PROMO 64J1 Miscellaneous - Opinion Ideads Blocks Heads People Lightbulb - iStock -

Opinion: ‘Hire American’ will lead to higher costs, fewer opportunities for Americans

© iStock -
Ross Marchand

Since the start of the pandemic, workers and contractors from abroad have worked hard to keep goods and services flowing to struggling Americans. They’ve helped test vaccines, keep America connected, and monitor federal agencies’ overburdened IT systems. But once President Donald Trump’s new executive order is fully implemented, all of that may change.

August 3, President Trump signed an order forcing federal agencies to review whether their hiring of foreign workers has hampered the job prospects of American workers (and take “corrective actions” if necessary). The president’s policies will also place additional scrutiny on federal contractors hiring H-1B workers, further escalating federal efforts against these temporary visa holders. This “Hire American” order will recklessly endanger government services, wasting more taxpayer dollars and hobbling the coronavirus response effort. Rather than doubling-down on arbitrary hiring reviews and restrictions, the federal government needs to hire the best and brightest to help Americans cope with the pandemic.

Shortly before signing the executive order, President Trump chastised Tennessee Valley Authority (TVA) CEO Jeffrey Lyash for replacing American workers with cheaper foreign counterparts while getting paid $8 million per year. While there’s no excuse for a federally-owned and sanctioned monopoly utility to pay top executives such outrageous salaries, punishing foreign hiring will only hurt the TVA’s bottom line and increase electricity prices for consumers. There are already significant cost pressures on the TVA with forecasts suggesting that the utility’s electricity rates could rise by more than 9 percent over the next 10 years. Limiting the TVA’s hiring options will leave the entity little choice but to raise prices on consumers and businesses, in turn leaving companies less money to … hire American workers.

President Trump’s move to push “Hiring American” may sound tempting, but taxpayers will pay the price for the inevitable costs associated with wasteful and inefficient hiring processes. It is far more likely that the wrong person will be selected for a position if hiring criteria are substantially narrowed, and faulty hiring could have significant financial ramifications. Wages and benefits for executive branch civilian workers already total roughly $300 billion, or about $2,300 for each household across the country. Average annual wages for federal civilian workers are north of $90,000, but the cost to taxpayers doesn’t end there. According to a report by the U.S. Merit Systems Protection Board, “The actual cost of hiring the wrong person for a job – including wasted salary, benefits, severance pay, training costs, and hiring time – can be up to three times the employee’s salary.”

The wider push to place additional scrutiny on H-1B workers may prove even more damaging to taxpayers and consumers. According to a 2015 analysis by University of California, Davis and Colgate University scholars, a single percentage point increase in a city’s H-1B science, technology, engineering, and mathematics (STEM) related employment is linked to a 7 to 8 percent overall boost in wages for college-educated Americans in that city. For Americans without college degrees, this increase in H-1B employment led to a 3 to 4 percent pay hike.

The results may seem counterintuitive but speak to the economywide benefits resulting from foreign, skilled employment. The researchers concluded that STEM workers “are fundamental inputs for innovation, the main driver of productivity growth.” These skilled workers tend to be in short supply in the U.S., and Americans benefit when these employment gaps are filled. Despite the well-documented benefits of work programs such as H-1B, the Trump administration has already moved to severely restrict work visas.

This latest “Hire American” executive order will exacerbate the problems posed by President Trump’s strict limits on work-based immigration. All Americans will lose out from these shortsighted policies and taxpayers and consumers will see higher bills. Instead of focusing on caps and restrictions, the Trump administration should pursue flexible employment policies that place qualified personnel at relevant positions. This merit-based system would lead to higher-quality government services and drive innovation for decades to come. Americans are struggling to cope with the pandemic and need assurances that their tax dollars will not be spent on faulty hiring and retraining. Nixing this needless executive order would be a critical step in the right direction.

Ross Marchand is the Vice President of Policy for the Taxpayers Protection Alliance.