[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.
---------------------------------------------------------------------------
\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
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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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