U.S. Labor Force
The year 2006 marked the first time the U.S. population passed the 300 million mark and the civilian labor force reached 152 million workers, with 6.7 million unemployed. In addition to this workforce, in 2005 the U.S. provided work visas and temporary visa status (known as non-immigrant visas, including tourist travelers) to 4.6 million temporary visitors for business, 883,000 temporary workers/trainees and families, and 455,350 intracompany transferees and families. North Carolina had the 20th highest number of non-immigrant admissions in 2005. The number of legal foreign workers in the United States is established by Congress and enforced by the Department of Homeland Security - Citizenship and Immigration Services.
Authorized Work Visas
Many businesses and organizations in Charlotte have utilized work-force visas to bring legal immigrant workers to the City. Charlotte and the surrounding metropolitan area is headquarters to several large, multinational companies, and the City also houses significant US operations of foreign companies. It is vital to the economic well-being of these companies, and to the continuing economic growth of the City and the regional economy, that companies have the legal ability to transfer goods, technology, and key personnel from abroad.
The most commonly used temporary visa category for multinational companies is the L-1 "intracompany transferee." Companies can transfer managers, executives, and specialized knowledge employees from overseas operations for a period of five to seven years. Studies have determined that a relatively small number of intercompany work visas (less than 60,000 per year) have created millions of jobs in the U.S.
Certain foreign nationals who desire to invest money in the US to create new businesses or acquire existing businesses can apply for a Treaty Trader or Treaty Investor (E-1 or E-2) nonimmigrant visa. This visa is limited to nationals of those countries that have entered into treaties of commerce and navigation, or bilateral investment treaties, with the U.S. The principal investor or trader can obtain this visa so they may develop and direct the newly acquired or newly established business.
The H-1B visa is one of the most widely used work-authorized visas. The Immigration Act of 1990 outlined the H-1B nonimmigrant visa category that allows U.S. employers to augment the existing labor force with highly skilled, temporary workers. H1-B workers are admitted to the U.S. for an initial period of three years, which may be extended for an additional three years. This category was established to help U.S. firms employ foreign workers in specialty occupations that require theoretical or technical expertise in a specialized field. The offered position must require a specific four-year degree. Typical H-1B occupations include architects, engineers, computer programmers, accountants, doctors and college professors. In addition, the H1-B Visa Reform Act of 2004 made available an additional 20,000 new H1-B visas for foreign workers with a Master or higher level degree from a U.S. academic institution.
The 2006 annual cap for H1-B is 65,000. In the past, the H1-B visa cap was as high as 200,000 and a 2006 U.S. Senate proposal called for the H1-B cap to be increased to 125,000. For the Fiscal Year beginning October 1, 2006, the H-1B cap was reached on May 26, 2006, more than four months before the first day of the fiscal year. No new H-1B visas can be issued until October 1, 2007. Beginning April 1, 2007, DHS will accept H-1B petitions for H-1B workers with a starting date of October 1, 2007. This scenario of the Cap immediately being met puts employers in the situation of waiting up to 16 months to get a visa status employee that they need today raising concerns for competitiveness and productivity achievements. The current visa system, with its severely limited annual quotas or caps on both temporary (nonimmigrant) and permanent (immigrant) visas, is not meeting U.S. companies' or the U.S. economy's needs. To continue our leadership in the technology and research sectors, companies must have access to the best and brightest minds, regardless of nationality. The delays in visa unavailability for the H-1B professional worker category have been previously described. But professional workers who are seeking immigrant (permanent) visas currently suffer a much longer wait of five to seven years for a visa. With this level of uncertainty hanging over foreign candidates, many may choose to remain in their home country, continuing their professional career development and providing for family stability.
The federal government has also provided the H-2B visa to allow U.S. employers in industries with peak load, seasonal or intermittent need to augment their existing labor force with temporary workers. Typical occupations that utilize the H-2B visa include construction, health care, landscaping, lumber, manufacturing, food service/processing, and resort/hospitality services. The 2007 limit for H-2B is 66,000 and the cap has already been reached. A third business visa category, referred to as the H-3 visa, was created to give temporary status to those coming to receive training that is not available in the individual's home country, but will prepare the individual to accept a position in their home country. This category also has a limited number of visas available (50 per year) for immigrants coming to participate in structured training for the special education of children with physical, mental, or emotionally disabilities.
This current federal policy to limit the number of temporary professional worker visas with such low caps, which are filled even before the visa dates take effect, creates a backlog for visas or simply delays the hiring process until the next visa cycle begins a year or more out. This also demonstrates that U.S. companies are not finding a sufficient number of domestic professionals, particularly in the science and engineering disciplines; therefore they are seeking to fill the gap with legal foreign employees. Given the unavailability of visas and demonstrated demand, some companies have investigated outsourcing research and development operations.
The aforementioned are the most commonly used temporary employment-authorized visa categories. Others that are used by US companies include the O-1 (for aliens who can document their "extraordinary ability" in business, sciences or the arts.), the P-1 (athletes of international renown), and the TN (Trade NAFTA, which is available to Mexican and Canadian professionals who enter to work in specified occupations). Regardless of visa status or nationality, all U.S. employers must maintain evidence of their compliance with U.S. immigration law.
Employment VerificationThe Immigration Reform and Control Act (IRCA) made all U.S. employers responsible for verifying the employment eligibility and identity of all employees hired to work in the United States after November 6, 1986. To implement the law, employers are required to complete Employment Eligibility Verification forms (Form I-9) for all employees, including U.S. citizens. This law has raised concern in the business community that they are being held accountable for determining the valid immigration status of the work force, based on documents presented by prospective employees.
The most commonly offered documents include Social Security cards and driver's licenses. But, employers cannot mandate what documents are provided. The law requires them to accept any facially valid document or documents from a long menu of documents. Employers who comply with the record-keeping provisions of the IRCA argue they should not be held accountable if an employee's documents are subsequently determined by a government agency to be improper.
The issue is more complicated when the concept of contracting is introduced, and determining what, if any, responsibility a business has to ensure the workers are properly documented by a firm being contracted. The City of Charlotte states in its contract documents that the company providing the contracted service must "make itself aware and comply with all local, state and federal ordinances, statutes, laws, rules, and regulations applicable to the Services," without distinguishing immigration laws from occupational safety laws, etc. No follow-up is presently done by the City to verify that applicable laws are being met.
This concern has been heightened by local employers since ICE Assistant Secretary Julie Myers announced on July 18, 2006 that they had "arrested a record number of employers who hire illegal aliens as well as thousands of illegal alien workers." In Fiscal Year 2006, ICE arrested 718 individuals on criminal charges in worksite investigations and apprehended another 3,667 illegal workers on immigration violations, more than a three-fold increase over 2005. ICE's record year of enforcement was achieved through such work as arresting 58 illegal immigrants who were trying to enter Ft. Bragg Army Installation in July 2006 with false or fraudulently obtained identification.
In August 2006, Wal-Mart paid a landmark $11 million civil settlement based on ICE enforcement action in 2003 at 60 Wal-Mart stores located in 21 states that led to the arrest of 240 illegal immigrants employed by cleaning contractors. Twelve Missouri-based cleaning contractors also consented to the forfeiture of $4 million in assets as a result of the investigation. As recent as November 2006, ICE arrested six illegal immigrants who were doing drywall contract work and possessed security badges for restricted area access at the Hartsfield -Jackson Atlanta International Airport.
IMAGE Program
The enhanced focus on worksite enforcement has caused the Department of Homeland Security and businesses to work together to help employers ensure they are addressing the law, and avoiding pervasive use of fraudulent employment documents. In 2006, ICE announced the Mutual Agreement between Government and Employers (IMAGE) program to assist employers in targeted sectors to develop a more secure and stable workforce and to enhance fraudulent document awareness through education and training.
The voluntary program provides employers with education and training on proper hiring procedures, fraudulent document detection, and use of the Basic Pilot Employment Verification Program, an internet-based system linked to Social Security Administration and DHS immigration databases that is operated by DHS - Citizenship and Immigration Services. In order to participate, employers must:
1) submit to an I-9 audit by ICE
2) ensure the accuracy of their wage reporting
3) verify the Social Security numbers of their existing labor force, using a Social Security Number Verification System.
The participation criteria has discouraged many employers from taking part in the IMAGE program, as there is concerns that ICE will levy penalties if discrepancies are found in any of the businesses wage or workforce status information/audit.
Market Factors - Immigration Survey
The stepped up enforcement against employers has raised the issue of the impact and role of the illegal immigrant worker in the United States economy. While there is no data that identifies how many illegal immigrants are employed in the U.S. economy, the estimate that 11 million people are in the country illegally suggests a number are being employed. Data by the Kenan Institute at UNC-Chapel Hill suggests that many illegal immigrants work in the construction or contracting industries, but other common areas of employment for illegal immigrants include working in lawn care, serving as Nannies or private house cleaning maids, working in hotels cleaning rooms, and at restaurants as wait staff, among others. A common myth is that the hiring of an illegal work force drives down wages. There is no statistical data on the impact of wages for an illegal workforce, but an unscientific and anonymous survey of 27 members of the Carolinas Associated General Contractor of America located in the Charlotte, NC region found that the General Contractor businesses are providing market rate wages and offering benefits, even paying a workers compensation claim to an illegal immigrant who has since returned to Mexico. The survey of highway, building, utility, and other trade contractors revealed the following facts about the 27 companies (and their 3,505 field employees) that completed the survey:
- 31% of the workforce was Hispanic
- 53 of the Hispanic workers were Project Managers or above
- There is a critical shortage of concrete and waterproofing workers
- An overall lack of applicants for most manual labor positions
- A language barrier between employees on the worksite
- And a strong concern that the employment documents the employers are getting are not valid and may be fraudulent.
This survey, while not statistically valid, still highlights the concern that if the illegal immigrant workforce were to leave all at once, the economy of the country would be gravely impacted. Particularly, the construction industry, and other manual labor businesses, that are thriving in high growth cities such as Charlotte. The Kenan Study on the Economic Impact of Hispanics in North Carolina determined that 29% of all North Carolina construction workers are Hispanic and that if those workers were withdrawn, there would be an economic loss of:
- $10 billion value in construction
- $2.7 billion in construction material and labor
- $145 million in equipment and building rental
- 27,000 housing units not built
- $980 million in labor-cost savings.
This concern has caused Tom Donahue of the U.S. Chamber of Commerce to highlight in the Chamber's report, Global Engagement that "immigrants now supply from 12% to 22% of our workforce in highly skilled occupations like medicine, engineering, the physical sciences, and computers and mathematics. Foreign-born workers also hold a quarter of the jobs in construction, a third in building cleaning and maintenance, and 44% in agriculture. With unemployment at just 4.8% and 77 million baby boomers preparing to retire, it is clear that the economy will need to continue to generate a sufficient and skilled workforce -now and in the future."
The US Chamber of Commerce has worked extensively to lobby members of Congress to include provisions in the many immigration bills that were introduced over the past year. The Chamber's 2006 - 07 Immigration legislation priorities include:
Ensure that
- (1) border security and visa policies and procedures are reasonable and carried out efficiently,
- (2) comprehensive immigration reform takes into account the current and future need for essential workers, and
- (3) the United States continues to attract the best and the brightest from around the world."
Focusing on the need for … "essential workers, continue to advance long-term immigration objectives to secure additional workers to counteract demographic trends and provide for targeted earned legalization of those essential undocumented workers already here. For highly skilled workers, continue to push for the continuation and expansion of both temporary and permanent visa programs, including the L-1, H-1B, and programs that give employers the ability to access and keep the talent necessary to compete in the global market."
The local Charlotte Chamber of Commerce also adopted a resolution supporting the U.S. Chamber's position for immigration reform legislation and sent letters to the U.S. Senators from North Carolina and South Carolina seeking comprehensive immigration legislation.
Economic Impact
The Kenan Institute of Private Enterprise within the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill released a study in January 2006, entitled "The Economic Impact of the Hispanic Population on the State of North Carolina." The study was funded by the North Carolina Bankers Association, in cooperation with the Consulate of Mexico in Raleigh, NC. It doesn't distinguish between illegal and legal Hispanics in North Carolina, although it did estimate that illegal immigrants make up 45% of North Carolina's 600,913 Hispanic Population. Although the study doesn't separate out data specifically to illegal immigrant issues, this is a very useful study for North Carolina to begin to understand the future economic impact this demographic will have on the State.
The Kenan findings include:
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The average Hispanic household contains 3.7 persons (compared to 2.4 persons in the average non-Hispanic household) and earns about $32,000 annually (compared to $45,700 for non-Hispanics).
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In 2002, there were 9,047 Hispanic-owned businesses in North Carolina that generated $1.8 billion in sales and receipts.
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North Carolina exports to Latin America have grown markedly to where exports are responsible for nearly 70,000 jobs and $231 million in state and local taxes in 2004.
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Hispanics annually contribute about $756 million in taxes (direct and indirect) while costing the state budget about $817 million annually for K-12 education ($467 million), health care ($299 million), and corrections ($51 million) for net cost to the state of about $61 million.
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Hispanics contribute more that $9 billion to the state's economy through its purchases and taxes, while the net cost to the state budget in an estimated $102 per Hispanic resident for health care, education, and corrections.
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Nine percent of the wages in North Carolina are sent to other countries. In 2004, North Carolina sent $800 million in funds transfers out of the country, a 17% increase over the last two years. The top Latino Countries to receive funds transfers from the U.S. include:
Mexico $20 billion
Brazil $6.4 billion
Colombia $4.1 billion
Guatemala $3.0 billion
Dominican Republic $2.7 billion
While the impact of the Hispanic population is becoming clearer through studies such as the Kenan Study, what is clearer still is that traditional business practices are changing to address the rise of legal and illegal immigrants in North Carolina and the country. Most businesses presently offer products, advertisements, website content, and call center operations in multiple languages to catch the increasing international, if not illegal immigrant, market share. The Federal Reserve Bank has considered a policy to extend loans without Social Security numbers or I-10 forms and no-documentation or low-documentation mortgages, particularly as it related to income verification, are increasingly available in the United States.
