Delaware National

Trump’s ‘Buy American—Hire American’ EO May Have The Opposite Effect

Carelessly limiting the immigration of this type of talent could have far reaching ramifications, including increased research and development costs for the technology, pharmaceutical, and chemical industries.

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Trump will sign a new Executive Order today to reinforce his ‘Buy American—Hire American’ campaign slogan. This order intends to enforce protections for certain American made goods, which is not necessarily a bad thing. However, the second part which looks to strictly enforce H1-B Visa laws could have very adverse effects. H1-B Visas allow skilled workers in certain fields to work in the US. The stricter enforcement is intended to curb fraud as well as stop foreign workers from working for below-market wages. While this seems like a good idea on its surface, one need only look back  nine years to a different industry to see the consequences of ill considered enforcement of immigration policy.

In 2008, ICE carried out one of the largest immigration raids in US history in Iowa and Mississippi. The May raid in Postville, IA of a Kosher meat packaging facility resulted in 389 arrests, approximately one quarter of the town’s population. In September of that year, ICE raided an electrical transformer plant in Laurel, MS resulting in 595 arrests, approximately five percent of the town’s total population. These raids not only had a crippling effect on the on the businesses, but the towns as well. Postville was decimated. Stores were empty and businesses began to close as a result of the sharp decrease in population. According to a 2008 report by Susan Donaldson James for ABC News

“A Wal-Mart and other shopping centers have been a “dead zone” since the raids, according to Velez. “It’s empty, like going to the desert.”

These raids, as well as many others conducted around the same time throughout the country on agricultural and industrial businesses, had a devastating effect on local economies and municipalities. The mass collection and deportation of immigrant populations did not “free up jobs for American workers” as is advertised by President Trump’s campaign rhetoric. It actually did the opposite. It hurt the incomes of American workers and closed American business that serviced the populations of these communities. Restaurants, retail shops, mechanics, doctors, and countless other business suffered, or closed as a result of the loss of large portions of the local population. What the Bush administration failed to realize then, as the Trump administration seems to ignore now, is that although these workers are undocumented, they are still consumers. They still pay sales tax, shop at stores, got to the movies, eat in restaurants, and use purchase goods and services. Yes, many even pay federal income taxes. It is like a human Jenga puzzle. Each piece supports the next. If you remove too many, the whole system collapses.

Granted, this EO does not address the same population as those raids. This matter seeks to limit the amount of skilled workers entering the country. In other words, it does not hurt Postville, IA, it hurts Silicon Valley, CA. And, what hurts Silicon Valley, hurts Main Street, USA. Taking a ham-fisted approach to immigration at this level could have dire consequences on a national scale.  An excerpt from an article in the Washington Post highlights this point—

“There are a handful of companies that have stirred controversy in this space but there are 27,000 other employers that still have to use this system,” said Scott Corley, executive director of Compete America, a coalition of mostly tech companies advocating for immigration reform to benefit high-skilled foreign workers. “If you basically go in and take a sledgehammer to the program without any thought for collateral damage, the cure can be worse than the ailment. Change needs to come. It comes down to how you do it.” 

Google, Yahoo, eBay, Tesla/Space X, and many other American tech giants might not be exist if not for their immigrant founders. It is not that Americans cannot, or do not have the capability, skills, or intelligence to create these types of things. It is that the opportunities afforded to these immigrants in this country allowed them to use there skills to build this great companies that employ hundreds of thousands of American workers. Taking a Postville-raid approach to H1-B Visa laws and running headlong with an ill conceived plan can cause irreparable damage to the US economy. Carelessly limiting the immigration of this type of talent could have far reaching ramifications, including increased research and development costs for the technology, pharmaceutical, and chemical industries. These increase costs are passed along to consumer in higher priced smartphones, computers, medications, and everyday man-made products. This will created the same adverse reaction as the ICE raids, only instead of closing local businesses, it will force consumers to look for cheaper foreign goods, thereby causing large corporate employers to lose business, layoff employees, and ultimately fail.

It is not that the US should turn a blind eye to abuses in the immigration system. There are plenty and often it is the employer who is the culprit. Unfortunately, it is the worker, and often the consumer who suffers the consequences. There is much room for improvement in the immigration system, but one, or two page Executive Order is not the answer. We thorough and well thought out policy that allows for the entrance of skilled and talented people, laborers willing to fill vacancies that would otherwise remain empty, and individuals and families seeking asylum from war and persecution should be the goal. It will take time, political capital, and a lot of sacrifice and compromise. What will not work is a political slogan designed to garner applause. That has never been a sound basis for policy or governing.

12 comments on “Trump’s ‘Buy American—Hire American’ EO May Have The Opposite Effect

  1. Perhaps I should get my brother to comment about the H1-B visa, he’s worked in Silicon Valley for 25 years, warning, he’s not nice like me. The H1-B visa is used to replace Americans with Indian computer science grads who work for very little, so little they can’t afford housing and live in motor homes that move every few hours to avoid tickets. The visas have nothing to do with innovation or productivity, it’s all about low wages and more profit. To compare this to the ICE raids is foolish, hell, it’s a convenient lie.

  2. HyperbolicDem

    Mike Krieger, co-founder of Instagram was and H1-B holder. Rahul Vohra, Sam Stokes, and Martin Kleppman sold their platform to LinkedIn, and all were H1-B holders. It wouldn’t take long to find a ifnifvant number of these examples to make this comparison less “foolish,” since the H1-B has been in effect since before the big tech explosion.

  3. Disney replaced a bunch of its IT workers with foreign born workers — and that was not about getting better skills. This is a repeating story, really and a story that doesn’t do a good job of explaining what happens to all of the kids in school here who are getting engineering and compsci degrees. While there are certainly individuals who have created and built important tech companies, there are way more H1-B holders for whom it is not as clear why they are here. While I want American companies to get the skillsets they need, there is not much good data that he current output from American universities is not sufficient for certain demand.

    • HyperbolicDem

      Just like all immigration laws, there are loopholes. That is why it takes careful and thorough policy making to fix these. What we many fail to realize, particularly on the right, is that it’s the employer that is the one who takes advantage of these loopholes and weaknesses. The worker is just looking for opportunity, in most cases. I have no doubt that many of these visa holders are, in fact, just cheap labor for companies. It happened to my father. He trained his replacements. However, what we can’t do is make this classification so restrictive that it prohibits talent from coming in.

  4. delacrat

    HYPERBOLICDEM,

    How many H1-B visa holders do you have working for you now ?

    • HyperbolicDem

      None, in this line of work, but in a past life I had several. They definitely did not work for a cheaper rate.

  5. Chris Counihan

    Our H-1B program is a very important part of our country’s technology policy. There is a Global Competition for Talent as countries fight against each other to attract the “best & brightest”. However, there has always been a lot of problems with the system. The H-1B program has beeN revised several times (1998, 2000, 2004, & 2009) in an attempt to fix some of most flagrant flaws, but employers quickly find new ways to (as one Unilever HR Manager put it) “get their guy where we want them, when we want them there”.

    Executive Orders can’t reform the H-1B system, it can only tweak the existing rules. What is really needed is enforcement to make sure that H-1B employers are paying prevailing wages, that they actually attempt to find US workers, and that no US workers are displaced. All of these standards are currently required by law, but are not effectively enforced so abuses persist.

    In most years (except for this year, because of the uncertainty around the program) the H-1B program’s slots are filled nearly instantly. Increased policing of the program requires increased funding, which can only be done through legislation (not an EO). Getting rid of the cheats will clear up spaces for the people that we intended to bring in through the H-1B program. In fact, the program should be dramatically increased to fulfill its unmet need.

    Hopefully, with smart enforcement, the program will actually serve its intended purpose, to bring in those with the specialized talents (many of which were educated as foreign students in US colleges & would otherwise be tossed out of the country when their F1 Visas expired) that are in short supply in the US.

  6. Chris Counihan

    What Trump’s H-1B visa executive order actually does
    http://www.cnbc.com/id/104412277

    • HyperbolicDem

      In other words, much like Trump’s other policies, it does nothing. Luckily, he hasn’t figured out how to write effective EO’s yet, just vague and broadly worded ones that are difficult to implement and enforce.

    • Well, yes, it’s a review of current policy. And periodic review of policy ought to be OK. It is also a chance for Trump to continue working his nativist base. It is also a chance for American tech workers to question whether this program is really adding tech skills, or lowering wages for trained Americans. Nothing is changed yet, other than we have one more chance to talk about this.

      Here are the US states — and the companies — that use the most H-1B visas. And Delaware is pretty high up on the list.

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