[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
THE SEASONAL EMPLOYMENT NEEDS OF SMALL TOURISM BUSINESSES AND H-2B VISA 
                                 POLICY

=======================================================================



                                HEARING

                               before the

        SUBCOMMITTEE ON ECONOMIC GROWTH, TAX AND CAPITAL ACCESS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS

                             UNITED STATES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                             JUNE 12, 2013

                               __________

                               [GRAPHIC] [TIFF OMITTED] 
                               

            Small Business Committee Document Number 113-022

              Available via the GPO Website: www.fdsys.gov






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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                       BLAINE LUETKEMER, Missouri
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                   JAIME HERRERA BEUTLER, Washington
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                       DAVID SCHWEIKERT, Arizona
                       KERRY BENTIVOLIO, Michigan
                        CHRIS COLLINS, New York
                        TOM RICE, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                        BRAD SCHNEIDER, Illinois
                          RON BARBER, Arizona
                    ANN McLANE KUSTER, New Hampshire
                        PATRICK MURPHY, Florida

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Tom Rice....................................................     1
Hon. Donald Payne, Jr............................................     2

                               WITNESSES

Brad Dean, President & CEO, Myrtle Beach Area Chamber of 
  Commerce, Myrtle Beach, SC.....................................     4
Sarah Diment, Owner, The Beachmere Inn, Ogunquit, ME.............     6
William Spriggs, Chief Economist, AFL-CIO, Washington, DC........     8
Jane Nichols Bishop, President, Peak Season Workforce, Mashpee, 
  MA.............................................................    11

                                APPENDIX

Prepared Statements:
    Brad Dean, President & CEO, Myrtle Beach Area Chamber of 
      Commerce, Myrtle Beach, SC.................................    25
    Sarah Diment, Owner, The Beachmere Inn, Ogunquit, ME.........    31
    William Spriggs, Chief Economist, AFL-CIO, Washington, DC....    38
    Jane Nichols Bishop, President, Peak Season Workforce, 
      Mashpee, MA................................................    42
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    American Hotel & Lodging Association.........................    46
    Anchorage By the Sea.........................................    50
    Biltmore.....................................................    52
    Butler Landscaping...........................................    54
    The Forest Resources Association Inc.........................    55
    Hilton, Inc..................................................    57
    H-2B Workforce Coalition.....................................    61
    Joint Written Testimony of Tom Delaney, Director of 
      Government Affairs, Professional Landcare Network (PLANET) 
      and Craig Regelbrugge, Vice President for Government 
      Relations and Research, American Nursery and Landscape 
      Association (ANLA).........................................    93
    Keesen Landscape Management..................................    99
    Kiawah Island Golf Resort....................................   101
    Naples Beach Hotel & Golf Club, Inc..........................   102
    Nemacolin Woodlands Resort...................................   103
    Pentagoet Inn................................................   106


THE SEASONAL EMPLOYMENT NEEDS OF SMALL TOURISM BUSINESSES AND H-2B VISA 
                                 POLICY

                              ----------                              


                        WEDNESDAY, JUNE 12, 2013

                  House of Representatives,
               Committee on Small Business,
                   Subcommittee on Economic Growth,
                                    Tax and Capital Access,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 1:00 p.m., in 
Room 2360, Rayburn House Office Building. Hon. Tom Rice 
[chairman of the subcommittee] presiding.
    Present: Representatives Rice, Chabot, Coffman, Mulvaney, 
Payne, Schneider, Barber, and Keating.
    Chairman RICE. Good morning. Thank you for being here 
today. Thank you especially to our witnesses for appearing 
before our Committee, and we look forward to your testimony.
    Our small businesses in the tourism industry need to 
significantly increase their workforce during peak seasons. For 
businesses in my district, the high season is well under way. 
South Carolina's Grand Strand is one of the top tourist 
destinations in the country but has a fairly small, year-round 
work population. From April to August, Myrtle Beach hotels, 
resorts, restaurants, and other tourism-related businesses are 
welcoming vacationing guests from across the country. Having a 
well-trained and reliable staff is a critical component to 
having a successful seasonal business.
    Companies located in small, often rural towns, that rely 
heavily on tourism to sustain the local economy, have a 
difficult time finding enough local workers to fill seasonal 
jobs.
    Employers that cannot find American workers to fill these 
seasonal jobs rely on H-2B visa programs to supplement their 
local workforce. The H-2B visa program allows businesses to 
bring in temporary foreign workers to fill lesser skilled, non-
agricultural jobs. H-2B visas are capped at 66,000 per year 
nationwide. While the program is relatively small, it is 
heavily relied upon by small, seasonal businesses, including 
those in the tourism industry.
    Utilizing the H-2B program is a time-consuming and costly 
process which involves several agencies, including the 
Department of Labor and Department of Homeland Security. 
Unfortunately, these departments are making the process even 
more difficult during a critical time for small businesses.
    Both the Department of Labor and the Department of Homeland 
Security recently suspended H-2B visa applications for a month. 
Although processing was restarted in late April, the suspension 
of the program caused a backlog. Some small businesses that 
were expecting their H-2B workers to arrive before Memorial Day 
are still waiting. Being short-staffed is leading to a strain 
on existing resources of small businesses.
    In addition, a recent regulatory change that is immediately 
effective changes the way wages are calculated for H-2B workers 
and U.S. workers recruited in connection with the H-2B process. 
Businesses that have received new wage rates from the 
Department of Labor since the new rule was implemented are 
seeing an average wage increase of 32 percent according to a 
nationwide survey. The impact of the increased cost is 
especially significant for small businesses that have set up 
their seasonal rates or have existing contracts. These 
businesses that operate on thin margins have little or no 
flexibility to offset the increased labor costs.
    I am very concerned that the H-2B program may be regulated 
out of existence. That would have a dire effect on small 
businesses that rely on this program to supplement their local 
workforce to meet their seasonal hiring needs.
    I look forward to hearing from our witnesses today about 
the H-2B visa program and its importance to small tourism 
businesses, as well as how the recent suspension of the program 
and regulatory change will affect small businesses that rely on 
the program.
    I now yield to Congressman Payne for his opening remarks.
    Mr. PAYNE. Good afternoon. Thank you, Mr. Chairman, for 
calling this hearing today. And thank you to the witnesses for 
joining us to offer their insight and experience on H-2B visa 
program.
    This program is a critical tool for many businesses to find 
the labor they need during peak seasons when American workers 
are not available to fill the positions. However, it is our job 
in Congress to create the right balance between promoting 
economic growth, protecting the rights of all workers, and 
supporting American jobs.
    Businesses large and small take advantage of the H-2B visa 
program to fill seasonal jobs in nonagricultural sectors for 
which they cannot find American workers. Companies in 
landscaping, forestry, tourism, seafood processing, and housing 
construction industries have high demand for H-2B visas. In 
order for a business to participate in the guest worker 
program, they must first try to recruit American workers. If 
they can prove that there is a valid labor shortage for these 
types of jobs, then they can receive a certification from the 
Department of Labor. They also have to pay farm workers the 
prevailing wage in the industry and insure good working 
conditions.
    However, in these difficult economic times, we need to 
ensure that the nearly 12 million American workers that are 
unemployed have access to good jobs with wages and that protect 
workers' rights. We need a system that allows small businesses 
the access to the labor that they need while protecting the 
wages and the working conditions of these workers, whether they 
are American or foreign.
    The recent regulatory changes issued by the Department of 
Labor and the Department of Homeland Security have changed the 
methodology used to calculate the wages guest workers are paid. 
Small businesses have legitimate concerns about how these 
changes will impact them. The court mandated suspension of the 
H-2B visa program this spring created an uncertainty for many 
of the businesses who take advantage of the program, and many 
work that the new rule will disrupt small business operations 
because they have already signed contracts based on lower labor 
costs. They operate in narrow margins and are dependent on 
these foreign workers that they might not be able to get 
according to the Small Business Administration's Office of 
Advocacy. In theory, this program could be a great resource to 
both businesses and temporary guest workers if it is finely 
tuned to the market's needs and adequately supports businesses 
and workers, immigrant and American alike.
    Unfortunately, the program today has flaws that allows bad 
players to abuse the program and the workers that participate 
in it. I have heard numerous stories proving that some 
employers are using this program to exploit foreign workers, 
failing to pay the appropriate wages and overtime needed, and 
also not supplying the safety equipment that these employees 
need. This unlawful behavior undercuts American workers and 
American businesses that are playing by the rules.
    Take, for example, the more than 500 skilled Indian H-2B 
guest workers who were lured to the United States by the 
shipyard company Signal International. After the promise of 
green cards, family visas, and fees up to $20,000, Signal 
recruited these workers to come to the U.S. to repair oil rigs 
after the damage from Hurricane Katrina. These workers were 
forced to live in work and labor camps under harsh conditions 
and were bunked 24 people to a room. They were threatened with 
deportation if they complained. When the workers accused Signal 
of illegal human trafficking, the company reported them to the 
immigration authorities. This is not fair to those workers, and 
it is not fair to Signal's competitors that were following the 
law.
    Thankfully, not all businesses that participate in the H-2B 
visa program are bad actors like Signal, but for many, this 
case has come to represent some of the flaws and pitfalls for 
immigrants and for employers in the H-2B temporary guest worker 
program.
    As this Committee considers this new rule, and as Congress 
debates changes to our immigration system, we must ensure 
American businesses have the labor they need while making 
certain that workers are protected as well. We also need to 
make the American workforce our number one priority, and we 
should not undercut these American workers. It is a reality 
that the economic growth for small businesses depends on an 
immigrant workforce to fill the labor demands caused by 
shortages in various U.S. sectors.
    American small business owners are the largest employers in 
the nation and are impacted greatly by immigration reform. I 
believe we should address these issues in a comprehensive 
reform that will ensure small businesses' access to the 
workforce while at the same time meeting the labor needs and 
maintaining functional laws that will modernize America's 
immigration system.
    This hearing will present both sides of this critical issue 
so we can properly understand the advantages and challenges of 
the H-2B visa program as both houses of Congress debate 
immigration reform.
    With that, I look forward to hearing your testimonies. 
Thank you, and I yield back my time, Mr. Chairman.
    Chairman RICE. Thank you, sir. If additional members have 
opening statements prepared, I ask they be submitted for the 
record.
    I would also like to take a minute to explain the timing 
lights to you all. You each have five minutes to deliver your 
testimony. The lights in front of you will start out green. 
When you have a minute remaining it will turn yellow, and when 
your time is up it will turn red. If you are close to the end, 
obviously, we will be a little lenient on the time. Nobody is 
going to throw a hook out there.
    Our first witness is my friend, Brad Dean. Brad is the 
president and CEO of the Myrtle Beach Area Chamber of Commerce 
in South Carolina. The Myrtle Beach Area Chamber of Commerce 
has more than 2,700 members and serves the business community 
throughout the Grand Strand from Little River to Pawleys 
Island. Before joining the Myrtle Beach Area Chamber of 
Commerce, Mr. Dean opened and ran the Hard Rock Cafe in Myrtle 
Beach. Currently, he serves on the board of directors of the 
South Carolina Tourism Alliance. I will also tell you Mr. Dean 
is an innovator in tourism. He has done wonderful things with 
our area and I am very proud to have him in our area.
    Welcome, Mr. Dean. You have five minutes to present your 
testimony.

  STATEMENTS OF BRAD DEAN, PRESIDENT & CEO, MYRTLE BEACH AREA 
CHAMBER OF COMMERCE; SARAH M. DIMENT, OWNER, THE BEACHMERE INN; 
WILLIAM SPRIGGS, CHIEF ECONOMIST, AFL-CIO; JANE NICHOLS BISHOP, 
               PRESIDENT, PEAK SEASON WORKFORCE.

                     STATEMENT OF BRAD DEAN

    Mr. DEAN. Well, thank you, Chairman Rice, Ranking Member 
Payne, and other members of this Committee. As Congressman Rice 
mentioned, I am Brad Dean from Myrtle Beach, South Carolina. 
The organization that I represent serves in businesses that 
employ over 50,000 American workers in South Carolina, and I 
appreciate your invitation to testify today on a matter that is 
important to businesses throughout America, and particularly 
Myrtle Beach, South Carolina, and that is the seasonal 
employment needs of small businesses in our tourism industry.
    Myrtle Beach is a small town. We only have about 30,000 
residents, but this year we expect to welcome more than 15 
million visitors to our community. As you might imagine, 
tourism is a huge economic generator for our community. A $7 
billion annual economic impact supports over 74,000 jobs in our 
small community, and as you might expect, it also pays for a 
lot of important public services like police, firefighting, and 
education, and infrastructure. One challenging aspect of our 
tourism industry is the seasonality. We will conduct more than 
60 percent of our business in the months of June, July, and 
August, and while we welcome that influx into our community in 
the summer months, that certainly presents some unique 
challenges for our community. And one of those challenges is 
the handling of employment for small businesses during the peak 
season.
    To attract employees, local businesses take a number of 
steps each year. They advertise in newspapers, online websites. 
They host job fairs and participate in their own independent 
hiring events. They also hire students who re-enter the 
workforce for the summer; retirees who re-enter the workforce, 
albeit temporarily; and they also employ workers from outside 
our county and actually help to pay for transportation to bring 
those workers to and from the job.
    Yet despite our best efforts, seasonal jobs remain unfilled 
each and every year. We have found ourselves needing temporary 
seasonal workers in both good and bad economic times. The 
economic reality for us is very simple. During our peak tourism 
season, when business doubles or triples and several thousand 
jobs are added to our community, we do not have enough American 
workers to fill our temporary employment needs. The H-2B visa 
program, which supplies approved temporary workers at a fair 
wage, is essential to our economic success. The businesses that 
I represent pay competitive wages and successfully hire 
thousands of hard-working Americans for both full-time and 
part-time jobs. They pay seasonal workers a market-based wage 
that is documented and approved by the federal government, and 
though the H-2B program is often complex and costly for small 
businesses, it is a necessary tool for our local businesses. It 
creates a win-win scenario for our business community. 
Employers find reliable, trained temporary workers to fill 
temporary jobs which would otherwise go unfilled; temporary 
workers voluntarily come here to earn a fair wage, pay taxes, 
and learn our language and our customs; American workers enjoy 
full-time pay and benefits in businesses that succeed in part 
by the hiring of H-2B visa workers; and our economy benefits by 
optimal business activity and the fair collection of all taxes 
owed. Unfortunately, the opposite is also true. If temporary 
jobs go unfilled, everyone loses.
    While our businesses willingly use the current H-2B visa 
program out of necessity, the process for hiring an H-2B visa 
worker could be improved upon. We would encourage Congress to 
consider opportunities to improve the efficiency of this 
program, streamlining some of the onerous requirements and 
making it less burdensome for small- and medium-sized 
businesses. And we should seek to prevent the processing delay 
experienced by small businesses using this program. This year, 
the uncertainty in agency action and the regulation of the 
program presented a barrier for a lot of businesses that we are 
experiencing right now at the peak of our summer season. 
Seasonal hiring was deterred for several weeks, and that has 
made a lengthy, costly process even longer and more costly.
    Critics of the program might try to confuse the issue and 
make this part of the immigration debate or suggest that this 
is simply about displacing American workers, but that is not 
true. The real issue here is about jobs and enabling American 
small businesses to do what they do best--create jobs and put 
American workers back to work. Let me assure you that a guest 
worker program is not a luxury; rather, it is a business 
necessity. And without the H-2B program, a seasonal tourism 
destination, like Myrtle Beach, South Carolina, will struggle. 
But with it, we enjoy a level playing field and our businesses 
are given a fair chance to succeed.
    In closing, Mr. Chairman, Ranking Member, and members of 
this Committee, I humbly offer you a gentle reminder that the 
laws you create can provide small businesses greater confidence 
and clarity, a willingness to grow and invest and the 
opportunity to succeed. Likewise, you can create laws that 
stifle growth and limit job creation. I encourage you to bear 
in mind the needs of small businesses, the single largest 
creator of jobs in America today. Recognize that for 
communities dependent upon a seasonal tourism industry, 
temporary guest workers are a business necessity, and the H-2B 
visa program is one very small but important part of a 
successful economy and should be given fair consideration.
    On behalf of the nearly 3,000 businesses I represent, I 
encourage you to make this a priority, and I thank you for your 
time.
    Chairman RICE. Thank you, Mr. Dean.
    Our second witness is Sarah Diment, owner of The Beachmere 
Inn in Ogunquit, Maine. She is a third generation innkeeper. 
For 76 years, members of Ms. Diment's family have owned and 
operated The Beachmere Inn, which is located 87 miles north of 
Boston on the coast of Maine. Ms. Diment was honored recently 
with a Real Hero award from the American Red Cross of Maine, 
Southern Maine chapter for assistance she provided to the 
families affected by Hurricane Sandy.
    Welcome. You have five minutes to present your testimony.

                   STATEMENT OF SARAH DIMENT

    Ms. DIMENT. Thank you for having me, Chairman Rice, and 
ranking members of the Committee.
    As you have heard, I am a third generation hotel owner from 
Ogunquit, Maine--it is not easy to say--and I do appreciate you 
inviting me here to speak to you about seasonal employment 
needs.
    We operate a year-round, 73-room property in Ogunquit. We 
have been using the H-2B program on and off for over 10 years 
as we have had a very difficult time hiring seasonal workers to 
support our housekeeping needs during the peak summer and fall 
seasons. This year, we had to drop out of processing due to the 
application that was stuck in limbo when the DOL stopped 
processing earlier this year. We could not wait with 
uncertainty to find out if we would get our approvals.
    Ogunquit is located only 87 miles north of Boston and six 
hours from New York City. Yesterday, I left my office at 10:30 
and I was in downtown D.C. by 3:00. We are a very popular 
community resort. We operate at almost 100 percent occupancy 
for July, August, and September, dropping down to a nice 85 
percent occupancy in October. That is a lot of guests, rooms, 
meals, and amenities that we provide daily.
    Tourism is the primary industry in our region and is the 
number one industry in Ogunquit. We have 1,100 residents in 
Ogunquit. We have 44 restaurants and over 2,500 hotel rooms. I 
clearly do not pull from our local community in order to assist 
us for hiring. There are many neighboring towns to compete with 
for employees--Kennebunk, York, Wells, Biddeford all pull from 
one area that has the most employees to offer for hiring, and 
that is Sanford, Maine, a community of approximately 22,000 
residents. That is a big town for us.
    From Portland, Maine, to the New Hampshire border, there 
are 18,000 hotel rooms that need to be cleaned on a daily basis 
during the summer and the fall season. Starting level 
housekeeping wages earn anywhere from $9 to $10 to start. I 
have never paid minimum wage since I have joined the business 
in 1995. We currently have 14 housekeepers, but we need 17 to 
run our operation smoothly. As we employ mostly working 
mothers, we make accommodations for part-time and flexible 
hours to keep them employed year-round. We are a year-round 
business. We offer benefits for our employees, retirement 
plans, vacation pay, sick time, and reviews to keep them--to 
encourage growth and leadership within the departments.
    H-2B workers are essential to our operation, and they are 
seen by our employees as a critical backup they need during the 
summer and fall months. I have tried to recruit in many ways 
for seasonal housekeeping. I do the normal advertising through 
the Internet, newspapers, and so forth, but I have also tried 
to reach out to college students. Unfortunately, the closest 
educational facility is 22 miles but yet takes 40 minutes to 
commute from. College students are focused on resume-building 
starting in freshman year. They are primarily taking 
internships during the day and working in a job at night. 
Housekeeping needs to be done during the day.
    Last weekend, I tried to recruit high school graduates when 
I attended my cousin's graduation in Bangor, Maine, and not one 
student was interested in coming down to work for the summer as 
a housekeeper. We have also tried to recruit in Northern Maine, 
where I placed ads up in the county, which brought in a few 
interested applicants, but unfortunately, because it is a 
seasonal job and the high cost of housing in a very resort 
community, I was not able to bring them down for the short term 
that they would be here. The complications of bringing their 
family or leaving them behind quickly made these jobs 
undesirable.
    H-2B workers are paid the same rate as those we hire from 
the American workforce. They are in some instances even paid 
more as they have been returning for season after season. We 
built new housing for them in 2008, some with ocean views, all 
within a 100-foot walk of our property. They are eligible for 
retirement benefits, workers' comp insurance, bonuses, as well 
as weekly shopping trips to be able to purchase for their 
families at home.
    Hiring H-2B workers is not easy or inexpensive. We pay up 
to $3,100 in agency fees, as well as $1,700 in USCIS fees 
related to processing of that paperwork. All transportation is 
paid by us, to and from their home country. Prevailing wage 
that was determined for us earlier this year before we dropped 
out was $9.39 an hour. That was in February. It was then 
revised to $10.54 an hour in May. That is an increase of $1.15 
an hour. I am well into my season at that point. I have already 
published my rates and I have already hired and have committed 
to hotel rooms at rates. I am not able to change my revenues 
based on change in cost for employees.
    The impact of not having H-2B workers for our property this 
season is already being felt. We have had to move to a six-day 
workweek, we are pulling employees from various departments, 
and we are not able to have full coverage in all of the areas. 
That means that my GM, as well as myself, are cleaning rooms. 
Not having seasonal coverage puts my entire team at a pace that 
is not conducive to lasting the season. Housekeeping is not an 
easy, sedentary job. H-2B workers come with the knowledge that 
they are here for a short time to help us cover a seasonal job.
    Thank you for your time. I am happy to answer any 
questions.
    Chairman RICE. Thank you, Ms. Diment.
    I will now yield to Congressman Payne to introduce the next 
witness.
    Mr. PAYNE. Thank you, Mr. Chairman.
    The next witness, William Spriggs, serves as the chief 
economist to the AFL-CIO and is a professor and former chair of 
the Department of Economics at Howard University. Bill assumed 
these roles in August of 2012, after leaving the Executive 
Branch of the U.S. Government. Before August, Bill was 
appointed by President Barack Obama and confirmed by the U.S. 
Senate in 2009, to serve as assistant secretary of the Office 
of Policy at the United States Department of Labor, taking a 
leave of absence from Howard University to do so. At the time 
of his appointment, he also served as chairman of the Health 
Care Trust for UAW retirees of the Ford Motor Company and as 
chairman of the UAW retirees of the Dana Corporation Health and 
Welfare Trust and on the Joint National Academy of Sciences and 
National Academy of Public Administration Committees on the 
fiscal future of the United States, and also as a senior fellow 
of Community Service Society of New York. Mr. Spriggs' previous 
work experiences include roles leading economic policy, 
development, and research as a senior fellow and economist at 
the Economic Policy Institute; as senior vice president for the 
National Urban League, an over a 100 year old leading civil 
rights NGO in the U.S.; as a senior advisor for the Office of 
Government Contracting and Minority Business Development for 
the U.S. Small Business Administration; as a senior advisor and 
economist for the Economics and Statistics Administration for 
the U.S. Department of Commerce; and as an economic--wow, you 
have been busy--and also as an economist for the democratic 
staff of the Joint Economic Committee on Congress; and as a 
staff director for the Independent Federal National Commission 
for Employment Policy. While working on his Ph.D. in Economics 
from the University of Wisconsin, Bill began his labor career 
as co-president of the American Federation of Teachers Local 
3220 in Madison, Wisconsin. He is a member of the National 
Academy of Social Insurance and the National Academy of Public 
Administration.
    Mr. Spriggs.

                  STATEMENT OF WILLIAM SPRIGGS

    Mr. SPRIGGS. Thank you. And thank you very much, Chair, for 
inviting me and giving me this opportunity to testify before 
your Committee. On behalf of Richard Trumka and the whole AFL-
CIO family, we want to make sure on the record that we share 
our condolences with Congresswoman Chu in the loss of her 
mother. And we are very sorry that she could not be here and we 
hope that you will be able to convey to her our concerns at 
this time.
    I want to thank the ranking member and Mr. Keating, Mr. 
Schneider, Mr. Barber for joining us as well.
    Today we stand over five years into the wrath of the Great 
Recession. The number of payroll positions in American remains 
over 2.4 million less than in January 2008. At the rate of job 
creation last month, it would take more than 13 months to get 
back to the pre-recession level of employment, meaning a net 
job growth of zero jobs over almost a six and a half year 
period. In the interim, America's labor force has grown over 
one and a half million and will grow larger over the next year. 
The result is a backlog of Americans looking for jobs, over 
11.7 million Americans.
    The brunt of the difficulty in the labor market has fallen 
on young workers, who are suffering from the lowest levels of 
employment on record in American history. Fewer than 38 percent 
of 18- and 19-year-old Americans have a job. That is the lowest 
ever in American history. Among those 20 to 24, the share of 
jobs is below 61 percent, well below the full employment levels 
when the figures should be 13 percentage points higher. And for 
those with jobs, wages have been essentially flat, rising only 
three percent over this period when adjusted for inflation.
    So to put it bluntly, we are still in the midst of an 
American jobs crisis, especially for entry level jobs for young 
Americans. It has never been more crucial for America's 
policymakers and Congress and the administration to pull 
together to ensure job opportunities for the almost 12 million 
Americans looking for work and to protect the wages of those at 
work, many of whom are working part-time but would like to work 
full-time.
    An important policy would be for Congress to join with the 
administration to ensure that job opportunities being created 
are fully available to millions of Americans looking for work 
while protecting the wages of those people. Straddled with 
court cases and appropriation blocks from Congress, the 
administration has delayed several times the implementation of 
new rules over the use of temporary, non-immigrant workers in 
entry level jobs like young Americans desperately need.
    Over the course of the recovery, Congress has worked with 
the administration to pass various tax cuts aimed at helping 
small business in particular add workers, ranging from the 
Small Business Jobs Act, to the HIRE Act. These tax cuts have 
given small business extra incentives to add workers to their 
payrolls, but these efforts will be undermined if the jobs are 
given to non-immigrant temporary workers or if workers are 
brought in with wages to undercut the competitiveness of small 
businesses struggling to take advantage of the tax cuts and 
boost their local economy.
    The loser when wages are set low by a few firms are not 
just Americans denied job opportunities but the hardworking 
businesses and their employees fighting to restore an economy 
that works for everyone. The economic analysis done by the 
Department of Labor to study its interim final rule found that 
there are just on average 79,000 H-2B positions that are open 
in the United States that are being applied for. Unfortunately, 
the regulations for the program have been caught on struggles 
that have hurt businesses that may have need of the program and 
delayed policymakers from coalescing around a sound set of 
policies that protect the Americans looking for jobs and need 
access to them.
    The courts have not accepted the premise that the 
Department of Labor could adopt multiple wage levels for the 
jobs typical of the H-2B program. The findings of the court 
appeared consistent with BLS characterization of these jobs as 
having relatively lower skills compared to many jobs and 
therefore, a wage structure that does not reflect skill 
differences. The source of the Department's wage rule is the 
Occupational Employment Statistics administration studies is a 
huge database that covers over 1.2 million different U.S. 
establishments and captures 62 percent of employment. Given the 
size of the samples and the technical issues involved in 
designing a proper probability-based sample similar to the BLS, 
the need for accurate, reliable, and replicable results in 
policymaking mean that the costs are really prohibitive for 
employers to do such studies. If employers pay below the 
average wage for an occupation, they really lower the wages for 
the area, and so I think the Department has set the wage at the 
correct level.
    More could be done to protect the wages of American 
workers. We need to think about those businesses that have 
entered into collective bargaining agreements with their 
workers. We have to think about those employers who are federal 
contractors and are trying to live up to rules under the Davis-
Bacon Act and Service Contract Act wage rules. Unfortunately, 
many H-2B workers gain access to the program through foreign 
labor recruiters who illegally charge the worker fees. Many H-
2B workers then arrive in America already in debt. The result 
is that much of those foreign workers earn has to be 
repatriated to pay for foreign labor agents and recruiters. 
This is why it is important to coalesce around a rule that can 
work for everyone and protect us from that kind of abuse.
    I just want to conclude by pointing out that yes, the 
tourism industry is an important industry in the United States. 
That means that we should be sure that our policies are giving 
Americans the best opportunity to acquire the jobs, experience, 
and skills to excel in industries we want to promote through 
public policy. To maximize the potential for gathering the full 
value added or the industry, it is essential that we turn to 
the millions of unemployed Americans for these jobs. Yes, the 
demand for these jobs is seasonal, but to young people looking 
for entry-level positions, these are good steps. And to many 
companies hiring Americans in the tourism industry, it is very 
important to keep them protected from low-wage competition that 
undercuts their efforts to protect and promote middle-class 
American values.
    Thank you.
    Chairman RICE. Thank you, sir.
    At this time I would like to yield to Congressman Keating 
to introduce the next witness.
    Mr. KEATING. Well, thank you, Chairman Rice and 
Representative Payne. I also want to thank Chairman Graves and 
Ranking Member Velazquez and also keep Ranking Member Chu in 
our thoughts today.
    I have the privilege of introducing one of our esteemed 
witnesses, Jane Bishop, who is a constituent of mine. Jane is 
the founder and president of Peak Season Workforce. Peak Season 
Workforce is a family-owned small business based in Mashpee, 
Massachusetts on Cape Cod and was created to fill a 
demonstrated local need in understanding the complexities of 
government filings to successfully obtain H-2B work visas. Over 
the years, Peak Season Workforce has grown from assisting 
transportation and hospitality businesses on the Cape and 
islands of Martha's Vineyard in Nantucket to representing 
scores of businesses in New England and across the nation to 
fill seasonal jobs with international workers when American 
workers were not available. Known affectionately as Mama Visa, 
Jane brings in exceptional knowledge of federal and state visa 
rules and decades of experience previously working in D.C. as 
the president of an international student travel agency. She 
was an authorized federal visa signer and a successful 
innkeeper on Cape Cod. So I welcome her and welcome the 
opportunity to introduce her. And I would take note that I am 
in the midst of taking testimony in the Ethics Committee and I 
might be leaving. It has nothing to do with anyone's testimony.
    Thank you, Mr. Chair. I yield back.

                STATEMENT OF JANE NICHOLS BISHOP

    Ms. BISHOP. Good afternoon, Chairman Rice and Congressman 
Payne. Thank you for holding this important hearing and for the 
opportunity to present testimony. I also want to thank my 
congressman, Bill Keating, of Massachusetts, for his presence 
here today and for his untiring support of the small businesses 
that employ H-2B international workers.
    My name is Jane Nichols Bishop. I am the president of Peak 
Season Workforce of Mashpee, Massachusetts, on Cape Cod. For 
more than a decade, we have successfully helped seasonal 
tourism-based businesses navigate the intricate government 
filing process to successfully obtain H-2B work visas. We do 
not charge international workers any fees. Our fees are paid by 
employers exclusively. Incidentally, we are a small, family-run 
business with just three employees, including myself. I 
represent more than 100 employers seeking H-2B work visas to 
supplement their American workforces during peak visitor 
seasons.
    I represent, for example, hotels, motels, inns, bed and 
breakfast establishments, restaurants, clam shacks, pizza 
shops, public transportation operator, coffee shops, and golf 
courses. All of them experience a significant increase in 
business during the season. These businesses depend on workers 
with H-2B visas to fill essential jobs. My client employers 
that use H-2B international workers are not able to find enough 
U.S. workers to fulfill their staffing needs. They use workers 
from abroad to supplement, not replace, Americans in their 
workforce. Each of my employers hires American workers but does 
not have enough of them during their busy season.
    This year, small businesses encountered a particularly 
vexing problem that threw a last-minute monkey wrench into the 
application process and caused costly delays of many visa 
applications. On March 21, a federal judicial ruling ordered 
the Labor Department to stop issuing new prevailing wages 
because of an alleged flawed methodology that has been used 
successfully since 2008. The Labor and Homeland Security 
Departments responded by freezing all pending applications for 
up to 45 days. This stopped the H-2B application process in its 
tracks and created a major approval backup at U.S. embassies 
worldwide. Businesses could not get their H-2B staff approved 
and were left without help at the start of the season. Today, 
25 to 30 of my small business clients still wait for final 
approval while the season is in full swing.
    Because we are experiencing delays now, some small tourism-
based businesses are taking extreme measures to survive. These 
include turning business away because of staff shortages.
    Here is an example. Along the New England coast there is a 
small inn with a restaurant. Here, the middle of June, the 
owner has been unable to offer dinner because her H-2B cooks 
are stuck in the approval process. She is losing reservations. 
In fact, there was a planned wedding reception that could not 
go on because of inadequate staff. The owner has resorted to 
cleaning guestrooms herself while her H-2B housekeepers are 
waiting in their home countries for approval.
    When some of this year's approvals resumed at the Labor 
Department, business were told flat out to pay their H-2B 
workers much higher wages in order to continue with the 
program. For most of our businesses, the new mandated wages 
went up 10 to 34 percent per hour. In dollar amounts, we saw an 
increase of $3 to $8 per hour per employee, including American 
workers who do the same jobs.
    Businesses cannot survive with this type of sudden labor 
cost increase. All of this from a Labor Department that told 
the ruling judge that subsequent wages would increase ``at 
most, $2.12 per hour.'' Over the past two years, Congress has 
repeatedly blocked the Labor Department from implementing 
prevailing wage increases that burden struggling small 
businesses. We strongly encourage Congress to act again. Please 
encourage the Departments of Labor and Homeland Security to 
rescind the interim final rule and replace it with a more 
reasonable approach to setting wages as was done under 2008 
regulations. One approach might be the H-2B wage language that 
is included in S.t4, the immigration bill currently being 
debated in the Senate. It is also important that the 
Departments implement a new and more reasonable approach to 
setting wages without shutting down the H-2B program and 
causing further processing delays on already struggling small 
businesses.
    As you know, small businesses are the backbone of the U.S. 
economy. Many in popular tourism destinations are dependent on 
international workers with H-2B visas to have successful 
seasons. They cannot thrive without adequate staff and with the 
uncertainty of when they will become available. Businesses 
cannot show a successful bottom-line if they are hobbled by 
bureaucratic delays and decision-making that imposes 
unreasonable and noncompetitive wage rates.
    Thank you for your time. I will be pleased to answer any 
questions that you have.
    Chairman RICE. Thank you, Ms. Bishop.
    Now comes the part where we put you on the frying pan.
    I have a few questions. And Mr. Spriggs, I want to start 
with you. I am a little confused about your testimony. Are you 
saying that the H-2B program is bad law and should be 
eliminated? Or do you think it provides a valid piece of the 
employment picture for small businesses in these areas that 
have low populations and big tourist destinations?
    Mr. SPRIGGS. Chairman, thank you. And thank you for the 
opportunity to clarify my testimony since I rushed through it 
so much and I appreciate you doing that.
    Let me be clear. The big problem is, as was mentioned, an 
uncertainty around regulation. But the regulation has to be the 
correct regulation. And I believe the correct regulation 
includes paying wages that are the average wage for the 
occupation for which the worker would come in. Otherwise, the 
wages are lowering the average lower wage in the area. It is 
just the arithmetic of it.
    Chairman RICE. Let me clarify.
    Mr. SPRIGGS. Yes.
    Chairman RICE. So you are saying that the H-2B is a valid 
program. It is good law. You are questioning about the 
regulations; correct?
    Mr. SPRIGGS. That is correct. And part of the regulations 
that are not being implemented would have further improved two 
key elements. One, the recruitment of American workers; the 
other is the oversight of foreign labor recruiters. Many 
employers here in the U.S. do not see those foreign labor 
recruiters. They are invisible to them. They do not know what 
those recruiters are doing, and we need the ability to have 
oversight over the use of them. So I am not saying that the law 
is bad, but the proper regulation needs to be in place. The 
sooner Congress and the administration can coalesce around 
rules that protect the wages of American workers, ensure real 
recruitment of American workers, and end the abuse of foreign 
labor recruiters, the sooner I think we have a program that can 
help everyone.
    Chairman RICE. We thought we were coalesced until the 
spring of this year and somehow we got uncoalesced. I guess the 
administration made the decision we were not coalesced. Thank 
you, sir.
    Mr. Dean, Ms. Diment, let me ask you, what is the problem? 
Why do we not just hire American workers? Why do we need this 
program?
    Mr. DEAN. Well, Mr. Chairman, as you point out, we want to 
hire American workers. The businesses I represent want to hire 
full-time, permanent American workers. We would like to see 
those numbers grow, and I suspect everyone here today would 
agree with that. The simple fact of the matter is this--that 
when you see a seasonal tourism destination, like your 
community, Myrtle Beach, where millions of visitors come in a 
short period of time, we just simply do not have the labor and 
it takes a different business model.
    Let me put it in perspective that perhaps Congress can 
relate to. Just imagine if three out of every five of your 
committee hearings, three out of every five of your office 
visits, and three out of every five of your pieces of 
legislation you pass had to get passed or occur in the months 
of June, July, and August. I dare say that you would staff and 
operate your offices and your committees differently, and that 
is what we face. The simple fact of the matter is we do not 
have the number of American workers to fill those jobs during 
the peak season, and we simply have to utilize the H-2B visa 
program. It is a small, but very important part of our seasonal 
tourism economy.
    Chairman RICE. Ms. Diment.
    Ms. DIMENT. I would say in Maine the seasonality issue and 
the fact that we are so rural just does not allow us to have 
enough workers to be able to fill the jobs in the season. And 
it is not that we do not want to hire American workers and we 
have 75 to 85 percent of our workforce is American workers. We 
are looking to shore them up during the busiest time of the 
year when we have 50,000 people in our town on a daily basis. 
Having the resources to pull from is the problem in many rural 
communities around the country who are operating in these great 
destinations that people come to because they are out of the 
way, yet these rural destinations do not have the workforce 
available to support the demands of the traveling public.
    Chairman RICE. Thank you, Ms. Diment.
    Ms. Bishop, do these workers get paid less than American 
workers would in the same job in the same circumstance?
    Ms. BISHOP. No. In fact, they are paid more. There is 
something called prevailing wage. Prevailing wage is a wage 
that is much more than minimum wage and in fact, businesses 
that use it are at a disadvantage, competitive disadvantage, 
because they do have to pay so much more than someone who does 
not participate in an H-2B program. The problem now is that the 
new prevailing wages are going up while the season is already 
in swing. It has already started.
    Chairman RICE. Who determines the prevailing wages, the 
innkeeper?
    Ms. BISHOP. The Department of Labor if you participate in 
the H-2B program.
    Chairman RICE. So the Department of Labor tells you what 
you have to pay?
    Ms. BISHOP. That is correct. It tells the employers that 
the wage is--well, in the case of one client it went from $15 
an hour--no, I am sorry, excuse me--$13 an hour to $21 an hour. 
That is 21 workers this client now has to pay $21 an hour. His 
fees are not set for that wage.
    Chairman RICE. And let me clarify one other thing. If 
somebody participates in this and they hire these foreign 
workers at this wage, do the American workers that work there 
get paid less?
    Ms. BISHOP. No. If an American is doing the same job, they 
also must be paid prevailing wage. So if you were paying a wage 
of--so I can use round figures--$10 an hour to Americans, 
prevailing wage came in at $11 an hour, even the Americans, if 
they are doing the same job, now get $11 an hour.
    Chairman RICE. So just so I can be crystal clear about 
this, if somebody elects to participate in the H-2B program, 
then the Department of Labor sets the wage rate they have to 
pay, then everybody--everybody--American, foreign, whether they 
come through this program or not, get paid that prevailing 
wage. Is that correct?
    Ms. BISHOP. That is correct.
    Chairman RICE. Thank you.
    Mr. Dean, in your experience, why don't American workers 
apply for the seasonal jobs you are seeking to fill? Could you 
elaborate on the responses that your members get from American 
workers to their recruiting efforts?
    Mr. DEAN. Sure. Thank you, Mr. Chairman. That is perhaps 
one of the most common questions about this program--why is it 
when we have an unemployment rate in our community that will 
range anywhere between 8 and 12 percent this year do these jobs 
go unfilled? I suspect that part of the reason is that the 
workers that are unemployed are working for full-time, 
permanent jobs. Now, that is the main source of jobs in our 
community, but most of those unemployed are not looking for a 
job that lasts 60 to 90 days. And it may be that some of them 
have found that they can subsist on other government programs 
like unemployment insurance for that time as opposed to 
entering the workforce.
    I cannot speak for other communities, but what I can tell 
you, in Myrtle Beach, South Carolina, we have thousands of 
college students who enter the summer workforce. We have 
retirees who reenter the workforce. We bring employees from 
outside the county in and even still that is not enough. So 
clearly, there is a gap between the number of workers needed 
and the number that we are able to hire. And many of those who 
are unemployed are just simply choosing not to participate in a 
competition for these jobs. Most of the businesses would prefer 
to hire a local employee but that has never been possible in 
good and bad economic times, and therefore, we need the 
seasonal tourism employees to help our tourism businesses 
succeed during the peak season.
    Chairman RICE. Thank you, Mr. Dean.
    At this time I am going to yield to Mr. Payne for his 
questions.
    Mr. PAYNE. Thank you, Mr. Chairman.
    You know, in light of the topic that was just being 
discussed, Mr. Spriggs, it has been suggested that the impact 
of the H-2B program on our economy has been to depress wages 
for both domestic and foreign workers. Can you explain in 
detail how the recent Department of Labor regulations addresses 
the wage issue and explain how they can impact small 
businesses?
    Mr. SPRIGGS. Yes, thank you.
    So the wage is set at the average wage for that particular 
occupation in that particular metropolitan area. Or if it is 
rural, then that particular nonmetropolitan area. The 
Occupational Employment Statistics survey that is used is big 
enough to pinpoint very specific occupations. So in the cases 
of food preparation workers, that is one category. A bus boy is 
another job category. A short order cook is a different 
category. So it is able to fine tune to very precise 
occupations and on a basis of a very large survey of employers 
covering over 1.2 million American establishments, 62 percent 
of American employment, we are able to accurately tell you what 
is the average wage of people in that occupation in that 
specific substate area. So that is what is the prevailing wage. 
If you offer wage below that, you are lowering the average wage 
in that occupation in that very specific region.
    Now, some areas use H-2B workers but there are many tourist 
areas that do not. Atlantic City, near you, does not have any 
H-2B applications on record for fiscal year 2012. We know 
Nevada, which is in a remote area as well, zero. Tunica, 
Mississippi, zero. So this is not something that is used 
universally in the tourism industry or in tourism locations. My 
area where I went to high school, Virginia Beach, almost all of 
those H-2B visa applications are for landscaping. There is only 
one for food prep workers.
    So this is not a universal model for how resort areas work. 
But we do need to have rules that we agree on, and I think the 
more sound policy--becuase these occupations are very finely 
tuned--is to have just the average wage. What has happened is 
back in 2008, the courts ruled that using a four-tier wage 
level and arguing that some workers could be brought in under 
the guise that there is some lower tier within being a bus boy 
did not make economic sense. The Department of Labor had not 
made a case for the four-tier wage level, and in reviewing the 
four-tier wage level, the Department rejected the idea that 
there were four different wage levels for these very narrow 
bands of occupations and that the average wage made the most 
sense.
    Mr. PAYNE. Okay. Now, Ms. Diment, critics of the H-2B 
program argue that American workers could fill these positions 
but we are hearing that might not be the case. You know, how 
rigorous are your recruitment activities around that, and do 
you feel that they go beyond existing recruitment requirements? 
How vigorous do you attempt to recruit American workers?
    Ms. DIMENT. Weekly to daily. Honestly, it will depend on 
what is happening at the hotel at the time. We are obviously 
pulling people to work in housekeeping right now, so there are 
times when my general manager cannot put out her advertising 
for housekeepers because she is working in housekeeping.
    We are recruiting all of the time. We are talking to our 
employees every day about who they know, who could they 
recommend, who could come in. However, I do have to screen 
people. I am asking housekeeping to clean rooms with personal 
belongings and not everyone is appropriate for the job. People 
who come in may decide that a seasonal job is not what they are 
looking for, and the purpose of H-2B for us is to support our 
year-round workforce. So I am not offering year-round jobs 
right now. I am looking to fill and support the people who are 
already there, the American workforce that is already working 
for us. Barring dragging people from Bangor, Maine, last 
weekend, I have done everything I can think of at the moment.
    Mr. PAYNE. So basically, you use it just to supplement 
during your peak time of business and your primary workforce is 
American?
    Ms. DIMENT. Seventy-five to 85 percent. Without the H-2B 
right now it is 100 percent. But I am also working short. I see 
this as a supplement. I see this as a time when we are 
competing with every other hotel, restaurant, retailer, 
amusement park for summer business on the coast of Maine. 
Eighteen thousand hotel rooms are a lot of rooms to clean every 
day in the summertime. We just do not have the population and 
the availability of Americans during the height of the season.
    Mr. PAYNE. Okay. And can you further explain how the move 
from the self-attestation to a certification-based model in the 
DOL rules could harm your ability to obtain these visas?
    Ms. DIMENT. So you are speaking of prevailing wage?
    Mr. PAYNE. Yes.
    Ms. DIMENT. We set our rates in advance in the coastal 
communities. Most of our people come to us year after year. 
They reserve reservations a year in advance. And we base our 
rates based on our forecast and our budget as most small 
businesses do. So when the prevailing wage comes in not until 
the spring, I have already set my rates in the December 
beforehand. So I am already working in a gray area as to what I 
am going to be paying any workers who are coming in to 
supplement our regular workforce. There is already a level of 
ambiguity there. When they came in this year, the initial 
prevailing wage came in at a range that is appropriate for my 
area and what we pay for housekeeping. It was then modified to 
be about $1.15 more. That is an expense to my biggest 
department that has to be paid to not only H-2B employees but 
to our American workers, and it then ripples out into every 
other department who says why are you paying housekeeping more 
than you are paying a person in the food service department or 
an entry level front desk employee or a person who we hire in 
the maintenance department to clean up trash and clean off the 
lawn chairs?
    So it is a bigger picture overall for us. It affects every 
person who works at the hotel. It also sets me up as having 
unfair competition for the hotel next door who might be 50 
rooms but has chosen not to utilize the H-2B program for 
whatever reason. Their costs are much lower than ours, yet they 
probably have set their rates at the same time that we have set 
ours.
    Mr. PAYNE. Okay. So Mr. Spriggs, once again, I understand 
that the critics of the H-2B visa program believe that it has a 
negative effect on American workers. They suggest that 
employers prefer temporary workers to keep costs low. While I 
believe cost is a factor, could it also be that more Americans 
are advancing their education so they do not seek temporary 
work?
    Mr. SPRIGGS. In the current labor market, Americans are 
very desperate, and so I do not think that is the issue. And as 
I mentioned before, this is not a model everywhere. Tunica, 
Mississippi, is a very remote area but they do not use the H-2B 
program in Tunica, Mississippi. So I think it is particular to 
certain areas. And I would say the program, while we have model 
employers here and the people here are honest, hardworking 
businesses, we know there are many violations of the program 
where the program has been abused. And the regulations need to 
reflect those who misuse the program and hurt those who are 
trying legitimately to run their businesses. Without the 
implementation and the clarity for all employers of clear set 
rules so we do not have violations that no one on this panel 
would agree with, no one on this panel would agree that foreign 
labor recruiters should be extorting the workers who are 
working for them, but you need regulations in order to weed out 
those violations of those foreign labor recruiters. You need 
regulations to avoid those who are abusing the program. And so 
we need Congress to coalesce with the administration on these 
meaningful corrections to a program that we have on record, 
these many violations that you mentioned in your opening 
statement. Those are facts. They have happened. And we need 
regulations to avoid those.
    Mr. PAYNE. Absolutely. I think that is very important. As 
Mr. Spriggs stated, for Ms. Diment and Ms. Bishop, and Mr. 
Dean, we want to try to weed out the people that are not 
playing by the rules that you are playing, and that is the root 
of a great deal of my concern. You are doing everything you 
need to do but there are people that are in your industry and 
your competition that are cutting corners. And I think that is 
where Congress and the administration come in and try to level 
that playing field.
    And Mr. Dean, the cap for non-agricultural foreign workers 
is only 66,000 people. The program has to contend with a wide 
range of industries and a growing need for labor. Certainly, 
specialty and smaller firms may not have the same access as 
larger companies. How do you see the tourism industry growing 
in terms of the workforce and demand or lack thereof?
    And just on a personal note, I was in Myrtle Beach for the 
first time, my first time in South Carolina, several months ago 
for the Congressional Black Caucus Institute met there and got 
to hear your presentation. So I know you are recruiting, and I 
know your tourism business, you are a great advocate. But to my 
question.
    Mr. DEAN. Certainly. Well, we're delighted you were able to 
make it. As you are probably aware, in the middle of the 
summer, Myrtle Beach is the ad hoc capital of the state of New 
Jersey with as many New Jersey license plates that frequent 
there.
    The cap is a challenge for us. It would seem to me that it 
is a relatively arbitrary level that could and should be 
reviewed regularly. In our community, we will not hire the 
number of temporary seasonal workers we need, and that has been 
true for several years, even in the recessionary environment 
that we face. Now, our tourism industry has grown more than 
most in recent years, but the simple fact of the matter is, 
Congressman, that the cap, while we understand it needs to be 
regulated and there does need to be a mathematical analysis of 
those workers necessary, in the Myrtle Beach area the cap tends 
to be a limit that limits us far too much. Now, part of that 
may be the timing of our season. Part of it may be the fact 
that I represent a lot of independently owned businesses, a lot 
of third and fourth generation businesses.
    And one other point I would offer, I think you make a great 
point on the regulation, and all of us agree that Congress does 
have a role and responsibility to regulate this, but I would 
offer this, that for those few businesses that are not 
following the rules, just because rules are being broken does 
not mean the system is broken, and I am glad to hear this 
Committee express your appreciation for those small businesses 
that are following the rules. We certainly should regulate this 
reasonably but we should not punish those who are playing by 
the rules just simply because others have chosen not to. Thank 
you.
    Mr. PAYNE. Chairman, I yield back.
    Chairman RICE. Thank you, sir.
    Mr. Mulvaney.
    Mr. MULVANEY. Thank you, Mr. Chairman. And thank you to 
everybody for coming out. I always am impressed with people 
willing to take the time out of their schedules to come, 
especially long distances from Maine and South Carolina to do 
this. It is extraordinarily helpful. What you are doing today 
is helping to drive the debate. It does not look like it is 
very well attended, but these reports will go out to all 
members of Congress. These things will be printed and reported 
by the folks who are here, and this will become part of the 
debate on this program and probably on a larger discussion of 
immigration, which we will talk about in a second.
    I am also glad you are here to talk about the H-2B program 
because I am not as familiar with it as I am the H-2A program. 
My district is more agriculturally oriented than it is tourist. 
It sounds to me like there is a lot of overlap. I talked to my 
farmers. They had some of the same difficulties about the 
change in prevailing wages in the middle of the season. They 
talk about the delay. I was not aware that the DOL had actually 
stopped processing. I know that in the past several seasons 
they have delayed processing, and whereas the program used to 
be able to reliably produce legal migrant workers in six weeks, 
and if you asked for those migrant workers seven weeks before 
the peach crop came in you could usually count on getting your 
folks in. When they switched that from six weeks to six months, 
we have actually seen businesses in my district go out of 
business because of that delay, whereas some folks have the 
opportunity to sort of stretch and get through if you are 
relying on this program for 90 percent of your workforce during 
your peak times. Again, you have got folks talking about 60 
percent of your business during the summer. If 90 percent of 
your business comes during a particular harvest season and you 
cannot get the workers, then you are quite literally out of 
business. So I appreciate the input.
    Just out of curiosity, Ms. Bishop, you probably know a good 
bit about the program. My farmers have to provide food and 
housing, and to a certain extent maybe even clothing to their 
legal migrant workers under the H-2A program. Is it similar in 
the H-2B or not?
    Ms. BISHOP. The H-2Bs do not have to provide housing, but 
almost all of my clients do provide subsidized housing because 
it is difficult to find housing when you are coming from a 
foreign country and you do not know the area. So if you are 
going to run a business that participates in H-2B, you have 
usually secured housing. It is seasonal housing, and it is also 
offered to American workers in the newspaper ads that they run 
and in the job bank listings so that if Americans are able to 
take the jobs and they cannot say, gee, I do not have housing, 
well, we have subsidized housing for you.
    Mr. MULVANEY. In the Ag program you have to be able to 
establish that you have taken certain steps in order to attract 
American workers to the jobs. Do the same rules apply here?
    Ms. BISHOP. They are very similar rules. The job needs to 
be posted on the statewide job bank for at least 10 days. There 
needs to be two very detailed newspaper ads, not the little 
tiny ad but the big expensive ones that tell you everything 
about the job, and that needs to run on two days during that 
10-day period, one of them being a Sunday. And any American 
that applies for that job, you do everything you can to get 
that American in to be interviewed. Anything from scheduling 
the interviews to a time that is appropriate for the worker who 
wants to come and take your job or try to take their job, and 
chances are that in all that I do and all the ads that I have 
placed, we can run ads and receive absolutely no Americans 
apply for it. And some of these jobs are $12 to $15 an hour 
jobs with flexible schedules and I cannot get a single American 
to apply for it.
    Mr. MULVANEY. My farmers tell the same story. There is a 
farmer who has actually kept the paperwork on the last 1,000 
workers who showed up to pick peaches, and he can prove to you 
in writing that one of them lasted more than a week. So I think 
what I am hearing here is the same I hear from my farmers, 
which is they would much rather hire American citizen workers. 
It is cheaper, it is easier, it is more effective, but doing 
this is a last resort.
    Mr. Spriggs, I have got one question for you. When we talk 
about that database, if we have the database for busboys in the 
Myrtle Beach market, we have this average wage. They can look 
at it and there is an average wage. Some folks are making 10, 
some folks are making 12, some folks are making 14, right? IS 
that how it pretty much works? Without those specifics. Okay? 
Why are you arguing for a system that pays migrant workers more 
than American workers?
    Mr. SPRIGGS. No.
    Mr. MULVANEY. You are. I mean, if there are three workers 
in the market--one makes 8, one makes 10, and one makes 12, and 
those are three American workers, and you are arguing that a 
migrant worker should make the average--that is $10--you are 
arguing that that person should make more than the American 
worker making $8.
    Mr. SPRIGGS. Let us remember the previous answer. So you 
are paying the average because that is the average wage for the 
area, and the simple math is that if you bring in people below 
the average, you are pulling down the average. An American who 
works at that establishment then must be paid the same wage 
that you are offering to the H-2B worker.
    Mr. MULVANEY. And the American who works across the street 
is going to be making less.
    Mr. SPRIGGS. It is a free labor market and Americans are 
aware of the wage distribution, but the idea here is that we do 
not want to pull down the average wage of Americans. And if you 
bring in a set of workers----
    Mr. MULVANEY. Actually, you would not be pulling down the 
average wage of Americans. If they are making 12, 10, and 8----
    Mr. SPRIGGS. If you have 12, 10, and 8, and you bring in 
somebody who makes 8, now the simple math, right, is now you 
have just lowered the average.
    Mr. MULVANEY. No, I have not, because my three Americans--
--
    Mr. SPRIGGS. Yes. You have two----
    Mr. MULVANEY. Excuse me, sir. My three Americans who are 
there are still making 8, 10, and 12. I have not drawn down the 
salaries or wages of any American. I have--yes, I have paid the 
migrant worker lower than the average, but the three Americans 
who were in that market beforehand are still making 8, 10, and 
12. None have seen their wages come down.
    Mr. SPRIGGS. The average wage for the occupation has now 
shifted down.
    Mr. MULVANEY. True.
    Mr. SPRIGGS. If I come--if I come----
    Mr. MULVANEY. But the average wage received by Americans is 
the same.
    Mr. SPRIGGS. If competition is that we are going to have--
lower the average wage in the area, then yes, you will affect 
future Americans who go to look for the job.
    Mr. MULVANEY. I am glad to hear the AFL-CIO is arguing for 
wage competition.
    Mr. Dean, very quickly, and to you, Ms. Diment, tell me 
what this means for growth--for your businesses, Mr. Dean, and 
yours in particular, Ms. Diment. Are you able to grow your 
businesses if you cannot find people to work?
    Mr. DEAN. Congressman Mulvaney, as you well know, in 
tourism, this is a service industry. It is not a manufacturing 
industry where we can turn the assembly line off. We have to 
serve our customers 24 hours a day, 7 days a week, 52 weeks a 
year. If you cannot provide the necessary labor to serve your 
customers, then you simply cannot accommodate them. The best 
case scenario is that you underperform. The worst case scenario 
is that your business actually declines instead of growing. And 
in our view, the system has worked well in the past. It could 
work better, but the old adage, ``if it ain't broke, don't fix 
it'' applies here.
    Mr. MULVANEY. Ms. Diment, what are the chances of you 
growing your business in the current labor environment?
    Ms. DIMENT. None. I take people out of other departments to 
assist the department that is short-staffed, and thus, I am not 
able to get them to do jobs that would increase the revenue or 
increase the sales and the availability of what they are doing. 
So if my food service people are in stripping rooms out to get 
them ready for the next guests, I am not selling food and 
beverage. So there is no growth.
    Mr. MULVANEY. Thank you. Thank you, Mr. Chairman. Sorry to 
go over on my time.
    Chairman RICE. No problem. Thank you, Mr. Mulvaney.
    Next, we have Congressman Barber.
    Mr. BARBER. Thank you, Mr. Chairman. And thank you to all 
of our witnesses for being here today. This is a very important 
area of discussion back home in my community.
    My first question, Mr. Spriggs, is for you. Let me just 
explain a little bit about the community I represent. First of 
all, I would have to say there is nothing I agree with more 
than we have to find jobs for Americans. We are making 
progress. It is way too slow. Way too many people in my 
community are out of work, and they need it, and we need to do 
everything we can to grow their opportunity.
    The tourism industry in my community in Tucson and southern 
Arizona is a very big deal. It accounts for $2.3 billion in 
spending just in metropolitan Tucson alone, and I am concerned 
that those businesses who have a peak season that starts around 
October and goes through March--no one really wants to come 
there in August. Believe me. I am dreading going back in August 
myself. But clearly, we have a very important peak period and 
we need to fill in.
    So Mr. Spriggs, my question to you is in your opinion what 
more can we do--we in Congress and we in our communities, to 
help better match up American job seekers with our small 
tourism businesses? What more can be done?
    Mr. SPRIGGS. I appreciate the question.
    It is one thing to say I posted a job on the Internet. It 
is another to actually reach the American workers who are 
unemployed. And while people feel that they are meeting the 
needs of the regulation, it is clear when we see job openings 
appear, if Wal-Mart says that they are looking for workers, 
people line up around the block. So there is a level of 
publicity that we know works in reaching American workers. We 
do not see in the record, if you look at fiscal year 2012, any 
H-2B applications from Tunica, Mississippi, which is a very 
rural area. So the idea that Americans will not do this type of 
work, well, Americans do this type of work. In Reno, Nevada, 
there are no H-2B applications. People in America do this kind 
of work. We are a hard-working people in America.
    So I think it is the ability to really reach Americans, and 
the problem is that we are bottling up the regulations that the 
Department of Labor was trying to put in place to improve the 
process of recruiting and reaching American workers. It is not 
just the Department's fault. There are court cases. Congress 
has consistently intervened into the implementation of the 
rules. So creating the crises that these businesses are 
suffering through now is the result not of the administration 
but of the courts and of Congress interfering with the 
implementation of a set of rules that would have improved the 
recruitment of American workers and would have prevented the 
abuse of foreign labor recruiters that we know turns this 
program into a very ugly type of program. Those things have to 
be cleaned out.
    Mr. BARBER. Thank you, Mr. Spriggs.
    My next question is for both Mr. Dean and Ms. Bishop. Same 
question. Let me just set it up this way.
    My wife and I were former small business owners for 22 
years. We never had to use this visa program, but many of our 
community do. We hear on this Committee a lot about the amount 
of red tape and bureaucracy that hurts small businesses from 
developing, from growing, and I really want to make sure that 
we are doing everything we can to reduce or eliminate it.
    So Mr. Dean and Ms. Bishop, the same question. You had 
spoken about the inefficiencies within the H-2B program, 
including paperwork, long processing delays. Could you give us 
specific recommendations of what we should do, what we can do 
to streamline the program and make it easier for small tourism 
businesses who need the program while still guaranteeing the 
protection of American jobs?
    Mr. DEAN. Thank you, Congressman. I am glad to hear that 
question because I think that is what a lot of small businesses 
are asking you to do is to make this process more efficient.
    In our community, we actually have hoteliers who will start 
this hiring process in October for a temporary seasonal 
employee that actually arrives in June, an eight month period. 
I suspect that part of the reason for that is because of the 
recruiting that has to go on, and we agree with that. We do not 
question that at all. I also suspect that part of the reason 
for that may be the fact that you can have as many as four 
governmental agencies involved in this process. Now, some of 
that, referencing the ranking member's comments earlier, is 
because of that necessary oversight that the federal government 
has to provide to protect American workers. We understand that. 
We embrace that. We certainly agree with that. But there may 
well be some opportunities to reduce the paperwork and the 
handoffs between the agencies, and also to consider perhaps a 
slightly reduced administrative process for those returning 
workers. Not all of the workers that come for the seasonal jobs 
are returning workers but many of them are. In fact, many 
return to the same properties year after year after year, so it 
might well provide some opportunities not only for those 
businesses but for the federal government agencies involved to 
make the process more efficient in that regard.
    Mr. BARBER. Mr. Chairman, with your indulgence may I ask 
Ms. Bishop to respond?
    Chairman RICE. You are indulged.
    Mr. BARBER. Thank you, sir.
    Ms. Bishop, please.
    Ms. BISHOP. There are a few things that can make this 
program much more streamlined. We agree with the process in 
that you do need to make sure and test the market for American 
workers, but in many seasonal areas there is negative 
population growth, negative. Or the population may be in our 
area 66 percent is over the age of 65 or under the age of 17. 
They are not there.
    But as far as the process, I think one of the things that 
would be very helpful is for the U.S. embassies to just let 
returning workers drop off their passports, do their 
fingerprints, and then approve them. They are coming 
repeatedly. You can check a record on a computer that shows 
that they paid their taxes, they did not overstay their visas, 
they worked their jobs. They did everything correctly. You do 
not need to schedule an embassy appointment that is two to 
three to four weeks later, making the workers arrive much 
later. That would be a great thing if we could get the State 
Department to do that.
    I think the other thing that would be really well done if 
we could do it is when we do the third step of this four step 
process, which is Department of Homeland Security, it would be 
great if we could e-file those applications and pay for those 
with a debit card instead of having to file documents this much 
to get 10 workers into the country. That would be a big 
lifesaver because the Labor Department, to their credit, is now 
doing an e-filing process for both the prevailing wage and both 
the labor certificates, and we embrace that. We think that is 
great. Now let us get the other agencies to do the same and we 
would be very happy.
    Mr. BARBER. Well, thank you for that last suggestion. I am 
on the Oversight Subcommittee of the Homeland Security 
Committee. I will definitely take that up and see what we can 
do.
    Thank you so much, Mr. Chairman.
    Chairman RICE. Thank you, sir.
    I want to thank our witnesses for their testimony and 
participation today. While the H-2B visa program is relatively 
small, it is a vital source of temporary, legal foreign workers 
used by small businesses that cannot find enough American 
workers to fill their seasonal job openings. The temporary 
suspension of the program and the mid-season wage rate increase 
pose real challenges for small tourism businesses. We will 
continue to work with the small business community to ensure 
that the Department of Homeland Security and the Department of 
Labor examine whether increasing labor costs on small 
businesses utilizing this program is appropriate given the slow 
economic recovery.
    I ask unanimous consent that members have five legislative 
days to submit statements and supporting materials for the 
records.
    Without objection, so ordered.
    This hearing is now adjourned.
    [Whereupon, at 2:23 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

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                      Testimony of Sarah M. Diment


            Before the Subcommittee on Economic Growth, Tax


                           and Capital Access


                      Committee on Small Business


                     U.S. House of Representatives


                             June 12, 2013

    Dear Mr. Chairman Rice, Madam Ranking Member Chu, and 
Members of the Committee:

    Thank you for inviting me here today to speak on ``The 
Seasonal Employment Needs of Small Tourism Businesses and H-2B 
Visa Policy.'' My name is Sarah Diment, a 3rd generation 
hotelier at The Beachmere Inn, in Ogunquit Maine, southern York 
County. Our complex of buildings offers various accommodations 
from hotel rooms and suites to a full service cottage. We have 
73 rooms to service daily. I hope to put a face on the 
challenges of running a business in a seasonal community on the 
coast of Maine and the difficulties we have in staffing for the 
peak summer and fall months and what that means to my own 
business and to our industry.

    Ogunquit is a seasonable tourist destination, located 87 
miles north of Boston and is within a three-hour drive of the 
most populated areas on the East Coast. We are only a six-hour 
drive from New York City, where many of our July and August 
guests originate.

    Ogunquit offers miles of pristine white sandy beaches, a 
famous 1-mile walk along the ocean called Marginal Way, and a 
working fishing cove surrounded by restaurants and shops. We 
cater to visitors who return for generations. This past week I 
spoke to a guest who has been coming to our Inn since the last 
1960's. Tourism is the principal source of income for many York 
county residents and businesses and is heavily relied upon 
during the summer months to help businesses survive the quiet 
winter season.

    We are in the business of hospitality. There are no excuses 
for not having a clean room, working amenities, or proper food 
service when our guests arrive. They don't care if we are 
short-handed or that we cannot find help during the season. 
They expect and deserve a perfect stay, as they are paying for 
it. During the past 10 years or so it has been increasingly 
difficult to find help in the housekeeping department during 
the summer and fall months. Our business peaks from mid May to 
the beginning of November. During 2012, we had a monthly 
occupancy of May 15-31 83.96%, June 78%, July 99.8%, August 
99.9%, September 98.5%, October 84%.

    We currently employ 14 people in the housekeeping 
department (2 part-time, 1 supervisor and 11 Americans who 
average 30-35 hours or more). Typically we require 17 full time 
housekeepers to make the department run smoothly. As we employ 
mostly single mothers, our average of 30-35 hours is based on 
accommodations we must make for family and childcare 
situations. We had used the H-2B program for the past 10 years 
or so, but due to the changes in rules we opted out of the 
program last year.

    We attempted to apply for visas this year, but due to the 
``hold'' on petitions (and issues that may affect us next year 
if we were to drop out once the processing at the Department of 
Labor had begun) we chose to withdraw our petition. We could 
not wait with uncertainty as to when our petition would be 
approved for this coming season.

    It also concerns me that the wages for these positions are 
set at the federal level by the Department of Labor, a wage 
called the ``Prevailing Wage'' which is not commensurate with 
the wages paid by hoteliers in my area. Maine minimum wage is 
currently $7.50 per hour; federally, the minimum wage is $7.25 
per hour. I had to research minimum wage rates, as I don't 
think I've ever paid someone minimum wage at my inn. We start 
our housekeepers, with no experience necessary, at $9.00 to 
$10.00 per hour, with those having some cleaning experience 
starting at the higher end.

    Before dropping out of the program this year, the 
prevailing wage for housekeeping was determined to be $9.39 per 
hour based on the determination give to us by the Department of 
Labor on February 15, 2013. Then the Department of Labor 
revised that figure to $10.54 per hour, communicated to us on 
May 20, 2013. That's an increase of $1.15 an hour in a three-
month span. We determine room rates by December of the year 
prior, rates that we provide to our guests, and rates our 
guests expect us to honor. We cannot change the room rates to 
accommodate a wage increase in the largest department at our 
Inn now that the season has already begun. We work within a 
budget, as most prudent small business owners do. I'm also 
troubled that this rate is targeted at only the properties who 
utilize the H-2B program. Because we have more rooms than say, 
a fellow competitor at the property next door of 35 rooms, we 
have to pay our American and H-2B workers more. That smaller 
hotel may not need seasonal help to get through the summer, but 
because we do, and, because we find those people through the H-
2B visa program, we are penalized with a higher wage. This wage 
also applies to my American workers, which in the short run is 
a good deal for them. However, once they leave us for other 
employment or to pursue another career, they will quickly find 
that entry-level work in many industries in Maine does not 
start at $10.54 per hour. It seems that we are creating a false 
expectation, one that does not reflect entry-level wages in our 
area. This new higher wage would affect the benefits I would 
offer, the level I contribute toward health insurance and 
retirement plans and how we allocate revenues going back into 
the Inn's capital improvements.

    For 2013, we have been actively recruiting through employee 
referrals, newspaper ads, and online recruiting efforts since 
March with these results:

    Responses to our housekeeping ads: 16

    No-shows for interviews: 9

    Interviews conducted: 7

    Reference checks indicated not hirable: 2

    Candidates who came in to interview but showed obvious lack 
of interest: 2

    Job offers declined: 2

    Candidates who were hired for other positions in the hotel: 
1

    Number of housekeepers hired through advertising: 0

    Number of housekeepers hired through employee referrals: 3

    We had once tried to recruit American workers by 
advertising in northern Maine, where unemployment levels were 
higher and industries such as paper mills and manufacturing 
were closing. We experienced some inquiries but they were 
mostly from workers who had families they did not want to leave 
behind. Housing in the summer months is next to impossible to 
find at a reasonable rates, thus we were unable to provide 
family housing that would be affordable based on the one person 
working a seasonal position. We quickly realized that lack of 
affordable housing and the seasonal nature of the job made 
these positions undesirable. This past weekend, I tried 
recruiting housekeepers while attending my cousin's graduation 
in Bangor, Maine. Although I was prepared to let them leave mid 
August to start college and drive to Bangor to get them, I 
could not get any takers. There genuinely seemed to be a lack 
of enthusiasm in doing housekeeping work.

    Locally, as of January 2013, Ogunquit had 1,098 registered 
voters with 44 restaurant establishments and 65 hotels/B&Bs/
inns representing 2,561 hotel rooms, not counting rental homes 
and condos. The median age in our town is approximately 61.7 
years old. We currently have more hotels rooms than residents. 
At the height of the season, we can see up to 50,000 people in 
town, including overnight visitors as well as day-trippers.

    Many have asked why we don't hire students. As our coastal 
town is not near any college campuses, recruiting from those 
attending summer school has proven fruitless. The University of 
New Hampshire is 27 miles away, a 40-minute commute; the 
University of Southern Maine is 38 miles to the north, a 55-
minute drive; and, the University of New England is 22 miles, a 
46-minute drive. Many college students are working in 
internships for the summer, as they must shore up their resumes 
far in advance of graduation in this difficult job market. The 
high cost of college tuition has caused many of those students 
to work an internship during the day and take job during the 
evenings. Housekeeping must be done during the day. 
Housekeeping is no longer a job that is valued nor sought by 
college students.

    So we turn to surrounding communities as a source in 
hiring. We compete not only with the other 65 hotels/B&Bs/inns 
in our town, but also with well known summer vacation spots 
such as Kennebunkport, Old Orchard Beach, York, Biddeford Pool 
and more.

    There are about 18,000 hotel rooms south of Portland, Maine 
to the New Hampshire border. That does not include the demands 
for the hiring needs of retail shops, restaurants or 
attractions that are looking for seasonal help to operate 
during the summer months. We primarily recruit from the Sanford 
area, a 20-mile drive that takes about 35 minutes. Sanford has 
equally easy access to Kennebunkport, Wells, Ogunquit and 
Biddeford for job opportunities, yet there were only 20,798 
residents there in 2010. Smaller communities surrounding 
Sanford are also sources of recruitment, but the primary area 
of available applicants is in Sanford. Clearly, we do not have 
the human resources available to work at just the hotel 
industry to clean rooms given the demographics of our region 
and the competition for the other jobs, seasonal or year round.

    Hiring H-2B workers is not an easy, or inexpensive way of 
recruiting employees. We pay approximately $3,100 in agency 
fees and $1,700 for USCIS fees to process the paperwork. We 
also pay the transportation costs for each worker to Ogunquit 
Maine, from their home country. The myriad paperwork, 
applications, verification and costs make this program one of 
the more expensive ways to find housekeepers. This is a 
complicated and expensive program to use, but is one that has 
been able to fulfill our seasonal needs and support our 
American workers.

    That being said, the H-2B housekeepers who have worked for 
us are treated as we would any employee. They are paid wages 
that are comparable to our local workforce, if not more, based 
on their years of service, just as any American worker would 
be. They are provided housing (which we built in 2007) with an 
apartment offering 2 bathrooms, washer/dryer, full kitchen 
(with 3 refrigerators) AC, TV, and, from some rooms, ocean 
views. Workers walk 75 feet to the housekeeping office in our 
main building to report for work. They only pay $80.00 a week 
for rent (everything included, except food) and are provided 
transportation by one of our staff members for weekly shopping 
trips to local grocery stores and big box retailers.

    They are afforded all of the same benefits that our local 
seasonal workers are offered. They are eligible for our 
Employee Retirement program after the obligatory waiting 
period. This past season, the employer contribution was 11% of 
the employee's gross yearly wages. This retirement program is 
funded 100% by The Beachmere Inn. They pay taxes and remit 
Social Security weekly deductions even though they will never 
be able to use the benefits. They work hard to earn money to 
shop for goods that they then send home to support their 
families.
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    In October 2011, our four H-2B workers shipped 25 barrels 
and 5+ boxes of goods back to Jamaica. Everything in this 
shipment was a result of the money they earned while here in 
the U.S. That's a lot of shopping for just four women. This is 
money that is rolled right back into our economy and is 
something to be said for these hard working employees. They 
also pay a U.S. shipping company to send everything back, at a 
cost of $75.00+ a barrel.

    The impact of not being able to shore up our year-round 
staff during the summer and fall affects us in many ways. We 
often have to pull staff members from other departments in to 
assist housekeepers, thus delaying work that should be done in 
their own departments. We have turned to a 6-day workweek for 
our year-round housekeeper, which impacts them for childcare, 
gasoline costs and physical exhaustion. If any of you have ever 
tried housekeeping, it's not a job for the faint of heart. It 
is a physical job, where you are on your feet most of the day 
with many tasks requiring bending, kneeling, lifting, twisting 
and turning. Asking our year round staff to work more to cover 
the seasonal needs means we are taxing them physically and 
putting them at risk for injury due to the sheer nature of the 
job. Or should we shut down rooms to shield them from the work 
and overtime?

    I am now analyzing what services I may not be able to offer 
(or have to reduce) for this season, as I will not have the 
staff to do it all. Staff removed from one area to help in 
another area means we will not be able offer all programs we 
might wish to. Making these choices is going to hinder what I 
can do later this season in capital improvements, employee 
resources and purchases of goods and services for the amenities 
we may drop.

    The H-2B program is a supplement to our year-round American 
workforce, allowing our business to operate at full capacity so 
that we can be as successful as we can be, rolling revenue and 
benefits back into the workforce and our local economy.

    We didn't get to celebrate 75 years of operation by not 
employing Americans and do not plan on continuing to operate 
without our valued local employees at the helm; however, 
operating without proper seasonal staffing will force us to 
make drastic changes. H-2B staffing is not a luxury; it is 
critical for the operation and growth of my business and for 
the many other businesses in Maine who realize a dramatic 
seasonal increase in their businesses.

    I hope you can see that we are not using this program as an 
easy fix, but as a critical business need for the employment, 
not a displacement or infringement on the success of our year-
round American workers. Thank you very much for the opportunity 
to testify. I am happy to answer any questions you may have.

    Sarah Diment, Owner
    The Beachmere Inn
    Ogunquit, Maine
                 Statement of William E. Spriggs, Ph.D.


     Chief Economist, American Federation of Labor and Congress of 
                        Industrial Organizations


 Testimony before the Subcommittee on Economic Growth, Tax and Capital 
                                 Access


                Of the House Committee on Small Business


  Hearing on ``Help Wanted Seasonal Employment Needs of Small Tourism 
                              Businesses''


                        Wednesday, June 12, 2013


    Thank you Chairman Rice for this opportunity to appear 
before your subcommittee. And thanks also to Ranking member 
Congresswoman Chu for this chance to explain the plight of the 
millions of unemployed Americans looking for a chance at any 
work.

    Today we stand over five years into the wrath of the Great 
Recession. The number of payroll positions in America remains 
over 2.4 million less than in January 2008. At the rate of job 
creation last month, it would take more than thirteen months to 
get back to that pre-recession level of employment--meaning a 
net job growth of zero jobs over an almost six and a half year 
period. In the interim, America's labor force has grown over 
1.5 million, and will grow larger over the next year. The 
result is we have a backlog of Americans looking for jobs--
officially 11.7 million. The brunt of the difficulty in the 
labor market has fallen on young workers who are suffering from 
the lowest levels of employment on record; fewer than 38 
percent of 18 and 19 year olds have jobs, and among those 20 to 
24 the share with jobs is below 61 percent, well below full 
employment levels when the figure should be thirteen percentage 
points higher. And, for those with jobs, wages have been 
essentially flat, rising only three percent over this period 
when adjusted for inflation.

    So, to put it bluntly, we are still in the midst of an 
American job crisis; especially for entry level jobs for young 
Americans. It has never been more crucial for America's policy 
makers--in Congress and in the Administration--to pull together 
to insure job opportunities for the almost 12 million Americans 
looking for work, and to protect the wages of those at work, 
many of whom are working part-time but would like to work full-
time.

    An important policy would be for Congress to join with the 
Administration to insure that job opportunities being created 
are fully available to the millions of Americans looking for 
work, while protecting the wages of working people. Straddled 
with court cases and appropriation blocks from Congress, the 
Administration has already delayed several times the 
implementation of new rules over the use of temporary, non-
immigrant workers in entry level jobs like young Americans 
desperately need. Over the course of the recovery, Congress has 
worked with the Administration to pass various tax cuts aimed 
at helping small businesses, in particular, add workers--
ranging from the Small Business Jobs Act to the HIRE Act. These 
tax cuts have given small business extra tax incentives to add 
workers to their payrolls. But, these efforts will be 
undermined if the jobs are given to non-immigrant temporary 
workers, or if workers are brought in with wages to undercut 
the competitiveness of small businesses struggling to take 
advantage of the tax cuts and boost their local economy.

    The loser when wages are set low by a few firms are not 
just Americans denied job opportunities, but the hard working 
businesses and their employees fighting to restore an economy 
that works for everyone. The economic analysis done by the 
Department of Labor to study its interim final wage rule for 
the H-2B non-agricultural temporary, non-immigrant work visa 
program showed the Department on average certified employers 
for 79,305 H-2B positions in FY 2011 and FY 2012. So, the bulk 
of businesses need protection from this program being abused to 
gain competitive advantage.

    Unfortunately, the regulations for the H2B program have 
been caught in a struggle between courts and Congress. This has 
hurt businesses that may have need for the program, and delayed 
policy makers from coalescing around a sound set of policies 
that protect the over 11 million unemployed Americans seeking 
jobs in having access to jobs created, in part, by numerous 
recent tax changes to benefit small business in creating those 
jobs.

    The courts have not accepted the premise that the 
Department of Labor should adopt multiple wage levels for the 
type of job typical of the H-2B program.\1\ The finds of the 
court appear consistent with the Bureau of Labor Statistics 
characterization of these jobs has having relatively lower 
skill levels compared to many jobs, and therefore have a wage 
structure that does not reflect skill differences.
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    \1\ CATA vs. Solis,--,F.Supp.--,2013 WL 
1163426, *13 (E.D. Pa. 2013) (CATA II)

    The source of the Department of Labor's wage rule data is 
the Occupational Employment Statistics report of the Bureau of 
Labor Statistics. The OES is a huge data base that collects 
information on occupations and wages for about 800 different 
occupational categories. The sample size of the survey is large 
enough to generate estimates at the national, state and sub-
state level, including for every metropolitan and non-
metropolitan area in a state. The sample is from establishments 
of every size, so that small establishments are included, and 
across all industries--except agriculture, fishing, forestry 
and private households. The sample averages data over a three 
year period to insure that it is representative for detailed 
occupations in small geographic areas. These steps yield a data 
set of over 1.2 million different U.S. establishments and 
captures about 62 percent of employment. Given the size of the 
samples, and the technical issues involved in designing a 
proper probability-based sample similar to the Bureau of Labor 
Statistics, the use of employer wage surveys should be strongly 
discouraged. The need for fair, accurate, reliable and 
replicable results in policy making means it would not be 
efficient or optimal to use inaccurate surveys and the cost of 
---------------------------------------------------------------------------
such an accurate survey is prohibitive for employers.

    If an employer pays below the average for an occupation in 
their area, they lower the average for the occupation in that 
area. So, the Department of Labor is correct in setting the 
wage for certification of an H-2B visa at the average for the 
occupation in an area. Further, the setting of low wages feeds 
into a self-fulfilling prophecy. It is possible to model the 
behavior of someone searching for a job, acquiring knowledge of 
job openings and wages in their area. When the workers do their 
job search, they will, in-a-away mimic the survey of the Bureau 
of Labor Statistics; though they are unlikely to look at as 
many firms, or replicate the probability sampling that the 
Bureau conducts. In the end, the worker searching for a job 
will arrive at a good estimate of the average wage in their 
occupation in their area. If their search is rational, they 
will try for the jobs with the highest wages. So, the worker, 
in doing their search, will turn down wages that are below 
average, knowing what the distribution of wages looks like; 
when they encounter wages that are below average, that time 
spent in that search will slow their search for a job, and they 
will spend more time unemployed. It will also be frustrating 
for the employer who offers low wages, because they will have 
to review applicants who are, in the end, uninterested in the 
job offer. Over time, the workers who will settle on the lower 
wages are likely to have been unemployed longer, and are likely 
to appear less skilled to employers than the workers who 
matched with the employers paying closer to the average wage or 
higher. So, employers who set the wage too low will either 
think there are no available workers, or do not wish to hire 
the workers who are left available at the low wage.

    More could be done to protect the wages of American workers 
and the competitiveness of the businesses that work hard to 
hire Americans. The OES is an excellent source for getting 
estimates of wages. But, if wages are offered to foreign 
workers that are below the wages set between employers and 
employees in a collective bargaining agreement, then the 
competitive position of those firms is at risk from an employer 
trying to undercut the profitability of the unionized 
establishment by paying a lower wage to foreign workers. And, 
those businesses that contract with the federal government and 
are paying prevailing wages, either under the Davis Bacon Act 
or the Service Contract Act, are similarly being undercut by 
firms paying lower wages to foreign workers.

    Unfortunately, many H-2B workers gain access to the program 
through foreign labor recruiters who illegally charge the 
workers fees. Many H-2B workers, then, arrive in America 
already in debt. The result is that much of what those foreign 
workers earn has to be repatriated to repay the foreign labor 
recruiter in their home country. That means that rather than 
circulate their wage money in the local American economy, much 
of their pay has to be sent back home. This in turn depresses 
the local economy, because tourism--which can be a great net 
exporter for our country--is being offset by ``importing'' the 
labor value added of the industry. Organizations like the 
Southern Law Poverty Center have uncovered too many cases of 
abuse of the program under its existing rules.\2\ Efforts by 
the Administration to monitor and fight against this type of 
misuse of the workers and of the H-2B program are unfortunately 
not being implemented because of battles in the courts and with 
Congress.
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    \2\ Southern Poverty Law Center, Close to Slavery, Guest Worker 
Programs in the United States, 2013 edition, accessed on the internet 
(June 10, 2013): http://www.splcenter.org/sites/default/files/
downloads/publication/SPLC-Close-to-Slavery-2013.pdf.

    Tourism is an important industry for the United States. 
That means we should be sure that our policies are giving 
Americans the best opportunities to acquire the jobs, 
experience and skills to excel in industries we want to promote 
through public policy. To maximize the potential for gathering 
the full value-added of the industry, it is essential that we 
turn first to the millions of unemployed Americans for these 
jobs. Yes, the demand for these jobs has seasonal variation, 
but to young people looking for entry level positions, these 
are good steps. And, to the many companies hiring Americans in 
the tourism industry it is very important to keep them 
protected from low-wage competition that undercuts their 
efforts to protect and promote middle class American values.
                    Testimony of Jane Nichols Bishop


   Before the Subcommittee on Economic Growth, Tax and Capital Access


                      Committee on Small Business


                     U.S. House of Representatives


                             June 12, 2013


The Seasonal Employment Needs of Small Tourism Businesses and H-2B Visa 
                                 Policy


    Thank you very much Chairman Rice and Ranking Member Chu 
for your leadership in holding this important hearing. I would 
also like to thank full committee Chairman Graves and Ranking 
Member Velazquez.

    My name is Jane Nichols Bishop, and I am the president of 
Peak Season Workforce of Mashpee, Massachusetts on Cape Cod. 
For more than a decade, Peak Season Workforce has successfully 
helped seasonal tourism-based businesses navigate the intricate 
government filing process to successfully obtain H-2B work 
visas. Peak Season Workforce currently represents more than 100 
employers seeking H-2B work visas to supplement their American 
work forces during peak visitor season. Incidentally, we are a 
small, family-fun business with just three employees including 
myself.

    We represent hotels, motels, inns, bed & breakfast 
establishments, restaurants, clam shacks, pizza shops, a public 
transit operator and coffee shops. All of them experience a 
significant increase in business during their seasons. We also 
work on behalf of small businesses that support them and their 
customers. These include commercial laundries, bike rental 
shops, golf courses, retail stores, ice cream parlors, party 
rental companies, landscapers, trash haulers, and a bulk paper 
supplier. These businesses depend on workers with H-2B visas to 
fill essential jobs such as housekeepers, front desk clerks, 
cooks, short-order cooks, food preparation workers, 
dishwashers, dining room attendants, servers, laundry workers, 
retail and stock clerks, tent installers, landscapers, trash 
collectors and shuttle bus drivers.

    Let me make this clear: my client employers that use H-2B 
international workers are not able to find enough U.S. workers 
to fulfill their staffing needs; they use workers from abroad 
to supplement--not replace--Americans in their work force. Each 
one of our 100+ employers hires American workers but does not 
have enough of them during their busy season.

    Small businesses located in seasonal destinations, such as 
Cape Cod and the coast of Maine, have between five and eight 
months on average to earn a year's worth of revenue. Some of 
these businesses chose to stay open during the non-seasonal 
months with a limited number of American staff. Others are open 
only for the season and close in off-season months.

    Seasonal small businesses wish they had more American 
workers from their immediate areas. They cannot rely anymore on 
high school or college students due to their school schedules. 
Most colleges start classes in early-to-mid August, and 
students must return to school while seasonal businesses remain 
busy through the summer and fall ``shoulder'' seasons. This 
often extends to the Columbus Day, three-day weekend in October 
and for some businesses, beyond that into Thanksgiving. Child 
labor laws correctly restrict the amount of labor young high 
school students can provide. And the reality today is that 
college students often seek professional summer internships 
related to their fields of study so they have a better chance 
of getting a professional job when they graduate. Regrettably, 
lower skilled jobs cannot compete.

    Working-age adults and retirees who live in popular tourist 
areas are not interested in entry-level jobs that are temporary 
in nature and often without benefits. Seasonal work is often 
physically demanding and can be challenging work for retirees 
who may want easy part-time jobs.

    This year, small businesses encountered a particularly 
vexing problem that threw a last-minute monkey wrench into the 
application process and caused costly delays of many visas 
applications. On March 21, a federal judicial ruling ordered 
the Labor Department to stop issuing new prevailing wages 
because of an allegedly flawed methodology that had been used 
successfully since 2008. The Labor and Homeland Security 
Departments responded by freezing all pending applications for 
up to 45 days. This stopped the H-2B application process in its 
tracks and created a major approval backup at U.S. embassies 
worldwide. Businesses could not get their H-2B staff approved 
and were left without help at the start of this season. Today, 
25-30 of my small business clients still wait for final 
approval while the season is in full swing.

    Any time there is even a one-day approval delay at either 
the Labor Department or at the Department of Homeland Security, 
it can add up to a week's delay in embassy clearances. Because 
we are experiencing delays now, some small tourism-based 
businesses are taking extreme measures to survive. These 
include turning business away because of staff shortages. Other 
examples:

     Paying excessive amounts of overtime to American 
workers to cover the shifts of the missing H-2B workers
     Closing restaurants one day a week because there 
is not enough staff to rotate all shifts over seven days
     Cutting out a meal service, often at brunch or 
lunch
     Shuttering part of the dining room because the 
kitchen can't handle the orders with existing staff
     Opening later or closing early
     Taking blocks of sleeping rooms out of service for 
hotel/motel guests because there is not enough staff to clean 
the rooms
     Requiring managers and owners to do the work of 
missing H-2B staff

    Along the New England coast, there is a small inn with a 
restaurant that is feeling the brunt of these problems. Now, at 
the middle of June, the owner has been unable to offer the 
dinner service because her H-2B cooks are stuck in the approval 
process. She is losing reservations. In fact, there was a 
planned wedding reception that could not go on because of 
inadequate staff. The owner has resorted to cleaning guest 
rooms herself while her H-2B housekeepers are waiting in their 
home countries for approval.

    On the island of Nantucket, off the coast of Massachusetts, 
an accommodations business had 27 guest rooms occupied over 
Memorial Day weekend and no H-2B staff to clean rooms, change 
linens and prepare breakfast.

    Please understand that despite these problems, Cape Cod, 
the coast of Maine and other destinations are open for 
business, and visitors should not be deterred from coming. The 
ocean is still there, meals are being served, and the days are 
warm and nights are cool. The chambers of commerce are eager to 
welcome and serve guests.

    When this year's approvals resumed at the Labor Department, 
businesses were told flat-out to pay their H-2B workers higher 
wages in order to continue with the program. For most of our 
businesses, the new mandated wages went up ten to 34 percent 
per hour. In dollar amounts, we saw an increase of $3 to $8 per 
hour per employee, including American workers. Businesses 
cannot survive with this type of sudden labor cost increase. 
Tourism businesses already have set their budgets for the year 
and fixed their rates for their services. In some cases, an 
entry-level worker with no experience will now make more per 
hour than their supervisors do under the new prevailing wage 
rates. This will cause a ripple effect, because supervisors 
will not work for less than the workers they manage. All of 
this from Labor Department who told the judge that wages would 
not increase ... ``at most, $2.12 per hour''.

    Employers already pay more to American and H-2B workers 
because they must adhere to prevailing rates versus state and 
federal minimum wage requirements. This puts them at a 
competitive disadvantage with companies that choose not to 
employ H-2B workers. Now with the supplemental wage 
requirements, H-2B employers face payroll costs that are 
significantly higher than those elsewhere in their communities. 
It is simply not sustainable.

    Over the past two years, Congress has repeatedly blocked 
the Labor Department from implementing prevailing wage 
increases that burden struggling small businesses. We strongly 
encourage Congress to act again. Please encourage the 
Departments of Labor and Homeland Security to rescind this 
interim final rule and replace the regulation with a more 
reasonable approach to setting wages as was done under the 2008 
regulations. One approach might be the H-2B wage language that 
is included in S. 744, the ``Border Security, Economic 
Opportunity, and Immigration Modernization Act immigration,'' 
currently being debated in the United States Senate. It is also 
important that the Departments implement a new more reasonable 
approach to setting wages without shutting down the H-2B 
program and causing further processing delays on already 
struggling small businesses.

    On November 18, 2011 Congress enacted the Consolidated and 
Further Continuing Appropriations Act, 2012, Public Law 112-55, 
125 Stat. 552 (November 2011 Appropriations Act) which was a 
spending bill that contained Department of Labor's 
appropriations. It prohibited Labor Department from using funds 
to implement, administer or enforce the 2011 wage rule. 
Subsequent appropriations bills for Labor Department have 
continued the prohibition on the implementation of the 2011 
wage rule. The prohibition will end after September 30, 2013, 
unless Congress again acts to extend the prohibition, 
preferably sooner rather than later.

    As you know, small businesses are the backbone of the U.S. 
economy. Many in popular tourism destinations are dependent on 
international workers with H-2B visas to have successful 
seasons. They cannot thrive without adequate staff or with the 
uncertainty of when staff will become available. Businesses 
cannot show a successful bottom line if they are hobbled by 
bureaucratic decision-making in Washington that imposes 
unreasonable and uncompetitive wage rates.
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