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FULL COMMITTEE HEARING ON

IMMIGRATION POLICIES AND

THEIR IMPACT ON SMALL BUSINESS

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MAY 10, 2007

Serial Number 110-21

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

WILLIAM JEFFERSON, Louisiana 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

DEAN HELLER, Nevada, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

WILLIAM JEFFERSON, Louisiana 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

WILLIAM JEFFERSON, Louisiana 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Urban and Rural Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

LOUIE GOHMERT, Texas, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

WITNESSES 

PANEL I 

Gutie ́rrez, Hon. Luis, Member of Congress ........................................................... 3

PANEL II 

Johnson, Benjamin E., American Immigration Law Foundation ........................ 16

Silvertooth, Craig, National Roofing Contractors Association ............................. 18

Torrey, Maureen, Torrey Farms, Inc. .................................................................... 20

Folz, Ralph J., Molecular ........................................................................................ 22

Rector, Dr. Robert, Heritage Foundation ............................................................... 24

Krikorian, Mark S., Center for Immigration Studies ........................................... 26

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 46

Chabot, Hon. Steve .................................................................................................. 48

Altmire, Hon. Jason ................................................................................................. 49

Gutie ́rrez, Hon. Luis ................................................................................................ 50

Johnson, Benjamin E., American Immigration Law Foundation ........................ 53

Silvertooth, Craig, National Roofing Contractors Association ............................. 62

Torrey, Maureen, Torrey Farms, Inc. .................................................................... 75

Folz, Ralph J., Molecular ........................................................................................ 77

Rector, Dr. Robert, Heritage Foundation ............................................................... 83

Krikorian, Mark S., Center for Immigration Studies ........................................... 103

Statements for the Record: 

Meisinger, Susan R., Society for Human Resource Management ........................ 110

(V) 

(1)

FULL COMITTEE HEARING ON IMMIGRATION 

POLICIES AND THEIR IMPACT 

ON SMALL BUSINESS 

THURSDAY, MAY 10, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

2360 Rayburn House Office Building, Hon. Nydia Vela ́zquez 

[Chairwoman of the Committee] presiding. 

Present: Representatives Vela ́zquez, Jefferson, Cuellar, Clarke, 

Ellsworth, Sestak, Chabot, Westmoreland, and Davis. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

ChairwomanVELA ́ ZQUEZ. Good morning. I call this hearing on immigration policies impacting the small business workforce to order. 

Our economy faces many obstacles in fostering small business 

growth, but one of the forgotten challenges has been the economic 

effects of our broken immigration system. Whether it is a visa system that doesn’t meet industry needs, or a verification system that 

is unworkable, the failures of our current immigration policies are 

weighing down our nation’s 26 million small businesses. 

As we will hear today, immigration plays an enormous role in 

providing that necessary workforce. U.S. small business owners are 

responsible for employing many of the million immigrants to fill 

their workforce needs, and yes, some of these 37 million workers 

are undocumented, many of them unbeknownst to their employers. 

These documented and undocumented workers can be found in 

nearly ever sector of the economy. It is clear their services are 

needed, but with the current system it is hindering entrepreneurs 

ability to grow and is creating enormous paperwork burdens. 

As job creation increases at a pace faster than our workforce, 

small businesses will require even more immigrants to continue innovate and develop their companies. In the coming decades worker 

shortages are expected to grow across the economy and impact sectors that are vital to the health of our society. The businesses that 

produce and harvest our food already rely heavily on millions of 

immigrants. There is a critical sector that is here only temporarily 

to fill seasonal needs during harvest time and others that are part 

of a permanent workforce. 

In the high tech industry, H-1B visas provide a pipeline for needed highly-skilled workers. However, demand for these visas routinely outstrip the limited supply. For proof of this shortage, one 

2

only has to consider that the application cap for H-1B visas was 

reached this year in only the first few hours of the process. The 

current visa system is clearly not accommodating the needs of 

small businesses. Visa programs are not only failing to direct 

enough workers to the right industry, they have also become so bureaucratic that small firms cannot compete with larger businesses 

for those employees. 

Large firms are better equipped to navigate the complicated system that ask companies to predict their staffing needs months in 

advance and to pay high compliance costs and fees. For some industries, it is clear that a temporary workforce is an inadequate solution to their labor shortage. Those sectors such as the construction and health sectors that need additional permanent workers to 

be successful must also be part of the discussion. Small construction companies rely heavily on immigrant labor to meet the demand for their services, but the industry still faces an inadequate 

labor supply. 

Although entrepreneurs share national concerns about the witnesses of our immigration system, they cannot be its primary policing mechanism. Small businesses don’t have the resources, the 

technology, and frankly, the responsibility to be that first line of 

defense. Instead, we need a sensible employment verification system. It must not place an undue regulatory or financial burden on 

them, nor can it create so much uncertainty that small firms will 

choose not to participate and therefore not expand. 

Unfortunately, under this broken system many small companies 

know they are up against competitors who are breaking the rules. 

As the broader immigration debate continues, small businesses 

must have a seat at the table because they face unique workforce 

challenges and make enormous contributions to the economy. Small 

companies need reforms to take into account the rate at which 

they’re growing and will address their need for short and long-term 

employees. 

Entrepreneurs are ready to work with a fair and accessible system. I look forward to hearing from the witnesses before us today 

about what can we do as the debate over comprehensive immigration reform moves forward. We must ensure that willing workers 

are matched with employers who need them to expand their businesses, develop their communities and create even more jobs. 

I thank all the witnesses for taking time to be here today and 

I yield to Mr. Chabot, for his opening statement. 

OPENING STATEMENT OF MR. CHABOT 

Mr.CHABOT. Thank you, Madam Chair, and thank you for holding this important hearing on immigration policies and their impact on small business, and thanks to our witnesses, both on the 

first and second panels who have joined us or will be here later. 

I’m eager to hear their thoughts and like my colleagues, very much 

appreciate their taking the time from their schedules to be here 

this morning. 

America has an honored tradition of being a melting pot, welcoming immigrants from around the world who have come to America in search of a better life. Legal immigrants, through their hard 

work and ingenuity, have made important contributions to our naVerDate 0ct 09 2002 08:57 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\34833.TXT LEANN
3

tion. However, there’s a significant difference between legal and illegal immigration which is too often overlooked. Illegal immigration is by definition against the law. Illegal immigration is an issue 

to be taken very seriously. It affects citizenship, our economy, and 

our national security. 

I strongly believe that those who come to the United States legally should have every opportunity to work and support their families and contribute to our nation as any American citizen would. 

However, those who enter illegally and bypass those who have 

played by the rules and waited their turn, should not be afforded 

the same opportunities as those who follow the law. It is also important to ensure that those immigrants who arrive here legally, 

on a temporary basis, return to their home countries when their 

visas expire. America remains the land of opportunity. Just as immigrants through the last three centuries were willing to give up 

the lives they knew for promises of a better life, there remain many 

who dream of being able to call America home. 

Those who choose to take the legal avenues to come here should, 

of course, be welcomed here, to live and work. Those who choose 

who do so illegally should forfeit that opportunity. 

Welcome again to our witnesses and I think we all look forward 

to hearing their testimony this morning about immigration policies 

and their impact on small business and I yield back the balance 

of my time. 

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Chabot, and on the first 

panel I want to welcome our colleague, the Honorable Luis 

Gutie ́rrez from Illinois. He is one of the leaders in this Congress 

regarding immigration reform working on a bipartisan basis with 

another colleague, Mr. Flake. They are the main sponsors of the 

STRIVE Act. 

Mr. Gutie ́rrez, welcome, and you’ll have more than five minutes 

to make your presentation. Thank you. 

STATEMENT OF LUIS V. GUTIE ́ RREZ, A REPRESENTATIVE 

FROM THE STATE OF ILLINOIS 

Mr.GUTIE ́ RREZ. Thank you, Chairwoman Vela ́zquez and Ranking 

Member Chabot and Members of the Committee for the invitation. 

I introduced, with Congressman Jeff Flake, the only bipartisan 

comprehensive immigration reform bill in the House of Representatives, the STRIVE Act, which provides for a number of reforms to 

our nation’s immigration system and would greatly benefit small 

businesses and our economy. 

STRIVE is a comprehensive bill. It proposes enhancing our border and interior enforcement efforts, a robust employment 

verification system, a tough and fair earned adjustment for the estimated 12 million undocumented individuals in the U.S., a new 

worker program to provide for future flow of workers to fill jobs 

that require little training or skill and for which Americans cannot 

be found, and extensive reforms of the employment-based and family-based immigration systems. 

In particular, I believe that earned legalization, new worker programs, and visa reforms will provide significant relief to small 

businesses who often struggle under the current broken bureaucracy. Together, these provisions will ensure a legal workforce well 

4

into the future and provide significant stability and longevity to 

small businesses.I would be happy to further discussion these important provisions if Members have an interest. 

I would like to focus my remarks today on how the nation’s family immigration system could impact the creation and stability of 

small businesses in the U.S. This connection between family immigration and entrepreneurship is not often made in the broader immigration debate, but it is an important one. We know that families are often the ones who start and own new businesses from 

local hardware stores to restaurants to Mom and Pops, familyowned businesses are the backbone of our economy. 

We also know that immigrant entrepreneurs are the fastest 

growing segment of small business owners today and they form 

small businesses at a much higher rate than non-immigrant Americans. Given the preponderance of immigrant families in the community of small business owners, our nation’s family immigration 

system could have a significant impact on the state of the American small businesses’ future job creation and U.S. economy. 

Promoting family unit has been a major feature of our immigration policy for decades. This does not only promote strong family 

values for our nation, but also provides an influx of entrepreneurs 

who start and grow family businesses that generate tax receipts, 

property ownership, and new jobs essential to keeping our cities 

and neighborhoods strong. However, as we know from our constituent casework, the current backlog in family visas are causing 

lengthy waiting times for families to immigrate legally to the 

United States. 

The STRIVE Act addresses these problems in our family-based 

immigration system by significantly increasing the availability of 

family visas to reduce the backlog of visas within six years. In the 

context of the immigration debate, President Bush has repeatedly 

said and I quote, ‘‘family values don’t stop at the Rio Grande.’’ I 

could not agree with the President more. However, I am concerned 

that his moderate and compassionate views are being abandoned in 

recent Senate negotiations on immigration reform. Senators are 

considering eliminating most of the family-based immigration categories and replacing them in favor of employment-based system 

with a point and merit system. 

The argument to justify abandoning our nation’s historic commitment to preserving family values in our immigration system is not 

allowing immigrants to join their U.S. citizen brothers and sisters, 

parents or adult children, is not in the national interest. If moral 

arguments to preserve a robust family immigration system do not 

compel us, the economic facts should. It might sound attractive to 

recruit only the most highly skilled and educated to the U.S., but 

I assure this would be not in the national interest. Let me explain 

why. 

Although the initial earnings of family-based immigrants are 

below those of employment-based immigrants. The earning differences dissipate over time. Family immigrants also benefit the 

U.S. economy by starting businesses that would not otherwise be 

developed. And given that immigrants do not come in with a focused set of skills for a particular job, they are more likely to be 

flexible to respond to real-time gaps in our economy and willing to 

5

take a chance to start up new businesses. In other words, it is precisely because family-based immigrants lack specific skills that are 

able to more readily seize upon the opportunities presented by a 

dynamic economy. 

I see no legitimate economic rationale for eliminating family immigration categories and the idea is politically divisive. 

Having a robust family employment immigration system are not 

mutually exclusive. In fact, the reforms and increases in family and 

employment-based visas in the STRIVE Act allow for both. These 

are essential elements of comprehensive immigration reform as 

they reduce illegal immigration and strengthen our economy. 

Thank you, Madam Chair. It’s a pleasure to sit here before you 

in this wonderful Committee and I look forward to answering all 

of the questions of the Members of the Committee. 

[The prepared statement of Mr. Gutie ́rrez may be found in the 

Appendix on page 51.]

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Gutie ́rrez, for a great 

presentation. For the work you do in addressing an important issue 

that is impacting every—so many sectors of our economy and our 

society. 

I would like to ask you, Mr. Gutie ́rrez, how different is the new 

record-keeping requirement in the STRIVE Act for employers from 

the current law? 

Mr.GUTIE ́ RREZ. Well, currently, after the 1996 Immigration Reform and Control Act, it became illegal to hire someone that wasn’t 

legally in the United States with employment ability. So the I-9 is 

simply changed because we’re going to use a biometric system. 

That is, when an employee goes before an employer, you’re going 

to fill out the form, but we’re going to use computers. We’re going 

to use the telephone. We’re going to use electronic equipment in 

order to verify whether that employee is eligible. 

The Department of Homeland Security, Mr. Chertoff, has indicated to me and to others that within one year of passing any comprehensive immigration reform package here in the House, they 

will be ready at the Department of Homeland Security. 

Now, let me stress that not everybody will be under the system 

immediately. We will first go to critical infrastructure in our economy. That’s to say our—those who supply our energy, nuclear 

plants, our banking community, large infrastructure, employees 

will be the first ones. It will take about seven years to roll out the 

program. We have to make their benchmarks, make sure it’s reliable information. But I would say to the Chairwoman, it should 

take one day. The employee, if he doesn’t get verified gets to continue working at that job and still gets hired, but within a 30-day 

period, because they have the ability to appeal a decision in case 

a decision comes back unfavorably, they get the ability to appeal 

that decision and within 30 days everything will be wrapped up. 

But I do want to stress to the Chairwoman, you know, we leave 

a safe harbor for businesses. That is, if you use the system, at 

DHS, to verify the employability of your employee, you have a safe 

harbor and you’re held harmless. So there are no penalties. We 

want to go after the employers that knowingly, willingly, violate 

the law and hire undocumented workers by putting penalties 

6

against them. And I’ll end with this. When I got a Social Security 

card, it was the same technology that my dad had when he got his 

Social Security card. 

My daughter is 19. The same technology that I got 40 years ago 

is the same technology and her children. It’s time that we have a 

biometric system with readable information through a magnetic 

strip on the back of the card so that we know. And once we get 

that system in place, I would suggest to the Chairwoman, you come 

in with your biometric Social Security Card, you can swipe it. It 

will say much like a credit card, approve or disapprove and the federal government will be the one holding those records. 

ChairwomanVELA ́ ZQUEZ. If the Department of Homeland Security or Social Security Administration cannot confirm the identify 

of an individual, what is an employer to do? 

Mr.GUTIE ́ RREZ. What the employer to do is number one, he employs the person. The employment continues with that employee. 

And that process continues. That employee has 15 days to go to the 

Department of Homeland Security and to get from the Department 

of Homeland Security a correction. Systems make mistakes each 

and every day. Systems, especially large systems that are going to 

have tens of millions of people’s information and they have 15 days, 

if at the end of those 15 days it isn’t corrected, the employee cannot 

get the job. 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Mr.GUTIE ́ RREZ. And let me just say at the end, for paper purposes, once DHS sends you a verification of employment, that’s the 

only piece of paper you have to keep in the file. DHS, everything 

else, you can discard. So a lot less paperwork. 

ChairwomanVELA ́ ZQUEZ. Mr. Chabot? Thank you, Mr. Gutie ́rrez.

Mr.CHABOT. Thank you very much, Madam Chair. Just a few 

questions and first of all, I want to thank you for your testimony. 

We may not necessarily agree on this issue or really a whole lot 

of issues for that matter, Luis, but I think—and probably everybody knows that after this year, the chair, you’re retiring, and I 

just wanted to say that it’s been a real honor to serve with you. 

I think you’ve done a commendable and incredible job, really, for 

the people of your District and you’ve worked extremely hard. So 

thank you very much, and please convey our best wishes to the 

misses as well. 

Mr.GUTIE ́ RREZ. And you do the same to your wife. 

Mr.CHABOT. I will certainly. 

Mr.GUTIE ́ RREZ. We look forward to meeting with you outside the 

context of the Congress—both you and your lovely wife. 

Mr.CHABOT. Maybe we can agree on something there.Just kidding. Thanks, Luis. 

First of all, relative to—there’s a lot of us that believe that the 

primary issue initially needs to be security at the border. That that 

needs to be the number one priority. Once that is accomplished, 

then we can deal with the rest of the issues. But unless that’s dealt 

with first, we wont’ seriously deal with that. And the people that 

are here will stay and people will see that they got to stay and 

we’ll have more and more come over the border which has never 

been secured. That’s the concern that a lot of us have. 

7

And would you comment on where you believe that security at 

the border comes into the solution to the problem of illegal immigration in the country? 

Mr.GUTIE ́ RREZ. When Congressman Flake and I drafted the 

STRIVE Act, if you go to the first section of the STRIVE Act, it’s 

border security. Then we went to interior enforcement. I mean the 

first three chapters of our bill are about internal enforcement and 

enforcement procedures. So obviously, as we drafted the legislation, 

we prioritized that for the reading and so that people when they 

looked at it. 

Look, we need to secure our borders. Fences have been established, without proper funding to build them. I didn’t vote. I didn’t 

think you need that, but if you read our legislation, I will tell you, 

Mr. Chabot, we build a virtual fence between the United States of 

America and Mexico, by using technology, by putting thousands of 

new border patrol agents on that border. 

But the other thing I think we do, Mr. Chabot, is let’s ask ourselves who really comes across that border? So we’ll just deal with 

the border for one second. People come looking for job opportunities 

and the U.S. Border Patrol says about 90 percent of the people that 

they capture are coming here to seek a new job, to seek employment opportunities. And about five percent of them are coming to 

be re-unified with family members, given the delays in our visa 

system. 

Then we have another five percent which are alien criminals, 

people with criminal backgrounds. They’re not good people. So we 

try to distinguish in our legislation between while all immigrants 

are foreigners, not all foreigners are immigrants. Immigrants come 

seeking job and family reunification. Foreigners come here to cause 

damage and not necessarily immigrants. 

Second, and you made this point very well, Mr. Chabot, in your 

testimony, 40 percent of all of those that are here illegally in the 

United States never crossed that border, so they came here on temporary visas, student visas, tourist visas, H-1B visa. whatever visa 

they had and there are multiple number of visas and then they 

overstayed their visas. 

So I just want to go quickly back to what I shared with Chairwoman Vela ́zquez. That’s why we need a biometric system and an 

employment verification system at the federal level, so if I come 

here on a student visa, I overstay it, if I don’t have that biometric 

with that swipe on the back, I can’t get a job. And the other thing, 

I won’t stay because I can’t get a job. 

The only way you’re going to be able to be employed in the 

United States, ultimately, is by having a biometric card, verifiable 

by the federal government. 

Mr.CHABOT. Thank you. In your view, does giving law enforcement the authority to voluntarily assist in enforcement of our immigration laws, is that helpful? Would you favor that? 

Mr.GUTIE ́ RREZ. Let me tell you what we do in our bill. We simply 

restate what the law is. And we state that look, if you’re committing a burglary, you should be arrested and prosecuted and jailed. 

If you’re in an illegal activity, law enforcement should be able to 

go after you regardless of your immigration status, based on that 

action. 

8

Mr.CHABOT. But when you say illegal activity, you would not include being here illegally as one of those activities? 

Mr.GUTIE ́ RREZ. Let me suggest to you the following, and this is 

how we look at it. Being here in the United States, not under color 

of law, is a civil violation of our immigration system. It’s a criminal 

violation of our system. So we do think nothing should happen to 

them? No. So let me try to make the argument this way. 

You’re the judge, the American people. You and the American 

people are the judge. What I say on behalf of the undocumented 

is they violated a stipulation of our law, the immigration law. And 

we agree that they did that. Then we say did they violate any other 

law, and if they haven’t, if for any other purposes they’re of good, 

moral character and never have had interface with our legal system and they’ve been working, they’re of good moral character, 

then we say to them, pay a $2,000 fine. Learn English. Learn 

civics. Pay all your back taxes. Work during those six years. Do a 

touch back. That is, leave the country and re-entry and re-boot legally, and at the end of six years, we’re going to take a look at you 

and see if whether or not you should then be eligible for permanent 

residency. So we let them earn, that is here was the violation of 

the law, here is the corresponding punishment. 

In justice, there should be a relationship between the punishment and what you did and we think we do that in our legislative. 

Mr.CHABOT. Madam Chair, I won’t ask any more questions, but 

if I could just conclude by stating, although I don’t agree with 

many of the parts of this bill, I at least commend you for trying 

to deal with a very challenging issue that we face as a nation. And 

I would just note that the last time the country seriously looked 

at this issue was about 20 years ago. At that time we had about 

two million people here illegally and they said—Congress at that 

time said they were going to do two things. One thing, they were 

finally going to get control of our borders, and they were going to 

allow the people that were already here, since there’s nothing they 

could do about it were going to give them amnesty. There were 

about two million people here at that time. Well, they didn’t get 

control of the borders, never did. 

And we still don’t have control of the borders. The people stayed 

and that really sent a message, I think, to a lot of other people and 

now have 12 million people here and I believe if we follow that 

same pattern, that the number 20 years down the road or even 10 

years down the road will be significantly higher than the 12 million 

people that we have here now, illegally, and that’s why so many 

Americans, both Republicans and Democrats, are very concerned 

about this issue, and I yield back. 

Mr.GUTIE ́ RREZ. Madam Chair, if I could quickly—I understand 

1986. You’re right. 1986 was an amnesty. We will find agreement 

on that. They didn’t pay a fine. They didn’t go to the back of the 

line. They weren’t required to take English classes. They weren’t 

required to touch back. They weren’t required to go back and do 

all of their income taxes and show they didn’t owe any income 

taxes. I mean basically they went straight to the front of the line. 

I understand that flaw in the 1986 legislation. We address it clearly in the legislation 2007. 

9

Mr.CHABOT. Luis has been around here long enough to know that 

I didn’t ask a question. I just made a statement, but he got to answer it anyway. So that’s why he’s so good. 

Mr.GUTIE ́ RREZ. Thank you, Mr. Chabot. 

ChairwomanVELA ́ ZQUEZ. Mr. Westmoreland.

Mr.WESTMORELAND. Thank you, Madam Chair, and I want to 

thank you, too, for all your hard work on this and I think we’re 

finally getting somewhere because it is very necessary that we take 

a first step in the direction of solving this immigration problem. 

Let me thank you also for putting the language in your bill that 

was in an amendment I had on the last bill that much related to 

the safe harbor. I don’t think it’s right to criminalize employers 

when they really don’t have any document verification skills out 

there and so I think that’s great. And I also think it’s wonderful 

that we do make a distinction between primary contractors and 

subcontractors and make sure that we keep a distinction between 

those and make sure it’s in the law that provides for that because 

as most small businessmen and I am a—was a small businessman, 

you know, you have very little control over your subcontractors. 

And you can’t be responsible for everything they do. So I commend 

you for doing that. And I think we’re taking a great step. 

The one question I had, you mentioned the swipe which I very 

much agree with and it would come back instantly that there was 

a problem. Are you going to have anything in the legislation that 

would hold that employer harmless if there was an error in that 

person being not eligible to be employed? 

Mr.GUTIE ́ RREZ. Absolutely. We have safe harbor provisions and if 

you use the technology and the technology incorrectly gives you an 

approval, remember, you’re going to get via—you’re going to be 

able to go on the Internet. Let’s say you hire somebody. You’re 

going to be able to go on the Internet, press print, and you’re going 

to keep—you’re going to have something that says Department of 

Homeland Security says you can hire Luis V. Gutie ́rrez, right? And 

that’s the only paper you’re going to have to keep and you’re going 

to file that. You don’t have to file it, obviously, you can keep it in 

your computer and as any smart small businessman, you’ll probably put a floppy disk in there in case the computer falls apart 

later on, and you can retrieve that information. 

But you will get a verification. As long as you use DHS 

verification system, you are held harmless and you have a safe harbor against any prosecution or penalties. 

Mr.WESTMORELAND. Okay, but my question is if it comes back 

and says that the employee is not ready to be hired, does it hold 

the employer harmless from the employee? 

Mr.GUTIE ́ RREZ. Yes. 

Mr.WESTMORELAND. Okay. 

Mr.GUTIE ́ RREZ. I understand, yes. The employee then has 15 

days under our legislation, 15 days, because quite honestly we’ve 

all—I mean I’ve certainly gotten stopped at the airport and been 

asked for extra ID because I’m on some watch list, maybe they 

know more about me than I do. And you know I’ve been delayed, 

many of us have been delayed, and the government gets our names 

and big government can make big problems for small people. 

10

So they have 15 days in which to clear that up. Everything is 

cleared up within 30 days, so let’s say at the end of 30 days, you 

are going to get from Homeland Security yes or no. After the person appeals. So I come to you, you continue, you want me. I have 

the skills. You continue to hire me. And I have 15 days to correct 

it. Within 30 days you will get a final determination based on my 

appeal from them and no, I cannot sue you. I can, however, I do 

have judicial review with the federal government and with the bureaucrats at the federal government should they be responsible for 

an action on my employment opportunity, but not the employer. 

Mr.WESTMORELAND. That’s good. 

Mr.GUTIE ́ RREZ. The person who runs the system is the one, the 

government. 

Mr.WESTMORELAND. Because you have to understand from a 

small business perspective that sometimes those first two weeks or 

three weeks are the most expensive part of hiring somebody because you’re filling out all the paperwork, you’re introducing them 

to any 401(k)s or retirement programs that you’ve got; any insurance programs you’re trying to them and their family enrolled, and 

I do think the 30-day provision is great. I would like to see it be 

an instant —

Mr.GUTIE ́ RREZ. It is instant. 

Mr.WESTMORELAND. But you know, that 15-day period I just, and 

I understand and I think it’s a provision that has got to be in there. 

It just does concern me from a small business standpoint is that 

really you have to kind of make a decision then where do you want 

to put the investment in this individual to go ahead and hire him, 

let him be working there for 15 days and then have 30 days invested in this employee that you don’t get any really resolve after 

30 days. 

Mr.GUTIE ́ RREZ. Let me suggest one positive thing about the program. Because we’re talking about small businessmen, they will be 

the last people to be enrolled in the program and we’re not going 

to—there’s 144 million Americans in our workforce. Obviously, 

we’re not going to enroll them all overnight. We’re going to go to 

critical infrastructure, the banking industry, you know, those industries that are critical to our—and our large industries. We’re 

going to do them first. It will take about seven years and there are 

benchmarks during the seven years to check the accuracy. We have 

seven years. 

I’ll put it to you this way, we have at least five years before we 

get to the small business people to help fix it, to fix it, to mature 

it, and to redefine it so that it works really well. So small business 

will be the last people entering the program. Hopefully, by then 

we’ll have it pretty good. But it’s critical to our security here in the 

United States. 

Mr.WESTMORELAND. Sure. 

Mr.GUTIE ́ RREZ. Because now we’re going to know, everybody 

who’s hired, we’re going to know—and it ends illegal immigration. 

It truly ends it as we know it today. 

ChairwomanVELA ́ ZQUEZ. The gentleman’s time is expired. 

Mr.WESTMORELAND. Can I do one—

ChairwomanVELA ́ ZQUEZ. Will you please be fast? 

11

Mr.WESTMORELAND. I will be fast. Let me just say this, and I appreciate it taking that long to get to small business, but remember, 

small business probably employs 80 percent of these people. 

ChairwomanVELA ́ ZQUEZ. Mr. Ellsworth.

Mr.ELLSWORTH. I’ll make mine very fast, Madam Chairwoman. I 

appreciate you having this hearing. Congressman, I don’t have 

many questions, just a brief statement that as a newly-elected 

Congressperson, going back and doing my first town halls in February and I can remember vividly this is on people’s minds, the 

issue of illegal immigration. In fact, one of the gentlemen asked me 

why we hadn’t done anything yet about illegal immigration. And I 

probably made the mistake and said well, we’ve only been in there 

52 days and he said, he used a couple of expletives, he said that’s 

no excuse. 

So we won’t try that one now that we’ve been in four months, 

but there’s a—I think we really have to look at the practical side. 

We have illegal immigration laws and we didn’t do a good job of 

enforcing those. And I appreciate, Congressman, you and all the 

hard work you’re doing to do something. I just implore us that 

when we do things that we do them and we enforce what we put 

on the books and we do practical things. 

I was just thinking, Congressman Chabot, your question about 

local law enforcement getting in on the act and as a former sheriff 

and a person who ran a jail, I can tell you that almost every jail 

in this country is suffering from overcrowding and probably under 

federal lawsuits and to wave the wand and let us start doing that, 

if we don’t build into things what we’re going to do after we arrest 

those people, just taking them to our local lockups will not work 

and the local law enforcement will not do it. The sheriffs can’t handle the load if the rest of the story that goes with that. 

Sometimes it sounds good to say let’s let local law enforcement 

and the local law enforcement would, in fact, be glad to enforce 

whatever laws are on the books, but then we have to go to the 

practical side. What are we going to do with these people once we 

put them in our jails, how do we adjudicate those, more judges, 

more prosecutors and more beds and it’s going to be an awesome 

responsibility to undertake. They would try, but —

Mr.CHABOT. Would the gentleman yield for just a moment? 

Mr.ELLSWORTH. Absolutely. 

Mr.CHABOT. I thank the gentleman for yielding. I was down at 

the border last summer and we were talking to some of the folks 

down there and they were talking about they would pick up illegal 

immigrants and they would basically rather than process them, 

they’d take them back over at night across the Mexican border to 

a town pretty far away from the border and they always did it after 

dark and they’d let them out basically at the town square, dozens 

or sometimes even hundreds and we asked them why did they do 

it at night and they said because they didn’t want to embarrass the 

Mexican government is what they said. It’s a big problem, and obviously, the closer you are to the border, the bigger the problem is, 

but even in your State of Indiana and my State of Ohio, it’s a real 

problem that we have to face. 

12

Mr.ELLSWORTH. It sure is. A lot of discussion. I appreciate 

everybody’s efforts in this problem. Thank you, Madam Chairwoman, I yield. 

ChairwomanVELA ́ ZQUEZ. Thank you. Mr. Jefferson? All right, Ms. 

Clark? 

Ms.CLARKE. Thank you very much, Madam Chair, and I want to 

thank Congressman Gutie ́rrez for his efforts in this endeavor. I 

think it’s a defining moment for our nation quite frankly that we 

approach homeland security in many respects and basically the 

growth and development of this nation in a very humane way. 

I come from New York City which is a gateway for many immigrants, many waves of immigrants over many generations and certainly we have felt the impact of what I consider quite frankly a 

governmental problem. The infrastructure, the bureaucratic infrastructure that should have been in place and that needs to be in 

place today in order to really regulate immigration to this nation 

has faltered. 

And so my question really has to do with the capacity building 

that needs to happen within our own government to handle what 

we found ourselves in terms of a real quandary and what we look 

at going forward. I think to a large extent your legislation begins 

to address that, but I’d like to see the nuts and bolts of it really 

put in place because that is what we’re going to inherit, the next 

generation is going to inherit as opposed to some of the xenophobic 

types of reactions that I’ve seen. 

I don’t live on the southern border. And so the types of reactions 

that I hear from many of our colleagues, while I’m sympathetic to 

it, I come from a totally different environment where the reaction 

is not quite the same. 

I want to just speak to you at a certain point about the whole 

touch back provision because touch back on the southern end is a 

lot different than touch back on the northern end and there are a 

lot of folks who want to come into compliance with what we’re talking about it, but touch back for them is a challenge because the 

way that they got here was either as a visitor, as you said, or as 

a foreign student as you’ve stated, and they came here legally usually by airline and not by foot. And so just the whole idea well, you 

can maybe touch back in Canada or you can maybe touch back in 

Mexico, I don’t know how those governments will feel about other 

folks from other nations touching back or whether they would be 

in cooperation with us regardless of where people come from about 

the touch back provision. I think we need to take another look at 

that and try to fine tune it to a certain degree to address the nuances of the variety of immigrants that we have coming to our nation or who have come to this nation and are not in compliance 

with our laws. 

I want to thank you once again. Your work has been tremendous, 

tremendous, and I look forward to working closer with you in terms 

of the fine tuning. We’ve got to deal with homeland security. That 

is a key piece to this. The bureaucracy of our federal government 

has to be dealt with. Thank you, Madam Chair. 

ChairwomanVELA ́ ZQUEZ. Thank you. Your time has expired. Mr. 

Cuellar.

13

Mr.CUELLAR. Thank you, Madam Chair, and Luis, I want to 

thank you for the work. I know you’ve been working on this very 

hard and I appreciate that we’re looking at comprehensive immigration reform in three parts. Being from the border, living there, 

Laredo, understanding what’s been happening there, living there 

all my life, I understand exactly what’s going on, what’s legal migration, what’s illegal migration. 

We’ve got to have a strong border security, part of it. I know the 

bill has that. It’s very strong and I appreciate that. The second part 

is the guest worker plan or some sort of control system to allow 

people in is important. The system that we have now is one, I 

think it’s a good start, but it’s not working, the HB-A and B and 

all that. I brought in some folks that have gone over the process 

itself and it’s just too cumbersome. It’s not big enough, in many 

ways, so the pools that we’re looking at and I appreciate the work 

that you’re doing in that part. 

The third part, which is a difficult part which is what do we do 

about the 11 and 12 million undocumented aliens is a difficult part. 

And keep in mind that about 40 percent of the folks that got in 

across the river, because everybody just think they came in across 

the river, illegally, but about 40 percent of them came in through 

a legal permit or visa which means that we did not tell them it’s 

time for you to leave and this is an important thing. This is why 

when people start talking about building a wall and all that, it 

really doesn’t matter because 40 percent of them came over 

through a legal permit, a visa. 

So we’ve got to be smart on how we do this process and certainly 

one of the things that we have to look at is looking at putting the 

resources not only in homeland security and we’ll be handling part 

of this through our committee in homeland security, but the other 

part is working with the State Department. Because right now, it’s 

so easy for them to just say deny, deny, deny and for the people 

who are trying to come, in a legal way, it has just become very, 

very difficult. 

So I want to thank you for the work that you’ve done and I appreciate the cooperation that you’re showing the Committee here. 

Mr.GUTIE ́ RREZ. Congressman, I just want to thank you for your 

help and your assistance being from the border. I think you make 

an excellent voice because I listened to the colloquy between my 

friend, Mr. Chabot, and my friend, Mr. Ellsworth, about criminals. 

The fact is we put 20,000 beds in our legislation, 20,000 beds that 

don’t exist today. I mean we’re smart and we’re tough in our legislation and we say prosecute. 

The other thing we do in our legislation so that we understand, 

we order that every person in a jail, every person in a jail go 

through a security check on their immigration status. That is every 

inmate has to go. And if you are not legally in the United States, 

but in a jail, we make it seamless, from your point, you don’t like 

get out of jail and be released back into society. Our legislation 

calls for a seamless process from that jail cell, whether it’s in Texas 

or in Oklahoma or New York, straight to a facility, Department of 

Homeland Security and deported. That doesn’t happen today. 

So I would hope that people would look at the enforcement capacity that we put in our legislation. We’re tough, but we’re fair and 

14

we want a solution to the problem. Thank you so much, Mr. 

Cuellar. 

Mr.CHABOT. Would the gentleman yield? Thank you. I’ll be very 

brief. The gentleman, I think you’re right. They don’t all just come 

across the border across the river illegally. Some are already here 

about 40 percent and have overstayed their visas. I would just comment relative to that. You had mentioned that we don’t tell them 

it’s time to go back as if it’s the government’s fault. 

My understanding is the people know that the visa is for a certain period of time and they failed to comply with the existing law 

and so they’ve overstayed their visa so at that point, they’re illegal. 

We need, clearly, if they haven’t gone back, we need to follow up 

much better than we do now and I think that’s the point you’re 

making. 

Mr.CUELLAR. Yes, I think that is the point and I’m sorry I said 

it that way. 

Mr.CHABOT. That’s okay. 

Mr.CUELLAR. We basically should know when somebody’s time is 

over, but then we’ve got to follow up on that because we talk about 

11 or 12 million undocumented aliens and 40 percent of them overstay their time, that’s a serious problem. Let me just conclude with 

this, Madam Chair, just one last point. We just got back from Honduras and we got back from Mexico City. We’ve got to work with 

the Mexicans on securing their southern border because if you look 

at what’s happening, you’ve got so many Central Americans and 

what they call, this is a jargon that Border Patrol uses, I don’t 

know it’s a PC word, other than Mexicans because they classify 

Mexicans coming in and other than Mexicans. Central Americans, 

other countries are coming in through our southern border and 

other parts of that. So we’ve got to work with other countries on 

that. 

Thank you. 

ChairwomanVELA ́ ZQUEZ. Mr. Davis.

Mr.DAVIS. Thank you, Madam Chairman. Thank you for your 

testimony. 

Mr.GUTIE ́ RREZ. Thank you, Mr. Davis. 

Mr.DAVIS. Just looking at the perceptions that are out there 

across America right now, I know there’s a perception that jobs are 

being taken from Americans that would like to have those jobs. Of 

course, there’s discussions out there that Americans won’t do the 

jobs. I actually met with a lady on Saturday back in Green County, 

Tennessee, and she’s worked for 49 years. She lost her job last 

week and there is a high frustration level out there across my District in east Tennessee and I think probably across America. People 

are concerned and they take illegal being exactly that, starting 

with that premise, being illegal. 

I know there’s a study out there, one of the surveys of NFIB, 

even small business owners that belong to NFIB say that 70 to 80 

percent of the business owners see this as an issue that we need 

to deal with. It’s putting the burden on small businesses. The small 

business owners they start jobs to be a florist or a healthcare worker or whatever that small business is and they didn’t really get into 

the business to be an accountant or be a lawyer or have a departVerDate 0ct 09 2002 08:57 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\34833.TXT LEANN
15

ment to deal with human resources. They really just want to go out 

and do that job that they know how to do and create those jobs and 

grow that business. 

What is your thought on—how can we make it easier for those 

businesses to do what they started that small business to do? 

That’s the number one thing. And then how can we either perception or reality, get to that point where Americans understand that 

either jobs are being taken, number one, we need to answer that 

from—jobs that they would take or number two, that that’s not reality? 

Mr.GUTIE ́ RREZ. Number one, I think small business people need 

a reliable, simple system to verify the employee and that’s what we 

offer. We make it electronic. And if we have a biometric Social Security card, if we—you know, the poor small businessman, I mean 

he can use a driver’s license. In Illinois, our former Governor went 

to jail for seven driver’s licenses and there are people manufacturing driver’s licenses and false Social—he says oh good, this is 

something I can rely on. He swipes it once or he goes on the computer and it says David Davis and your photo shows up on the 

Homeland Security, simple system, and then he gets—he sends it 

on the computer, he sends it over the phone to DHS and he gets 

one simple piece of paper. 

All the rest of the application form and all the other verification 

he can put it away because it said David Davis is good to go and 

he puts that in his file. You need something reliable and quick, so 

you can get it done in one day. 

Secondly, the best way I can answer your question is our economy creates about 400,000 low-wage, low-skill jobs a year. But we 

only offer 5,000 visas for low-skill, low-wage workers a year. Here’s 

an economy that’s exploding in these low-wage, low-skill jobs. Does 

that sometimes go over to other jobs? Probably. Can we find anecdotal evidence of this person being affected or that person? But in 

the totality, the immigrants obviously buy cars, buy groceries, buy 

tires, buy clothes, rent apartments, contribute to the economy. The 

Social Security Trust Fund has tens of billions of dollars in an unaccountable account. They have the money. Don’t tell us as Members of Congress, we have it, but they can’t tell you who that 

money really belongs to or how they’re going to get it back to someone for the simple reason they were using bad Social Security cards 

and they’re not identifiable. 

Lastly, let’s look prospectively. You were born between 1946 and 

1964. That makes you a Baby Boomer, makes me a Baby Boomer, 

right? There are 80 million Baby Boomers. In 20 years, the youngest Baby Boomer is going to be 81. I mean the oldest Baby Boomer 

will be 81 and the youngest will be 63. Eighty million people. I’m 

not saying all of them will leave the workforce because we’re living 

longer, many of them will need care, they’ll be retired, our Social 

Security system is going to be hurting, but the most important 

thing, think about those tens of millions of people that are going 

to be leaving the workforce. 

At current rates, of birth rates here in the United States, in the 

next 20 years, we will increase about 13 million people, given current birth rates. Who is going to take over the jobs of the tens of 

millions of people in the Baby Boomers as they retire? 

16

We’re going to have to grapple with this issue, so we want to do 

it strong and effectively and securely and we want to make sure 

that people have a legal document to come here because it’s good 

for our economy too. 

Mr.DAVIS. If your legislation were to pass, when would this swipe 

card actually go into effect? How long are we talking about? 

Mr.GUTIE ́ RREZ. Much of it, the critical infrastructure would happen rather quickly within the first to second year. But the first—

the other thing we do is we say until we get to that biometric system, we say that you must have a driver’s license to get a job 

under the Real ID Act, a driver’s license or we say you have to 

bring your passport which is biometric and has a swipe. So we 

limit the numbers immediately of kinds of identification that an 

employer can use. 

ChairwomanVELA ́ ZQUEZ. Time has expired. And we’re going to 

have a set of votes, so the Committee is in recess subject to the call 

of the chair. I believe that we will be back here around 11:30. 

Mr.GUTIE ́ RREZ. Thank you, you’ve been very generous. 

ChairwomanVELA ́ ZQUEZ. Thank you, sir, for your presentation. 

[Off the record.] 

ChairwomanVELA ́ ZQUEZ. The Committee will reconvene. I will 

ask the witnesses of the second panel to take your seats. 

We are going to start our second panel, and our first witness is 

Mr. Benjamin Johnson. He is the Executive Director of the American Immigration Law Foundation and has written extensively on 

immigration law and policy. The Foundation is dedicated to increasing public understanding of immigration law and policy and 

the value of immigration to American society. 

Mr. Johnson, you will be given five minutes to make your presentation. You could either summarize it—and without objection your 

whole testimony will be entered into the record. 

STATEMENT OF MR. BENJAMIN E. JOHNSON, DIRECTOR, 

AMERICAN IMMIGRATION LAW FOUNDATION 

Mr.JOHNSON. Thank you very much, Madam Chair, and members of the Committee for this opportunity to talk about the impact 

of U.S. immigration policies on small businesses in this country. 

Rather than trying to tackle all of the complex issues that we have 

heard about today, I am going to focus my comments on the economic and demographic realities that are making immigration an 

important issue for hundreds of thousands of small businesses 

around the country. 

In the debate about the economics of immigration, I often hear 

people recite the one lesson we all seem to have learned from Economics 101, which is that it is all about supply and demand. But 

after reciting this axiom, the conversation is almost always focused 

exclusively on the issue of supply. The argument I hear most often 

is that millions of immigrants are coming to the U.S. for jobs, and 

that the arrival of all these workers must be driving down wages 

and opportunities, because everyone knows that if you have a large 

supply of something then its value must go down. 

But you don’t have to look much further than your morning cup 

of coffee to find evidence that just because there is a large supply 

of something isn’t a guarantee that its value is going to go down. 

17

Coffee shops seem to be everywhere, on street corners across America, and yet people line up out the door waiting to pay more than 

they have ever paid for coffee. 

And the reason is that the demand for coffee has kept pace with 

the supply. These stores aren’t just competing for a fixed number 

of customers; they are expanding the customer base by creating 

more and more coffee drinkers. The lesson here is that we have to 

look at both supply and demand. Demand matters. 

When it comes to immigration, we cannot focus only on the numbers that are coming. We have to look at what kind of demand is 

being created by our economy. I think that the evidence strongly 

suggests that the—strongly supports the conclusion that immigrants are drawn to our labor force because of legitimate demands 

being created by our incredibly diverse and dynamic economy. 

In 2006, the net supply of immigrants into our workforce, both 

legal and undocumented, was approximately 700,000 workers. But 

when we look at demand, we find that in 2006 our economy created 

2.2 million new jobs. To put that in perspective, that is more new 

jobs than were created by all of the European Union and Japan 

combined. And those numbers reflect what almost everyone agrees 

is a jobless recovery. 

Evidence that immigration is a response to legitimate demand 

can also be seen in the types of immigrants that we attract. A majority of the new jobs in the last 10 or 15 years have been in occupations at the extremes of the skill spectrum. The highest growth 

rates have been in occupations that require high levels of education, jobs like engineers, doctors, geologists. 

But in terms of sheer numbers, the vast majority of jobs have 

been created in occupations that require very little education, jobs 

like home health aides, landscapers, construction helpers. And it 

turns out that in fact the immigrants that are coming to the 

United States have skills that match our demand. Most immigrants coming into the United States either have very little education or very high levels of education. That is happening because 

the majority of U.S. workers are right in the middle of the skill 

spectrum, not at the two extremes. 

The result is that immigrants complement rather than compete 

with the vast majority of U.S. workers. In other words, immigrants 

are coming here to fill gaps in our labor market. 

There has been a lot of controversy about immigrants coming 

here to do jobs that Americans are less interested in. But the truth 

is: it is not an insult to the American worker that the number of 

people who are looking for jobs that require very little education 

or training is getting smaller. 

Our labor markets attract younger, less educated immigrants, 

because our labor force is getting older and it is getting better educated. In the early 1960s, somewhere around half of U.S. workers 

were high school dropouts. Today, on about 12 percent of U.S. 

workers are high school dropouts. We should be proud of this fact. 

But this success means that we have fewer workers who are 

looking for jobs that require no education or training. And we 

shouldn’t be surprised that employers are doing what they have always done for the last 200 years, which is turning to immigration 

to fill the gaps in our labor force. In fact, the ability to use immiVerDate 0ct 09 2002 08:57 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\34833.TXT LEANN
18

gration to supplement and fill gaps in our labor force across the 

skill spectrum is one of the principal reasons the United States has 

been able to create the most diverse, most dynamic, most flexible 

workforce the world has ever seen. 

Unfortunately, for the growing number of immigrant workers 

and small businesses that turn to the immigration system for help, 

dealing with the economic and labor force challenges they face, the 

current system has failed them. The harsh reality is that the current environment is one where a growing share of the workforce is 

foreign-born, where large numbers of those workers are undocumented, where there is no effective way to discern which workers 

are legal and which ones are not, where there is an increasing 

threat of immigration raids, and where the legal system of immigration offers very few options to the industries where immigrant 

workers are most often employed. 

In this environment, small businesses are at serious risk. Small 

companies are the least able to overcome the loss of a large share 

of their workforce due to raids, or the inability to pursue some innovative idea that requires a skill set not readily available in our 

workforce. Small businesses are the least likely to be able to afford 

or endure the delays and bureaucracy that have come to define our 

immigration system. 

Given the fact that the majority of workers in the United States 

are employed by small- and medium-sized companies, and that the 

health and vitality of our economy has always relied on the success 

of small businesses, we cannot afford to put these companies or 

their employees at risk because of our dysfunctional immigration 

system. Congress must act to reform all aspects of our laws, so that 

we can have an orderly, regulated flow of workers that fits the legitimate demands of our economy. 

Thank you. 

[The prepared statement of Mr. Johnson may be found in the Appendix on page 54.]

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Johnson. 

Our next speaker or witness is Mr. Craig Silvertooth. He is the 

Director of Federal Affairs of the National Roofing Contractors Association. NRCA is an active organization of members who share 

a common purpose and interest to further promote the art of roofing application through continual education, professionalism, and 

adherence to the highest standards. 

Thank you. Welcome. 

STATEMENT OF MR. CRAIG SILVERTOOTH, DIRECTOR OF FEDERAL AFFAIRS, NATIONAL ROOFING CONTRACTORS ASSOCIATION 

Mr.SILVERTOOTH. Thank you, Madam Chair. I appreciate it, and 

I appreciate you entering my prepared testimony into the record as 

well. Members of the Committee, thank you as well. 

I am testifying here today on behalf of the National Roofing Contractors Association, but I am also testifying here today on behalf 

of the Essential Worker Immigration Coalition, which is a coalition 

of businesses spanning the spectrum of American industry. I serve 

as a co-chair of that coalition as well, and I would like to speak 

19

today about the intersection of the small business community and 

our nation’s current immigration laws and how those might be 

changed in the coming year, if we see successful immigration reform in this Congress. 

My comments will break down broadly into four areas. First, the 

demographic challenges we face; secondly, our current system, focusing specifically on two initiatives by the Department of Homeland Security’s Immigration and Customs Enforcement Division; 

then, I would like to talk about concerns with certain proposals 

that are currently under consideration; and, finally, our belief as to 

what a workable immigration system would look like, particularly 

from the small business community’s perspective. 

I understand that I have time constraints, so I will try to be brief 

and touch just broadly on these topics. NRCA and EWIC’s members come to the table just like every other business, frankly, in 

this country to the immigration debate, from the perspective of 

meeting our workforce needs. Ben touched upon what we are facing 

from the demographic standpoint. I would like to focus on two industries in particular. There are two of the largest private sector 

employers in our economy—that is, the construction industry and 

the roofing industry—or the restaurant industry. 

Regarding the construction industry, this is what we are seeing 

in the industry today. There was data released by the Pugh Hispanic Center on March 7 of this year. They found that construction 

employed 2.9 million Hispanic workers in 2006. Total employment 

for the construction industry is 11.8, so fully one-quarter of every 

employee in the construction industry is of Latino or Hispanic origin. 

2.2 million of the Hispanics in the industry were foreign-born, 

and a staggering number of those were recent arrivals, meaning 

that they came from—they have arrived in the country since the 

year 2000. That is important to bear in mind, because you need to 

keep in mind that this country only allows 5,000 green cards per 

year of essential worker visas, and that translates into a waiting 

list of about 10 to 12 years. And, frankly, the number would be a 

lot higher if employers decided to take advantage of that program. 

Then, we also have the H-2B program. That is a seasonal visa, 

and that only allows for 66,000 a year. It is capped at that level. 

In 2006, the construction industry employed a total of 559,000 

new workers, and of that number 372,000 were of Latino origin. 

That translates into 66.5 percent of all new hires in the industry 

last year were of Latino origin. About 60 percent of the increase 

in industry employment, or 335,000, were foreign-born Hispanics. 

And 255,000 of the total increase, or 45 percent, arrived in the 

country since the year 2000. 

In total, nearly one-third of all recently-arrived foreign-born Hispanics worked in the construction industry in 2006. So clearly our 

industry is a big draw. 

Regarding the restaurant industry, we are seeing that the restaurant industry is going to need an additional 15 percent of its 

workforce. They currently employ 13 million immigrants, foreignborn, or they currently employ 13 million workers in total, but we 

know that they are going to need an additional two million over the 

next 10 years. 

20

I see I am running a little short on time, so I am going to skip 

over to what we are facing in the current system from the small 

business perspective. There are two initiatives underway. One is 

what is called a Social Security No Match proposal that has been 

issued by the Department of Security’s Immigration and Customs 

Enforcement Division, came out last August. They are signaling 

that they would like to prosecute employers for continuing to employ workers that have been the subject of a Social Security No 

Match letter. The second issue is this ramped up enforcement of 

immigration and customs enforcement that we are seeing across 

the nation. 

I want to be very clear: our members are supportive of adhering 

to immigration laws. They do their best to adhere to them, but the 

system is broken. It is difficult, it is unwieldy to manage, and what 

they are finding is that they are grappling with a system where the 

rules are unclear. A good example is this. If somebody comes 

through your front door and they issue—they give you a form of 

identification, it might be one of 27 different forms, because currently that is what the law says that an employer has to accept. 

If the person looks like they may not be a native-born worker, 

you are not allowed to challenge them, and that is probably a good 

thing. I think that would run afoul of what this country is about. 

But it would violate employment discrimination laws. 

Under the proposal that we are considering now, an employer 

would be held liable in the future even though they would be prevented from asking these types of questions due to anti-discrimination statutes that we have on the books. And so you would have 

a drastic increase of what we see going on in the workplace in 

terms of raids by ICE and them coming through the front door, but 

you are not allowed to really question and investigate whether or 

not your workforce is legal. 

I see my time is up, and I will be happy to answer any questions. 

[The prepared statement of Mr. Silvertooth may be found in the 

Appendix on page 63.]

ChairwomanVELA ́ ZQUEZ. Sure. During the time for question and 

answers, I am sure that you will be able to share with us or express any other ideas or comments that you may have. 

Our next witness is Ms. Maureen Torrey. She is the Vice President of Torrey Farms, Inc., family-owned in Elba, New York. The 

Torrey family has farmed in upstate New York for 11 generations, 

where Ms. Torrey oversees marketing and business management 

for her family’s 10,000-acre farm. 

Welcome, and thank you for being here. 

STATEMENT OF MS. MAUREEN TORREY, TORREY FARMS, INC., 

ELBA, NEW YORK 

Ms.TORREY. Thank you, Madam Chairwoman, and members of 

the Committee, for the opportunity to testify before you today regarding the impact of immigration reform on America’s small business community, and specifically agricultural producers. 

My testimony reflects my own experience as a life-long farmer. 

I am also testifying on behalf of Agriculture Coalition for Immigration Reform, the National Council of Agricultural Employers, and 

21

the United Fresh Produce Association. ACIR is a broad national coalition of agricultural groups working to pass meaningful immigration reform. And I just concluded my term as Chairman of United 

this past week. 

My family and I farm vegetables and dairy in western New York. 

Our farm is now being run by the eleventh generation and the 

twelfth is on the way, if we are able to sustain the business. However, the lack of farm labor, the lack of a workable agricultural 

labor program, and immigration enforcement without a complete 

solution constitutes an immediate and absolute threat to the survival of farms like mine across the country. 

Some years ago, American farm families provided much of the 

needed farm labor, and local communities turned out extra workers 

for peak harvest needs. Times have changed. America’s labor-intense farming operations are now sustained by immigrant labor. 

This is true of fruit, vegetable, farms, dairies, ranches, nurseries, 

greenhouses, and Christmas tree farms. 

Federal Government data shows that the majority of farm workers lack proper work authorization and immigration status. The 

U.S. Department of Labor’s National Agricultural Workers Survey, 

or NAWS, reports that 78 percent of seasonal agricultural workers 

are foreign-born. There are about 1.6 million farm workers who 

perform 25 or more days of hired farm work during the year. 

NAWS reported in 1998 that 52 percent of farm workers lacked 

legal status. Experts suggest that percentage now exceeds 70 percent. 

This phenomenon is national in scope, not just a California and 

border state problem. Data for the eastern half of the U.S. presented by Dr. Dan Carroll of the DOL revealed that an astonishing 

99 percent of new labor force entrants into the agricultural workforce in the eastern states in 1998 through ’99 were not authorized 

to work in the United States. 

These statistics reveal what we already knew. Americans are not 

raising their children to be farm workers. Domestic workers rarely 

apply for farm jobs. And in the absence of a reliable agricultural 

worker program, our industries will rely on workers who present 

work authorization documents that appear, but in fact are not legitimate. This unstable situation threatens small business survival 

and economic prosperity, especially in our rural communities. 

My own story underscores how broken the system is. Since 1981, 

Torrey Farms has cooperated with the New York State Department 

of Labor to recruit farm workers for our operation. No one is hired 

in any position, whether college educated or cut cabbage or milk 

cows without a referral from the New York State Department of 

Labor. 

The Department verifies the work eligibility of the applicants in 

the same manner as most employers. It looks at all the allowable 

forms of identification specified on the I-9 form, yet we know the 

high incident of false documents. We were starkly reminded of that 

fact last October when agents of the Department of Homeland Security’s Immigration and Custom Enforcement showed up at one of 

our farms. 

The agents kicked in the door at one of our housing facilities and 

proceeded to round up 34 workers at 6:00 a.m. in the morning who 

22

had been referred by the State Department of Labor. Referrals 

from the State Department of Labor to our farms have been apprehended on more than one occasion. Put simply, one arm of government recruits and refers our workforce and another arm of government takes away. 

It is a crying shame that our great nation has failed to implement a rational legal system. If we do not see a solution soon, 

much of our food production will move out of the country. It will 

move to areas where labor is available—Canada, Mexico, South 

America, China. 

We are the largest employer in our town and among the largest in our county. We have a $10 million payroll amongst all our entities. This brings back over $70 million in our community. That 

does not include all the work that we do with suppliers and other 

small businesses. 

I just need to touch on the needed solutions. First, we need a reliable and affordable guest worker program. Second, we need an 

opportunity for trained, experienced, and otherwise law-abiding 

farm workers to have the chance to continue working and to earn 

the right to become permanent legal residents of the U.S. subject 

to strict conditions. 

Growers and producers are conservative by nature. We work 

hard, we pay our taxes, we care deeply about the security and the 

future of our country. We care about the rule of the land. We urge 

Congress to finally get the job done this year. We are in a crisis. 

Thank you. 

[The prepared statement of Ms. Torrey may be found in the Appendix on page 76.]

ChairwomanVELA ́ ZQUEZ. Thank you, Ms. Torrey. 

Our next witness is Mr. Ralph Folz, CEO of Molecular. He has 

been responsible for building this company into one of the fastestgrowing Internet professional services firms in the United States. 

Prior to founding Molecular, Mr. Folz served as an advisor of strategies and consultant to several of New England’s largest technology 

companies. 

Welcome, and you have five minutes. 

STATEMENT OF MR. RALPH J. FOLZ, CEO, MOLECULAR, 

WATERTOWN, MASSACHUSETTS 

Mr.FOLZ. Thank you. Madam Chairwoman, members of the Committee, thank you for the opportunity to testify today. I am Ralph 

Folz. I am the CEO of Molecular. We are an Internet consulting 

company with 140 employees located in Boston, Massachusetts. We 

help large firms such as Reebok and Coke and Fidelity Investments 

build Internet sites to reach and service their customers. 

I testify today on behalf of Molecular and as a member of the 

Technology Network, or TechNet. We are a network of CEOs and 

senior executives of companies that are leading innovators in the 

fields of IT, Internet, e-commerce, biotechnology, venture capital, 

and investment banking. TechNet membership is diverse. Some of 

us are leaders of the world’s largest and best-known technology 

companies, and other of us are just starting out with small firms 

with promising innovations that have enormous potential. 

23

We are all entrepreneurs. We believe in the free market and the 

power of ideas. We have turned innovation into high-paying jobs, 

more than a million nationwide. TechNet’s top priority is to shape 

public policy impacting U.S. innovation and technology leadership. 

Recently, TechNet CEOs worked with Speaker Nancy Pelosi and 

others in the development of the innovation agenda, a comprehensive set of public policies designed to spur continued growth and 

expansion of our innovation economy. It is a great pleasure today 

to testify before Chairwoman Vela ́zquez, who has been a longstanding leaders in the policies that encouraged the creation of 

growth of small business, truly the backbone of this nation’s economy. 

I am very passionate about entrepreneurial ventures. I started Molecular 13 years ago with a co-founder, an idea, and $2,000 

each. And we have been able to turn that into a $25 million company generating many high-paying jobs along the way. 

Ensuring that we continue to attract and retain the brightest, 

most talented people from around the world, who can contribute to 

our U.S. innovation leadership, is fundamental to supporting our 

global competitiveness. Highly skilled immigration reform is essential to our nation’s continued economic prosperity. Perhaps for the 

first time in more than half a century the future is truly up for 

grabs. 

Unlike the industrial revolution, today’s innovation economy is 

global. China, India, Russia, and other nations are investing in 

emerging technologies and industries to seize a competitive advantage in the industries and the markets of the future. The number 

of engineering degrees awarded in the U.S. is down 20 percent 

from the peak in 1985. 

Only 17 percent of U.S. college students receive undergraduate 

degrees in science and engineering. That compares to 52 percent in 

China and 41 percent in Korea. As a result, the majority of advanced degrees awarded by U.S. universities in the same areas of 

study are granted to foreign nationals. 

I can tell you that my company has missed business opportunities because we couldn’t hire professionals with specific skill sets 

to do the work. Now, as part of an international network, I have 

seen sister companies based overseas win contracts with American 

firms because they did have the staff to do the work. 

I can also tell you that over our 13 years in business some of our 

best people joined us via the H-1B program. They are incredibly 

bright people, and the vast majority of them are interested in 

building a permanent life here in America. Let us in-source talent 

into America rather than losing the work and intellectual capital 

produced in our American universities to other companies overseas. 

Under the current system, this trend is only going to get worse. 

The U.S. Citizenship and Immigration Service announced that the 

fiscal year ’08 allotment of H-1B visas was met on the very first 

day applications were accepted, the ninth time since ’97 that the 

cap has been reached before the end of the fiscal year. And it is 

the fourth year in a row that the cap has been reached before the 

fiscal year has even started. 

These caps limit how quickly we can grow. It limits our ability 

to stay ahead of our foreign competitors. And if we cannot grow, 

24

we cannot continue to create jobs here in the U.S. At Molecular, 

we are doing innovative work for some of America’s largest companies, and we really want to grow our business and grow it here. 

TechNet supports efforts to develop a comprehensive immigration package that permanently fixes the shortcomings of both the 

employment-based green card and the H-1B visa programs this 

year. We support legislation that gives U.S. employers timely access to highly educated foreign nationals. We need to eliminate the 

artificial quotas, the processing delays and backlogs that undermine U.S. competitiveness. 

We need to create a flexible market-based H-1B cap that would 

ensure U.S. employers are not locked out of hiring critical talent. 

We need to exempt foreign nationals who earn U.S. advanced degrees as well as the foreign-earned advanced degrees from H-1B 

and employment quotas. 

We need to streamline the path to permanent resident status for 

graduates of bachelor’s or higher from U.S. universities who have 

job offers from U.S. employers, and we need to increase the number 

of employment-based permanent resident visas, known as EB green 

cards. 

In conclusion, in an increasingly competitive global economy, the 

U.S. cannot afford to lose its edge in attracting and retaining the 

world’s best talent as a result of complicated and restrictive U.S. 

immigration policies. We commend the Committee for its focus on 

these pressing issues and urge you to play a leadership role in ensuring that high-skilled immigration reform happens this year. 

Thank you. 

[The prepared statement of Mr. Folz may be found in the Appendix on page 78.]

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Folz. 

Our next witness is Mr. Robert Rector. He is a Senior Research 

Fellow at the Heritage Foundation. He played a major role in 

crafting the federal welfare reform legislation passed in 1996, and 

he has conducted extensive research on the economic costs of welfare and its role in undermining families. 

Welcome, sir. 

STATEMENT OF ROBERT RECTOR, PH.D., SENIOR RESEARCH 

FELLOW, HERITAGE FOUNDATION 

Mr.RECTOR. Thank you for having me as a witness. I am here to 

talk about the—my expertise is government spending and government programs, and I am here to talk about the fiscal costs of immigration, particularly low skilled immigration, immigrants who do 

not have a high school degree. 

I have analyzed in the United States there are about four and 

a half million immigrant households headed by individuals that do 

not have a high school degree. About half of these are legal; about 

half are illegal. About a third of all immigrant households in the 

United States are headed by high school dropouts, compared to 

about 9 percent among the native population. 

I analyzed the fiscal cost of these households. That is, the total 

benefits that they receive minus the taxes that they pay in to the 

American government system. I cover a full range of all governVerDate 0ct 09 2002 08:57 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\34833.TXT LEANN
25

ment benefits, including Social Security, Medicare, 60 different 

welfare programs, public schooling, police and fire. I don’t have defense, I don’t have interest, just things that are sort of directly consumed. 

The methods I use are exactly the same as those used by the National Academy of Sciences in their study of the fiscal impact of immigration 10 years ago, and the conclusions I get are basically the 

same. A lot of people say, ‘‘Well, immigrants get less of these benefits. All of my data is based on the immigrants’ self-report in the 

Census of whether they got the benefit or not. If they said they got 

food stamps, then I count food stamps. If they don’t get it, they 

don’t get it. 

And what I find is that the typical low skill immigrant household 

receives about $30,000 a year in benefits from federal, state, and 

local governments, and it pays in about $10,000 in taxes. It pays 

very little income tax, but it pays a significant amount of Social Security tax, a lot of sales and consumption taxes. That means that 

each of these households is receiving each year about $19,500 

worth of benefits that they didn’t pay for with the taxes that they 

paid in. Somebody else has to pay for that, and that somebody else 

is the American taxpayer. 

Overall, these households cost the taxpayer on net, benefits 

minus taxes that are paid in, $89 billion each and every year. 

These households are in deficit, fiscal deficit, at every stage of the 

life cycle. From the moment they walk in this country and form a 

household they begin to cost the taxpayers more in benefits than 

they pay back in taxes, and it kind of gets worse. By the time they 

get to retirement age, they are drawing down about $10 of benefits 

for every dollar that they are paying in. 

The net lifetime cost of a low skill immigrant who comes into the 

United States and brings a family and remains here for life is 

around $1.2 million. That is something that—benefits in excess of 

the taxes that they pay into the system. And, again, this really 

shouldn’t be surprising. 

People say, ‘‘How can they get $30,000 in benefits?’’ Well, the average household in the United States gets around $22,000 in benefits. These households get an additional $10,000 or so from the 60 

different means-tested welfare programs in the United States, and 

they pay very little in taxes. That is why they are in deficit. 

The reality is that the United States has a very generous system 

for supporting less advantaged workers. We don’t require much 

from them. We provide basically free schooling, welfare, Medicare, 

Social Security. We can do that for individuals born in the U.S. But 

if you try to do that for a huge inflow of similar individuals from 

abroad, we simply can’t afford that as a nation. 

Well, now look at this from the perspective of employers. Employers say to me, ‘‘Well, we have to have this type of worker. We 

really need these families.’’ You know, and I always say, ‘‘Well, 

look, each worker of this sort, of a very low skilled worker that you 

bring in from abroad, costs about net $18,000 in excess taxes. Do 

you as the employer want to pay that?’’ And every one of them I 

have ever asked, ‘‘No, no. I don’t want to pay that.’’ Well, who does? 

Who do you want to pay that? ‘‘I don’t care, as long as it is not me.’’

26

And so the reality is that we are irrationally subsidizing a lot of 

this employment through the general taxpayer in a way that really 

does not make sense. And if the employers had to bear the full fiscal cost of these choices, they would make different types of choices. 

Another topic that we are looking at here today is amnesty or 

earned citizenship, or so forth. The most important thing to understand about that is that very few illegals are now elderly, and very 

few illegals have eligibility to Social Security, Medicare, Medicaid, 

and SSI, Supplemental Security Income. If you grant amnesty and 

legal permanent residence, they will have access to those things. 

None of these—for the most part, none of these individuals have 

ever been net taxpayers. When they hit retirement, which would 

occur about 20 years from now, they are going to draw down out 

of programs. The net cost to the taxpayer of that, of granting amnesty to nine million current adult illegals, about 20 years from 

now, will be $2.5 trillion net cost. That is with a T, $2.5 trillion, 

in net cost. And those costs will slam into the system at exactly the 

point the Social Security system is starting to go bankrupt. 

The conclusion is that the current open border system is expensive. Guest worker programs that grant legal permanent residence 

would be even more expensive, and amnesty is very expensive. 

What we really need as a nation is an immigration system that allows perhaps some temporary workers without access to the welfare system, but, in particular, focuses on bringing in high skilled 

workers who will pay much more in taxes than they take out in 

benefits. 

Thank you. 

[The prepared statement of Mr. Rector may be found in the Appendix on page 84.]

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Rector. 

Our next witness is Mr. Mark Krikorian. He is Executive Director of the Center for Immigration Studies. The Center for Immigration Studies promotes public knowledge and understanding of the 

need for an immigration policy that gives first concern to the broad 

national interest. 

Welcome, sir. 

STATEMENT OF MR. MARK S. KRIKORIAN, EXECUTIVE 

DIRECTOR, CENTER FOR IMMIGRATION STUDIES 

Mr.KRIKORIAN. Thank you, Madam Chairwoman. There is a lot 

of ways to look at this issue of immigration and small business, but 

maybe the best place to start is with the opinion and views of small 

businessmen themselves. 

The National Federation of Independent Business and the National Association for the Self-Employed, the two main organizations speaking for small business as a whole, surveyed their membership last year on this specific issue, and they found overwhelming concern among their membership for illegal immigration, 

overwhelming support for increased penalties against their fellow 

employers, who knowingly hire illegal immigrants, and overwhelming opposition to letting illegal immigrants stay. 

None of this should be surprising, because in some sense small 

business is America, given the depth and breadth of small business 

27

ownership and entrepreneurship in our country. And so the views 

of small businessmen simply reflect the broad public dissatisfaction 

with our current policy of open borders through non-enforcement of 

the immigration laws. 

But there are some specific issues, specific to small business, 

that are worth briefly touching on. First, the large scale use of foreign labor is actually harmful in the long run, even to the small 

businesses and the industries using it. As Barbara Jordan’s Commission on Immigration Reform wrote a decade ago, ‘‘The availability of foreign workers may create a dependency on them.’’ In 

other words, as with drugs or alcohol, easy availability of foreign 

labor can create a sort of addiction, rending the user incapable of 

imagining life without a fix. 

But in a free market system like ours, industries evolve and 

adapt in response to changing labor characteristics and changing 

standards. For instance, nearly a century ago, small businessmen 

told—testifying before Congress said that child labor was essential 

for the functioning of their business. One small businessman said 

that ending child labor would ‘‘paralyze the country.’’ Of course, it 

didn’t work out that way, and precisely because a flexible economy 

like ours can and will adapt to changing labor market standards. 

When lawmakers—today’s lawmakers acknowledge the existing 

social consensus against the addiction to foreign labor, legal and illegal, those industries where some small businesses have become 

addicted to that foreign labor will adapt in ways that Adam Smith 

would have easily understood—offering better wages and benefits 

and changing the working conditions and recruitment practices to 

attract and retain legal workers, while at the same time finding 

ways of using the existing labor pool more efficiently, whether 

through increased harvest mechanization, increased use of prefabricated housing, what have you. 

Those who say otherwise are in fact telling the truth as they see 

it. The problem is—in other words, they are not lying. The problem 

is they are too close to the situation to see the big picture. They 

cannot see the forest for the trees, just like the small businessmen 

using child labor were unable to see the forest for the trees. It is 

Congress’ job to step back and look at the whole forest, not focus 

on the bark of a single tree, if you will. 

Two other issues I quickly touch on that are relevant to small 

business. The question is—or the claims are that using an electronic verification system to verify the status of new workers will 

be burdensome and sort of a burden—a new mandate on employers. In fact, that is not the case. All of the information that a 

verification system would collect is already collected. In fact, the 

only way that would change is if Congress abolished the Social Security system and income tax withholding, and I don’t see that 

happening any time soon. 

So that being the case, verifying that already collected information through a free, easy, quick system is clearly not a burden or 

a new mandate. And I can speak with experience about this, because the existing voluntary electronic verification system is something my own small business participates in, and it is quick and 

it is easy and it represents no burden at all. 

28

In fact, a mandate for all businesses to verify—electronically 

verify their new workers isn’t just a question of penalizing employers. In fact, it empowers legitimate employers to make sure they 

actually know who they are hiring and are able to build a workforce on concrete, if you will, instead of on sand. 

And a final point that Congressman Gutie ́rrez referred to was 

the fear that a tighter immigration system, whether it is through 

enforcement or changing some of the categories, would somehow reduce entrepreneurship. And the contention here is that immigration is somehow—immigrants are somehow uniquely entrepreneurial, and immigration represents sort of a booster shot into a 

tired America and increases our entrepreneurial energies. 

Fortunately, when you look at the data, there is actually nothing 

to that at all. Immigrants are actually slightly less likely to be entrepreneurs than native-born Americans are. Certain ethnic groups 

are more likely to be entrepreneurial. Koreans, for instance, are 

more likely to be self-employed, but immigrants overall are actually 

slightly less likely to be self-employed than native-born Americans 

are. 

And so any change in immigration policy is, in fact, not going to 

have any significant effect on America’s entrepreneurial situation. 

Let me end there, and I will be happy to answer any questions 

that the Subcommittee may have. Thank you. 

[The prepared statement of Mr. Krikorian may be found in the 

Appendix on page 94.]

ChairwomanVELA ́ ZQUEZ. Sure. Let me start with you, sir. 

Mr.KRIKORIAN. Yes. 

ChairwomanVELA ́ ZQUEZ. Where is the scientific data or research 

that proves that immigrants are not entrepreneurial? Places like 

New York—if you go to every corner, the grocery store, the manufacturing plants, they are Korean, they are Hispanic. I don’t know 

where you mean when you talk about immigrants, because then 

you say Koreans, they are immigrants, too. So I am a little confused here. 

Mr.KRIKORIAN. I would be happy to explain that. Anecdotes, unfortunately, don’t tell us anything about the broad situation. There 

are, in fact, large numbers of immigrant entrepreneurs, but the 

Census Bureau in various surveys asks whether people are self-employed or not. That is essentially the marker of being—owning a 

small business, being entrepreneurial. 

And the fact is that the most recent data, this is from 2005, 

shows that about 11 percent of foreign-born people in the United 

States, regardless of who they are, where they are from, when you 

put them all together, 11 percent of immigrants are self-employed 

versus about 13 percent of native-born Americans. So that means 

there is a lot of immigrant entrepreneurs. It is just that they are 

no more likely to be entrepreneurs than the native-born. 

ChairwomanVELA ́ ZQUEZ. Yes. The same Census data shows that 

if we take one sector like Hispanics, because for some people Hispanics are the immigrants, are the fastest growing sector. And in 

places like New York, Hispanic businesses are even triple the national average. 

29

So I don’t get it. Anyway, I will recognize Mr. Westmoreland, and 

then I will come back and ask another question, and allow for the 

other members to ask questions.

Mr.WESTMORELAND. Thank you, Madam Chairman. And thank 

all of you for being here. 

Mr. Rector, I wanted to ask you a question. You talked about 

both the legal and the illegal that are in this country. Did that—

the benefit number stay the same whether they were in the country legally or illegally? Or is that just for the illegal? 

Mr.RECTOR. This covers all low skill immigrant households, so it 

has both of them. The illegals probably get somewhat less in welfare, but they do get welfare. Why is that? Well, the reality is that 

most of them have children, and those children are all eligible for 

welfare benefits. They are actually eligible for welfare benefits even 

before they are born. Most of them are paid for—the birth is paid 

by Medicaid, and so the welfare system is actually focused around 

the child. 

So these households do draw down a lot of welfare. They get 

somewhat less government assistance than other households, but 

the main difference between illegals low skill and legals is that the 

illegals have very few elderly people. Okay? And the most—if you 

look at the charts I have provided, this type of household is always 

in deficit. They always receive more in benefits than they pay in 

taxes. But they really go into deficit of about $30,000 per household 

per year, once they hit retirement. 

So one of the major effects of legalizing that illegal population is 

you are going to let them stay here over time, and then they are 

adding in about 10 million people into Social Security retirement. 

That is the single most expensive thing you can even begin to 

imagine, and you would be adding those people in at exactly the 

point that Social Security is its maximum crisis. It is an absolute 

fiscal disaster for the United States. 

Mr.WESTMORELAND. Do you have any statistics about how many 

of the people that are in this country illegal, undocumented, that 

have compromised identification, I guess we could say, that are actually now having taxes and Social Security taken out on them 

that probably will never get it back, or, you know, are receiving 

some type of benefits? Do you have any idea what—

Mr.RECTOR. I do. 

Mr.WESTMORELAND. —that number is? 

Mr.RECTOR. Yes. Well, among illegals, the general estimate is 

that about 55 percent of them are working on the books, and 45 

percent are off the books. So those that are working off the books 

are not going to be paying FICA tax or income tax. 

But on the other hand—well, first of all, they don’t pay much income tax anyway, because of the school level. But if you look at all 

of these, let us throw the legals in, too, because I assume they all 

pay FICA tax. I think that is true. The reality is that they are paying about $3,000 a year in this type of taxes, but they are drawing 

down $30,000 a year in benefits. 

So any analysis that just looks at the Social Security Trust Fund 

and says, ‘‘Oh, look, there is this little dribble of money coming into 

Social Security,’’ you have to look at it holistically. And if they are 

30

putting in $3,000 a year into Social Security, but drawing down 

$30,000 a year out of general revenue, well, who the heck is paying 

for that? Well, the Social Security retirees are paying for it, everybody else is paying for it. 

You have to look at across the board, and across the board this 

type of individual, because we have a system of very serious income 

redistribution in our country, this type of household is always a net 

receiver from the taxpayer. The longer they stay, the more we pay. 

A lot of people say what we need is younger workers to help us 

with Social Security. As my analysis shows us, no, absolutely not. 

What you need is higher skilled workers. They will pay more in 

than they take out in taxes. With a low skilled worker, the younger 

they are, the more they cost over time to the U.S. taxpayers, because they are always net losers. 

Mr.WESTMORELAND. Thank you. 

Mr. Silvertooth, I come from a builder background and use many 

roofing contractors, by the way, but I also used a lot of subcontractors. And as you know, we put an amendment on the House-passed 

immigration bill that we did last year that set a standard of knowingly hiring an illegal immigrant. I understand that now there is 

some folks out there and some conversation about changing that 

standard from knowingly to reckless disregard. 

And I would like to know if you have looked at those two different terms and could put your input into whether the ‘‘knowingly’’ or the ‘‘reckless disregard’’ and how that would affect your 

business. 

Mr.SILVERTOOTH. Thank you, Congressman. The answer to this 

is very simple for the construction industry. We are an industry 

that is defined by contractual relationships, as you indicated. The 

knowing standard would establish clearer guidelines for prosecution of an employer for a violation. 

Reckless disregard or even a lower standard, such as reason to 

know, which is also being contemplated currently in discussions, 

would lower the standard, making it easier to prosecute an employer by inferring this notion that, well, a reasonable person 

would have done this, a reasonable person might have done that. 

You didn’t, so we are going to go after you. 

Well, as you said in a hearing earlier this year regarding a level 

playing field, if you ever see one, please take a picture of it, because you have never seen it before. I am not really sure who that 

reasonable person is. It is a straw-man argument. It is thrown out 

there as a standard, and it might be a standard that no business 

would be able to live up to. 

Also troubling about this, and this is particularly for the construction industry, but it would affect any type of business that has 

a contractual arrangement, is this notion of vicarious liability 

where you are held to—you are held liable for the actions of another employer and their hiring practices, but you don’t really have 

the power to hire or fire that employer’s employees. 

And we think that is not an appropriate standard of liability either, particularly you don’t have the power to do anything about 

it. But if we are going to be migrating to a system in which every 

employer in the country is participating in some type of new 

verification system, and DHS believes that they have confidence in 

31

the system and that there is—they have high voracity in it, then 

it strikes us as redundant and superfluous, frankly, to have an employer on the hook for the actions of another. If the system is working, DHS ought to be able to catch the subcontractor. 

Mr.WESTMORELAND. Thank you. 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Ms. Clarke. 

Ms.CLARKE. Thank you very much, Madam Chair. I just wanted 

to direct my question to Mr. Silvertooth and Mr. Johnson. And this 

has to do a little bit with the STRIVE Act. You know, that is our 

centerpiece legislation on immigration reform in the House, and it 

covers many areas including the new worker program. 

There are triggers in the bill. You are probably both familiar 

with these triggers. I wanted to—and the Department of Homeland 

Security—it states that the Department of Homeland Security may 

not implement the new worker and legalization programs until it 

completes a certification process. 

Can you explain these triggers in the STRIVE Act, and do you 

think these triggers prevent or unreasonably delay the implementation of legalization or new worker programs? And you may also—

some other folks on the panel may have some thoughts around this. 

Mr.SILVERTOOTH. The inclusion of triggers I think is probably 

important from a political standpoint in order to build the political 

will within Congress to make sure that we can get comprehensive 

reform. At the same time, we are strong believers that there needs 

to be four legs on this stool. 

There has got to be border enforcement, there has to be interior 

enforcement, there has to be some type of future flow program, so 

we are not setting at this table again 20 years from now scratching 

our heads wondering what we did wrong in immigration reform, 

and there needs to be some type of transition to some type of legal 

status for those that are currently here in an undocumented capacity. 

If we do something short of that, if we put these triggers out 

there and we start enforcing first, there needs to be a transition 

protection for those workers that are currently in the economy, and 

there needs to be transition protection for those businesses that are 

using those workers currently, because they are grappling with an 

imperfect system, and it would be unreasonable to start enforcing 

on them for a failed status quo. 

So that would be my initial comments. 

Mr.JOHNSON. Yes. Since we don’t lobby on legislation, maybe I 

am not as constrained by the politics of this issue. But I am troubled by the idea, because you don’t see it in any other context, 

right? We don’t say that we are going to wait to make sure there 

is no more tax fraud before we reform our tax system or no more 

health care fraud until we reform our health care system. 

And in the immigration context, the key to getting control of the 

borders is dealing with, you know, one of the root causes of undocumented immigration, which is this sort of schizophrenia that we 

have at our border, the fact that our economy hangs up a Help 

Wanted sign, and then our immigration system hangs up a Keep 

Out sign. 

32

And an effective border enforcement policy has to confront the 

sort of disconnect that we have between our economic policies and 

our immigration policies. Otherwise, the prospects of gaining control over the border is going to be enormously expensive. We have 

in the last 10 years quintupled the amount of money we spend on 

border enforcement, tripled the size of our border patrol departments, and the result is we have more undocumented immigration, 

more deaths at the border, a huge growth in the business of human 

smuggling. 

So the fact that we are trying to—you know, that part of the 

enemy here is our own economic demand, makes the costs of fighting ourselves much, much more expensive than it has to be. I don’t 

see any reason why you can’t do both. You need smarter, more effective enforcement. But part of the way that we gain control of the 

borders is making sure that we have a system that is responsive 

to the family and employment demands that we have in our economy. 

Ms.CLARKE. Ms. Torrey, you wanted to comment? 

Ms.TORREY. Yes. I would just like to add, on behalf of the agriculture community, along with the comments that Mr. Silvertooth 

made is that the STRIVE bill is fine for us except the main problem is the triggers. Agriculture can’t wait for the programs to be 

implemented. We are in a crisis situation right now. 

And the agriculture community recognized this over 10 years ago 

and started addressing the issue, and we need to have some type 

of program that works for us now, and we can’t wait. 

Thank you. 

Mr.KRIKORIAN. Yes. Thank you, Ms. Clarke. I can’t comment on 

the internal politics within Congress, but the reason the trigger 

idea is introduced—and I am somewhat dubious of it, but the reason it is there is because no one believes the new rules will be enforced, and with very good reason. 

In 1986, the deal was a grand bargain. Prohibition of the employment of illegal immigrations for the first time ever, in exchange for, 

as it were, tying up the loose ends, legalizing the illegals who were 

here. The amnesty part of it came up front; the promises of enforcement were to come in the future. They were abandoned. 

And no one believes—and, I mean, I think the public largely 

doesn’t believe either that new bodies of rules will be enforced. And 

in a sense, the sense is fool me once, shame on you, but fool me 

twice, shame on me. And that is why a trigger requirement is attractive to a lot of people, because it prevents—it makes sure that 

the enforcement happens first, at least some of it, before the legalization follows. 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Mr. Sestak.

Mr.SESTAK. Thank you, Madam Chair. I just had two questions. 

Mr. Krikorian, when you did your analysis of—on the 11 percent 

and the 13 percent, when you went back to the 1800s and looked 

at the percentages for the immigrants then, and their entrepreneurship as compared to the population then, what were the percentages? 

33

Mr.KRIKORIAN. We didn’t, and I am pretty sure the reason for 

that is the Census Bureau doesn’t keep those kind of—

Mr.SESTAK. Who do you think would? 

Mr.KRIKORIAN. I have no idea. Probably—

Mr.SESTAK. How far back did you go? 

Mr.KRIKORIAN. Well, we—

Mr.SESTAK. I mean, is this statistically—if I could, is this statistically important, the 11 and 13 percent? I mean, if you went back 

50, 60, 80 years, I mean, that just might be what things are. You 

know, 11 percent now, and three decades from now they—all of a 

sudden you have, you know, a standard in oil. I mean, is it really 

significant what you are telling us, if you can’t go back and say, 

‘‘What is the reference for it’’? 

Mr.KRIKORIAN. No, I understand. We actually went from 1970, 

’80, ’90. 

Mr.SESTAK. No, I know that. 

Mr.KRIKORIAN. 2000. 

Mr.SESTAK. But I am trying to get back to, you know, maybe the 

last great wave of immigration. 

Mr.KRIKORIAN. I understand. 

Mr.SESTAK. You know, the Irish or, you know, something like 

that, because we come in waves, you know. 

Mr.KRIKORIAN. Nobody asked, number one, back then. 

Mr.SESTAK. It would be very interesting to know, because you 

are saying these statistics are important, but I don’t have any reference for them. Eleven and 13 percent compared to the last great 

wave of immigration, I would love to see, because I would think 

coming in here and just getting a job—you are probably coming 

here to make sure your kids can eat, and somewhat you are less 

risk—more risk averse, if that is the case. You kind of get going 

and steady them out a bit, and then maybe the entrepreneurship 

comes. 

I have a question for you, Mr. Rector. I was really taken by your 

comments about how you needed to do this holistically. Do you remember the last comment you made? If you really do your analysis 

holistically, as I listened to these here say, and those less—those 

people can’t put as much into the system as you say, aren’t putting 

as much into the system, if they are removed, they disappear with 

a magic wand, what is the cost attendant to this nation’s economy, 

if it could? 

In other words, if you really do want to do a holistic analysis, 

what are the benefits that accrue from having them here to the 

quality of our lives—a non-leaky roof? I mean, and the taxes attendant to being able to have a farmer produce more fruit. What 

did your analysis show for that? 

Mr.RECTOR. My analysis doesn’t cover that, but I can answer 

that. If you—

Mr.SESTAK. But if we have to do holistic, shouldn’t we do that? 

Mr.RECTOR. If you jerk them all out of the economy tomorrow, 

you would have a big shock effect. But let us look at it another 

way. If you look at the flow of illegals that we currently have coming in, we are probably going to bring an additional seven million 

low skill illegals in under the status quo—

34

Mr.SESTAK. If I could interrupt for a moment. you took a snapshot. It wasn’t a fluid or dynamic situation at this moment. And 

you presented it here as something very important—this snapshot—and emphasized it was to be seen in a holistic way. If you 

take that snapshot today and look at the benefits, forget the cost 

in disappearing, potentially that was the wrong way to ask it, but 

you look at the benefits that accrue to this from more taxes paid 

into the system, from growing businesses and things like that, 

what does your analysis show for that? And if that is not done, why 

not do that? Shouldn’t that give us the holistic cost-benefit analysis? 

Mr.RECTOR. I do account for all of the taxes paid into the system. 

Mr.SESTAK. From the businesses? In other words, the roofing 

business is able to do something because they have people letting 

them do something, and they grow bigger and they pay more taxes. 

Without those people here, they wouldn’t pay more taxes. In other 

words, that snapshot. 

Mr.RECTOR. That is—

Mr.SESTAK. If you pride yourself on holistic approach. 

Mr.RECTOR. I think what you are getting at is the contention 

that by adding more immigrants in—

Mr.SESTAK. No, that is not what I am getting at. What I am getting at specifically is you said that holistic approach was important. Your holistic approach looked at this—what these people put 

in and what they took out into government, but not the economy. 

And so, therefore, what does that cost-benefit analysis show, and 

shouldn’t we do that whole picture? 

Mr.RECTOR. Absolutely. And I—and, for example, the National 

Academy of Sciences did that analysis in their 1997 study, and 

they found that the net economic gain from immigration was between $1- and $10 billion a year. It is very, very small. And there 

really—this is the way to separate this question out. There is no 

doubt that when you add illegal immigrants into the economy you 

get a bigger GDP. I mean, obviously you do. You have a larger 

economy. 

The real question is: does the fact that you have a larger economy mean that the average American citizen has a higher post-tax 

standard of living or income as a result of that? And that is really 

the issue, okay? And what my study is indicating is, no, that there 

would have to be massive positive externalities to make up for 

these huge fiscal costs that come along with this type of labor. 

And you don’t get that. You do not get—I draw a wage. The fact 

that I draw a wage does not magically make you richer, okay? Just 

adding labor into the economy—one way of looking at this is let us 

say you have a factory, you have 10 employees, okay? Next week 

we add one additional employee. Now, a lot of people say, ‘‘Oh, 

well, the output of the factory just went up 10 percent.’’

Well, the real question is: what happened to the wages of the 

first 10 workers? Did they go up? Did they go down? And that is 

the question you have to ask, and there is, in fact, to my knowledge 

virtually no economic literature that shows that just by adding low 

skilled labor into the economy that the incomes of the average citizen post-tax get better. In fact, they seem to get significantly 

worse. 

35

Mr.SESTAK. May I have just one moment? 

ChairwomanVELA ́ ZQUEZ. Yes, Mr. Sestak. 

Mr.SESTAK. I guess I—I appreciate your tangent there. My question just is that I am taken by any analysis, but I have always 

been more taken when it is more holistic. And I think that I understand the ins and the outs to government, and you have now said, 

okay, there is some document here that says there is more benefit. 

I am not arguing whether we should have more illegal immigrants. 

I am not arguing that issue at all. 

I just want to make sure when someone comes forward and presents the benefit and the cost that it is the most holistic way, and 

that is my only point. And I would like to have the other study—

the research you said you have done—that leads you to believe, because you must have great regression analytical capability that you 

can pull out Tax Code policies, impact of tax policies, etcetera, to 

show that more people—illegal or whatever—don’t add that much 

benefit, the one that you mentioned that, if I heard you correctly. 

Mr.RECTOR. That was the National Academy that—

Mr.SESTAK. No, no. There was another one you said that your 

analysis says that—and maybe I missed the point—but you have 

also done some extrapolation on your own when you went off there 

for a while. Do you know what I am saying? Whatever that area 

is—I have gone on too long, but whatever that analysis is, I would 

love to have it. 

Thank you, Madam Chairwoman. 

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Sestak. 

Following the statement made by Mr. Rector, I would like to direct my question to Ms. Torrey and Mr. Silvertooth. He stated that 

there is a drain of—he talked about the drain that immigrants 

have on our economy and our government. And you both, Ms. 

Torrey and Mr. Silvertooth, have spoken about the importance of 

immigration to the agriculture and the construction sector. 

So these are both billions of dollars industries. So can you talk 

to us about how immigration has allowed for growth in your industries? 

Ms.TORREY. I will go ahead, and I will give a personal example. 

Our small community in upstate New York, two to three generations ago, the migrants were the Italians, and they were the people 

working in the fields, sleeping in barns, and going home on the 

weekend. The first generation did that, the second generation became the workers, the third generations have left the farms. 

In the late ’70s, the Hispanics became our workers. Our farm—

in 1978, we only owned 146 acres of land. The only reason why we 

have grown is because of our Hispanic workers. We have three generations working for us. They work—we offer a 401(k), profit-sharing program. We have a lot of extended families, we have families 

with 45 to 60 people in them. It is an entry-level with a skill that 

they can bring from their country to help grow our food industry. 

And then, their hopes and dreams for their children are to educate themselves and go on. And it has made a thriving industry 

here in this country. 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Mr. Silvertooth. 

36

Mr.SILVERTOOTH. Our experience has been very similar. As I indicated in my testimony, you know, two-thirds of the new entrants 

into our economy, into the construction economy last year, were 

Hispanics, and a huge percentage of those were foreign-born immigrants. 

There is a few reasons that is happening—our birth rate is low, 

our population is aging, people are cycling out of the workforce, and 

at the macro-economic level in this country the reigning educational philosophy through the Department of Education and subsidizing student loans is that we should send our native-born 

Americans to four-year colleges and get them through that. 

A lot of the service sectors have a very tough time attracting people into our industry, despite the fact that construction is one of 

the quickest paths to entrepreneurship, as is the restaurant industry. The other thing that you see in our industry is that the average wage in construction this past March was $21 an hour, and yet 

we still have shortages across the country. 

Now, admittedly, they are geographically disparate, but I have contractors in the San Francisco Bay area that offer a $40 an hour 

package, and they have vacancies. They have to pass up work as 

a result of that. And that contracts the economy, that contracts the 

GDP as well, because there is work that could be performed that 

is not being performed. Sixty-nine percent of my members reported 

in a survey last year that they were short workers, that they were 

not able to access the workers they needed. And close to half of 

those indicated that they had passed up on work because of that 

phenomenon. 

So to the small business industry in general, foreign-born labor, 

the ability to access that when there are not American workers 

available is absolutely critical. And if we are not able to do that, 

our industries are going to atrophy. 

ChairwomanVELA ́ ZQUEZ. Mr. Folz, can you comment on immigration in your industry? 

Mr.FOLZ. All I can is that listening to all of the testimony so far 

that immigration is a very important part of our company. It 

brings diversity to our company. These are people that are some of 

our best employees. They want to live here permanently. 

I would also add that for every employee we can add to our company means about a quarter of a million dollars of revenue for our 

company. So in terms of measuring holistic impact, it is much more 

than the taxes they pay in. It has tremendous impact, and that 

doesn’t even count the work we are able to do for our American clients that help their business. So I think it has a magnifying effect. 

ChairwomanVELA ́ ZQUEZ. Yes. Mr. Folz, you mentioned in your 

testimony that last month the fiscal year 2008 allotment of H-1B 

visas for skilled foreign-born employees was exhausted six months 

before the start of the fiscal year. That means that there is at least 

an 18-month wait for new visas. Can you help the Committee understand the implications of this situation for a technology company like yours that might here from a good customer that they intend to double their order next year? 

Mr.FOLZ. Yes, it is quite simple. If I have a customer that would 

like to do more business with us, and I have a vast shortage of engineers that I can hire into my company, I will give you a real exVerDate 0ct 09 2002 08:57 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\34833.TXT LEANN
37

ample. We have—we recently hired two college graduates, foreign 

nationals. They can stay here for a year under a practical work 

visa, but they did not—we were not able to get them a visa in the 

latest allotment. 

And because of this—because of the timing, I can have them for 

a year. And if they don’t win the next lottery, even if they do, there 

is going to be a gap in time where they are going to have to leave 

the country. It is incredibly disruptive. And for a small business, 

too, it gives us pause as to whether we can even take the risk in 

the investment in hiring these great people. 

ChairwomanVELA ́ ZQUEZ. Okay. Ms. Torrey, in your testimony, 

you talk about the ordeal that you face regarding some of the problems with our current verification system, both at the federal and 

state level. So my question is: do you support an electronic or telephonic verification system that will provide greater certainty that 

you are provided with legally authorized workers? 

Ms.TORREY. Yes, if we—as long as we—not only being electronically, it also needs—we need to be able to do it by the telephone, 

because some hiring is not done in an office. It is done out in the 

field. It needs to be simple. The number of acceptable documents 

must be reduced to a few. 

We must make sure that it prevents identity fraud. The 

verification system must give fast confirmation, as we hire seasonal 

workers that come and go. It has got to work fast for us, because 

when a crop is ready to harvest, to wait 30 days is not the answer 

for us. 

And the other thing is when we hire these people, we also have 

to provide housing. And if someone has moved in, and all of a sudden after the process, how do I get them out? And I have turned 

away somebody else that probably had proper documentation. 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Mr. Johnson, about 12 percent of the construction industry’s 

workforce is undocumented employees. That number percentage is 

even higher for many other industries. In agriculture, it is 13 percent; food manufacturing 14 percent; and in private households, it 

is as high as 21 percent. With such a large number contributing 

to the total workforce, some have suggested an earned legal status 

for these workers will have the least damaging effect on our economy. What options are available to integrate these workers who are 

already here? 

Mr.JOHNSON. Well, integration, I mean, in the larger sense, you 

know, has to be part of this equation as well. I mean, and one of 

the, you know, benefits of allowing people a path to permanent status, I mean, I think there is a role for a temporary worker program 

for, you know, truly seasonal temporary jobs. 

But an over reliance on a temporary worker program, particularly for jobs that are permanent, I think cuts off our ability to incorporate these people into our society. Language acquisition, home 

ownership, economic development—those are the keys to integration, giving people the tools and the resources that they need to become part of our communities, both from a communication as well 

as from an ownership perspective, is an essential part of the value 

that we have gained from immigration. 

38

I certainly would like to see us have more carrots and not a lot 

more sticks when it comes to integration. 

ChairwomanVELA ́ ZQUEZ. But, Mr. Johnson, what will you tell opponents who believe that this is rewarding those who have cheated 

the system? 

Mr.JOHNSON. Well, I would say that those people who are in the 

United States in an undocumented status, I think that there is—

sort of agreeing with Congressman Gutie ́rrez, I think there is a 

penalty to be paid for that, but that penalty has to be proportional 

to the offense. And I think we also, quite frankly, need to keep in 

mind that victims—or that immigrants themselves are also victims 

of our dysfunctional immigration system. 

They are drawn here by the Help Wanted sign that our economy 

hangs at the border. And for the most part, they come through the 

back door because the front door is closed. I think we have a responsibility to create a system that allows them to come through 

the front door. 

Shifting all the responsibility for our dysfunctional immigration 

system onto immigrants I think is just that—avoiding our own responsibility. 

ChairwomanVELA ́ ZQUEZ. Thank you, Mr. Johnson. 

Mr. Davis. 

[No response.] 

I will recognize Mr. Chabot.

Mr.CHABOT. Thank you very much, Madam Chair. And, again, I 

want to apologize for having not been able to be here during the 

testimony. I am going to reread all the testimony from the statements that we got last night on this. I had to give a speech down 

the street here, so I do apologize. 

But let me start with you, Mr. Silvertooth, if I can. If the cap 

on temporary H-2B visas was raised, what level would you recommend to make a real difference? 

Mr.SILVERTOOTH. Well, currently we are operating under an extension of that program where—that is set to expire this September, in which workers that have been in the program for the 

previous three years are exempt from that cap. NRCA is a member 

of a coalition that is advocating for an extension of that program. 

We think that makes sense. 

But the way I would answer this question is this. The way you 

need to look at the H-2B visa program is to understand that we 

have shortages in permanent labor in this country, and then we 

have shortages in truly seasonal work in that. What I would probably recommend is that we have some type of market regulator 

that looks at the vitality of these industries on a yearly basis, what 

their particular needs are, look at the regional variations in terms 

of need. 

For instance, agriculture—well, agriculture is not covered by H2B, but there are certain industries that would be covered, such as 

seafood processing, the Eastern Shore - this is a big issue for them. 

If they have a bumper crop coming up that season, there may need 

to be an adjustment on that. Similarly, we would have to look at 

what our tourism demands are in the country. 

39

So I think 66,000, if you have this exemption for previous workers, is a workable system. But there would need to be some type 

of market regulator and take a look at it in a couple of years. 

The other thing that I would recommend in terms of the H-2B 

program is there needs to be particular attention paid to the processing of H-2B visas. The system is currently in a state of crisis. 

In Mexico, the largest processor of visas in that country is in the 

Monterrey Consular Office. They just decided earlier this year, or 

at the end of last year, that they would stop processing visas for 

the season, and it took Congressional intervention to get them to 

resume that. 

You have also got problems in regional DOL offices here in the 

country. We are having a devil of a time in the Chicago and Atlanta offices in terms of delays. 

Mr.CHABOT. Thank you very much. 

Mr.SILVERTOOTH. Thank you. 

Mr.CHABOT. Mr. Rector, if I could turn to you next. Before I ask 

a question, I just want to publicly acknowledge your important role 

in one of the most significant issues that I think we faced up to 

in this country during the Clinton administration, under a Republican Congress at the time—that was welfare reform, and I believe 

you were at the Heritage at the time. 

And many of us, including myself, looked to you for knowledge 

about the right way to go on this. And your recommendations 

ended up being followed not to the letter but to a great extent in 

the welfare reform. Had we followed your recommendations, it 

would have been even better. 

But in any event, thank you for you involvement because the 

welfare roll since that welfare reform was passed that President 

Clinton signed, the welfare rolls are less than half of what they 

were at the time, and we have turned more power back to the 

states. And the time that a person could be on welfare was no 

longer forever, but it was—there were time limits. And there were 

so many things, and you had a lot to do with that, so I want to 

publicly acknowledge that and thank you for your work on that. 

Now, turning to my question, it is my understanding that in my 

absence you mentioned that immigration reform should center on 

highly skilled and temporary workers without including amnesty. 

Could you explain why this would be beneficial to the economy and 

why that is the way we ought to go? 

Mr.RECTOR. I will just quote from the study of the National 

Academy of Sciences from 1997. What they showed was that high 

skill immigrants coming into the United States with a college degree pay more in taxes into the system than they take out in benefits. They show, conversely, that dropout immigrants take out significantly more in taxes than they—in benefits than they take in 

taxes. Therefore, each of those individuals is a net cost to everybody in society. 

Moreover, they show that the huge deficit is so large that even 

when you include the fiscal contributions of their offspring for the 

next 300 years, you never make up for that initial cost. That is a 

pretty potent statement, and the reality is that in our society what 

we need are—there are probably a billion people across the globe 

who would like to come and live in the United States. 

40

And we can’t admit them all, but we should have a criteria of 

those individuals that we do admit that when we bring them in 

they are a net benefit to American citizens instead of a net liability. And the reality is very simple: if I came to you today and said, 

‘‘Hey, we just added 10 million high school dropouts, native-born, 

across the United States,’’ everyone on this Committee and everyone in this room would say, ‘‘Well, that doesn’t sound like a very 

good idea. That sounds like a lot of social problem. That sounds 

like a lot of government cost.’’ And as a welfare expert, I will tell 

you, yes, that is an awful lot of governmental cost. 

But somehow, we have imported in the last 20 years 10 million 

high school dropouts from abroad. But because they came from 

abroad they suddenly have this magical quality that they don’t cost 

us anything and they contribute all this magic to the economy. 

Well, if they contribute magic to the economy, then domestic-born 

high school dropouts must also contribute magic to the economy, 

making everything magically bigger. Every dollar that they earn 

contributes two dollars—there is no economic literature that shows 

that at all. 

The reality is that high school dropouts are costly. They generate 

social problems. Doesn’t matter where they come from. Therefore, 

our immigration policy should focus on bringing in individuals who 

will make a maximum economic contribution, and who will pay 

more in taxes than they take out from the system. 

Particularly, if you are looking toward the viability of Social Security, you don’t want to bring in people that are a net fiscal deficit 

every year that they are in the country. They will make the Social 

Security crisis infinitely worse, and that is exactly what amnesty 

is going to do. It is going to add $2-1/2 trillion in costs in retirement in about 20 years, exactly the time Social Security starts to 

go bankrupt. It couldn’t help but do otherwise. Okay? 

If you want to make Social Security more viable, bring in higher 

skilled workers. And you don’t need to do it now, you should do it 

a little bit later, so that they would be contributing at the maximum point of crisis. 

Mr.CHABOT. Thank you very much. 

Mr. Johnson, if I could turn to you next. In Congress, in recent 

years, and even very recently, we have significantly bolstered federal programs to encourage more students to pursue math and 

science and technology fields, so that we can better compete in the 

global economy. Are these programs to respond to the need for 

skilled students and workers, are they working? Are they heading 

in the right direction? What are your thoughts about that? 

Mr.JOHNSON. Well, I mean, they are important investments, and 

I think we need to do more, particularly in the science and technology fields, to encourage native-born students to pursue those 

types of degrees. We continue I think to be lacking in enrollment 

and graduation rates for the native-born in those areas. 

We have seen some improvements. You know, I hope those improvements will continue. You know, there is no question that, you 

know, part of the formula—and this is what I take issue with Mr. 

Rector, is that you need a well-rounded labor force. You need a 

labor force that is made up of people who have less education and 

41

skills and a labor force that is made up of people who have very 

high levels of education. 

I think we have got to make sure that we are creating a labor 

force that is that dynamic and flexible, and the education trends 

that we are talking about are important. We need to do more in 

terms of those investments. 

Mr.CHABOT. Thank you. 

Mr. Krikorian, if I could turn to you next, you have written about 

the false premise that since the Federal Government can’t quickly 

deport the 10 to 12 million illegal immigrants, the only alternative 

is legalization or amnesty. You have said that the only approach 

that can actually work is shrinking the illegal population. Could 

you explain how this could work, how we could go about following 

that recommendation? 

Mr.KRIKORIAN. Sure. Thank you, Congressman. The way you put 

it is correct, that we are presented with a false choice—deport everybody tomorrow—Mr. Sestak had said, you know, what if everybody disappeared tomorrow? That couldn’t happen anyway, even if 

we wanted it to, because we don’t have the resources, and it would 

be shocking to the economy and the society. But the only alternative is not legalization. 

It is what you could call attrition through enforcement, where we 

enforce the law, and rather than—which we have never really even 

attempted to do before—enforcing the immigration law inside the 

country. So that instead of allowing the illegal population to grow 

every year, we start shrinking it every year. 

And this is realistic, because there is already a lot of churn in 

the illegal population, people coming and going, what have you, so 

the thing to do would be to make sure fewer new illegals arrive, 

more of those who are already here leave. And almost half of 

illegals have been here less than five years anyway. These are not 

all people with roots here. 

Essentially, what we have done—what we can do is back out of 

this problem that we have created over a period of years. Once we 

have shrunk the illegal population, once there is a political commitment to enforce the law and people actually believe that it is being 

enforced, and with good reason they don’t believe it now, then 

maybe we can address the question of legalizing some of those who 

are still here. 

I am not sure I would be for it or not at that point, but it is a 

legitimate topic for discussion, but only then. It is not even a legitimate topic for discussion as far as I see it, until we have, through 

attrition, reduced the size of the problem and created a mechanism 

that can in fact enforce the new rules. 

Mr.CHABOT. Thank you. 

In the interest of time, Madam Chair, I will yield back the balance of my time now. Thank you.

ChairwomanVELA ́ ZQUEZ. Thank you. 

Ms. Torrey, because the fruits and vegetable industry is so labor 

intensive, it is important that employees in this sector have access 

to the proper visas and documents to work in the U.S. What type 

of documentation is necessary for your industry to have, in order 

to ensure that you have the workers you need to do the job? And 

42

my other question is: how many graduates with bachelor’s degrees 

or master’s degrees come to your business seeking jobs? 

Ms.TORREY. I do have some that are looking for mid-management 

jobs. 

ChairwomanVELA ́ ZQUEZ. No, no, no. But I am saying, you know, 

to go there and pick the—

Ms.TORREY. And pick vegetables? 

ChairwomanVELA ́ ZQUEZ. Yes. 

Ms.TORREY. None. 

ChairwomanVELA ́ ZQUEZ. None. 

Ms.TORREY. None. None at all. And no matter if I offered 

$100,000 starting would they show up. It is not only fruits and 

vegetables, Chairman, it is also the dairy industry. And they are 

at more—even more of a greater risk than the fruit and vegetable, 

because we do have a dysfunctional H-2A program that less than 

2 percent of us do use. But the dairy industry does not even have 

that available to them. 

ChairwomanVELA ́ ZQUEZ. If you don’t have access to the workforce that you need, what does that mean to the average American 

when they go to the grocery store? 

Ms.TORREY. We are going to see food inflation like we have never 

seen before. It is going to be imported. 

ChairwomanVELA ́ ZQUEZ. Mr. Folz—

Ms.TORREY. But worse yet, it is going to be our communities—

our rural communities are going to be boarded up and dying, because we are what keeps—agriculture is what keeps a lot of communities alive across this country, and the businesses that feed off 

of them. 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Mr. Folz, the U.S. Labor Department has estimated that nearly 

one million new jobs in math and computer science will be created 

between the years 2004 and 2014. As I understand it, foreign nationals received the majority of the total number of advanced degrees awarded by U.S. universities in science, technology, engineering, and math fields. 

Without reform of the current H-1B system, wouldn’t you expect 

recruiting and retaining skilled employees to become increasingly 

difficult for small technology companies? 

Mr.FOLZ. I would say that we have that problem today. So I have 

even seen this—this trend has been happening the last few years. 

This isn’t something that is happening now and is 10 years forward. So the last few years it has become increasingly more difficult to find people. 

We probably have 20 open positions today that we would fill 

them tomorrow if we had the right candidates. We now pay on the 

order of $30,000 to recruiting firms to find us one engineer. So it 

is becoming dramatically expensive, and we are just taking the 

same engineers from each other rather than focusing on more engineers. 

So I think it is both a long-term and a short-term problem. The 

long term, I am fully supportive of everything we do to get more 

children interested in the math and sciences and get more people 

involved in this field. In the short term, the caps on the visas are 

hurting us today and now in our ability to service our customers. 

43

ChairwomanVELA ́ ZQUEZ. Yes, Mr. Johnson. 

Mr.JOHNSON. I just wanted to say that it relates to the question 

that Congressman Chabot had as well, which is that, you know, 

particularly at the high skilled end, this isn’t always just about 

shortages. I mean, it is a serious question, but it is also about specialty skills. 

So even as we improve the graduation rates in science and technology, I think it is important that we stay open to the fact that, 

you know, we don’t have a monopoly on good ideas here in the 

United States. Sometimes the newest technology that is being developed, sometimes the new ideas for how to find oil or how to find 

new resources, or whatever they may be, are being developed 

abroad, and we want to stay open to the idea that bringing those 

talents here to the United States will create more job opportunities 

for the industries that we are trying to build. So specialty occupation is as important as the concept of shortage as well. 

Mr.FOLZ. Madam Chairwoman? 

ChairwomanVELA ́ ZQUEZ. Yes, Mr. Folz. 

Mr.FOLZ. Since 1990, technology firms have been funded with 

venture capital. Twenty-five percent of them have had founders 

that were foreign nations—25 percent. These are innovators. We 

want them to come here. And these include names such as eBay 

and Yahoo, incredible companies that started small and were very 

successful. 

So when we have a cap, you know, are we excluding the next Bill 

Gates from entering our country? 

ChairwomanVELA ́ ZQUEZ. Thank you. 

Mr. Silvertooth, employers have expressed concern that the error 

rate for the basic pilot program is too high at 8 percent. Add that 

to the fact that the basic pilot only services 16,000 employers, and 

not the 5.6 million employers that actually need it, what costs in 

time and money will manually checking each employee’s status impose on your company? 

Mr.SILVERTOOTH. The initial cost is in terms of productivity, because, as you are focusing on administrative tasks, you are not focusing on serving your customer’s needs. This is particularly important for small businesses. A lot of us have lean administrative 

staffs. A lot of the accounting departments for small businesses are 

the kitchen table. Sometimes the storage is the garage. 

We are not talking about companies with economies of scale such 

as General Motors or Microsoft that have entire departments of 

thousands of employees that deal with this type of situation. 

Regarding the basic pilot program, you are right, we have seen 

error rates that are pretty high so far. It causes problems for the 

employees, as well as the employers as well, because you have employees that are in a state of limbo. If we were to expand this into 

the entire employer community, there is estimated to be—depending on whose estimates you go with, anywhere from about 5.6 to 

7 million employers in the country, it depends on how you measure 

a lot of the independent contractors—you are looking at a scenario 

that would overwhelm the resources of this government. 

And that, in turn, is going to be put back on business, because, 

once again, you are in a state of limbo. Do you hire somebody in 

44

the interim? Do you make an offer of employment when you are not 

certain as to what their concerns are going to be? 

Congressman Westmoreland noted that the early weeks are frequently the most expensive weeks in terms of bringing a new employee on board. So there are costs associated with that. 

In terms of the construction industry, we have a unique situation, because most of our work is performed outside of an office. 

They are at multiple work sites. Having employers come off of the 

job work site and go to another location is, frankly, not a recipe for 

running a successful business. It cuts into your productivity, and 

we are already seeing a diminished productivity because of just absolutely worker shortages. 

But it would vary by industry. It would vary by type of, you 

know, business and number of employees. 

ChairwomanVELA ́ ZQUEZ. Does the Department of Homeland Security currently have the capacity or the budget to handle—

Mr.SILVERTOOTH. The Department of Homeland Security has a 

large budget, I will give them that. Their capacity, it remains to 

be proven. In discussions with them, they are under the belief that 

they could register 10 percent of the American economy tomorrow 

if they had the authority to do it, or if—and they do have the authority to do it, but businesses, because of the raids that I spoke 

about earlier, are reluctant to deepen their relationship with the 

Department of Homeland Security, so you don’t see businesses 

jumping en masse to jump into the basic pilot program. But the answer right now is: we don’t know. 

ChairwomanVELA ́ ZQUEZ. Any other comments? Yes, Mr. Johnson. 

Mr.JOHNSON. On that one, I do think that is one of the things 

we have to consider. I mean, we are pouring ever more money into, 

you know, enforcement that is focused on the border, and sort of 

boots and guns at the border. And I don’t think we are thinking 

about both the security implications and the important administrative role that adjudicators in the agency play here. I mean, they 

are overworked and underpaid, and that agency, as a result, operates sometimes in geological time when, you know, the employment 

industry operates in real time. 

So if we want real answers through the employment verification 

system, we need an agency that has enough resources and enough 

manpower to be able to process those applications efficiently and 

effectively, so that the data goes into the database in a timely fashion. 

ChairwomanVELA ́ ZQUEZ. Well, let me—Mr. Chabot, no more 

questions? 

Mr.CHABOT. No more questions. 

ChairwomanVELA ́ ZQUEZ. Okay. Let me take this opportunity 

again to thank all of you. This has been quite an incredible discussion. It is, I know, sometimes an emotional issue. In my capacity, 

I will say that this is not only an issue to fix a broken system that 

is not working, but it is also an economic security issue for this nation, as well as a national security issue. 

And I just want to make sure that you understand that we are 

going to do everything possible to make possible for small businesses to know that your concerns will be represented at the table, 

and that we are going to inject ourselves into the immigration deVerDate 0ct 09 2002 08:57 Dec 20, 2007 Jkt 033615 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\34833.TXT LEANN
45

bate and make sure that when we have a final product that it 

takes into consideration the impact that it is going to have on 

small businesses. 

Thank you very much, and I will ask unanimous consent for 

members to have five legislative days to enter statements into the 

record. 

And this Committee is adjourned. Thank you. 

[Whereupon, at 1:52 p.m., the Committee was adjourned.]

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