Another day, another sound bite from the publicity stunt presidency.
On Tuesday afternoon, President Donald Trump signed the "Buy American, Hire American" executive order, following up on the president's campaign trail pledges by taking aim at foreign worker visas and government purchasing of overseas goods.
"The buy and hire American order I'm about to sign will protect workers and students like you," Trump reportedly said at a Wisconsin public appearance. "It's America first, you better believe it. It's time. It's time, right?"
Rhetoric aside, this order won't do anything of the sort. The numbers just aren't there.
Trump's new policy calls for a review of two main programs: first, the H-1B visas which allow companies to sponsor visas for skilled, foreign workers, and second the Buy American laws under which government agencies and contractors must provide specific rationales whenever they choose to use foreign suppliers instead of domestic ones.
Neither of these programs is big enough to have any significant effect on the labor market, even if White House follows up on its reviews with concrete action. This is true of the H-1B program, and it's especially true about the much less known Buy American laws.
The latter that deserves the biggest spotlight, because, until Tuesday, most people didn't know that many agencies operate under a directive to buy domestically. Let's start, however, by touching on the visa issue.
It's small potatoes.
H-1B visas have stirred controversy for a long time. Critics argue that they allow companies to replace domestic workers with cheaper, foreign staff. Defenders of the program argue that it allows companies to staff jobs, primarily in STEM fields, in which there's not enough domestic talent.
"There's different points of view," said Harry Holzer, a professor of Public Policy at Georgetown. "The people on the left, like the Economic Policy Institute, like to point to studies that define engineers broadly, [studies] that say there's a big supply of those people who are native born… Whereas the companies like to say that their interests are far more narrow. They need people on the frontier, the cutting edge of things."
The H-1B program probably does affect engineering jobs and salaries somewhat, but equally probably not that much. From an economy-wide perspective, though, it just doesn't affect that many people.
Every year the State Department allows a maximum of 65,000 new fresh H1-B applicants, and up to 20,000 additional if they hold a U.S.-issued graduate degree. That's a maximum of 85,000 workers per year for three-year stints.
By contrast, the economy has created over 560,000 positions since the start of 2017 alone, and more than 14 million since the end of the Great Recession. Compare that to the potentially fudged H-1B applicants, well, there's no comparison.
"That's not a trivial number," Holzer emphasized, "but it's also a very, very small slice of all engineers in America."
The same is true of Buy American.
Buy American laws require government agencies to buy some of their materials and manufactured products from U.S. sources. There's a wide range, as these laws have been passed on and off since 1933.
The most common Buy American laws relate to steel and iron. For example, under the 2009 American Recovery and Reinvestment Act, the Department of Transportation has to ensure that all "iron, steel, and other manufactured goods used in [a] project are produced in the United States." For a non-comprehensive list of the many buy American laws floating around out there, see this page.
(Classified and sensitive defense contracts also adhere to this standard, but through a different and generally uncontroversial set of laws.)
While much of the coverage of Trump's order has focused on the H-1B program, the administration has made much more of Buy American. The President even staged his Tuesday announcement at a Kenosha tool company in front of an American flag made of wrenches.
Trump claims that his order will give the steel mills and die casting plants of the heartland their biggest customer back. This ignores several realities. Buying more steel has increasingly little to do with hiring more workers… and that this policy can't make much difference overall.
Despite much of the response, on their own Buy American rules have never mattered all that much. They mean that taxpayers pay somewhat higher prices for a defined set of products, but in the scheme of government spending this has always amounted to little more than a pork barrel appropriation.
Farmers get their subsidies, homeowners get tax credits, steelworkers get Buy American rules… for better or worse this is how the U.S. government does business. Inefficient, but not abnormal, and riddled with special exceptions and waivers. By one count, 59 countries have waivers which the Trump administration would continue.
All of which is why there's no low hanging fruit here.
Even if government agencies do play fast and loose with buy American rules, a crackdown would lead to marginal gains. A few more projects would by U.S. iron and office chairs and steel. Some companies would see gains, and would reflect that through some combination of increased automation and hiring.
A few other companies would probably see losses. Every additional dollar spent on an I-beam, after all, is a dollar not spent on software or someone's salary. The money has to come from somewhere.
And big picture? Just like the H-1B visas, the Buy American program doesn't account for that big a slice of the U.S. economy. What fudge factor the administration could smooth out through its review process accounts for even less. Out of a $3.8 trillion federal budget and a 16.77 trillion dollar economy, moving around a few federal vendors won't matter much to that many people.
"The Buy American thing, it would not have a big effect on the overall economy," Holzer said, "because we're talking about either how the federal government procures goods or groups that get federal funding, how much iron and steel they buy. Those are very particular slices."
"It could raise the demand for American steel a bit, I would argue not dramatically," Holzer added. "It could affect manufacturing industries that produce some of the goods that the us government buys, but again, not dramatically."
This, then, is the problem with Trump's vaunted Tuesday order: it's very small thinking.
For a big ceremony meant to herald a big campaign promise, Buy American Hire American won't affect many actual Americans.
Does that make it a bad idea? No. Years of reporting have made clear that some companies do try to use H-1B visas to undercut wages, but even if every single H-1B job was legitimately taken from a U.S. worker it would still represent 0.03% of the positions created in 2016 alone.
As a way to bolster local industry, Buy American falls somewhere between a perfectly normal subsidy and inefficient pork barrel spending. But as a jobs program? Somewhere between 87,000 and 145,000 people work in and around the U.S. steel industry. Again, a small number compared to the scale of the economy and likely to be influenced only slightly by a few more government purchases.
Had Trump directed his staff to look into this, or brought it up as a laundry-list item of government housekeeping, then these decisions would have been laudable. Certainly in the case of the H-1B program, the government could review and improve.
But, said Holzer, "for the aggregate U.S. labor market neither one of them is going to matter a lot. They both effect particular slices of that labor market and if you're in one of those particular slices you might be affected more."
For everyone else, he said, how much difference can it really make?