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U.S. President Donald Trump has issued a new executive order focusing on so-called “Buy American, Hire American” policies. Making the announcement at the Snap-On Tools plant in Kenosha, Wisconsin, the President’s order directs various federal agencies to produce reports and recommendations on government procurement policies, with the goal of increasing domestic employment and production.
The Executive Order covers two broad areas of government policy: numerous “Buy American” laws and regulations, which set requirements that materials purchased by the government – say, steel for building a bridge – give preference to US domestic producers; and “Hire American,” which aim to address reported abuses of H1B visas that undermine high-skilled domestic labor.
The government procurement component of the order is not surprising, given President Trump’s stated plans to boost domestic production through large-scale infrastructure projects. The language of the order specifically mentions targeting materials being “dumped” in the US market, a priority for the administration as I address in a previous article on Anti-dumping Duties. The H1B issue is also not surprising, as then-candidate Trump often criticized its abuse on the campaign trail.
Offering a little background, the H1B visa is a nonimmigrant work visa used to bring in high skill workers, such as doctors, scientists, or technology workers. The program is subject to various regulations, such as equal pay and documentation requirements, to avoid displacing US workers. However, several high-profile cases of abuse have emerged, such as the 2015 uproar over Disney’s plans to bring in low-paid foreign IT workers on H1B visas, and requiring the American staff to train them in before being themselves laid off.
Part of the concern seems to be the way the visas are currently issued. H1B visas were Initially intended as a means for businesses to bring over talent unavailable in the US. The Customs and Border Patrol agency takes applications from companies up to a certain limit, and issues the visas by lottery if applications exceed the cap. Currently restricted at 85,000 visas a year, applications typically surpass the quota within weeks of the application window. As a result, the visas do not necessarily go to the most qualified candidates, but to the quickest and luckiest ones. As another unintended consequence, this system benefits large outsourcing firms that flood the applications office, crowding out the applicants for whom the program was intended.
Despite these abuses, the controversy over H1B points to a more glaring problem: the shortage of technology workers in the US. According to a Brookings report, job postings in fields of Science, Technology, Engineering and Mathematics (STEM) take nearly twice as long to fill as non-STEM positions. Managers from Silicon Valley, for example, argue they need the H1B to fill these types of positions, since they provide specialized skills that are not easy to find.
Concrete changes to the H1B visa will depend on the reports developed by various US government agencies, but it’s clear that the order aims to limit the use of the program. However, this may be missing the bigger picture. The real root of the problem is lagging STEM and computer science education, as well as insufficient practical job training programs for in-demand skills. Restrictions on foreign workers alone will not create these skills in American workers.
To see real benefits for the U.S. tech industry, the administration should aim to cultivate these skills at home to meet the growing demand for them. Otherwise, cutting off the supply of skilled labor could do more harm than good.
Professor Michael Czinkota teaches international marketing at Georgetown University’s McDonough School of Business and at the University of Kent in Canterbury, England. He co-authored a book with Ilkka Ronkainen titled, "International Marketing, 10th ed."
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Scott Wilson
"Despite these abuses, the controversy over H1B points to a more glaring problem: the shortage of technology workers in the US. According to a Brookings report..."
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FakeNews - if there were a shortage wages would be going up, not down.1glenn
In my personal experience, there are not enough trained/educated Americans to do the jobs that require skills, to keep the economy going. Three anecdotes:
1.) at the package delivery company where I used to work (the largest in the USA), the majority of vehicle and building mechanics were men who had learned their trade in their home countries, mostly Mexico, but not only Mexico, then legally came here to work for better wages and fringe benefits. Without those immigrant skilled workers, that package delivery company would have to close its doors. There are not enough native born Americans who are competent mechanics to fill the need.
2.) I talked to the two ATT workers who installed high speed internet cable in our neighborhood, and to our house. The youngest of them was an immigrant from Belize, a country in central America which had formerly been a British colony. The people of Belize speak English, and this young man had learned how to work on telephone lines and high-speed cable in his native country. He told me that although he had been in this country for less than six months, he had been hired by ATT to do a job which started off at $100,000 dollars per year. There are not enough Americans with the skills to install and maintain our high-speed internet lines. BTW, the other man working with him was a much older American, getting ready to retire, making $160,000 per year.
3.) We had a fairly big plumbing job done at our house a few years ago, but still during the economic downturn. We used a reputable local company. The company was owned by an American who was getting ready to retire. The younger man who was taking over the company - buying it from the retiring American - was a well spoken, highly trained, legal immigrant from Mexico. He had several men working for his company, under his direct supervision, and they did good work, for which we paid the going rates. We had earlier hired a company with just Americans, but one of them turned out to be a drug addict who did bad work and who stole from us. The Mexican immigrant told us that even in the economic downturn he was so busy that he was turning down work. His men were working all the hours they possibly could, even as other men were complaining that there were no jobs to be had.
My point is that many people here in the States want a job, but many of those same people have neither the skills to do the jobs that need to be done, nor the desire to do those jobs. Are there abuses in the H1B program? Probably, but the programs to train Americans to do jobs requiring skills have mostly been shut down by the various Republican administrations, in order to save tax money for the 1%, and we are left with the need to bring in trained immigrants.