I would like to emphasize something that the Commissioner has said and which I have been working on for quite a while, and that is about the Border Patrol.

The Border Patrol has basically the same number of people it had 30 years ago. They were not even a line item appropriation process. Not that you can stop all of the entries by beefing up the Border Patrol, but I think we should do more along those lines because they do not have the personnel, they do not have the equipment, and they certainly need more help and probably they could do a lot more.

They do above and beyond, I am sure, with what is available to them, but I think that would be one of the areas we could cooperate to work in this respect.

I would like to ask you one question, Commissioner. You mentioned that the typical illegal alien would be about 17 to 19. Did you say from Mexico or just the alien?

Mr. CASTILLO. The persons we apprehend tend to fall in that age group. Since the majority of the people we apprehend are Mexicans, this would be more likely to be a Mexican, yes, sir.

Mr. DE LA GARZA. Because the legal entries do not fall into that category, it seems like. They would probably be a little older and a little more skilled.

Mr. CASTILLO. That is true.

Mr. DE LA GARZA. And married because they are bringing in children. Mr. CASTILLO. That is true, sir. The legal immigrants are older, and because of the way the immigration law is set up, many of them will have skills.

Mr. DE LA GARZA. And you mentioned briefly something that I have some disagreement with. The trend is that because he is an alien, because he is here illegally, automatically he gets paid less, and he depresses wages and he is abused by the employer. Anyone who must pay minimum wages has to pay them, and it is between him and IRS, and whether his workers came from the Moon, Timbuktu, or Mexico has no bearing.

Now, there will be the exception of the one who cheats, but the one who cheats will cheat regardless of where his employees came from.

I do not adhere to the theory that because he is an alien automatically he is paid less when his employer has to deal with IRS, entirely with IRS, with the wage and hour people and his books are audited, his premises are inspected by OSHA, you have EPA people coming in and out, you have State EPA people, and I think unless it can be verified without question that we should not give the American employer that characteristic, that because he has an alien, automatically he pays him less, because it is between him and IRS. It has nothing to do with where his worker came from.

Mr. CASTILLO. What we are learning, I think, is that the evidence is mixed. In some specific industries, in some specific parts of the United States, where, for example, the workers are all unionized at a job site and where the union has difficulty organizing the workers who are here from another country, there the workers from the other country, because they do not join the union, because they have a little different status, sometimes will work for less money and depress the wages in that skill, in that place.

In some other parts of the country, of course, in some other skills, we find that is not as true. We have some studies now that are begin

ning to be developed that indicate that there are some jobs the U.S. citizens really do not want to do very much unless the pay would change drastically, at which point the employer would have a problem. Mr. DE LA GARZA. I am sure this is correct. My contention is the employer who has to pay minimum wage, it is between him and IRS— where his employees came from has no bearing.

Mr. CASTILLO. Part of the problem, Congressman, is that in some industries, for example, in Los Angeles, when we visit an employer, we can apprehend 50 people. We deport the 50 people. A month later we visit that same employer and we deport the same 50 people. Several months later we deport the same 50 people again. That employer, nothing happens to him. There is no problem as far as him breaking the law because it is not illegal to hire these workers, but those workers that he has hired from another country are not as likely to be organized and to claim benefits as are U.S. workers, or to make a claim for higher wages.

I think there is a real problem in terms of just exactly measuring the displacement of U.S. workers. What is the actual displacement of U.S. workers? We know that it is not 1 to 1. We know that unemployed U.S. workers on the east coast will not flock to, let's say, west Texas to take some jobs.

Mr. DE LA GARZA. To pick onions?

Mr. CASTILLO. In 100-degree heat?

Mr. YATRON. We are going to recess to answer this rollcall.

Mr. DE LA GARZA. I have no further questions. The Commissioner has to leave.

Mr. YATRON. We will come back for Secretary Nachmanoff. Commissioner, we thank you very, very much. I am sorry we had to cut it a little short.

We will return in about 10 minutes.

[Whereupon, a brief recess was taken.]

Mr. YATRON. The subcommittee will resume the hearings.

Now we would like to welcome Secretary Nachmanoff. Mr. Secretary, you may proceed.

STATEMENT OF ARNOLD NACHMANOFF, DEPUTY ASSISTANT SECRETARY FOR DEVELOPING NATIONS, DEPARTMENT OF THE TREASURY

Mr. NACHMANOFF. Thank you, Mr. Chairman.

It is an honor to appear before you today to discuss the subject of undocumented aliens and its implications for U.S. policy in the Western Hemisphere.

I would like to introduce Jack Sweeney, Latin American Coordinator, the Office of Developing Nations at the Treasury who is accompanying me.

My remarks will focus primarily on source areas of undocumented aliens, economic conditions which induce people to migrate, what can be done in these countries to promote economic development and reduce the push factors and the role of external assistance, particularly from the multilateral development banks.

Western Hemisphere countries account for an estimated 90 percent of all illegal immigration into the United States. It is estimated that

60 to 65 percent of all undocumented aliens entering the United States today originate from Mexico with an estimated total of 300,000 to 600.000 persons annually. That estimate, incidentally, Mr. Chairman, comes from the Immigration and Naturalization Service.

Most come from the rural areas in the North Central States of Mexico. Many of those who come to the United States from Mexico do so with the idea of remaining only temporarily to earn money and return to the areas from where they came to buy farms or set up small businesses. Frequently they must come to the United States several times over the course of many years before their goals are realized.

The second largest source of illegal immigrants is the Caribbean region, notably the Dominican Republic, Jamaica, and Haiti. Approximately 100,000 Caribbean nationals enter the United States each year. Unlike their counterparts from Mexico it appears that most of the Caribbean illegals come with a view to remaining for long periods of time or permanently and enter either with forged papers or a legal nonresident visa. Much of the migration from this region, particularly from the English speaking countries formerly was to the United Kingdom. However, since the mid-1960's, when the United Kingdom altered its immigration laws, most of the flow has been redirected toward the United States.

Other important source areas in the hemisphere include Guatemala, Peru, Colombia, and Ecuador. Most migrants from these countries gain entry to the United States in the same manner as those coming from the Caribbean, although the numbers coming from these countries probably are much fewer.

Although there exists a wide diversity in size, resource endowment, level of economic development and cultural and social characteristics of the principal source countries, there are a number of common economic characteristics. All of these countries have per capita incomes that are only a fraction of that in the United States with recent estimates as follows: Mexico, $1,100; Jamaica, $1,150; the Dominican Republic, $720; Haiti, $190; Guatemala, $570; Peru, $760; Colombia, $580; and Ecuador, $590. To further aggravate this problem income distribution is heavily skewed with most of the income earned by a very small segment of the population. All have serious unemployment and underemployment problems, in some cases as high as 40 percent. Despite the fact that most of them have grown at an acceptable or even a rapid rate over the past two decades, say between 5 and 8 percent, this exchange has been partially offset by rapid population growth which is as high as 3.6 percent in some countries.

The roots of the undocumented alien problem in all source countries are principally economic in nature. Income levels and general living conditions for many of the people in these countries, particularly those in rural area, are much lower than those in the United States. For example, in the Latin American and Caribbean region 66 percent of all dwellings lack running water and almost half have no electricity. Only 36 percent of the population receive any secondary school education. Furthermore, their prospects for improvement are relatively limited in most cases. These conditions are the factors which "push" individuals to leave their home areas.

Some go to the urban centers in their own countries while others migrate across national borders. It is not entirely clear why the latter

group choose to leave their homelands. However, the prospect of earning wages 6 to 10 times higher or more is a strong drawing force. This combined with the attraction of living in an urban or industrial environment with its social amenities, services, and infrastructure combined with the perception of greater opportunities for employment, a higher standard of living and upward mobility seems to "pull" many of these individuals to the United States.

One of the basic causes of the undocumented aliens problem is the very substantial gap which exists between unemployed workers and available jobs in source countries.

Their economies have not been able to generate sufficient employment opportunities to close that gap even during periods of rapid economic growth. When growth rates fall as they did in the mid-1970's new job opportunities are further reduced. Thus, the level of unemployment has increased, and pressures for outward migration have continued to mount.

A fundamental factor in the persistence of the problem is the growth rate and composition of the population in many of these countries. For example, the rate of population growth in Mexico is estimated at between 3.2 and 3.6 percent per year, which is one of the highest in the world.

The population growth rate in the major source areas in the Caribbean and Guatemala is about 3 percent. In many of these countries population density is high. Furthermore, a high concentration of the population is under 15 years of age. Even under the most optimistic assumptions, new entrants into the labor force will continue to grow at a rapid rate for many years to come.

Given the economic problems they face most governments in source countries support, at least tacitly, outward migration. They view it as a necessary safety valve to cope with potentially explosive problems of unemployment and overcrowding.

The solution to overcoming these economic difficulties and addressing the "push" factors of the illegal alien problem will depend largely upon the success of domestic measures undertaken by governments in the source countries. In general, these governments have taken a more vigorous role in the economy over the past two decades and the trend probably will continue in that direction.

If they are to be successful they must intensify their efforts to raise living standards and insure a more equitable distribution of income. They must pursue policies which will reduce population growth. They must undertake measures to increase the flow of private and public investment into productive agricultural and industrial activities, particularly those which create employment opportunities. They need to strive to implement more labor intensive development strategies and to adopt appropriate technologies for their individual needs.

Serious efforts are being made by source country governments to address these problems. They have generally increased public sector spending substantially to strengthen their capital base and improve living conditions in the rural areas. These outlays have helped but for the most part public sector revenues have not expanded apace, resulting in increasing public sector deficits in many of these countries. A number of them have had to cut back on these deficits and imports to help stabilize their economies.

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Nevertheless, their efforts continue. For example, all of these countries are accelerating their rural and agricultural development programs. The Dominican Republic, Guatemala, Jamaica, and Peru have large irrigation and land reclamation projects. Colombia, Ecuador, and Peru have begun major agricultural credit programs to improve productivity and incomes on small farms. Haiti has undertaken a program of special vocational training aimed particularly at agricultural employment. The Mexican Government will begin a new program which could have a significant impact on the unemployment problem over the longer term. Last week President Lopez Portillo announced the creation of a national employment plan under which the Government will orient public spending toward the specific objective of employment. Agriculture and construction will be particularly emphasized and the goal is to create nearly 4 million new jobs by 1982. This will help to offset the 2.8 million new entrants to the work force between now and then and absorb many of those who presently are unemployed.

The development and expansion of these economies is linked to continued access for their exports to external markets and to continued capital flows to help finance domestic investment. Given our geographic proximity and the size of our economy, these nations will continue to depend heavily on the United States as an outlet for their products and a key source of external financing.

External development assistance both bilateral and through the multilateral development banks can be helpful in the efforts of these countries to strengthen their economies, create new jobs, improve living conditions, and expand family planning efforts. Development assistanee can contribute to the general growth of the economy, both by directly providing additional resources for investment but perhaps more importantly by acting as a catalyst for increased investment from the private and public sectors.

The governments and the international development banks are giving increased attention to the development of rural areas and projects which are employment generating. This includes not only basic agricultural projects but also small- and medium-size industry, infrastructure, and social services in rural areas.

Programs to create jobs and improve living conditions in those areas probably will have the most direct effect on reducing unemployment and thereby help alleviate the undocumented alien problem. Rural projects, moreover, could produce significant multiplier effects, since the expanded income of lower income groups would result in increased demand, which in turn would stimulate other productive activities having secondary employment and investment implications.

Development assistance can also provide additonal support to help slow population growth. For example, Jamaica, the Dominican Republic, and Mexico recently have initiated family planning programs. This, of course, is a sensitive area involving changes in cultural and social attitudes, and change cannot be accomplished overnight. The development banks can provide additional resources and expertise. However, leadership must come from the governments themselves. At the present time the World Bank and the Inter-American Development Bank are lending about $1.8 billion annually to major source countries in Latin America and the Caribbean. Bilateral assist