[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 113-0047
IMMIGRATION AND ITS CONTRIBUTION TO OUR ECONOMIC STRENGTH
PART II
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HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MAY 8, 2013
__________
Printed for the use of the Joint Economic Committee
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U.S. GOVERNMENT PRINTING OFFICE
81-373 PDF WASHINGTON : 2013
JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES SENATE
Kevin Brady, Texas, Chairman Amy Klobuchar, Minnesota, Vice
John Campbell, California Chair
Sean P. Duffy, Wisconsin Robert P. Casey, Jr., Pennsylvania
Justin Amash, Michigan Mark R. Warner, Virginia
Erik Paulsen, Minnesota Bernard Sanders, Vermont
Richard L. Hanna, New York Christopher Murphy, Connecticut
Carolyn B. Maloney, New York Martin Heinrich, New Mexico
Loretta Sanchez, California Dan Coats, Indiana
Elijah E. Cummings, Maryland Mike Lee, Utah
John Delaney, Maryland Roger F. Wicker, Mississippi
Pat Toomey, Pennsylvania
Robert P. O'Quinn, Executive Director
Niles Godes, Democratic Staff Director
C O N T E N T S
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Opening Statements of Members
Hon. Amy Klobuchar, Vice Chair, a U.S. Senator from Minnesota.... 1
Hon. Kevin Brady, Chairman, a U.S. Representative from Texas..... 2
Witnesses
Dr. Madeline Zavodny, Professor of Economics, Agnes Scott
College, Decatur, GA........................................... 3
Dr. Steven A. Camarota, Director of Research for the Center for
Immigration Studies, Washington, DC............................ 4
Submissions for the Record
Prepared statement of Chairman Brady............................. 22
Prepared statement of Dr. Madeline Zavodny....................... 23
Prepared statement of Dr. Steven A. Camarota..................... 29
IMMIGRATION AND ITS CONTRIBUTION TO OUR ECONOMIC STRENGTH
PART II
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WEDNESDAY, MAY 8, 2013
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 9:30 a.m. in Room
216 of the Hart Senate Office Building, the Honorable Amy
Klobuchar, Vice Chair, and the Honorable Kevin Brady, Chairman,
presiding.
Representatives present: Brady, Paulsen, Hanna, and
Delaney.
Senators present: Klobuchar and Coats.
Staff present: Corey Astill, Ted Boll, Conor Carroll, Gail
Cohen, Connie Foster, Niles Godes, Paige Hallen, Colleen Healy,
J. D. Mateus, Robert O'Quinn, and Brian Phillips.
OPENING STATEMENT OF HON. AMY KLOBUCHAR, VICE CHAIR, A U.S.
SENATOR FROM MINNESOTA
Vice Chair Klobuchar. Good afternoon, everyone. We are
going to get started. I was telling the Chairman and both our
witnesses that we have votes in the Senate starting at 2:00. So
he is going to ably take over this hearing, and I hope to
return, and I know we have a number of House Members who are
going to be stopping by. But a lot of the Senate will be over
in the Chamber voting on the Water Resources Development Act.
I would like to thank both of our witnesses for being here.
This is a continuation of our hearing from yesterday on
Immigration and Its Contribution to Our Economic Strength. It
was a very positive and well-attended hearing, and I thought it
was important to examine some of the economic issues involved
in comprehensive immigration reform, as the Senate is going to
be looking at the bill that some of the Senators have put
together on a bipartisan basis tomorrow in the Judiciary
Committee on which I serve.
In the first part of the hearing yesterday we heard from
Grover Norquist and Dr. Adriana Kugler about how they believe
immigration creates jobs and accelerates economic growth.
They told this Committee that the skills of immigrants
complement the skills of workers born in the United States
leading to what they believe are productivity gains across the
economy.
Yesterday's discussion was a very good one, and we look
forward to continuing it today.
I would like to introduce today's distinguished panel and
thank both of you for being here, before I turn it over to the
Chairman.
First of all, Dr. Madeline Zavodny is a Professor of
Economics at Agnes Scott College, where she serves as Chair of
the Economics Department. She is co-author of the book ``Beside
the Golden Door: U.S. Immigration Reform in a New Era of
Globalization.'' Dr. Zavodny has also been on the Economics
Faculty at Occidental College and worked at the Federal Reserve
Bank of Atlanta, and the Federal Reserve Bank of Dallas.
Dr. Steven Camarota is our second witness. He is the
Director of Research for the Center for Immigration Studies.
Dr. Camarota's research focuses on the consequences of legal
and illegal immigration, and has been featured by leading print
and electronic news outlets. He served as lead researcher on a
contract with the Census Bureau examining the quality of
immigrant data in the American Community Survey.
Thank both of you. Dr. Zavodny, if you would like to begin,
but the Chairman I hope would say a few words first.
OPENING STATEMENT OF HON. KEVIN BRADY, CHAIRMAN, A U.S.
REPRESENTATIVE FROM TEXAS
Chairman Brady. I will be very brief. Again, I appreciate
Vice Chairman Klobuchar for identifying this important issue,
and timely issue.
I am convinced the priorities that America sets for
immigration are too important to get wrong because of their
impact on security and our economic future. I am convinced we
need to firmly shut the backdoor of illegal immigration in
order to keep open and fix the front door of legal immigration.
Economically, with America's population not replenishing
itself, attracting workers that fill in the gaps is absolutely
essential if we want to remain the strongest economy in the
world through the 21st Century.
Right now, my view is that the Senate proposal appears
heavy on family ties in citizenship rather than on skills and
guest workers. That may be short-sighted. While we train more
American workers for the jobs of today and tomorrow, who should
we encourage to immigrate to the United States? And what are
our priorities? What criteria should we use?
And finally, this Committee is looking at what overall are
the benefits and the costs of immigration reform over the long
term. Which workers benefit the most? Those who are here today,
or those immigrating? What is the overall impact on our economy
going forward?
Like you, Madam Vice Chair, I am very excited about the
witnesses here today and I yield back.
[The prepared statement of Chairman Brady appears in the
Submissions for the Record on page 22.]
Vice Chair Klobuchar. Dr. Zavodny, why don't you begin and
I will be going off for the votes and hope to return. Thank
you.
STATEMENT OF DR. MADELINE ZAVODNY, PROFESSOR OF ECONOMICS,
AGNES SCOTT COLLEGE, DECATUR, GA
Dr. Zavodny. Thank you, Chairman Brady and Vice Chair
Klobuchar, and members of the Committee:
Thank you for having me here today. I am very happy to be
here with you to discuss the economics of immigration. A
growing economy attracts immigrants, and in turn immigrants
make the economy grow.
Immigrants contribute to the economy as workers, as
consumers, and as taxpayers. Immigrants fill vital niches in
the labor market. They go where the jobs are. They contribute
to innovation and business creation. They revitalize declining
areas, and they slow the aging of the American workforce.
Immigration increases the size of the labor force, which
makes our economy bigger and GDP bigger. Foreign-born workers
comprise about 16 percent of the workforce right now, and
immigrants accounted for about one-half of labor force growth
since the mid-1990s. So they are important to the economy.
Conventional estimates of immigrants' contributions to the
U.S.-natives' national income, or Gross Domestic Product, GDP,
are actually relatively small. They are typically about 0.5
percent of U.S. GDP annually. Most of the income gains from
immigration actually accrue to the immigrants themselves in
terms of their wages. However, such calculations miss a number
of the economic gains from immigration, including its effects
on innovation and business creation.
One of the most important economic contributions immigrants
make is to innovation, which raises productivity growth. There
is compelling evidence that high-skill immigrants play an
important role in innovation.
For example, research by Jennifer Hunt shows that highly
educated immigrants earn patents at more than twice the rate of
highly educated natives. Another important economic
contribution immigrants make is that they create businesses at
higher rates than do U.S. natives.
This contribution is most notable in the high-tech sector
where immigrants were key founders in a quarter of U.S. high-
tech start-ups in recent years, and half of high- tech startups
in Silicon Valley.
Low-skilled immigrants' economic contributions are harder
to see than those of high-skilled immigrants, but low-skilled
immigrants do contribute to our economy. They fill dirty,
dangerous, and dull jobs that many U.S.-born workers are
reluctant to take. Low-skilled immigration reduces the prices
of goods and services that these immigrants produce, which
helps all Americans as consumers.
Another important economic contribution of immigrants is
that they tend to go where the jobs are. This mobility is
important because it allows growth to continue in booming areas
without increasing further wage pressures there, while reducing
unemployment or declines in wages in areas that are growing
more slowly.
One of the most hotly disputed questions in economics is
whether other immigration adversely affects competing U.S.
workers. Basic economic theory predicts that immigrant inflows
reduce earnings and employment among competing U.S. workers.
However, a growing body of economic research indicates this is
not necessarily the case, particularly for workers who have at
least completed high school.
For example, my research for the American Enterprise
Institute and the Partnership for a New American Economic
concludes that immigration overall does not have an adverse
effect on employment among U.S. natives, and highly educated
immigrants, especially those who work in STEM fields, actually
have a positive effect on natives' employment.
I think there is more consensus among economists about
immigrants' fiscal impact. Much as is true for natives, the
fiscal impact of more educated immigrants is positive; while
the fiscal impact of less educated immigrants, especially those
who have not completed high school, is negative.
The fiscal impact of current immigrants is pretty small at
the federal level, but state and local governments in areas
with large populations of low-skilled immigrants experienced a
sizeable negative fiscal impact.
I will now turn to a few quick points about immigration
policy reform. From an economic standpoint, immigration policy
should prioritize those immigrants who are most likely to make
the biggest economic contribution. This suggests that
immigration policy should put considerable emphasis on
immigrant skills. The most highly educated immigrants make the
greatest economic and fiscal contributions. More generally,
putting greater priority on immigrants who have a job offer
from a U.S. employer when they are admitted to the country
would boost the economic and fiscal impacts of immigration
relative to current policy. In order to boost immigration's
economic impact, immigrant inflows should be more closely tied
to the business cycle. The economy would fare better if more
immigrants enter when the economy is booming and fewer when it
is weak. In addition, market forces should play a greater role
in determining which immigrants are admitted, as well as when
they are admitted. Thank you for your attention, and I look
forward to your questions.
[The prepared statement of Dr. Madeline Zavodny appears in
the Submissions for the Record on page 23.]
Chairman Brady [presiding]. Thank you.
Dr. Camarota.
STATEMENT OF DR. STEVEN A. CAMAROTA, DIRECTOR OF RESEARCH FOR
THE CENTER FOR IMMIGRATION STUDIES, WASHINGTON, DC
Dr. Camarota. Well I would like to thank the Committee for
inviting me here to discuss obviously this very important
topic.
When considering the economics of immigration, there are
three related but distinct issues that should not be confused
but often are:
First, there is the impact on the aggregate size of the
U.S. economy.
Second, there is the fiscal impact--taxes paid versus
services used.
Third, there is the impact on wages and the employment
opportunities available to natives.
I will touch on all three of these topics briefly in my
testimony. First, there is no question that immigration makes
the U.S. economy larger. More people means a bigger GDP, a
bigger Gross Domestic Product. However, bigger is not
necessarily richer. Pakistan has a larger economy than Ireland,
but it is not richer. It has a larger economy simply because it
has more people.
To benefit natives, immigration would have to increase the
per capita GDP of natives. As the Nation's leading immigration
economist George Borjas at Harvard points out in a recent
paper, 98 percent of the increase in GDP immigrants create goes
to the immigrants themselves in the form of wages and benefits.
There is no body of research indicating that immigration
substantially increases the per capita GDP of the native-born,
or existing population. As I will discuss later, the available
evidence indicates that for the native-born population
immigration is primarily redistributive, increasing the income
of some while reducing the income of others.
Now the second important issue to think about in
immigration is their fiscal impact. Taxes paid by immigrants--
that is, minus the costs they create. There is general
agreement that less-educated, lower income immigrants are a net
fiscal drain, while more educated immigrants are a net fiscal
benefit, paying more in taxes than they use in services.
Just to give you one example, the National Research Council
estimated that the net lifetime fiscal drain of an immigrant
without a high school education is -$89,000; for an immigrant
with only a high school education, it was -$31,000, and that
excludes any costs for their children, just the original
immigrant.
However, the National Research Council also found that
educated immigrants were a net fiscal benefit. Now the recent
Heritage Foundation study that has gained so much attention
finds exactly the same thing. Because three-fourths of illegal
immigrants have no education beyond high school, allowing them
to stay does create large fiscal costs even though most of
those individuals work. The fiscal drain less educated
immigrants, or less educated natives for that matter, create is
not because they don't work. But in the modern American
economy, less educated people earn modest wages. As a result,
they make modest tax contributions and typically they use a
good deal in public services--means' tested in particular.
Allowing less educated immigrants into the country unavoidably
creates large net fiscal costs.
Now the final, third issue, surrounding the economics of
immigration is probably the more contentious, which is its
impact on employment and wages of the native-born. Basic theory
does predict that immigration should create small gains for
natives, but to do so it must redistribute an awful lot of
income from those in competition with immigrants to those not
in competition with immigrants, or to businesses that use
immigrant labor. The size of the net gain will be tiny relative
to the size of the economy and the size of the redistribution.
If we look at immigrants, and given their share of the labor
force, it looks like immigration redistributes about $400
billion.
The losers tend to be the least educated and the poorest
Americans who face the most competition from immigrants. The
winners are business owners who employ immigrants, and those
native-born workers not in competition with immigrants. So for
example, about half of the maids in the United States are
immigrants, but only 6 percent of the lawyers are immigrants.
So lawyers don't face much job competition. There should be
very little adverse impact. But for the 850,000 U.S.-born
maids, there should be a significant downward pressure from
increasing the supply of workers.
Let me conclude by saying again that, first, immigrants
make the economy larger. There is simply no question. But not
significantly richer. Second, the fiscal impact is entirely
dependent on the education levels of the immigrants. Third,
there is a redistributive nature of immigration. The question I
guess for this Committee is: Is it fair to reduce the wages of
the young and less educated who face the most competition,
while more educated and affluent Americans can see their wages
and income increase? And that I think is really one of the key
questions for the country to decide.
[The prepared statement of Dr. Steven A. Camarota appears
in the Submissions for the Record on page 29.]
Chairman Brady. Thank you, both.
Beginning with the longer term problem, America's
population is not replenishing itself over the long term. We
will have gaps in the jobs that need to be filled if we are to
compete and win against China, Europe, Brazil, other
competitors as they go forward.
Dr. Zavodny, you made the point that immigration policy
should prioritize the type of immigrants who are most likely to
make the biggest economic contribution. You pointed to those
who have a job offer. That ebbs and flows with the budget
cycle, and it is market-driven rather than government-driven.
I know we have only seen the Senate proposal so far in
broad outlines. Does their proposal meet those priorities?
Dr. Zavodny. That's a good question.
Chairman Brady. And I don't mean overall, but looking at
the visa, the guest worker, sort of the focus on skills.
Dr. Zavodny. I think that the Gang of Eight bill, or Bessie
Mae, is a vast improvement over current policy in that it
reduces some flows of family-based immigrants. It dramatically
increases the number of green cards available on the basis of
employment, particularly to very highly skilled workers who
will no longer count against the cap. Dependents won't count
against the cap. It increases the number of H-1B visas, and
that is a good thing.
On the other hand, it creates lots of new rules for the H-
1B program that might reduce employer willingness to use that
program, and that might be of concern.
So I think it is better than current policy. Is it ideal?
Perhaps not.
Chairman Brady. Current policy is a bar set awfully low,
considering both the high-skilled end which we've been at
110,000 visas before were filled as well.
Dr. Zavodny. Right.
Chairman Brady. On the lesser skilled, 20,000 a year
stairstepped over to 75,000 doesn't seem market driven. Neither
does the ag numbers, necessarily, although we probably have a
better handle on that.
Dr. Camarota, same question. What should our priorities be
in looking at the--in addition to training more American
workers, what should our priorities be?
Dr. Camarota. Well let me start with your original first
part, too, about the impact of immigration on sort of the aging
of American society.
There's a lot of research on this question, and the short
answer is: It doesn't make much difference. Let me give you a
statistic to help you understand why immigration does not
really slow the aging.
If you look at the total fertility rate in the United
States, which is one of the ways that you try to have a more
youthful population--how many children are born per woman--it
is 2 children per woman in 2011. If you take out all the
immigrants and recalculate it using the American Community
Survey, you get 1.9 children. So you get about a .1 increase.
The immigrants have more children, somewhat, and they do pull
it up, but not much.
Over the next 40 years, a million or a million-and-a-half
immigrants a year might offset the aging of the U.S. population
by 10 or 15 percent. There are some mathematical reasons which
I won't go into why, but if you think about the underlying
fertility number it helps you understand why immigration does
not fundamentally change the age structure in the United States
unless you were to contemplate like 5, 10 million immigrants a
year, and then accelerate that year after year.
Now on the larger question of what we should do, remember
this bill accelerates family immigration for 10 years. There
are 4.5 million people who this bill contemplates admitting in
the first 10 years that are currently under family-based
immigration. That is, without regard to their education and
their skills.
At least for the first 10 years, it looks like this bill
doubles immigration, legal immigration, about a million a year
to 2 million a year. But the increases, it is not clear whether
the balance will be more skilled. It is possible the new flow
of immigrants will be about similar to the flow we have now.
After 10 years--and who knows what is going to happen after
10 years--that might change. But for the first 10 years, this
does not increase the flow of skill because it accelerates
family immigration so much.
Chairman Brady. Got it. Can I ask this, as I finish up.
There is general agreement that immigrants with necessary
skills that fill gaps in our workforce are helpful, very
helpful to the economy.
Have any studies been done of what were the impacts of the
mid-1980s, the last major immigration reform, where 2.5 million
roughly, 3 million undocumented were legalized? What was their
impact? Do we have any studies on their impact on innovation?
On patent holding? You know, I mean all the very positive
effects of immigrant creativity and innovation and hard work?
What do we know about what happened then? Because we have a bit
of a comparison today only with a larger number.
Dr. Zavodny. So in brief, 1986 IRCA legalized 2.7 million
immigrants who had relatively low skill levels. They were
predominantly from Mexico. Very few of them had finished high
school. And so we wouldn't expect to see a burst of innovation
from that population. And I don't think you would expect to see
a burst of innovation from legalizing most of the 11-plus-
million unauthorized here in the U.S.
Where you are going to get those big innovation gains, and
the business creation is the high-skilled.
Chairman Brady. Got it. That makes sense.
Dr. Camarota.
Dr. Camarota. Yes. Very briefly, the research shows that
they benefitted from the legalization. Their wages may
immediately have gone up about 5 percent. But since two-thirds,
three-fourths did not have a high school education, they were
not a source of a lot of business startups, and so forth. They
did do better--unfortunately, when we look at them, they do
have very high poverty rates today, but maybe they would be
even higher still if they stayed illegal; very high use of
welfare. More than half of those households headed by those
immigrants access one of the major welfare programs, as far as
we can tell. So very high rates of welfare use.
But it probably did make their lives better, even if maybe
it didn't make the lives of American taxpayers better.
Chairman Brady. Thank you very much.
Representative Delaney.
Representative Delaney. Thank you, Mr. Chairman, and thank
you to our two speakers here today for their remarks.
I have two questions. One is a more general question, but I
will start with the specific question to Dr. Camarota.
Your analysis seemed to be, when you talked about who
benefits from immigration and you compared the benefits that
accrue to the immigrants versus the benefits that accrue to the
non-immigrant population, it seemed to be somewhat of a static
generational analysis in that you are looking at a snapshot in
time.
For example, you said more than 50 percent--I couldn't
remember if you said housekeepers or people who work in hotels
were immigrants but only 7 percent were attorneys--when you
make this a more intergenerational analysis and you look at the
effect of immigrants on the society across more than the
immigrant population, but including their children, how does
that change the way you think about how benefits accrue to
immigration?
Because it is hard, it seems to me, to think about this in
the tight timeframe of a single generation, and that you need
more of an intergenerational analysis in terms of thinking
about where benefits accrue. I'll give you a minute or so to
answer that, and then I will go to my second question.
Dr. Camarota. It is a great question. Obviously no one
knows how the children of today's immigrants are going to do.
All we can kind of do is look at the past and say.
When we look at that, we find that the children whose
parents were relatively educated, those kids have done pretty
well.
But about 31 percent of all children born to immigrants
today are born to a mother who has not graduated high school.
Those kids, as far as we can tell, are really going to
struggle. And that does describe a large fraction of the
illegal population.
So if we look at second- and third-generation of people as
far as we can tell whose parents did not have a lot of
education, a lot of those folks struggle. Some don't. But----
Representative Delaney. Do they struggle more or less than
non-immigrant populations solving for the same fact set?
Dr. Camarota. Yes, I was going to say that they are better
off clearly than their parents in terms of high school
completion and general income. But they lag grossly behind the
general native-born population.
Representative Delaney. I think, Doctor, you wanted to
comment on that, real quickly? It seemed like you wanted to.
Dr. Zavodny. I would disagree. I think the evidence shows
quite clearly that the second generation of the children of
immigrants tend to do not only better than their parents, but
better than the children of similarly poorly off natives.
Representative Delaney. Which was my point. Which is, I
think, to think about the relative benefits that accrue we
should not think about it in the snapshot of the current
generation. I am sure the data does--or I am assuming the data
you are putting forth, Doctor, that it accrues more to the
immigrants than it does to the general population, that that
changes when you do an intergenerational analysis, which is how
I think we have to think about this.
My second question is--and this is a more broad, conceptual
question. We have all heard the data, that half of the Fortune
500 was founded by immigrants or children of immigrants. I
think, Doctor, you spoke about what is happening in the
technology industry, and the statistic that always strikes me
is that something like 70 or 80 percent of venture-capital
backed companies in technology that become public companies are
founded by immigrants. It is a staggering, overwhelming
statistic.
And one of the things, it seems to me, that has been a
great, obviously, virtue to this country is that across time
the overwhelming majority of the world's population have wanted
to come here. So if we have 7 billion people, I don't know, 5
or 6 billion of them wake up every day and would love to come
to the United States if they could, that is a benefit that is
hard to measure.
We can measure a whole variety of things, even in the
immigration analysis. You know, the data is important. I have
always said, ``Unless you're God, bring data.'' And the data is
really good on a lot of the immigration stuff. But this factor
to me seems hard to measure, which is the intangible benefit to
this country to be singular in terms of the destination that
everyone wants to go to.
How relevant is that, in your judgment? Because it seems to
me if we don't act on immigration soon in the context of a
global and technology-enabled world, in the context of lots and
lots of cities prospering around the world that could become
magnets for the top people in the world, how do you worry about
damaging that asset as it relates to our competitiveness as a
country and our economic prosperity?
Dr. Zavodny. So I think it's already happening; that we see
that high-tech entrepreneurs and skilled workers are going to
Canada. They're going to England. They're going to India.
They're going to China. Or staying in those countries instead
of coming to the United States because our immigration policy
is such an absolute mess.
And so we are forfeiting lots of gains that will matter
tremendously not only today but in the future.
Dr. Camarota. When we look at the total immigrant
population, as you are probably aware, as far as we can tell
the entrepreneurship rates are about the same: 12 percent of
natives are self-employed; 12 percent of immigrants. But there
is huge variation in the immigrant population; 26 percent of
Korean immigrants have a business, but there are other
immigrant groups where it is about 3 or 4 percent.
So overall it does not look like immigration is a
particular source of entrepreneurship as a group. However,
highly skilled immigrants and immigrants from some sending
regions do seem to have very high rates; it is just offset by
the lower-skilled in the other regions. So it is about the
same.
It is not a unique characteristic of immigrants, but nor is
it lacking among immigrants.
Representative Delaney. Thank you.
Chairman Brady. Thank you.
Representative Hanna.
Representative Hanna. Thank you. Thank you both for being
here.
I have been reading both of your testimonies. There is a
very common, clear theme. That is, that--to me, and argue if
I'm mistaken--but that there is high value added to a society
that immigrants move to in order to higher their education. I
don't know if it's direct or not, but from a -$89,000 with
below-a-high-school education, to a $105,000-plus with someone
with much higher, a Masters or a Doctorate, to the point where,
Ms. Zavodny, you said that we should give citizenship or visas
to virtually everyone who has a job offer in this country
because there's so much value added there.
And you suggest also that it should be tied to the business
cycle; that we should adjust immigration based on our own
demand. And I want to ask you about--and the Chairman mentioned
also our policy of having people come in who have family ties,
and basing immigration somewhat on that. I mean, it is clearly
true that people with higher educations also have family ties.
We can fill that need.
Can you, either one or both, give me some idea of what a
policy would look like that was both fair and reasonable to
people who want to come here, and this country's need over time
that somehow is dynamic because of our business cycle, what an
efficient bill that served this country would look like?
Dr. Camarota. Well, you know, I mean the labor market is
still not doing very well, as we know. We have a jobs' deficit
of about 9 or 10 million right now, if we got back to the
employment rates of the past.
In the next decade we will need, just for natural
population growth, about 9 or 10 million more jobs. That is
about 20 million. This bill contemplates about 15 million new
workers--20 million overall, but about 15 million new workers.
So what I would say is, the next decade better be the
greatest jobs bonanza in American history or we are going to
see a continuation of a decline in work. And that is very
troubling, especially among the young. So we have to think long
and hard about that.
If you want what I think is more sensible it would be to
look at what the Jordan Commission suggested in the 1990s.
Barbara Jordan headed a commission in the 1990s that basically
said we should try to curtail family-based immigration and put
more emphasis on skills.
Representative Hanna. Could I interrupt you, quickly? You
mention in your paper that I read with great interest that all
of the employment gains have gone to immigrant workers. This is
extremely puzzling since the native-born workers account for
about two-thirds of the growth in working age population. Yet
you offer no kind of--you offer a question, but not an answer.
Dr. Camarota. Yes, it is striking. It is, as I said, the
idea that all--what you're referring to is this idea that it
looks like there are about 5 million more immigrants working
than there were in 2000, and the number of natives working is
down by about 1 million. So it looks like what net gain there
was in employment all went to the immigrants. That is certainly
very consistent with the possibility that immigrants displace
natives in the labor market.
But by itself, it isn't proof that that happened. What it
does show is that you can have large-scale immigration.
Remember, the last 13 years, the latest Census data show,
16 million new immigrants settled in the United States. And we
have had very little job growth.
So large-scale immigration does not necessarily coincide
with large-scale job growth. And we just have a system that
runs on auto-pilot. Maybe that is one of the biggest messages
to take on that. Maybe we need to constantly be recalibrating
it based on that.
Representative Hanna. Dr. Zavodny.
Dr. Zavodny. I think as an economy, as policymakers you
have to make a choice, and we as a country have to make a
choice about how we are going to admit people, since we are not
going to have open borders.
And so fundamentally it comes down to a choice between
family ties or employment. And if the priority is economic
growth, and these days it really does need to be, then there
needs to be greater emphasis on the employment side at least
for now instead of on the family ties. Because we know that
immigrants who come in under family ties have lower skill
levels, lower employment rates, lower tax contributions, than
those who are coming in on the basis of having a job offer.
So it is not that everyone who gets a job offer should be
admitted. It is that to be able to come in maybe you should
have a job offer.
Representative Hanna. Thank you. I yield back.
Chairman Brady. Representative Paulsen.
Representative Paulsen. Thank you, Mr. Chairman.
Dr. Zavodny, I was just going to note that at the end of
your testimony, just to follow up on this, you mentioned and
talked about short-term migration instead of permanent
residency. And you said, creating a program that allows
immigrants who remain employed in the U.S. for a certain period
while on a temporary visa to opt to adjust to permanent
residence would be better than granting permanent residence to
many immigrants from the outset.
Can you just maybe expand a little bit more about that? I
mean, what would some of the benefits be just from an economic
standpoint of looking at the issue in that context?
Dr. Zavodny. So the concern is that if people come, and in
particular if they are not admitted because they already have a
job offer from a U.S. employer, how valuable are they going to
be in the U.S. labor market in terms of will they have the
skills that employers need? Will there be a good match between
them and employers?
And so there is no way for a bureaucrat to tell this. There
is no way for a point system really to tell this. It is up to
the employer to know whether or not an immigrant looks like he
or she is going to be a good match.
So when you grant permanent residents the right to live
here forever in essence unless you commit a felony, from the
outset without knowing how well someone is going to adapt here
and how much they are going to contribute as a citizen, as a
taxpayer to the economy and so on, perhaps the U.S.--the U.S.
is unusually generous in how much permanent residents it gives.
We are an enormous outlier worldwide in terms of the generosity
of our immigration policy.
It is something to be proud of. But on the other hand, it
is not prioritizing economic growth.
Representative Paulsen. My understanding--and I don't know
if I missed this at the beginning when the Chairman was asking
questions--but Canada is testing a pilot program right now that
would make available immediate permanent residency to anyone
who gets sponsored by a Canadian venture capital firm, or an
angel investor. And it would seem that their target market
there is obviously IT specialists in STEM fields. Maybe those
in the United States that have only a limited amount of time to
stay here on a temporary work visa.
But can you give your thoughts on that program, if a
similar program could work in the U.S.? Again, that is
permanent residency right away.
Dr. Zavodny. So I think there are some groups to whom you
would want to give permanent residency right away, and that
would be those with extraordinary ability. Say Ph.D. holders,
STEM graduates of U.S. colleges and universities, workers like
that.
But to grant it almost across the board to a million, over
a million people a year is unbelievably generous.
Representative Paulsen. And do you have a sense? Is there
any brain drain going on right now within the United States,
either among natives or immigrants just because of our policies
here, or the attraction that might exist in some of these
programs with other countries?
Dr. Zavodny. I think Vivek Wadhwa is the biggest expert on
this, and what his research shows is that we are seeing a brain
drain of people who come here and leave, both immigrants and
some U.S. natives, going in particular to China and India which
have experienced booming economic growth and significant
opportunities, particularly in the high-tech sector, and that
our immigration policy is certainly not helping us here; it is
hindering us.
Representative Paulsen. Thank you, Mr. Chairman. I yield
back.
Chairman Brady. Thank you. Since we have you here, I would
like to do a lightening round, three-minute questions for the
Members who would like to ask them. What I appreciate is that,
although this is a very highly charged issue, I appreciate that
we are going about it in a very thoughtful, constructive,
respectful way. I think that is the way this issue ought to be
discussed in Washington.
To follow up with Representative Paulsen's question, we
have honest differences about the issues of granting short-term
migration, some type of legal status, whether it is a guest
worker or longer term versus citizenship. And there are
different views.
From an economic standpoint, is there a demonstrably higher
economic benefit for citizenship granted immediately to a group
of people?
Conversely, is there a markedly lower economic benefit that
results from either a legal status through a guest worker
program, or another type of card?
Your insights there?
Dr. Camarota. Let me say this about guest worker programs,
because they look attractive, right? You get the person when
you need it, and supposedly they leave when you don't, and you
won't have to maybe pay for so much. You won't make them
eligible for welfare and other programs. It looks attractive.
But I would point out that every industrial society that
has tried to do it, it never works at least in this sense:
whether it's Pakistanis in Britain, North Africans in France,
Turks in Germany, or America's old Bacerra Program, it always
resulted in long-term permanent settlement.
So if we are going to sell it to the public as a guest
worker program, knowing that a large fraction are going to want
to stay permanently, will over-stay their visas, there will be
pressure to do that, maybe we should just not have it as a
guest worker program even though there were those attractive
reasons to do it. Because people are not ``things.'' Right?
They're not just ingots of steel, and factors of production. A
very large fraction are going to want to stay, and we know that
right now. We do. And so maybe we should take that into account
first.
Chairman Brady. Well I'm not sure that's the case. If you
look at Australia and New Zealand, the Middle East, that rely
on guest workers who do not have a skilled work force in the
native side of it.
But be that as it may, Dr. Zavodny, economically is there
evidence on short-term guest worker versus citizenship, for
example, that we ought to be aware of?
Dr. Zavodny. I think the most important thing to be aware
of is that our current guest worker programs, particularly on
the low-skill side, are not working very well.
Chairman Brady. They are unworkable.
Dr. Zavodny. There is so much red tape. Employers do not
want to go through them. It is much easier to go to your local
day labor site, or the street corner, and just grab guys or
gals off of it to work for you for the day under the table. And
this is unworkable in the long run. It violates the rule of law
to have this going on and to have such a big, unauthorized
population.
So I think it is better to try to channel that legally
through a temporary worker program. But as Dr. Camarota points
out, you have to think very carefully because there is nothing
as permanent as a temporary guest worker.
Chairman Brady. Is there economic evidence differentiating
legal status versus citizenship that you're aware of?
Dr. Zavodny. So I think Dr. Kugler talked a little bit
about this yesterday, and Dr. Camarota referenced it briefly,
the evidence indicates that there are small income gains--I
would say 6 to 13 percent--when people are able to legalize
their status, as happened after IRCA.
There's also, it looks like, a small income gain from
acquiring U.S. citizenship. But it may just be that people who
have the most to gain from becoming a citizen ``say they want
to work for the U.S. Government'' are the ones who take the
test.
Chairman Brady. Thank you, very much.
Madam Vice Chair, we were just starting a second round and
I would yield to you.
Vice Chair Klobuchar [presiding]. Well thank you very much,
Mr. Chairman. Thank you. The votes are done. Very exciting.
I thought I would ask a follow-up on something that we
discussed yesterday with Mr. Norquist, and that was the
Republican economist and former CBO Director Douglas Holtz-
Eakin testified before the Judiciary Committee in the Senate
that immigration reform would reduce the deficit by $2.7
trillion over 10 years. That is mostly because of the
productivity of workers. It is because there are workers now
who are working but not paying taxes, and they would have to
pay taxes. And it is also just the general innovation economy
that has come from the immigration in the past.
Can you talk about how you think this could affect the
federal budget, Dr. Zavodny?
Dr. Zavodny. So there are dynamic gains from a bill like
the Gang of Eight's bill, and there are some dynamic gains that
would occur just from the legalization portion, although those
are smaller than the gains that would occur from what will
happen on the high-skill side if a bill like the Gang of
Eight's bill passes.
So in terms of the fiscal effect, there will be revenue
gains particularly in the 10-year window that the CBO uses for
scoring. Because the way that the current bill is set up is
that unauthorized immigrants would be in a registered
provisional status for 10 years, and then able to naturalize
after 3 more years. So 13 years out.
So that is part of why the fiscal gains look positive.
Vice Chair Klobuchar. Okay. And then I had a second
question on the I-Squared bill that Senator Hatch and I
introduced with Senator Coons and Rubio, and as you know it
would increase the cap on the H-1B visas and make it easier for
people who get degrees in science, engineering, and technology,
and math to stay.
Most of the provisions were included in the Gang of Eight
bill. Senator Hatch and I have an important amendment that we
are going to be putting up that he is leading, and I'm the
Democratic lead on, to actually take some of the money and put
a little extra fee on the visas, and have that go directly to
STEM education for American students.
That was in our original bill that did not get included.
Could you talk about how these skills are important, both with
immigrants and native-born kids to learn these skills and
contribute to our economy?
Dr. Zavodny. Sure. It is incredibly important. My research
shows that the biggest gains for natives in terms of their
employment when immigrants come are from immigrants who are
highly educated and working in STEM.
So if you want the biggest bang for the buck on admitting
immigrants, you want those to be highly skilled immigrants,
highly educated, who work in STEM. But it is very important
that we also train the U.S.-born population in STEM. I see this
every day with my students, that their math skills are not what
they should be.
And I would also point out, it is really sad that one of
the pieces of advice I give my foreign-born students is: Marry
a U.S. citizen so you can stay. And that is sad. They should be
able to stay. They are wonderful women who are going to make a
huge contribution to the U.S. economy.
Vice Chair Klobuchar. I also heard from a daily reporter
for one of our university papers, just a college kid who
interviewed me about this, and she said that a number of the
students would tell her off the record that they want to stay,
but they could not even say that on the record because of the
dual-intent issue. When they are students, they cannot act like
they want to stay. And that was a pretty shocking thing to
hear.
I am out of time. Dr. Camarota, I will just get your
written answers to those two questions, if that is okay,
because there are other members who have been here. So I
appreciate you being here. Thank you.
[The information referred to was not available at the time
of publication.]
Chairman Brady. Representative Hanna.
Representative Hanna. There is a common assumption somehow
that immigrant workers--let me back up--both of you would
suggest somehow that there is almost unlimited elasticity to
the high end, but limited demand at the lower end educationally
and in terms of the type of work, the nature of the work.
I live in a highly agricultural community. We depend on
migrant workers a lot. Dairy isn't part of the H-2A program.
That has always been a problem. Dairy needs long-term help.
You mentioned that it isn't true, Dr. Camarota, that the
work that is available is work that Americans don't want. You
mentioned 472 civilian type jobs. And then you move on to say
there are only 6--I mean, that does not confirm anything, as I
understand it.
I wonder if you could, without an opinion from me about it,
I wonder if you could elaborate.
Dr. Camarota. Sure. What you are pointing to is this idea,
look, in fact just about every job you care to name in America,
the majority of workers are U.S.-born, whether it is
construction labor, whether it is nannies, maids, busboys, in
some cases, you know, three-fourths of janitors or something
like that are U.S.-born. And so that may not comport.
But you have to remember that in the cities it is different
than in the countryside. And it is very different in downstate
New York than in upstate New York. So that is part of what
you're seeing there.
But what that does tell us is the idea that there are jobs
Americans don't do of course is foolish and silly. So two-
thirds of people who work in meat and poultry processing are
U.S.-born. So obviously that is a job Americans do, and it does
not make sense.
The other question that this sort of relates to is the
precipitous decline in wages in that sector. Meat and poultry
processing, while still majority-U.S.-born, real wages have
declined 45 percent in that sector since 1980. Those same
employers then come before this Congress and say, gosh, we
can't find anybody to cut up dead animals, because it is nasty
work, we all agree.
But maybe because they pay half what they used to. One of
the things I would make the case is, since Americans do most of
this work, and we have all these unskilled Americans who are
now not working sort of at a record level, let's try to get
them back into the labor market.
Bringing in new immigrant workers would benefit the
immigrants, and some of those workers are probably very good
workers, but this huge growth in nonwork among our young and
less educated has huge sociological implications.
Just briefly, if you don't work when you're young, the
chance that you will work as you get older goes way down, and
you make less, and that is especially true for those who do not
go to college, which is about half of our kids.
Representative Hanna. Thank you. I yield back.
Vice Chair Klobuchar. We have Representative Delaney.
Representative Delaney. I just think this notion of
thinking about that the country has too many young and poorly
educated people, and they can't compete for decent jobs with
good standards of living, I'm just still not sure how relevant
that is to the immigration debate. Because that is a problem in
and of itself, a structural problem that needs very specific
solutions.
And I am not sure how immigration is the most effective way
to deal with that problem. But my question is more about
wondering whether we are still thinking about the immigration
debate in a backward-looking way as opposed to a forward-
looking way. Because I think when we think about the singular
advantage that this country has in terms of attracting talented
people to come here and create businesses, which all the
statistics we've seen about what immigrants have done, I worry
deeply actually that one of the great things that has happened
in the world is the rest of the world has become much more like
the United States.
The United States has historically been a country, I think
the hundred largest urban areas in this country are the hundred
largest cities in this country, were two-thirds of our economy.
So it is very different in the rest of the world.
I think in China 20 percent of their population, or 20
percent of their economy was in a city in 1980, and now it is
60 percent. And what that implies is the growth of all these
urban global cities. And I think there are 500 global cities
that comprise 70 percent of the global economy. And that is
very different than what it was 20 or 30 years ago, and
therefore our competition is very different.
It just seems to me we come to the immigration debate with
a somewhat outdated notion that we have lots and lots of time
to fix this. And when we get around to fixing this, people will
still want to come here with the same kind of supply and demand
imbalance that has always existed.
And I just wonder, do you think that we are calculating
that into our analysis of this sufficiently? I will start with
you, Dr. Zavodny.
Dr. Zavodny. I think you are absolutely right, that it is
impossible for any of us to anticipate what will happen in the
future and what the future needs of employers of the U.S.
economy are going to be, and the world is becoming increasingly
globalized and more and more competitive every single day. And
the United States needs to be ready.
We should be glad the rest of the world is becoming more
like us----
Representative Delaney. Absolutely.
Dr. Zavodny [continuing]. But on the other hand, it means
we need to keep going and progressing. We need to improve our
educational systems, and we need to fix immigration policy
right now.
But I think it would be very hard for the government to
pick and choose exactly or a commission to pick and choose who
to admit, and who is best going to contribute to the economy
going forward. That is very, very hard to know when you set up
a point system, or something like that.
Dr. Camarota. Well so far we have never had that trouble,
you know, when the economy is down, of attracting people. In
the last four years, 2008-2012, a net decline in jobs,
significantly, 5 million green cards were given out. We still
apprehended well over, in total, about 2 million people at our
border, well over a million more people came on temporary long-
term visas.
As far as we can tell, the desire to come to the United
States remains vast. It could always change, but it seems
likely, given wage differentials and other freedoms in the
United States, the quality of our public services, that that is
going to persist for a very long time indeed.
Vice Chair Klobuchar. Senator Coats.
Senator Coats. Well, Madam Chairman, thank you. I am
obviously very late and delinquent in getting here in time. I
do want you to know I read both your testimonies. I appreciate
very much the contributions that you have made to our thinking
on how to go forward with this, and particularly the
differentiation between the less skilled and the more skilled.
Obviously we don't want to be a country that simply gives a
test and the highest ranking on the test results are the ones
we admit. On the other hand, you make, I think, compelling
cases for a better understanding of where our needs are and how
we address those needs.
Clearly the technical skills, the skills that many of our
businesses now are asking for that require levels of education
and levels of training that in the past were not as necessary
are important, that we adjust our quotas appropriately. On the
other hand, I think there still is room in this country--there
certainly is in my State--for people starting at a lower rung
of the ladder and having the opportunity through that start to
move up, particularly following generations.
The story of America is immigrants coming and working below
their skills but with a goal of opening the door for their
children in following generations to gain the education, and
gain the skills necessary to make measurable contributions to
America.
So I am wondering, I guess my only question to you is could
each of you reflect on what I have said? And I apologize if you
have already discussed that, but particularly that sort of two-
tier thought process concerning what we need to grow our
economy, where we want to be open to the level of immigration
that brings people at the lower skills level, but gives them
that opportunity to move forward.
Let me just give you one example. We do a lot of processing
in our State. And that is not a desired business for many
people. And my employers there have said it is almost
impossible--even though we have unemployment problems--almost
impossible to hire Americans to do some of these jobs. And yet,
people that come from other countries are better able to handle
the truly difficult work of some of the processing that takes
place. And without them, they are in a quandary.
So that is just one example. But I hear that from a number
of people, and I wonder if either one of you could comment on
that.
Dr. Zavodny. So my inlaws live in Greencastle, Indiana, so
I see that there absolutely, a lot of processing jobs. And so I
think that the way to think about employers and the economy's
need for low-skilled immigrants, it exists I believe, and the
best way to maximize the economic contributions of low-skill
immigrants I think is to primarily admit them when they have a
job offer from a U.S. employer, instead of on the basis of
family ties.
And then, returning to an earlier question, to give them
sort of a provisional pathway toward getting to remain here
permanently; that they can come if they have a job offer, and
perhaps we have a certain number of those job offers that can
be made every year in aggregate; and then, if they stay here,
pay taxes, contribute, after a certain number of years then
they can apply for permanent residence and get it and bring in
their family members and so on.
And so I think that would be a way to maximize the economic
contribution, while also allowing employers to hire the workers
that they need.
Dr. Camarota. Well I would say, as you probably know we
have a record number of people not working who are less
educated, right now. If you look at people who have no
education beyond high school and are 18 to 65, we have about 27
million American citizens not working--5, 6 million more than
we had just a few years ago.
Real wages for those workers are down 10 to 22 percent in
inflation-adjusted terms, and I don't know if you were here
before but we talked about meat and poultry processing where
real wages are down 45 percent since 1980. And relative to more
educated workers, they are down even more.
In other words, the relative wage decline is even more
dramatic. If you have a super abundance of less-educated
people, and if you find real wage decline decade after decade,
it is very hard to say that we have a shortage.
What it looks more like is employers are just used to
paying much lower than they used to. They like that, and they
would like to have Congress keep the flow coming, whether it is
guest workers, or have a relaxed immigration system. But I
would say that if we don't get the less-educated, all these
young people who do not go on to college who are not working
right now, back into the labor market, the consequences of that
moving forward will be enormous. Because we know that if you do
not work when you are young, say between 16 and 24, and you do
not go on to college, the chance of you working later in life
is much less. You earn less. You just do not learn the skills
necessary to function in the labor market.
And that sociological phenomenon is very troubling.
Senator Coats. Thank you, Madam Chairman. I am over my time
already. Thank you.
Vice Chair Klobuchar. Well thank you very much, Senator.
Thank you to our witnesses today. This has been a very good
discussion, a bifurcated two-day hearing, and we have been
really pleased with how it's gone and the number of people who
have come. We really appreciate your testimony, and we look
forward to working with our colleagues in the House, as well as
in the Senate, on both sides of the aisle as we move forward
with this very important issue of immigration.
I don't know if you wanted to add anything, Mr. Chairman?
Chairman Brady. No, thank you.
Vice Chair Klobuchar. All right, well thank you very much
and the hearing is adjourned.
(Whereupon, at 2:55 p.m., Wednesday, May 8, 2013, the
hearing was adjourned.)
SUBMISSIONS FOR THE RECORD
Prepared Statement of Hon. Kevin Brady, Chairman, Joint Economic
Committee
I want to thank Vice Chair Klobuchar for choosing this important
hearing topic that will be explored in a Joint Economic Committee
hearing today and tomorrow.
Given the growth gap which America is experiencing--in which the
current historically weak economic recovery translates into 100,000
fewer new jobs per month and workers realizing only a mere fraction of
the increase in real disposable income during an average recovery --it
is important that the Joint Economic Committee carefully and
objectively examine the economic and fiscal effects of our current
immigration system and proposed reforms.
If we wish to remain the world's largest economy through the 21st
century, the economic objective of any immigration reform must be to
maximize potential economic benefits for the nation while minimizing
costs to hardworking American taxpayers.
My belief is that we must close the back door of illegal
immigration so that we can keep open the front door of legal
immigration. My frustration through the years of this politically
charged debate is that Congress and the White House have failed to
agree on a most basic question: What kind of workforce does America
need to remain the strongest economy in the world, and what steps do we
need to take to ensure we have that 21st century workforce?
There's little doubt the front door of legal immigration is--by all
measurable standards--broken. Talented individuals with advanced
education, unique skills, and wealth that could be invested here to
create new, high-paying jobs for American workers have been excluded or
have waited years--even decades--09 to immigrate legally. And the
current visa program for low-skilled workers is essentially unworkable.
Recognizing that other committees have jurisdiction over
immigration reform issues such as border security, employer
verification, and paths to legal status, the Joint Economic Committee
will concentrate on its principal function, which is to provide
Congress with analysis and advice on economic issues.
To that end, from our witnesses, I am seeking answers to these
questions:
What kind of workforce does America need to remain the
strongest economy in the world, and what steps do we need to take to
ensure we have a 21st century workforce?
In addition to developing more trained American workers,
who should we encourage to immigrate to the United States and what
should be our priorities? What criteria should we use to evaluate
potential immigrants?
Are immigrants entering the United States under our
current immigrant system a net economic benefit or a net cost to the
U.S. economy in the long term? What are the benefits and the costs?
What changes would you make to our current immigration
system to maximize the net economic benefits to the U.S. economy, the
federal treasury, and the treasuries of state and local governments?
How does the bill currently before the Senate Judiciary Committee
affect economic growth in the short and long term, including its
effects on wages, real GDP per capita, job prospects for Americans, and
our long-term global competitiveness?
As America continues to struggle with historically high
budget deficits, are the immigrants entering the United States under
our current immigration system a net fiscal benefit or a net fiscal
cost to the federal taxpayers and to state and local taxpayers in the
long term? How do the taxes that immigrants pay compare with the
taxpayer-funded benefits that they receive? And what is the impact of
the immigration reform proposal currently before the Senate?
Finally, what can we learn from the immigration systems
in our global competitors such as Australia, Canada, and New Zealand
that admit large numbers of immigrants relative to the size of their
native-born population?
Just as we need pro-growth tax reform, a rebalancing of burdensome
regulations, a sound dollar and a federal government credibly
addressing its long term entitlement challenges, America needs a
trained, mobile and flexible workforce that meets the needs of a 21st
century economy.
I welcome our witnesses and look forward to their insight as we
explore the economic effects of immigration reform.
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