There are two primary reasons why immigration reform in my view is so important. First, an expanding economy, a declining working-age population, and an impending retirement of the babyboom generation have all combined to create a current and future workplace shortage that, if left unchecked, will cripple American business, especially small ones, and severely impede economic growth. And I would like to the chairman in his other work in the Senate is very, very involved in the whole question of entitlements-health, pensions, Social Security, and so on. And if you look at the extension of life expectancy in this country and the extraordinary number of collectors we are going to have in the next years in relation to the shrinkage of the people that are prepared to work here and pay taxes here, you find that this Nation, because of its population change, because of its societal changes and these retirements that we are expecting, has got a great opportunity to do important things but has a tremendous challenge of where we are going to get the workers of the future.

More than 60 million current employees will likely retire over the next 30 years, and the Bureau of Labor Statistics projects that people on the labor force age 25 to 34 is going to decline by 2.7 million just over the next 7 years. Improving productivity, recruiting non-traditional employees such as the disabled, and taking people from welfare to work, luring retirees out of retirement because they are going to be around for a long, long time, and creating incentives for people to work longer on a voluntary basis are all part of the solution. But it is not going to happen without some very, very serious increases in immigration. We won't close the worker shortage without filling that gap on the immigration side.

Now, as John indicated, there are 8 or 9 or maybe 10 or 11 million undocumented immigrants working in America. Now, why are they here? Were those jobs created because they came here? No. Those jobs are here. And where are they? They are in hospitals. They are in the fields. They are in factories. They are in McDonald's. They are in all sorts of places where today we are unable to get sufficient workers. Many jobs are left unfilled in this country, and they are essential jobs. I have some involvement personally in the retirement and the health care business in terms of nursing homes. You take those 8 million employees, 9 million, 10 million, and you put them out of the country tomorrow, this economy, and particularly the service economy in this country, is going to stop dead in its tracks.

Now, John's views about protecting them, many of those I share. And John's views about-and I would let him speak for himself, but, you know, he sees a wonderful opportunity to continue to grow his own institution. And I respect that. But even though we have two different reasons for doing this, I think collectively we have an essential reason for doing it, and that is, we need to keep the American economy going and we need to keep the service industries that American citizens need in place.

We have a wonderful H-1B visa program to get, you know, the skilled workers we need, the high-skill, high-technology. We bring 600,000 workers a year into the United States. But when you talk about all the things that we ought to be doing as a way to legalize and formalize and improve this system, you have got to be very,

very careful, Mr. Chairman, of where you put that responsibility. The INS works hard. They give the IRS a good name in terms of their ability to get things done in a timely basis. And if you look at what would happen, Senator Specter, if we took some of these people right now and put them on line to get a green card, you could be talking 6 to 10 years. So that is why a guest worker program makes some sense because you could put people in a program-and, John, I don't care what we call it—in a formal way with all the protections that you might like to give them, and over time we could be sure that they earn their way into the system. On the matter that was discussed, very briefly, about Mexico and Canada and should they have a precedent, well, NAFTA has already demonstrated its essentiality by creating an extraordinary number of jobs in the United States. We are building a closer national security and national well-being and economic well-being in the NAFTA arrangement, and there may be a possibility to do something a little more creative there.

Let me hit the second issue. We need stability in the workplace. Right now today, in any of your States, an illegal worker coming into the United States for $50 to $100 can get a set of credentials that are so perfect that you would hire them in your own office if you had a little business there. And John indicated a number of issues where perhaps they are not treated well. And there are places where we just have to make sure that we are not leveraging people one way or the other, that we know who is working for us, we know they are legal, we know that we can count on them over a period of time.

Employers go to great lengths to make sure they are legitimate employers. By the way, we have people in every role of our society who we are not very excited about, and the Chamber of Commerce of the United States is not excited about every company in America. Some people behave the way we don't want them to behave. It is the same thing in John's organization. We want legitimate employment of people from other lands in a way that assures their rights and assures their safety and pays them in a comparable way that we would pay anyone else in the workforce.

But as I indicated, there is a lot of leveraging going on. If you try and follow the system by following the rules, if you deal-and, by the way, you know from your own offices, when you are trying to get a green card arranged for somebody where it is the most legitimate and thoughtful thing that it ought to be done, I mean, it is very, very difficult.

So here is my view: We need a temporary worker program but, more important, we need it so that we can figure out a way to transition from what we have to where we are going to get there. We need a transition system. And this might be a way to get around the problems with the INS and put a lot of people on a temporary worker program.

We need to be very, very careful to understand that-and, by the way, Senator Specter, when the demand for immigrants is the highest for us, when our demand for workers is the highest and our provision of workers is the lowest is when Mexico is going to be having fewer workers for us. So we are going to be finding other places to get them.

We need to understand we have to have those workers, or our economy doesn't work. And we need to figure out a way to do-I don't know whether it is an amnesty, whether it is an orderly transition to making these folks permanent workers. But we need to pick out the people that have paid their dues, that have paid their taxes, that have been good citizens, and find a way to do it. I would like to let John Sweeney have my way. I don't care what you call it. We need to get these workers legitimately into the United States economy and, gentlemen, you need more of them in the future, not fewer.

I understand a little economic downturn, a little unemployment. Some of that is in areas we are never going to be back in business. But many of those workers are not prepared to do the work that these immigrants are doing right now.

I would also say-and excuse me for taking just one other second-if we do this right, it is going to up the it is going to stabilize the pay in this country, and I think it is going to up some of the pay in the lower-level jobs because we are not going to have this leveraging. Everybody gets paid the same. We know who they are, and I think you are going to be in business in a way that benefits everyone.

I don't know how the details get worked out, but we have an extraordinary_staff. We are prepared to participate in that, Mr. Chairman. I think we set an excellent tone yesterday with President Fox and President Bush raising this subject. I believe the White House, by the way, is dragging its feet a little more than it should. I wouldn't say it is political considerations. But if they are, they are on the wrong curve, and they ought to get busy on this matter. And while some would suggest that they are great friends of ours, they are, but when they are wrong, we tell them. And they ought to move very, very quickly on this matter.

And so I am here because American business needs workers. John Sweeney is here because he understands that, but he would like to unionize them and protect them, God bless him. But, clearly, both of us understand a very simple issue: If we don't have workers here to run the American economy, that is a debate we can never have.

Thank you very much, Mr. Chairman.

[The prepared statement of Mr. Donohue follows:]

STATEMENT OF THOMAS J. DONOHUE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, U.S. CHAMBER OF COMMERCE, WASHINGTON, D.C.

Mr. Chairman, I thank you for inviting me to speak before the Committee today on the issue of immigration reform, specifically in the context of the historic new relationship between the U.S. and Mexico. I am Thomas J. Donohue, President and Chief Executive Officer of the U.S. Chamber of Commerce, a business federation representing more than 3 million individual companies and employers.

The subject of this hearing is the U.S.-Mexico Migration Discussions and as the title of the hearing states, we believe there is an historic opportunity to build closer relations with our neighbor to the South. Mexico is our second largest trading partner, after Canada, and last year accounted for 10% of all our international trade. And we are Mexico's largest trading partner, accounting for 82% of Mexican exports and 70% of Mexican imports. Our relationship, however, goes far beyond trade in goods and services. It entails extensive commercial, cultural, and educational ties, as demonstrated by the annual figure of nearly 340 million legal crossings from Mexico to the United States in the fiscal year 1999. In addition, more than a halfmillion American citizens live in Mexico. More than 2,600 U.S. companies have op

erations there, and the U.S. accounts for 60% of all foreign direct investment in Mexico. Along the 2,000-mile shared border, state and local governments interact closely. We are therefore pleased that Presidents Bush and Fox are building upon this close relationship by cooperating on law enforcement, border management, economic development, and, of course, migration. With a shortage of workers in America, and a ready and willing workforce in Mexico, we have a unique opportunity to build a mutually beneficial immigration system. We need only to act.

The Chamber strongly supports immigration and believes that immigrants are a driving force in our economy, both filling and creating jobs. They are also our best hope to curb chronic American labor shortages that are impeding the economy. The Chamber has been involved in efforts to increase the immigration of skilled workers under the "H-1B" program, to facilitate international transfers of personnel by allowing spouses to continue their careers, and to repeal potentially harmful provisions such as Section 110 of the 1996 immigration act that would have created a new border bureaucracy that would have hurt trade and travel along our borders. The Chamber has members in all industries, employers of workers at all levels, and we have been increasingly hearing from Chamber members across the country that workforce availability issues are among their top priorities. In fact, in testimony earlier this year before the Senate Immigration Subcommittee, Elizabeth Dickson, Human Resource Specialist for Chamber member Ingersoll-Rand Corporation, and Chair of our Subcommittee on Immigration, related her company's difficulties recruiting skilled welders, service and repair technicians, and tool and die workers. We also have members in the restaurant, hotel, health care, manufacturing, construction and other industries who have asked the Chamber for help in finding and keeping the "essential workers" that keep our economy running. Yes, knowledge workers are the driving force for development and expansion of ideas and products. However, once these ideas are developed and the ideas become products, essential workers are needed to manufacture, deliver and service those products. We still must answer the question: Who will fill the millions of essential worker positions that we will create? Immigration must be one answer, but current law does not provide the solution.

That is why the Chamber helped to found the Essential Worker Immigration Coalition (EWIC), comprised of organizations from across the economy, and continues to be a leader in that organization. For the Chamber, reform of essential worker immigration policy is a high priority.

I know the President and the Congress are concerned about the state of the economy, as are we. But you should know that the recent slowdown has not significantly impacted the need for these workers. Over the last few years, we have seen unemployment rates as low as any time since 1950, and some local and regional unemployment rates are under 2%. Employers continue to tell us they cannot find anyone to fill their jobs. According to a recent Employment Policy Foundation (EPF) study, the economy has more than 135 million jobs, and more than 9 million jobs have been created in the past five years. Further, workers who have lost jobs recently are finding new jobs at a faster rate than in the past—more than half find new jobs in seven weeks.

Furthermore, this issue is not just one of the boom and bust cycle of our economy. We are facing a long-term worker shortage that is based on demographics. Secretary of Labor Elaine Chao in her recent Labor Day address noted the phenomenon of the "Incredible Shrinking Workforce." Bureau of Labor Statistics (BLS) estimates show that the number of people in the labor force ages 25-34 is projected to decline by 2.7 million in the next seven years. By 2008, the labor force age 45 and older will have the fastest growth rate and be a full 40% of the labor force. BLS also projects that by 2008 we will have 161 million jobs, but only 154 million workers. More than 60 million current employees will likely retire over the next 30 years. The EPF report also discusses the coming labor shortage, projecting a shortfall of 4.8 million workers in 10 years, 19.7 million in 20 years, 35.8 million in 30 years. The economic impact of this shortage is already being felt. But according to the EPF, failure to close the labor supply gap will lower Gross Domestic Product growth by at least 3 percent in 10 years and 17 percent in 30 years.

Dr. Richard Judy of the Hudson Institute testified last February before a House Education and Workforce Subcommittee that:

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

In her Labor Day speech, Secretary Chao stated that not only must we find ways to integrate older workers, workers with disabilities, single moms and other non

traditional workers into the workplace, but also we must look to immigration. In this, she has echoed a sentiment expounded by Federal Reserve Chairman Alan Greenspan over the last few years—immigrants are good for our economy and support our workforce. As Chairman Greenspan recently stated before the House Financial Services Committee in July of this year:

[T]his country has benefited immensely from the fact that we draw people from all over the world. And the average immigrant comes from a less benign environment, and indeed that's the reason they've come here. And I think they appreciate the benefits of this country more than those of us who were born here. And it shows in their entrepreneurship, their enterprise and their willingness to do the types of work that makes this economy function.

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

The bottom line is that if the U.S. economy is producing jobs faster than it is producing people to fill those jobs, foreign labor must be accepted as a viable solution to the labor shortage. In addition, we must acknowledge that the Baby Boomer population is aging, and the total U.S.-born population, without immigrants, is shrinking. All across the world, increased immigration is seen as one solution to boost the workforce that is needed to sustain economies. The foreign worker, both legal and illegal, has been an integral part of our inflation-free economic growth, and must be valued as a contributor to our strong economy.1

We all now understand that immigrants are complementing our U.S. workforce, not displacing it. As we have made it a priority as a Nation for our workers to move into higher-paying, higher-skilled jobs, immigrant workers are filling the gap by taking many manual labor jobs that U.S. workers are avoiding.

Many have stated that this economy no longer needs lower-skilled workers. Nothing could be farther from the truth. Almost three-quarters of the jobs in our economy do not require a college degree. Close to 40% of the jobs require only shortterm on the job training. Over the next ten years, the most job growth (i.e., in absolute terms) will be in occupations requiring less formal education or training. According to the Bureau of Labor Statistics, of the top ten occupations with the largest numerical job growth between now and 2008, all but two require less than a bachelor's degree; the majority (six) require only short-term on-the-job training. These include: retail salespersons, truck drivers, personal care and home health aides, and office clerks. The next ten occupations with the largest job growth include nursing aides, janitors and cleaners, waiters and waitresses, and food counter and related workers. The top thirty include childcare workers, landscapers and groundskeepers, hand packers and packagers. Finally, the top ten occupations with the greatest retiree replacement needs (this group includes the occupations in which the average age of the current workforce is rapidly rising) include the following: secretaries, truck drivers, janitors and cleaners, registered nurses, bookkeeping and accounting clerks.

These needs cut across industry sectors. The health care industry is facing severe shortages, not just of registered nurses, which is well documented, but also of certified nurse assistants, who provide 75% of the care in nursing homes and long-term care facilities, as well as hospitals. The industry will create jobs for 600,000 Certified Nurse Assistants and 300,000 others over the next five years. According to the Department of Health and Human Services, the nursing home industry has a current shortage of 400,000 health care workers. The hospitality industry is also facing many unfilled jobs: the hotel industry estimates it will need an additional 700,000 workers in the next decade. The restaurant industry is looking at creating 2 million new jobs in the next ten years. In the construction industries, roofers are looking at an additional 50,000 workers needed in the next decade. In transportation construction, for every $1 billion invested in highway construction programs an additional 42,000 jobs are created.2 Overall the construction industry is expected to create 550,000 new jobs between now and 2008, according to the Bureau of Labor Sta

1 "Labor Shortages and Illegal Immigration: Arizona's Three-Pronged Strategy," Arizona-Mexico Commission, February 2001, pp. 4-5.

2 The Chamber is working with labor in support of a newly formed national coalition, Americans for Transportation Mobility, comprised of more than 300 organizations and strongly supports improving the safety and efficiency of our Nation's transportation infrastructure system. Such improvements will undoubtedly create additional jobs in this industry and benefit all Americans.