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< Back to current issue of Immigration Daily < Back to current issue of Immigrant's Weekly

Statement

On

Guestworker Immigration Proposals

Before the

Subcommittee on Immigration and Claims

Of the

House Judiciary Committee

For the

Essential Worker Immigration Coalition

By

Randel K. Johnson

Vice President, Labor and Employee Benefits, U.S. Chamber of Commerce

June 19, 2001

Chairman Gekas, Ranking Member Ms. Jackson-Lee, and members of the Committee, I am Randel Johnson, Vice President, Labor and Employee Benefits at the U.S. Chamber of Commerce. The U.S. Chamber of Commerce is a business federation representing more than three million businesses and organizations of every size, sector and region.

The Chamber is also a member of the Essential Worker Immigration Coalition (EWIC), and our testimony is on behalf of that entity as well. EWIC is a coalition of businesses, trade associations and other organizations from across the industry spectrum concerned with the shortage of both unskilled and lesser-skilled (“essential worker”) labor, outside of agriculture. (A list of the membership of the coalition is attached.) I am pleased to testify today before this subcommittee on the subject of those shortages, and the need for changes to our immigration system to help alleviate those shortages, particularly the utility of expanded temporary worker programs.

Information concerning my biographical background is attached. However, I would like to particularly note that I recently served on the 21st Century Workforce Commission established by the Workforce Investment Act and on the U.S.-Mexico Migration Panel sponsored by the Carnegie Endowment.

Even with the recent slowdown in the economy, our nation is still experiencing some of the lowest unemployment rates in decades, and is still below the 5 1/2% that many economic texts used to say represented “full employment.” The national average also masks much lower unemployment rates in various areas of the country. Thirty-three states in the Union still have unemployment rates below the national average. Many of these states have had significant decreases in unemployment over the last several years, including Virginia currently at 2.7%, Colorado at 2.5%, and Iowa at 2.7%.[1] Individual cities within these states have even lower rates. Even states that have had traditionally high unemployment are seeing jobs going begging. With the slowdown, labor markets have only moved from “very tight” to “tight”.

However, as we all know, the economy periodically undergoes these cyclical turns. If there is a shortage now, will there be one in the future? The evidence indicates the answer is yes. Bureau of Labor Statistics (“BLS”) projections indicate that by 2008 the U.S. economy will have 161 million jobs. Our total workforce, however, will be just over 154 million.[2] Furthermore, our workforce is aging. By 2008, the labor force age 45 and older will have the fastest growth rate and be a full 40% of the labor force.[3] More than 60 million current employees will likely retire over the next 30 years.[4] Finally, the rate of growth of our labor force will decrease, and, to quote Dr. Richard Judy of the Hudson Institute from his testimony last year before a House Subcommittee

“After 2011, the year in which the first of the Baby Boomers turns 65, their flight to retirement will reach proportions so huge as, barring unforeseen increases in immigration and/or participation rates among the elderly, to reduce the total size of the nation’s workforce.”[5]

A recent paper by the Employment Policy Foundation states that although the U.S. must do more to facilitate greater labor force participation rates by those not fully engaged in the labor force, and increasing productivity of those workers, neither will be enough to offset the demographic changes. “Immigration, always a key element in the American labor market, will become even more important as the American workplace attempts … to deal with a general shortage of labor….”[6]

A February 2001 analysis by the Arizona Mexico Commission reached similar conclusions:

Today, shortages in labor exist beyond the agricultural fields and are found in hotels and resorts, restaurants, tourist attractions, hospitals, construction companies, landscaping, nursing homes, janitorial companies and most other labor-intensive industries….

The bottom line is that if the U.S. economy is producing jobs faster than it is producing people to fill those jobs, foreign labor must be accepted as a viable solution to the labor shortage. In addition, we must acknowledge that the Baby Boomer population is aging, and the total U.S.-born population, without immigrants, is shrinking. All across the world, increased immigration is seen as one solution to boost the workforce that is needed to sustain economies. The foreign worker, both legal and illegal, has been an integral part of our inflation-free economic growth, and must be valued as a contributor to our strong economy.[7]

In fact, many economists attribute the fact that the economy did not slow sooner to the impact of the immigrant workforce. According to Mark Zandi, chief economist at RFA Dismal Sciences in West Chester, PA, “There’s no question that without immigrants, the U.S. economy would have overheated long ago. Without immigration the Fed would have started raising rates back in 1997, and the expansion would have been over years ago.” [8]

It should be emphasized that, in spite of the slowdown, we are still creating jobs. Until the recent months, job growth in the services and construction sectors more than offset job losses in manufacturing and other areas to result in net increases in job creation in the economy. [9] Recent reevaluations of the data by the Bureau of Labor Statistics have resulted in increases in the monthly net job creation for the last year.[10]

And the job growth is expected to continue. BLS projections show a 14% increase in employment (jobs held) from 1998-2008, a net increase of 20 million jobs.[11] However, what is most interesting is where the job growth will be. Although, as many know the projections show that the fastest growing occupations will be those requiring higher education (at least an associates degree), in fact, the most job growth (i.e., in absolute terms) will be in occupations requiring less formal education or training. Of the top ten occupations with the largest numerical job growth, all but two require less than a bachelor’s degree; the majority (six) require only short-term on-the-job training. These include: retail salespersons, truck drivers, personal care and home health aides, and office clerks. Registered nurses are also included in the top ten. The next ten occupations with the largest job growth include nursing aides, janitors and cleaners, waiters and waitresses, and food counter and related workers. The top thirty include childcare workers, landscapers and groundskeepers, hand packers and packagers. Even among the fastest-growing occupations, six of ten do not require a bachelor’s degree, and include medical assistants, and personal care and home health care aides. [12] Finally, the top ten occupations with the greatest retiree replacement needs (this group includes the occupations in which the average age of the current workforce is rapidly rising) include the following: secretaries, truck drivers, janitors and cleaners, registered nurses, bookkeeping and accounting clerks.[13] In fact the Employment Policy Foundation estimates that the available native population available for “essential worker jobs” has declined since 1994 from 9 million to 7.6 million.[14]

Members of the Committee, I have just described the essential worker work force, and the employees of the majority of EWIC members. But let’s get even more specific.

Chamber members across the country and across industries have reported workforce availability issues as among their top priorities. In fact, in recent testimony before the Senate Immigration Subcommittee, Elizabeth Dickson, Human Resource Specialist for Chamber member Ingersoll-Rand Corporation, and Chair of our Subcommittee on Immigration related her company’s difficulties recruiting skilled welders in Texas, service and repair technicians, and tool and die workers.[15] Here is some other data from the other organizations in EWIC.[16]

From the American Health Care Association: Long-term care facilities currently employ 1.5 million people, and the industry will create jobs for 600,000 Certified Nurse Assistants and 300,000 others over the next five years. According to the Department of Health and Human Services, the nursing home industry has a current shortage of 400,000 health care workers. The industry has had closures and facilities due to staff shortages, and just in Massachusetts, 10% of all homes there have closed in the last two years because of the shortage.

From the American Hotel and Lodging Association: A recent report by the American Economics Group estimated lodging industry employment at 1.9 million with estimates of over 2.6 million in 2010, meaning that the industry will require more than 700,000 additional workers in the next decade.

From the National Restaurant Association: Restaurants are the largest private-sector employer with over 11.3 million employees. By 2010 the industry expects to employ an additional 2 million workers. Labor shortages consistently poll among the top issues for restaurants/small business. According to the National Council of Chain Restaurants, workforce shortages, particularly in metropolitan areas, are among the most significant short and long term challenges to the industry.

From the National Roofing Contractors Association: The lack of qualified workers is the single biggest problem facing roofing contractors today. In a recent on-line survey of members, over 50% responded they could hire up to five additional employees right now if qualified workers were available. BLS data projects an additional 50,000 roofers will be needed over the next decade to keep pace with demand.

From the American Meat Institute: Total employment in meatpacking has increased steadily since 1965 to more than 151,000 today. In meat processing, employment has almost doubled in that time period and in poultry processing the increase is more than 150%.

From the Building Service Contractors Association International: Current employment in building services is over 1 million, and has grown steadily in the last year. According to a survey by the Association, all responding members reported they expect to increase employment in the next year, and all reported difficulty filling vacant positions. These vacancies have resulted in curtailment of seeking additional service contracts and expansion plans. Notably, these shortages were noticed in an industry that employs anywhere from 40 to 99% women and minorities.

From the Association of General Contractors: Reports from members are that a lack of skilled workers has negatively impacted companies and their ability to plan and expand. It has hindered the ability to bid for projects because employers do not have the people to do the job. Members attributed the shortages to a lack of skilled workers (especially in the skilled building trades), that are available, and the lack of new workers entering those trades.

As you can see, this is a problem that is widespread and not likely to go away in the future. We must begin to address this situation. If the recently signed tax cut and the lowering of interest rates by the Federal Reserve rebound our economy as they should, all of our industries will be facing further difficulties in finding employees. We must address these needs now, before the long-term demographics described above make it truly a crisis that forces our economy into recession.

I should emphasize that the U.S. Chamber and its members, as well as the other members of the EWIC coalition are doing our part to increase the workforce domestically. We have participated in welfare-to-work, school-to-work, and even prison-to-work initiatives. We are working in cooperation with local community leaders and unions in Workforce Partnerships across the country, and are taking other initiatives to help bring workers to our jobs, including increasing wages and benefits, improving the work environment, and even offering incentives such as signing bonuses and other “perks.”

Through the Center for Workforce Preparation, the Chamber’s non-profit affiliate, we have taken a strong role in addressing the critical shortages in the availability of skilled and unskilled workers that business is experiencing today. Current efforts of the Center include the following:

  • Identifying and supporting programs that bring new sources of labor to “work readiness” – former welfare recipients, people with disabilities, recent retirees, and others.

  • Partnering with Job Corps, the U.S. Departments of Labor and Education and others in efforts to develop worker training programs that address and meet current business needs.

  • Helping the Chamber’s federation of 3,000 state, local and metro chambers of commerce to effectively engage in workforce development by providing tools, models and best practices for implementation at every level.

  • Informing businesses of the resources and opportunities available to them and their employees to obtain education and training.
I would be happy to provide the Committee members with additional information about these efforts, at your request.

Other EWIC associations are also doing their best to attract and retain workers:

The National Roofing Contractors Association’s 2000 Salary and Benefit’s survey reveals that average hourly wages and bonuses for roofing and sheet-metal workers have increased 15 and 25 percent since 1998, respectively. In addition to increasing salaries, the NRCA is involved in other workforce development initiatives, including a Job Corps Center in New York to provide roofing training to disadvantaged youths. The training includes a paid six to eight week school-to-work experience. NRCA partnered with the YMCA in Broward County, Florida to provide training to young adults age 18 to 25, in cooperation with the Florida Department of Juvenile Justice, which identified candidates to participate in the project. NRCA is developing a portable entry-level training program that be used by many agencies, NRCA affiliates and contractors to start-up training programs in their communities. Finally NRCA has partnered with the South Texas Community College to create a training facility for potential roofers at the College. The primary pool of applicants is expected to be Mexican-American migrant farm workers that may be interested in permanent, full-time jobs in roofing.

According to the National Restaurant Association, restaurants have been at the forefront of welfare-to-work initiatives – nearly three out of four quick service restaurants have recently hired an employee who was a former welfare recipient. Restaurants also provide upward mobility – nine out of ten salaried employees at table service restaurants started as hourly employees. The industry is an important employer of new workers, providing opportunities for persons who are relatively inexperienced or unskilled to “learn the basics.”

According to the American Health Care Association, the industry has hired approximately 100,000 individuals from welfare-to-work initiatives over the last five years. The industry offers paid training for certification for Nurse Assistants, and many employers are offering signing bonuses, transportation allowances and other incentives. The industry also engages in extensive efforts to improve working conditions, career paths and other opportunities in long-term care.

The Building Service Contractors International Association reports that all of its members responding to a survey have continually offered wages above minimum, signing or referral bonuses and increased benefits to attract workers. Individual employers report advertising on Spanish-language radio stations to attract applicants, giving away televisions and trips for referrals, usage of welfare-to-work programs, and educational incentives.

The American Hotel and Lodging Association reports members offering a variety of incentives including free meals, bonuses, English classes, and paid benefits. PKF Consulting estimates that hospitality industry pay has increased 4-5% per year in the last five years; approximately double the national average. The lodging industry has been a leader in Welfare-to-Work initiatives. One member, Marriott, has graduated more than 3000 individuals from its Pathways to Independence program. Industry members are sponsoring school-to-work initiatives including Charter schools (the recently opened Marriott Hospitality High School here in Washington, for example), curriculum assistance and internship opportunities.

However, all of these efforts and the many others I have not mentioned will likely result in workers shifting from one industry with a shortage to another given the demographic projections I reported at the beginning of my testimony. Therefore, we must look at our immigration system to help “grow the pool.” Unfortunately, our current immigration system is of little help to the employer of essential workers. Like our education policy, in recent years our immigration policy has been heavily skewed toward generating additional highly skilled and educated workers for our economy; witness the recent debates over the H-1B program. We believe this is a correct strategy, since these knowledge workers are the driving force for development and expansion of ideas and products. However, once these ideas are developed and the ideas become products, essential workers are needed to manufacture, deliver and service those products. We still must answer the question: Who will fill the millions of essential worker positions that we will create? Immigration must be one answer, but current law does not provide the solution.

Our current immigration system provides visas to essential workers in very limited circumstances. The H-2B visa is a temporary visa issued to individuals who will be working in temporary, seasonal jobs outside of agriculture. The H-2B process is a cumbersome and bureaucratic one that involves two separate agencies, a lot of paperwork, and often more time than the job itself will last. In the past, this red tape has meant that very few employers bothered to try to use the program, but in recent years its use has escalated. This can be attributed primarily to the tight labor market. Recent news articles have pointed to usage of this category by hotels in Cape Cod, amusement parks in the Midwest, a tuxedo firm near Philadelphia, coal miners in Kentucky, resorts in Branford, Missouri, and others. Many employers who do not usually employ temporary workers are using the program to help “fill in” spot shortages. However, let me not understate this – the program is extremely difficult to use, especially for small businesses that must pay lawyers to help navigate the minefield of regulatory requirements.

However, while employers with truly temporary needs are forced to try to use the broken H-2B program, employers with long-term and permanent needs are out of luck, since no long-term temporary visa exists in our current system. In fact, there is no “H-1B” counterpart for essential workers. If an employer has a temporary long-term or permanent position, there is no legal mechanism to sponsor foreign nationals to fill that need.

Theoretically, such an employer could sponsor a foreign national for permanent residence – a “green card” under the formal labor certification program. However, our immigration system currently provides only 5000 green cards each year for persons coming to work in jobs that require less than two years of education or training.[17] Waiting lines for these green cards can be over five years. Another category of green cards, for individuals working in jobs that require more than two years of training or experience but less than a bachelor’s degree, shares its allotment of just over 49,000 visas with the H-1Bs and other highly-skilled workers. According to the INS, in 1998, the last year for which data have been published, just over 8,500 visas were issued to skilled workers.[18]Furthermore the process to get into the “waiting list” can take three-years or more.

Special mention should be made here about the problem specific to employers of registered nurses. Recent testimony before the Senate Immigration Subcommittee outlined the nursing shortage. While such nurses would be considered “essential workers” under our broad definition, most agree that they deserve their own visa category. However, with the sunset of the H-1A program in 1997, registered nurses have had no nonimmigrant category that is usable. Since the H-1B program mandates that the offered position require a baccalaureate degree for entry, most registered nurses cannot use that category. The new “H-1C” visa enacted in 1999 provides only 500 visas a year, and because of the restrictions in the statute, less than 14 facilities nationwide are eligible to sponsor nurses under this program. The Chamber and its members support creation or expansion of a temporary visa category for registered nurses as one method to alleviate the documented current and future shortages of registered nurses.

As you can see, we have a current situation in which our nation has millions of jobs available, a decreasing workforce relative to the number of openings, and an immigration system that provides no practical legal mechanism for employers and foreign nationals to fill those openings. Is it any wonder we have such a large number of undocumented workers in this country?

However, the time has never been better to fix this problem. We are eagerly awaiting the outcome of the discussions of the high-level working group on immigration between the U.S. and Mexico inaugurated by President Bush and President Fox in February. These talks are important because the largest percentage of potential essential worker immigrants is likely to be from Mexico. However, we must point out that we do not believe that a Mexico-specific program will be entirely adequate to meet the needs of employers. Employers do not select their employees based on nationality, and there are many other nationalities that should not be left out.

The specific topic of this hearing is “guest workers.” However, that term, having gained a negative connotation in past debates, is very unspecific. It can apply to any nonimmigrant visa category that allows work, including H-1B nonimmigrants, agricultural H-2A workers, even intracompany transferees, O and P artists and entertainers, and exchange visitors. We agree that there is a need for a workable temporary visa category for essential workers. EWIC is developing reforms to the current H-2B program to make it less bureaucratic and cumbersome, and a new H-1B-like category for longer-term needs.

Although clouded in much political rhetoric, the merits of properly structured guestworker programs are fairly self-evident. One, they constitute a mechanism to address worker shortages in this country that can be flexible depending on the actual need and the state of the economy. Two, although the exact benefits are difficult to quantify, they can alleviate illegal immigration by providing an orderly, structured (and safe) process by which those outside the country looking for work can enter the country, obtain legal employment, and return home to their families. (Of course, this also helps the country of origin as earned wages will be spent in the home economy.) Third, this process can, in turn, help address the problem of those who do enter illegally, but fear to return to their home country for fear of ever being able to obtain entry (legally or illegally) again. As one recent study put it:

From the U.S. perspective, temporary programs would address labor market shortfalls most directly and fairly for all parties. They would at the same time offer U.S. policymakers a new tool for managing both illegal migration and the border more effectively.[19]

On these general principles, I think almost all agree. Of course, many will differ on the details on what is a “properly structured” program and under what specific conditions should temporary workers be allowed into the country. We are not so foolish to think otherwise. However, the status quo is not acceptable and this is a debate that policymakers need to begin to wrestle with; EWIC looks forward to participating in that debate with the Congress, the Administration, and other interested parties. We are hopeful that there will be enough areas of common agreement to put the political rhetoric aside and develop positive solutions. As noted, we are developing several reform proposals and hope to submit those for consideration in the near future.

Such programs would allow employers to sponsor individuals legally, but temporarily. However, what if such a worker were to prove him- or herself such a valuable employee that the employer wished to promote him or her and offer permanent employment? Without additional green cards available, this proposition is hopeless. Employers need workers, but also long-term stability and flexibility in their workforce. Only with such stability would employers have incentives to keep and train their workers. Therefore, EWIC also believes that a temporary worker program should likely include some mechanism for increasing green cards for a number of essential workers, and streamlining the processing so that it does not take half a decade to obtain.

Finally, there is the question of the undocumented population. These individuals are here and working, many of them paying taxes according to data recently summarized by the Washington Post.[20] A National Academy of Sciences study in 1996 found that immigrants add $10 billion a year to the economy – between $20,000 and $80,000 per person.[21] This is a controversial area, and certainly not all experts agree, but one which needs to be examined as part of the overall debate concerning worker shortages and immigration reform generally.

In conclusion, the Chamber and its members are hopeful that this new era of frank discussion of essential worker issues may lead to real, substantial reform that will help all employers and continue to help our economy to grow. Thank you, and I welcome any questions you may have.


[1] Source: Bureau of Labor Statistics, Statewide Unemployment Statistics, May 2001, (http://stats.bls.gov/eag/eag.map.htm).

[2] Source: 2000-2001 Occupational Outlook Handbook, Bureau of Labor Statistics, “Tomorrow’s Jobs”. An unknown number of workers will hold more than one job, making the actual “gap” less.

[3] Ibid.

[4] Source: “Immigration is Critical to Future Growth and Competitiveness,” Policy Backgrounder, Employment Policy Foundation, June 11, 2001.

[5] Source: Dr. Richard Judy, Hudson Institute, Testimony before the House Subcommittee on Oversight and Investigation, Committee on Education and the Workforce, February 17, 2000.

[6] “Immigration is Critical to Future Growth and Competitiveness,” Policy Backgrounder, Employment Policy Foundation, June 11, 2001.

[7] “Labor Shortages and Illegal Immigration: Arizona's Three-Pronged Strategy,” Arizona-Mexico Commission, February 2001, pp. 4-5.

[8] “Immigrants fill gap in open job market,” USA Today, June 23, 2000.

[9] Source: Bureau of Labor Statistics, National Current Employment Statistics website (Historical data for the "B" tables of the Employment Situation News Release ) (http://www.bls.gov/cesbtabs.htm)

[10] Source: BLS Current Employment Situation, May 2001, Table B.

[11] Source: Braddock, Douglas, “Employment Outlook: 1998-2008 Occupational Employment Projections to 2008,” Monthly Labor Review, Bureau of Labor Statistics, November 1999.

[12] Ibid, Tables 3 and 4.

[13] Source: “OOChart: Occupations with the greatest retiree replacement needs, projected 1998-2008,” Occupational Outlook Quarterly, Spring 2001.

[14] Source: “Immigration is Critical to Future Growth and Competitiveness,” Policy Backgrounder, Employment Policy Foundation, June 11, 2001.

[15] Testimony of Elisabeth C. Dickson before the Senate Subcommittee on Immigration on “Immigration Law Issues in the 21st Century,” April 4, 2001.

[16] Data in the following paragraphs provided to the U.S. Chamber from the associations listed.

[17] The Immigration and Nationality Act allows up to 10,000 visas each year. However, other recently-passed laws have diverted up to 5,000 of those visas for Central American Adjustments.

[18] Source: 1998 Statistical Yearbook of the Immigration and Naturalization Service.

[19] Carnegie Endowment for International Peace, Mexico-U.S. Migration: A Shared Responsibility, 2000.

[20] Mary Beth Sheridan, “Illegals Paying Millions in Taxes,” Washington Post, April 15, 2001. The article noted, relying on internal Social Security Administration documents, that “Over the eight-year period, the mystery workers were responsible for more than $20 billlion paid in Social Security taxes—but they received no credit for them. Their payments have helped contribute to the system’s surplus….”

[21]National Research Council, National Academy of Sciences, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, National Academy Press, 1997, cited in Moore, Stephen, A Fiscal Portrait of the Newest Americans, National Immigration Forum & the Cato Institute, 1998.


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