immigration reform is essential to our nation's continued
economic prosperity. Perhaps for the first time in more than
half a century the future is truly up for grabs.
Unlike the industrial revolution, today's innovation
economy is global. China, India, Russia, and other nations are
investing in emerging technologies and industries to seize a
competitive advantage in the industries and the markets of the
future. The number of engineering degrees awarded in the U.S.
is down 20 percent from the peak in 1985.
Only 17 percent of U.S. college students receive
undergraduate degrees in science and engineering. That compares
to 52 percent in China and 41 percent in Korea. As a result,
the majority of advanced degrees awarded by U.S. universities
in the same areas of study are granted to foreign nationals.
I can tell you that my company has missed business
opportunities because we couldn't hire professionals with
specific skill sets to do the work. Now, as part of an
international network, I have seen sister companies based
overseas win contracts with American firms because they did
have the staff to do the work.
I can also tell you that over our 13 years in business some
of our best people joined us via the H-1B program. They are
incredibly bright people, and the vast majority of them are
interested in building a permanent life here in America. Let us
in-source talent into America rather than losing the work and
intellectual capital produced in our American universities to
other companies overseas.
Under the current system, this trend is only going to get
worse. The U.S. Citizenship and Immigration Service announced
that the fiscal year '08 allotment of H-1B visas was met on the
very first day applications were accepted, the ninth time since
'97 that the cap has been reached before the end of the fiscal
year. And it is the fourth year in a row that the cap has been
reached before the fiscal year has even started.
These caps limit how quickly we can grow. It limits our
ability to stay ahead of our foreign competitors. And if we
cannot grow, we cannot continue to create jobs here in the U.S.
At Molecular, we are doing innovative work for some of
America's largest companies, and we really want to grow our
business and grow it here.
TechNet supports efforts to develop a comprehensive
immigration package that permanently fixes the shortcomings of
both the employment-based green card and the H-1B visa programs
this year. We support legislation that gives U.S. employers
timely access to highly educated foreign nationals. We need to
eliminate the artificial quotas, the processing delays and
backlogs that undermine U.S. competitiveness.
We need to create a flexible market-based H-1B cap that
would ensure U.S. employers are not locked out of hiring
critical talent. We need to exempt foreign nationals who earn
U.S. advanced degrees as well as the foreign-earned advanced
degrees from H-1B and employment quotas.
We need to streamline the path to permanent resident status
for graduates of bachelor's or higher from U.S. universities
who have job offers from U.S. employers, and we need to
increase the number of employment-based permanent resident
visas, known as EB green cards.
In conclusion, in an increasingly competitive global
economy, the U.S. cannot afford to lose its edge in attracting
and retaining the world's best talent as a result of
complicated and restrictive U.S. immigration policies. We
commend the Committee for its focus on these pressing issues
and urge you to play a leadership role in ensuring that high-
skilled immigration reform happens this year.
Thank you.
[The prepared statement of Mr. Folz may be found in the
Appendix on page 78.]
ChairwomanVelazquez. Thank you, Mr. Folz.
Our next witness is Mr. Robert Rector. He is a Senior
Research Fellow at the Heritage Foundation. He played a major
role in crafting the federal welfare reform legislation passed
in 1996, and he has conducted extensive research on the
economic costs of welfare and its role in undermining families.
Welcome, sir.
STATEMENT OF ROBERT RECTOR, PH.D., SENIOR RESEARCH FELLOW,
HERITAGE FOUNDATION
Mr.Rector. Thank you for having me as a witness. I am here
to talk about the--my expertise is government spending and
government programs, and I am here to talk about the fiscal
costs of immigration, particularly low skilled immigration,
immigrants who do not have a high school degree.
I have analyzed in the United States there are about four
and a half million immigrant households headed by individuals
that do not have a high school degree. About half of these are
legal; about half are illegal. About a third of all immigrant
households in the United States are headed by high school
dropouts, compared to about 9 percent among the native
population.
I analyzed the fiscal cost of these households. That is,
the total benefits that they receive minus the taxes that they
pay in to the American government system. I cover a full range
of all government benefits, including Social Security,
Medicare, 60 different welfare programs, public schooling,
police and fire. I don't have defense, I don't have interest,
just things that are sort of directly consumed.
The methods I use are exactly the same as those used by the
National Academy of Sciences in their study of the fiscal
impact of immigration 10 years ago, and the conclusions I get
are basically the same. A lot of people say, ``Well, immigrants
get less of these benefits. All of my data is based on the
immigrants' self-report in the Census of whether they got the
benefit or not. If they said they got food stamps, then I count
food stamps. If they don't get it, they don't get it.
And what I find is that the typical low skill immigrant
household receives about $30,000 a year in benefits from
federal, state, and local governments, and it pays in about
$10,000 in taxes. It pays very little income tax, but it pays a
significant amount of Social Security tax, a lot of sales and
consumption taxes. That means that each of these households is
receiving each year about $19,500 worth of benefits that they
didn't pay for with the taxes that they paid in. Somebody else
has to pay for that, and that somebody else is the American
taxpayer.
Overall, these households cost the taxpayer on net,
benefits minus taxes that are paid in, $89 billion each and
every year. These households are in deficit, fiscal deficit, at
every stage of the life cycle. From the moment they walk in
this country and form a household they begin to cost the
taxpayers more in benefits than they pay back in taxes, and it
kind of gets worse. By the time they get to retirement age,
they are drawing down about $10 of benefits for every dollar
that they are paying in.
The net lifetime cost of a low skill immigrant who comes
into the United States and brings a family and remains here for
life is around $1.2 million. That is something that--benefits
in excess of the taxes that they pay into the system. And,
again, this really shouldn't be surprising.
People say, ``How can they get $30,000 in benefits?'' Well,
the average household in the United States gets around $22,000
in benefits. These households get an additional $10,000 or so
from the 60 different means-tested welfare programs in the
United States, and they pay very little in taxes. That is why
they are in deficit.
The reality is that the United States has a very generous
system for supporting less advantaged workers. We don't require
much from them. We provide basically free schooling, welfare,
Medicare, Social Security. We can do that for individuals born
in the U.S. But if you try to do that for a huge inflow of
similar individuals from abroad, we simply can't afford that as
a nation.
Well, now look at this from the perspective of employers.
Employers say to me, ``Well, we have to have this type of
worker. We really need these families.'' You know, and I always
say, ``Well, look, each worker of this sort, of a very low
skilled worker that you bring in from abroad, costs about net
$18,000 in excess taxes. Do you as the employer want to pay
that?'' And every one of them I have ever asked, ``No, no. I
don't want to pay that.'' Well, who does? Who do you want to
pay that? ``I don't care, as long as it is not me.''
And so the reality is that we are irrationally subsidizing
a lot of this employment through the general taxpayer in a way
that really does not make sense. And if the employers had to
bear the full fiscal cost of these choices, they would make
different types of choices.
Another topic that we are looking at here today is amnesty
or earned citizenship, or so forth. The most important thing to
understand about that is that very few illegals are now
elderly, and very few illegals have eligibility to Social
Security, Medicare, Medicaid, and SSI, Supplemental Security
Income. If you grant amnesty and legal permanent residence,
they will have access to those things.
None of these--for the most part, none of these individuals
have ever been net taxpayers. When they hit retirement, which
would occur about 20 years from now, they are going to draw
down out of programs. The net cost to the taxpayer of that, of
granting amnesty to nine million current adult illegals, about
20 years from now, will be $2.5 trillion net cost. That is with
a T, $2.5 trillion, in net cost. And those costs will slam into
the system at exactly the point the Social Security system is
starting to go bankrupt.
The conclusion is that the current open border system is
expensive. Guest worker programs that grant legal permanent
residence would be even more expensive, and amnesty is very
expensive. What we really need as a nation is an immigration
system that allows perhaps some temporary workers without
access to the welfare system, but, in particular, focuses on
bringing in high skilled workers who will pay much more in
taxes than they take out in benefits.
Thank you.
[The prepared statement of Mr. Rector may be found in the
Appendix on page 84.]
ChairwomanVelazquez. Thank you, Mr. Rector.
Our next witness is Mr. Mark Krikorian. He is Executive
Director of the Center for Immigration Studies. The Center for
Immigration Studies promotes public knowledge and understanding
of the need for an immigration policy that gives first concern
to the broad national interest.
Welcome, sir.
STATEMENT OF MR. MARK S. KRIKORIAN, EXECUTIVE DIRECTOR, CENTER
FOR IMMIGRATION STUDIES
Mr.Krikorian. Thank you, Madam Chairwoman. There is a lot
of ways to look at this issue of immigration and small
business, but maybe the best place to start is with the opinion
and views of small businessmen themselves.
The National Federation of Independent Business and the
National Association for the Self-Employed, the two main
organizations speaking for small business as a whole, surveyed
their membership last year on this specific issue, and they
found overwhelming concern among their membership for illegal
immigration, overwhelming support for increased penalties
against their fellow employers, who knowingly hire illegal
immigrants, and overwhelming opposition to letting illegal
immigrants stay.
None of this should be surprising, because in some sense
small business is America, given the depth and breadth of small
business ownership and entrepreneurship in our country. And so
the views of small businessmen simply reflect the broad public
dissatisfaction with our current policy of open borders through
non-enforcement of the immigration laws.
But there are some specific issues, specific to small
business, that are worth briefly touching on. First, the large
scale use of foreign labor is actually harmful in the long run,
even to the small businesses and the industries using it. As
Barbara Jordan's Commission on Immigration Reform wrote a
decade ago, ``The availability of foreign workers may create a
dependency on them.'' In other words, as with drugs or alcohol,
easy availability of foreign labor can create a sort of
addiction, rending the user incapable of imagining life without
a fix.
But in a free market system like ours, industries evolve
and adapt in response to changing labor characteristics and
changing standards. For instance, nearly a century ago, small
businessmen told--testifying before Congress said that child
labor was essential for the functioning of their business. One
small businessman said that ending child labor would ``paralyze
the country.'' Of course, it didn't work out that way, and
precisely because a flexible economy like ours can and will
adapt to changing labor market standards.
When lawmakers--today's lawmakers acknowledge the existing
social consensus against the addiction to foreign labor, legal
and illegal, those industries where some small businesses have
become addicted to that foreign labor will adapt in ways that
Adam Smith would have easily understood--offering better wages
and benefits and changing the working conditions and
recruitment practices to attract and retain legal workers,
while at the same time finding ways of using the existing labor
pool more efficiently, whether through increased harvest
mechanization, increased use of prefabricated housing, what
have you.
Those who say otherwise are in fact telling the truth as
they see it. The problem is--in other words, they are not
lying. The problem is they are too close to the situation to
see the big picture. They cannot see the forest for the trees,
just like the small businessmen using child labor were unable
to see the forest for the trees. It is Congress' job to step
back and look at the whole forest, not focus on the bark of a
single tree, if you will.
Two other issues I quickly touch on that are relevant to
small business. The question is--or the claims are that using
an electronic verification system to verify the status of new
workers will be burdensome and sort of a burden--a new mandate
on employers. In fact, that is not the case. All of the
information that a verification system would collect is already
collected. In fact, the only way that would change is if
Congress abolished the Social Security system and income tax
withholding, and I don't see that happening any time soon.
So that being the case, verifying that already collected
information through a free, easy, quick system is clearly not a
burden or a new mandate. And I can speak with experience about
this, because the existing voluntary electronic verification
system is something my own small business participates in, and
it is quick and it is easy and it represents no burden at all.
In fact, a mandate for all businesses to verify--
electronically verify their new workers isn't just a question
of penalizing employers. In fact, it empowers legitimate
employers to make sure they actually know who they are hiring
and are able to build a workforce on concrete, if you will,
instead of on sand.
And a final point that Congressman Gutierrez referred to
was the fear that a tighter immigration system, whether it is
through enforcement or changing some of the categories, would
somehow reduce entrepreneurship. And the contention here is
that immigration is somehow--immigrants are somehow uniquely
entrepreneurial, and immigration represents sort of a booster
shot into a tired America and increases our entrepreneurial
energies.
Fortunately, when you look at the data, there is actually
nothing to that at all. Immigrants are actually slightly less
likely to be entrepreneurs than native-born Americans are.
Certain ethnic groups are more likely to be entrepreneurial.
Koreans, for instance, are more likely to be self-employed, but
immigrants overall are actually slightly less likely to be
self-employed than native-born Americans are.
And so any change in immigration policy is, in fact, not
going to have any significant effect on America's
entrepreneurial situation.
Let me end there, and I will be happy to answer any
questions that the Subcommittee may have. Thank you.
[The prepared statement of Mr. Krikorian may be found in
the Appendix on page 94.]
ChairwomanVelazquez. Sure. Let me start with you, sir.
Mr.Krikorian. Yes.
ChairwomanVelazquez. Where is the scientific data or
research that proves that immigrants are not entrepreneurial?
Places like New York--if you go to every corner, the grocery
store, the manufacturing plants, they are Korean, they are
Hispanic. I don't know where you mean when you talk about
immigrants, because then you say Koreans, they are immigrants,
too. So I am a little confused here.
Mr.Krikorian. I would be happy to explain that. Anecdotes,
unfortunately, don't tell us anything about the broad
situation. There are, in fact, large numbers of immigrant
entrepreneurs, but the Census Bureau in various surveys asks
whether people are self-employed or not. That is essentially
the marker of being--owning a small business, being
entrepreneurial.
And the fact is that the most recent data, this is from
2005, shows that about 11 percent of foreign-born people in the
United States, regardless of who they are, where they are from,
when you put them all together, 11 percent of immigrants are
self-employed versus about 13 percent of native-born Americans.
So that means there is a lot of immigrant entrepreneurs. It is
just that they are no more likely to be entrepreneurs than the
native-born.
ChairwomanVelazquez. Yes. The same Census data shows that
if we take one sector like Hispanics, because for some people
Hispanics are the immigrants, are the fastest growing sector.
And in places like New York, Hispanic businesses are even
triple the national average.
So I don't get it. Anyway, I will recognize Mr.
Westmoreland, and then I will come back and ask another
question, and allow for the other members to ask questions.
Mr.Westmoreland. Thank you, Madam Chairman. And thank all
of you for being here.
Mr. Rector, I wanted to ask you a question. You talked
about both the legal and the illegal that are in this country.
Did that--the benefit number stay the same whether they were in
the country legally or illegally? Or is that just for the
illegal?
Mr.Rector. This covers all low skill immigrant households,
so it has both of them. The illegals probably get somewhat less
in welfare, but they do get welfare. Why is that? Well, the
reality is that most of them have children, and those children
are all eligible for welfare benefits. They are actually
eligible for welfare benefits even before they are born. Most
of them are paid for--the birth is paid by Medicaid, and so the
welfare system is actually focused around the child.
So these households do draw down a lot of welfare. They get
somewhat less government assistance than other households, but
the main difference between illegals low skill and legals is
that the illegals have very few elderly people. Okay? And the
most--if you look at the charts I have provided, this type of
household is always in deficit. They always receive more in
benefits than they pay in taxes. But they really go into
deficit of about $30,000 per household per year, once they hit
retirement.
So one of the major effects of legalizing that illegal
population is you are going to let them stay here over time,
and then they are adding in about 10 million people into Social
Security retirement. That is the single most expensive thing
you can even begin to imagine, and you would be adding those
people in at exactly the point that Social Security is its
maximum crisis. It is an absolute fiscal disaster for the
United States.
Mr.Westmoreland. Do you have any statistics about how many
of the people that are in this country illegal, undocumented,
that have compromised identification, I guess we could say,
that are actually now having taxes and Social Security taken
out on them that probably will never get it back, or, you know,
are receiving some type of benefits? Do you have any idea
what--
Mr.Rector. I do.
Mr.Westmoreland. --that number is?
Mr.Rector. Yes. Well, among illegals, the general estimate
is that about 55 percent of them are working on the books, and
45 percent are off the books. So those that are working off the
books are not going to be paying FICA tax or income tax.
But on the other hand--well, first of all, they don't pay
much income tax anyway, because of the school level. But if you
look at all of these, let us throw the legals in, too, because
I assume they all pay FICA tax. I think that is true. The
reality is that they are paying about $3,000 a year in this
type of taxes, but they are drawing down $30,000 a year in
benefits.
So any analysis that just looks at the Social Security
Trust Fund and says, ``Oh, look, there is this little dribble
of money coming into Social Security,'' you have to look at it
holistically. And if they are putting in $3,000 a year into
Social Security, but drawing down $30,000 a year out of general
revenue, well, who the heck is paying for that? Well, the
Social Security retirees are paying for it, everybody else is
paying for it.
You have to look at across the board, and across the board
this type of individual, because we have a system of very
serious income redistribution in our country, this type of
household is always a net receiver from the taxpayer. The
longer they stay, the more we pay. A lot of people say what we
need is younger workers to help us with Social Security. As my
analysis shows us, no, absolutely not.
What you need is higher skilled workers. They will pay more
in than they take out in taxes. With a low skilled worker, the
younger they are, the more they cost over time to the U.S.
taxpayers, because they are always net losers.
Mr.Westmoreland. Thank you.
Mr. Silvertooth, I come from a builder background and use
many roofing contractors, by the way, but I also used a lot of
subcontractors. And as you know, we put an amendment on the
House-passed immigration bill that we did last year that set a
standard of knowingly hiring an illegal immigrant. I understand
that now there is some folks out there and some conversation
about changing that standard from knowingly to reckless
disregard.
And I would like to know if you have looked at those two
different terms and could put your input into whether the
``knowingly'' or the ``reckless disregard'' and how that would
affect your business.
Mr.Silvertooth. Thank you, Congressman. The answer to this
is very simple for the construction industry. We are an
industry that is defined by contractual relationships, as you
indicated. The knowing standard would establish clearer
guidelines for prosecution of an employer for a violation.
Reckless disregard or even a lower standard, such as reason
to know, which is also being contemplated currently in
discussions, would lower the standard, making it easier to
prosecute an employer by inferring this notion that, well, a
reasonable person would have done this, a reasonable person
might have done that. You didn't, so we are going to go after
you.
Well, as you said in a hearing earlier this year regarding
a level playing field, if you ever see one, please take a
picture of it, because you have never seen it before. I am not
really sure who that reasonable person is. It is a straw-man
argument. It is thrown out there as a standard, and it might be
a standard that no business would be able to live up to.
Also troubling about this, and this is particularly for the
construction industry, but it would affect any type of business
that has a contractual arrangement, is this notion of vicarious
liability where you are held to--you are held liable for the
actions of another employer and their hiring practices, but you
don't really have the power to hire or fire that employer's
employees.
And we think that is not an appropriate standard of
liability either, particularly you don't have the power to do
anything about it. But if we are going to be migrating to a
system in which every employer in the country is participating
in some type of new verification system, and DHS believes that
they have confidence in the system and that there is--they have
high voracity in it, then it strikes us as redundant and
superfluous, frankly, to have an employer on the hook for the
actions of another. If the system is working, DHS ought to be
able to catch the subcontractor.
Mr.Westmoreland. Thank you.
ChairwomanVelazquez. Thank you.
Ms. Clarke.
Ms.Clarke. Thank you very much, Madam Chair. I just wanted
to direct my question to Mr. Silvertooth and Mr. Johnson. And
this has to do a little bit with the STRIVE Act. You know, that
is our centerpiece legislation on immigration reform in the
House, and it covers many areas including the new worker
program.
There are triggers in the bill. You are probably both
familiar with these triggers. I wanted to--and the Department
of Homeland Security--it states that the Department of Homeland
Security may not implement the new worker and legalization
programs until it completes a certification process.
Can you explain these triggers in the STRIVE Act, and do
you think these triggers prevent or unreasonably delay the
implementation of legalization or new worker programs? And you
may also--some other folks on the panel may have some thoughts
around this.
Mr.Silvertooth. The inclusion of triggers I think is
probably important from a political standpoint in order to
build the political will within Congress to make sure that we
can get comprehensive reform. At the same time, we are strong
believers that there needs to be four legs on this stool.
There has got to be border enforcement, there has to be
interior enforcement, there has to be some type of future flow
program, so we are not setting at this table again 20 years
from now scratching our heads wondering what we did wrong in
immigration reform, and there needs to be some type of
transition to some type of legal status for those that are
currently here in an undocumented capacity.
If we do something short of that, if we put these triggers
out there and we start enforcing first, there needs to be a
transition protection for those workers that are currently in
the economy, and there needs to be transition protection for
those businesses that are using those workers currently,
because they are grappling with an imperfect system, and it
would be unreasonable to start enforcing on them for a failed
status quo.
So that would be my initial comments.
Mr.Johnson. Yes. Since we don't lobby on legislation, maybe
I am not as constrained by the politics of this issue. But I am
troubled by the idea, because you don't see it in any other
context, right? We don't say that we are going to wait to make
sure there is no more tax fraud before we reform our tax system
or no more health care fraud until we reform our health care
system.
And in the immigration context, the key to getting control
of the borders is dealing with, you know, one of the root
causes of undocumented immigration, which is this sort of
schizophrenia that we have at our border, the fact that our
economy hangs up a Help Wanted sign, and then our immigration
system hangs up a Keep Out sign.
And an effective border enforcement policy has to confront
the sort of disconnect that we have between our economic
policies and our immigration policies. Otherwise, the prospects
of gaining control over the border is going to be enormously
expensive. We have in the last 10 years quintupled the amount
of money we spend on border enforcement, tripled the size of
our border patrol departments, and the result is we have more
undocumented immigration, more deaths at the border, a huge
growth in the business of human smuggling.
So the fact that we are trying to--you know, that part of
the enemy here is our own economic demand, makes the costs of
fighting ourselves much, much more expensive than it has to be.
I don't see any reason why you can't do both. You need smarter,
more effective enforcement. But part of the way that we gain
control of the borders is making sure that we have a system
that is responsive to the family and employment demands that we
have in our economy.
Ms.Clarke. Ms. Torrey, you wanted to comment?
Ms.Torrey. Yes. I would just like to add, on behalf of the
agriculture community, along with the comments that Mr.
Silvertooth made is that the STRIVE bill is fine for us except
the main problem is the triggers. Agriculture can't wait for
the programs to be implemented. We are in a crisis situation
right now.
And the agriculture community recognized this over 10 years
ago and started addressing the issue, and we need to have some
type of program that works for us now, and we can't wait.
Thank you.
Mr.Krikorian. Yes. Thank you, Ms. Clarke. I can't comment
on the internal politics within Congress, but the reason the
trigger idea is introduced--and I am somewhat dubious of it,
but the reason it is there is because no one believes the new
rules will be enforced, and with very good reason.
In 1986, the deal was a grand bargain. Prohibition of the
employment of illegal immigrations for the first time ever, in
exchange for, as it were, tying up the loose ends, legalizing
the illegals who were here. The amnesty part of it came up
front; the promises of enforcement were to come in the future.
They were abandoned.
And no one believes--and, I mean, I think the public
largely doesn't believe either that new bodies of rules will be
enforced. And in a sense, the sense is fool me once, shame on
you, but fool me twice, shame on me. And that is why a trigger
requirement is attractive to a lot of people, because it
prevents--it makes sure that the enforcement happens first, at
least some of it, before the legalization follows.
ChairwomanVelazquez. Thank you.
Mr. Sestak.
Mr.Sestak. Thank you, Madam Chair. I just had two
questions. Mr. Krikorian, when you did your analysis of--on the
11 percent and the 13 percent, when you went back to the 1800s
and looked at the percentages for the immigrants then, and
their entrepreneurship as compared to the population then, what
were the percentages?
Mr.Krikorian. We didn't, and I am pretty sure the reason
for that is the Census Bureau doesn't keep those kind of--
Mr.Sestak. Who do you think would?
Mr.Krikorian. I have no idea. Probably--
Mr.Sestak. How far back did you go?
Mr.Krikorian. Well, we--
Mr.Sestak. I mean, is this statistically--if I could, is
this statistically important, the 11 and 13 percent? I mean, if
you went back 50, 60, 80 years, I mean, that just might be what
things are. You know, 11 percent now, and three decades from
now they--all of a sudden you have, you know, a standard in
oil. I mean, is it really significant what you are telling us,
if you can't go back and say, ``What is the reference for it''?
Mr.Krikorian. No, I understand. We actually went from 1970,
'80, '90.
Mr.Sestak. No, I know that.
Mr.Krikorian. 2000.
Mr.Sestak. But I am trying to get back to, you know, maybe
the last great wave of immigration.
Mr.Krikorian. I understand.
Mr.Sestak. You know, the Irish or, you know, something like
that, because we come in waves, you know.
Mr.Krikorian. Nobody asked, number one, back then.
Mr.Sestak. It would be very interesting to know, because
you are saying these statistics are important, but I don't have
any reference for them. Eleven and 13 percent compared to the
last great wave of immigration, I would love to see, because I
would think coming in here and just getting a job--you are
probably coming here to make sure your kids can eat, and
somewhat you are less risk--more risk averse, if that is the
case. You kind of get going and steady them out a bit, and then
maybe the entrepreneurship comes.
I have a question for you, Mr. Rector. I was really taken
by your comments about how you needed to do this holistically.
Do you remember the last comment you made? If you really do
your analysis holistically, as I listened to these here say,
and those less--those people can't put as much into the system
as you say, aren't putting as much into the system, if they are
removed, they disappear with a magic wand, what is the cost
attendant to this nation's economy, if it could?
In other words, if you really do want to do a holistic
analysis, what are the benefits that accrue from having them
here to the quality of our lives--a non-leaky roof? I mean, and
the taxes attendant to being able to have a farmer produce more
fruit. What did your analysis show for that?
Mr.Rector. My analysis doesn't cover that, but I can answer
that. If you--
Mr.Sestak. But if we have to do holistic, shouldn't we do
that?
Mr.Rector. If you jerk them all out of the economy
tomorrow, you would have a big shock effect. But let us look at
it another way. If you look at the flow of illegals that we
currently have coming in, we are probably going to bring an
additional seven million low skill illegals in under the status
quo--
Mr.Sestak. If I could interrupt for a moment. you took a
snapshot. It wasn't a fluid or dynamic situation at this
moment. And you presented it here as something very important--
this snapshot--and emphasized it was to be seen in a holistic
way. If you take that snapshot today and look at the benefits,
forget the cost in disappearing, potentially that was the wrong
way to ask it, but you look at the benefits that accrue to this
from more taxes paid into the system, from growing businesses
and things like that, what does your analysis show for that?
And if that is not done, why not do that? Shouldn't that give
us the holistic cost-benefit analysis?
Mr.Rector. I do account for all of the taxes paid into the
system.
Mr.Sestak. From the businesses? In other words, the roofing
business is able to do something because they have people
letting them do something, and they grow bigger and they pay
more taxes. Without those people here, they wouldn't pay more
taxes. In other words, that snapshot.
Mr.Rector. That is--
Mr.Sestak. If you pride yourself on holistic approach.
Mr.Rector. I think what you are getting at is the
contention that by adding more immigrants in--
Mr.Sestak. No, that is not what I am getting at. What I am
getting at specifically is you said that holistic approach was
important. Your holistic approach looked at this--what these
people put in and what they took out into government, but not
the economy. And so, therefore, what does that cost-benefit
analysis show, and shouldn't we do that whole picture?
Mr.Rector. Absolutely. And I--and, for example, the
National Academy of Sciences did that analysis in their 1997
study, and they found that the net economic gain from
immigration was between $1- and $10 billion a year. It is very,
very small. And there really--this is the way to separate this
question out. There is no doubt that when you add illegal
immigrants into the economy you get a bigger GDP. I mean,
obviously you do. You have a larger economy.
The real question is: does the fact that you have a larger
economy mean that the average American citizen has a higher
post-tax standard of living or income as a result of that? And
that is really the issue, okay? And what my study is indicating
is, no, that there would have to be massive positive
externalities to make up for these huge fiscal costs that come
along with this type of labor.
And you don't get that. You do not get--I draw a wage. The
fact that I draw a wage does not magically make you richer,
okay? Just adding labor into the economy--one way of looking at
this is let us say you have a factory, you have 10 employees,
okay? Next week we add one additional employee. Now, a lot of
people say, ``Oh, well, the output of the factory just went up
10 percent.''
Well, the real question is: what happened to the wages of
the first 10 workers? Did they go up? Did they go down? And
that is the question you have to ask, and there is, in fact, to
my knowledge virtually no economic literature that shows that
just by adding low skilled labor into the economy that the
incomes of the average citizen post-tax get better. In fact,
they seem to get significantly worse.
Mr.Sestak. May I have just one moment?
ChairwomanVelazquez. Yes, Mr. Sestak.
Mr.Sestak. I guess I--I appreciate your tangent there. My
question just is that I am taken by any analysis, but I have
always been more taken when it is more holistic. And I think
that I understand the ins and the outs to government, and you
have now said, okay, there is some document here that says
there is more benefit. I am not arguing whether we should have
more illegal immigrants. I am not arguing that issue at all.
I just want to make sure when someone comes forward and
presents the benefit and the cost that it is the most holistic
way, and that is my only point. And I would like to have the
other study--the research you said you have done--that leads
you to believe, because you must have great regression
analytical capability that you can pull out Tax Code policies,
impact of tax policies, etcetera, to show that more people--
illegal or whatever--don't add that much benefit, the one that
you mentioned that, if I heard you correctly.
Mr.Rector. That was the National Academy that--
Mr.Sestak. No, no. There was another one you said that your
analysis says that--and maybe I missed the point--but you have
also done some extrapolation on your own when you went off
there for a while. Do you know what I am saying? Whatever that
area is--I have gone on too long, but whatever that analysis
is, I would love to have it.
Thank you, Madam Chairwoman.
ChairwomanVelazquez. Thank you, Mr. Sestak.
Following the statement made by Mr. Rector, I would like to
direct my question to Ms. Torrey and Mr. Silvertooth. He stated
that there is a drain of--he talked about the drain that
immigrants have on our economy and our government. And you
both, Ms. Torrey and Mr. Silvertooth, have spoken about the
importance of immigration to the agriculture and the
construction sector.
So these are both billions of dollars industries. So can
you talk to us about how immigration has allowed for growth in
your industries?
Ms.Torrey. I will go ahead, and I will give a personal
example. Our small community in upstate New York, two to three
generations ago, the migrants were the Italians, and they were
the people working in the fields, sleeping in barns, and going
home on the weekend. The first generation did that, the second
generation became the workers, the third generations have left
the farms.
In the late '70s, the Hispanics became our workers. Our
farm--in 1978, we only owned 146 acres of land. The only reason
why we have grown is because of our Hispanic workers. We have
three generations working for us. They work--we offer a 401(k),
profit-sharing program. We have a lot of extended families, we
have families with 45 to 60 people in them. It is an entry-
level with a skill that they can bring from their country to
help grow our food industry.
And then, their hopes and dreams for their children are to
educate themselves and go on. And it has made a thriving
industry here in this country.
ChairwomanVelazquez. Thank you.
Mr. Silvertooth.
Mr.Silvertooth. Our experience has been very similar. As I
indicated in my testimony, you know, two-thirds of the new
entrants into our economy, into the construction economy last
year, were Hispanics, and a huge percentage of those were
foreign-born immigrants.
There is a few reasons that is happening--our birth rate is
low, our population is aging, people are cycling out of the
workforce, and at the macro-economic level in this country the
reigning educational philosophy through the Department of
Education and subsidizing student loans is that we should send
our native-born Americans to four-year colleges and get them
through that.
A lot of the service sectors have a very tough time
attracting people into our industry, despite the fact that
construction is one of the quickest paths to entrepreneurship,
as is the restaurant industry. The other thing that you see in
our industry is that the average wage in construction this past
March was $21 an hour, and yet we still have shortages across
the country.
Now, admittedly, they are geographically disparate, but I
have contractors in the San Francisco Bay area that offer a $40
an hour package, and they have vacancies. They have to pass up
work as a result of that. And that contracts the economy, that
contracts the GDP as well, because there is work that could be
performed that is not being performed. Sixty-nine percent of my
members reported in a survey last year that they were short
workers, that they were not able to access the workers they
needed. And close to half of those indicated that they had
passed up on work because of that phenomenon.
So to the small business industry in general, foreign-born
labor, the ability to access that when there are not American
workers available is absolutely critical. And if we are not
able to do that, our industries are going to atrophy.
ChairwomanVelazquez. Mr. Folz, can you comment on
immigration in your industry?
Mr.Folz. All I can is that listening to all of the
testimony so far that immigration is a very important part of
our company. It brings diversity to our company. These are
people that are some of our best employees. They want to live
here permanently.
I would also add that for every employee we can add to our
company means about a quarter of a million dollars of revenue
for our company. So in terms of measuring holistic impact, it
is much more than the taxes they pay in. It has tremendous
impact, and that doesn't even count the work we are able to do
for our American clients that help their business. So I think
it has a magnifying effect.
ChairwomanVelazquez. Yes. Mr. Folz, you mentioned in your
testimony that last month the fiscal year 2008 allotment of H-
1B visas for skilled foreign-born employees was exhausted six
months before the start of the fiscal year. That means that
there is at least an 18-month wait for new visas. Can you help
the Committee understand the implications of this situation for
a technology company like yours that might here from a good
customer that they intend to double their order next year?
Mr.Folz. Yes, it is quite simple. If I have a customer that
would like to do more business with us, and I have a vast
shortage of engineers that I can hire into my company, I will
give you a real example. We have--we recently hired two college
graduates, foreign nationals. They can stay here for a year
under a practical work visa, but they did not--we were not able
to get them a visa in the latest allotment.
And because of this--because of the timing, I can have them
for a year. And if they don't win the next lottery, even if
they do, there is going to be a gap in time where they are
going to have to leave the country. It is incredibly
disruptive. And for a small business, too, it gives us pause as
to whether we can even take the risk in the investment in
hiring these great people.
ChairwomanVelazquez. Okay. Ms. Torrey, in your testimony,
you talk about the ordeal that you face regarding some of the
problems with our current verification system, both at the
federal and state level. So my question is: do you support an
electronic or telephonic verification system that will provide
greater certainty that you are provided with legally authorized
workers?
Ms.Torrey. Yes, if we--as long as we--not only being
electronically, it also needs--we need to be able to do it by
the telephone, because some hiring is not done in an office. It
is done out in the field. It needs to be simple. The number of
acceptable documents must be reduced to a few.
We must make sure that it prevents identity fraud. The
verification system must give fast confirmation, as we hire
seasonal workers that come and go. It has got to work fast for
us, because when a crop is ready to harvest, to wait 30 days is
not the answer for us.
And the other thing is when we hire these people, we also
have to provide housing. And if someone has moved in, and all
of a sudden after the process, how do I get them out? And I
have turned away somebody else that probably had proper
documentation.
ChairwomanVelazquez. Thank you.
Mr. Johnson, about 12 percent of the construction
industry's workforce is undocumented employees. That number
percentage is even higher for many other industries. In
agriculture, it is 13 percent; food manufacturing 14 percent;
and in private households, it is as high as 21 percent. With
such a large number contributing to the total workforce, some
have suggested an earned legal status for these workers will
have the least damaging effect on our economy. What options are
available to integrate these workers who are already here?
Mr.Johnson. Well, integration, I mean, in the larger sense,
you know, has to be part of this equation as well. I mean, and
one of the, you know, benefits of allowing people a path to
permanent status, I mean, I think there is a role for a
temporary worker program for, you know, truly seasonal
temporary jobs.
But an over reliance on a temporary worker program,
particularly for jobs that are permanent, I think cuts off our
ability to incorporate these people into our society. Language
acquisition, home ownership, economic development--those are
the keys to integration, giving people the tools and the
resources that they need to become part of our communities,
both from a communication as well as from an ownership
perspective, is an essential part of the value that we have
gained from immigration.
I certainly would like to see us have more carrots and not
a lot more sticks when it comes to integration.
ChairwomanVelazquez. But, Mr. Johnson, what will you tell
opponents who believe that this is rewarding those who have
cheated the system?
Mr.Johnson. Well, I would say that those people who are in
the United States in an undocumented status, I think that there
is--sort of agreeing with Congressman Gutierrez, I think there
is a penalty to be paid for that, but that penalty has to be
proportional to the offense. And I think we also, quite
frankly, need to keep in mind that victims--or that immigrants
themselves are also victims of our dysfunctional immigration
system.
They are drawn here by the Help Wanted sign that our
economy hangs at the border. And for the most part, they come
through the back door because the front door is closed. I think
we have a responsibility to create a system that allows them to
come through the front door.
Shifting all the responsibility for our dysfunctional
immigration system onto immigrants I think is just that--
avoiding our own responsibility.
ChairwomanVelazquez. Thank you, Mr. Johnson.
Mr. Davis.
[No response.]
I will recognize Mr. Chabot.
Mr.Chabot. Thank you very much, Madam Chair. And, again, I
want to apologize for having not been able to be here during
the testimony. I am going to reread all the testimony from the
statements that we got last night on this. I had to give a
speech down the street here, so I do apologize.
But let me start with you, Mr. Silvertooth, if I can. If
the cap on temporary H-2B visas was raised, what level would
you recommend to make a real difference?
Mr.Silvertooth. Well, currently we are operating under an
extension of that program where--that is set to expire this
September, in which workers that have been in the program for
the previous three years are exempt from that cap. NRCA is a
member of a coalition that is advocating for an extension of
that program. We think that makes sense.
But the way I would answer this question is this. The way
you need to look at the H-2B visa program is to understand that
we have shortages in permanent labor in this country, and then
we have shortages in truly seasonal work in that. What I would
probably recommend is that we have some type of market
regulator that looks at the vitality of these industries on a
yearly basis, what their particular needs are, look at the
regional variations in terms of need.
For instance, agriculture--well, agriculture is not covered
by H-2B, but there are certain industries that would be
covered, such as seafood processing, the Eastern Shore - this
is a big issue for them. If they have a bumper crop coming up
that season, there may need to be an adjustment on that.
Similarly, we would have to look at what our tourism demands
are in the country.
So I think 66,000, if you have this exemption for previous
workers, is a workable system. But there would need to be some
type of market regulator and take a look at it in a couple of
years.
The other thing that I would recommend in terms of the H-2B
program is there needs to be particular attention paid to the
processing of H-2B visas. The system is currently in a state of
crisis. In Mexico, the largest processor of visas in that
country is in the Monterrey Consular Office. They just decided
earlier this year, or at the end of last year, that they would
stop processing visas for the season, and it took Congressional
intervention to get them to resume that.
You have also got problems in regional DOL offices here in
the country. We are having a devil of a time in the Chicago and
Atlanta offices in terms of delays.
Mr.Chabot. Thank you very much.
Mr.Silvertooth. Thank you.
Mr.Chabot. Mr. Rector, if I could turn to you next. Before
I ask a question, I just want to publicly acknowledge your
important role in one of the most significant issues that I
think we faced up to in this country during the Clinton
administration, under a Republican Congress at the time--that
was welfare reform, and I believe you were at the Heritage at
the time.
And many of us, including myself, looked to you for
knowledge about the right way to go on this. And your
recommendations ended up being followed not to the letter but
to a great extent in the welfare reform. Had we followed your
recommendations, it would have been even better.
But in any event, thank you for you involvement because the
welfare roll since that welfare reform was passed that
President Clinton signed, the welfare rolls are less than half
of what they were at the time, and we have turned more power
back to the states. And the time that a person could be on
welfare was no longer forever, but it was--there were time
limits. And there were so many things, and you had a lot to do
with that, so I want to publicly acknowledge that and thank you
for your work on that.
Now, turning to my question, it is my understanding that in
my absence you mentioned that immigration reform should center
on highly skilled and temporary workers without including
amnesty. Could you explain why this would be beneficial to the
economy and why that is the way we ought to go?
Mr.Rector. I will just quote from the study of the National
Academy of Sciences from 1997. What they showed was that high
skill immigrants coming into the United States with a college
degree pay more in taxes into the system than they take out in
benefits. They show, conversely, that dropout immigrants take
out significantly more in taxes than they--in benefits than
they take in taxes. Therefore, each of those individuals is a
net cost to everybody in society.
Moreover, they show that the huge deficit is so large that
even when you include the fiscal contributions of their
offspring for the next 300 years, you never make up for that
initial cost. That is a pretty potent statement, and the
reality is that in our society what we need are--there are
probably a billion people across the globe who would like to
come and live in the United States.
And we can't admit them all, but we should have a criteria
of those individuals that we do admit that when we bring them
in they are a net benefit to American citizens instead of a net
liability. And the reality is very simple: if I came to you
today and said, ``Hey, we just added 10 million high school
dropouts, native-born, across the United States,'' everyone on
this Committee and everyone in this room would say, ``Well,
that doesn't sound like a very good idea. That sounds like a
lot of social problem. That sounds like a lot of government
cost.'' And as a welfare expert, I will tell you, yes, that is
an awful lot of governmental cost.
But somehow, we have imported in the last 20 years 10
million high school dropouts from abroad. But because they came
from abroad they suddenly have this magical quality that they
don't cost us anything and they contribute all this magic to
the economy. Well, if they contribute magic to the economy,
then domestic-born high school dropouts must also contribute
magic to the economy, making everything magically bigger. Every
dollar that they earn contributes two dollars--there is no
economic literature that shows that at all.
The reality is that high school dropouts are costly. They
generate social problems. Doesn't matter where they come from.
Therefore, our immigration policy should focus on bringing in
individuals who will make a maximum economic contribution, and
who will pay more in taxes than they take out from the system.
Particularly, if you are looking toward the viability of
Social Security, you don't want to bring in people that are a
net fiscal deficit every year that they are in the country.
They will make the Social Security crisis infinitely worse, and
that is exactly what amnesty is going to do. It is going to add
$2-1/2 trillion in costs in retirement in about 20 years,
exactly the time Social Security starts to go bankrupt. It
couldn't help but do otherwise. Okay?
If you want to make Social Security more viable, bring in
higher skilled workers. And you don't need to do it now, you
should do it a little bit later, so that they would be
contributing at the maximum point of crisis.
Mr.Chabot. Thank you very much.
Mr. Johnson, if I could turn to you next. In Congress, in
recent years, and even very recently, we have significantly
bolstered federal programs to encourage more students to pursue
math and science and technology fields, so that we can better
compete in the global economy. Are these programs to respond to
the need for skilled students and workers, are they working?
Are they heading in the right direction? What are your thoughts
about that?
Mr.Johnson. Well, I mean, they are important investments,
and I think we need to do more, particularly in the science and
technology fields, to encourage native-born students to pursue
those types of degrees. We continue I think to be lacking in
enrollment and graduation rates for the native-born in those
areas.
We have seen some improvements. You know, I hope those
improvements will continue. You know, there is no question
that, you know, part of the formula--and this is what I take
issue with Mr. Rector, is that you need a well-rounded labor
force. You need a labor force that is made up of people who
have less education and skills and a labor force that is made
up of people who have very high levels of education.
I think we have got to make sure that we are creating a
labor force that is that dynamic and flexible, and the
education trends that we are talking about are important. We
need to do more in terms of those investments.
Mr.Chabot. Thank you.
Mr. Krikorian, if I could turn to you next, you have
written about the false premise that since the Federal
Government can't quickly deport the 10 to 12 million illegal
immigrants, the only alternative is legalization or amnesty.
You have said that the only approach that can actually work is
shrinking the illegal population. Could you explain how this
could work, how we could go about following that
recommendation?
Mr.Krikorian. Sure. Thank you, Congressman. The way you put
it is correct, that we are presented with a false choice--
deport everybody tomorrow--Mr. Sestak had said, you know, what
if everybody disappeared tomorrow? That couldn't happen anyway,
even if we wanted it to, because we don't have the resources,
and it would be shocking to the economy and the society. But
the only alternative is not legalization.
It is what you could call attrition through enforcement,
where we enforce the law, and rather than--which we have never
really even attempted to do before--enforcing the immigration
law inside the country. So that instead of allowing the illegal
population to grow every year, we start shrinking it every
year.
And this is realistic, because there is already a lot of
churn in the illegal population, people coming and going, what
have you, so the thing to do would be to make sure fewer new
illegals arrive, more of those who are already here leave. And
almost half of illegals have been here less than five years
anyway. These are not all people with roots here.
Essentially, what we have done--what we can do is back out
of this problem that we have created over a period of years.
Once we have shrunk the illegal population, once there is a
political commitment to enforce the law and people actually
believe that it is being enforced, and with good reason they
don't believe it now, then maybe we can address the question of
legalizing some of those who are still here.
I am not sure I would be for it or not at that point, but
it is a legitimate topic for discussion, but only then. It is
not even a legitimate topic for discussion as far as I see it,
until we have, through attrition, reduced the size of the
problem and created a mechanism that can in fact enforce the
new rules.
Mr.Chabot. Thank you.
In the interest of time, Madam Chair, I will yield back the
balance of my time now. Thank you.
ChairwomanVelazquez. Thank you.
Ms. Torrey, because the fruits and vegetable industry is so
labor intensive, it is important that employees in this sector
have access to the proper visas and documents to work in the
U.S. What type of documentation is necessary for your industry
to have, in order to ensure that you have the workers you need
to do the job? And my other question is: how many graduates
with bachelor's degrees or master's degrees come to your
business seeking jobs?
Ms.Torrey. I do have some that are looking for mid-
management jobs.
ChairwomanVelazquez. No, no, no. But I am saying, you know,
to go there and pick the--
Ms.Torrey. And pick vegetables?
ChairwomanVelazquez. Yes.
Ms.Torrey. None.
ChairwomanVelazquez. None.
Ms.Torrey. None. None at all. And no matter if I offered
$100,000 starting would they show up. It is not only fruits and
vegetables, Chairman, it is also the dairy industry. And they
are at more--even more of a greater risk than the fruit and
vegetable, because we do have a dysfunctional H-2A program that
less than 2 percent of us do use. But the dairy industry does
not even have that available to them.
ChairwomanVelazquez. If you don't have access to the
workforce that you need, what does that mean to the average
American when they go to the grocery store?
Ms.Torrey. We are going to see food inflation like we have
never seen before. It is going to be imported.
ChairwomanVelazquez. Mr. Folz--
Ms.Torrey. But worse yet, it is going to be our
communities--our rural communities are going to be boarded up
and dying, because we are what keeps--agriculture is what keeps
a lot of communities alive across this country, and the
businesses that feed off of them.
ChairwomanVelazquez. Thank you.
Mr. Folz, the U.S. Labor Department has estimated that
nearly one million new jobs in math and computer science will
be created between the years 2004 and 2014. As I understand it,
foreign nationals received the majority of the total number of
advanced degrees awarded by U.S. universities in science,
technology, engineering, and math fields.
Without reform of the current H-1B system, wouldn't you
expect recruiting and retaining skilled employees to become
increasingly difficult for small technology companies?
Mr.Folz. I would say that we have that problem today. So I
have even seen this--this trend has been happening the last few
years. This isn't something that is happening now and is 10
years forward. So the last few years it has become increasingly
more difficult to find people.
We probably have 20 open positions today that we would fill
them tomorrow if we had the right candidates. We now pay on the
order of $30,000 to recruiting firms to find us one engineer.
So it is becoming dramatically expensive, and we are just
taking the same engineers from each other rather than focusing
on more engineers.
So I think it is both a long-term and a short-term problem.
The long term, I am fully supportive of everything we do to get
more children interested in the math and sciences and get more
people involved in this field. In the short term, the caps on
the visas are hurting us today and now in our ability to
service our customers.
ChairwomanVelazquez. Yes, Mr. Johnson.
Mr.Johnson. I just wanted to say that it relates to the
question that Congressman Chabot had as well, which is that,
you know, particularly at the high skilled end, this isn't
always just about shortages. I mean, it is a serious question,
but it is also about specialty skills.
So even as we improve the graduation rates in science and
technology, I think it is important that we stay open to the
fact that, you know, we don't have a monopoly on good ideas
here in the United States. Sometimes the newest technology that
is being developed, sometimes the new ideas for how to find oil
or how to find new resources, or whatever they may be, are
being developed abroad, and we want to stay open to the idea
that bringing those talents here to the United States will
create more job opportunities for the industries that we are
trying to build. So specialty occupation is as important as the
concept of shortage as well.
Mr.Folz. Madam Chairwoman?
ChairwomanVelazquez. Yes, Mr. Folz.
Mr.Folz. Since 1990, technology firms have been funded with
venture capital. Twenty-five percent of them have had founders
that were foreign nations--25 percent. These are innovators. We
want them to come here. And these include names such as eBay
and Yahoo, incredible companies that started small and were
very successful.
So when we have a cap, you know, are we excluding the next
Bill Gates from entering our country?
ChairwomanVelazquez. Thank you.
Mr. Silvertooth, employers have expressed concern that the
error rate for the basic pilot program is too high at 8
percent. Add that to the fact that the basic pilot only
services 16,000 employers, and not the 5.6 million employers
that actually need it, what costs in time and money will
manually checking each employee's status impose on your
company?
Mr.Silvertooth. The initial cost is in terms of
productivity, because, as you are focusing on administrative
tasks, you are not focusing on serving your customer's needs.
This is particularly important for small businesses. A lot of
us have lean administrative staffs. A lot of the accounting
departments for small businesses are the kitchen table.
Sometimes the storage is the garage.
We are not talking about companies with economies of scale
such as General Motors or Microsoft that have entire
departments of thousands of employees that deal with this type
of situation.
Regarding the basic pilot program, you are right, we have
seen error rates that are pretty high so far. It causes
problems for the employees, as well as the employers as well,
because you have employees that are in a state of limbo. If we
were to expand this into the entire employer community, there
is estimated to be--depending on whose estimates you go with,
anywhere from about 5.6 to 7 million employers in the country,
it depends on how you measure a lot of the independent
contractors--you are looking at a scenario that would overwhelm
the resources of this government.
And that, in turn, is going to be put back on business,
because, once again, you are in a state of limbo. Do you hire
somebody in the interim? Do you make an offer of employment
when you are not certain as to what their concerns are going to
be?
Congressman Westmoreland noted that the early weeks are
frequently the most expensive weeks in terms of bringing a new
employee on board. So there are costs associated with that.
In terms of the construction industry, we have a unique
situation, because most of our work is performed outside of an
office. They are at multiple work sites. Having employers come
off of the job work site and go to another location is,
frankly, not a recipe for running a successful business. It
cuts into your productivity, and we are already seeing a
diminished productivity because of just absolutely worker
shortages.
But it would vary by industry. It would vary by type of,
you know, business and number of employees.
ChairwomanVelazquez. Does the Department of Homeland
Security currently have the capacity or the budget to handle--
Mr.Silvertooth. The Department of Homeland Security has a
large budget, I will give them that. Their capacity, it remains
to be proven. In discussions with them, they are under the
belief that they could register 10 percent of the American
economy tomorrow if they had the authority to do it, or if--and
they do have the authority to do it, but businesses, because of
the raids that I spoke about earlier, are reluctant to deepen
their relationship with the Department of Homeland Security, so
you don't see businesses jumping en masse to jump into the
basic pilot program. But the answer right now is: we don't
know.
ChairwomanVelazquez. Any other comments? Yes, Mr. Johnson.
Mr.Johnson. On that one, I do think that is one of the
things we have to consider. I mean, we are pouring ever more
money into, you know, enforcement that is focused on the
border, and sort of boots and guns at the border. And I don't
think we are thinking about both the security implications and
the important administrative role that adjudicators in the
agency play here. I mean, they are overworked and underpaid,
and that agency, as a result, operates sometimes in geological
time when, you know, the employment industry operates in real
time.
So if we want real answers through the employment
verification system, we need an agency that has enough
resources and enough manpower to be able to process those
applications efficiently and effectively, so that the data goes
into the database in a timely fashion.
ChairwomanVelazquez. Well, let me--Mr. Chabot, no more
questions?
Mr.Chabot. No more questions.
ChairwomanVelazquez. Okay. Let me take this opportunity
again to thank all of you. This has been quite an incredible
discussion. It is, I know, sometimes an emotional issue. In my
capacity, I will say that this is not only an issue to fix a
broken system that is not working, but it is also an economic
security issue for this nation, as well as a national security
issue.
And I just want to make sure that you understand that we
are going to do everything possible to make possible for small
businesses to know that your concerns will be represented at
the table, and that we are going to inject ourselves into the
immigration debate and make sure that when we have a final
product that it takes into consideration the impact that it is
going to have on small businesses.
Thank you very much, and I will ask unanimous consent for
members to have five legislative days to enter statements into
the record.
And this Committee is adjourned. Thank you.
[Whereupon, at 1:52 p.m., the Committee was adjourned.]
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