By Tom Manzo
July 19, 2019 at 5:00 am ET
Donald Trump was supposed to reduce the cost of running a business. Thanks to a recent policy change from his Social Security Administration (SSA), the president is in competition with California state legislators to make staffing the company I run more difficult.
I don’t make this accusation lightly; California is the most challenging business environment in the United States. I would know: I run a small manufacturing company, Timely Industries, located north of Los Angeles, that competes with other manufacturers in business-friendly states like Alabama.
California’s hostile business climate is well-known. The state has the highest workers’ compensation rates in the nation; fuel is the most expensive in the nation, which adds additional costs to our product; the relevant minimum wage in our market is soon to be $15 an hour, which has forced our company to invest in automation; and a provision in the state’s legal code that favors trial attorneys (called the Private Attorneys General Act) has cost our company over a million dollars in settlement money and legal fees.
But my current headache has nothing to do with a letter from Sacramento; this one arrived from Washington, D.C. Starting in March of this year, SSA began sending out more than a half-million “no match” letters to the country’s employers. As the name suggests, the letter informs the business owner that they have one or more employees whose Social Security numbers don’t match what’s in the government’s database. If that sounds like a simple fix, you haven’t dealt with the U.S. government recently.
These letters have a troubled legal and political history. First sent by SSA in 1993, the controversy over the letters peaked in 2007, when the Bush administration promulgated a rule requiring employers to fire any employee whose Social Security number couldn’t be verified within three months. That rule was successfully challenged in federal courts by a coalition that included the U.S. Chamber and the AFL-CIO. The Obama administration tinkered with its own version of the letters, which would have omitted a termination requirement, but ultimately stopped sending them in 2012.
The Trump administration revived the letters and began sending them out this spring. Here’s the bind employers are in when a letter arrives: The Social Security letter says that we can’t fire the employee on account of receiving the letter, because that termination might be illegal. On the other hand, if you do nothing, Immigration and Customs Enforcement (ICE) may use that as evidence against the employer during an I-9 audit. Possible penalties from ICE include jail time for the employer. The only way out is a delicate dance (in consultation with labor attorneys) where employees are asked for documentation but the employer is limited in its option to act on this information.
This is personal for Timely. We lost 24 employees on account of these no match letters; included in this group are some very talented young people in their late 20s who were bilingual and excelled at their jobs. The 24 employees made a good living, paid their taxes and were contributing to our society. I’m not a politician with deep knowledge of the immigration reform debate, but I can say with certainty that my company would be better off — -and the country would be better off — were there an alternate path to allow these young men to stay.
I appreciate the President’s desire to cut red tape and improve the business climate; anything would be an improvement over the current state of affairs in California, where the Labor Law Digest now exceeds 1,100 pages. But since Trump has taken office, our raw material costs have increased over 22 percent because of tariffs, it is more difficult to sell into Mexico and we just lost 24 employees at the busiest time in the history of the company.
I was excited to have a businessman as president. But right now, I’d rather have someone who understands my business, my employees and the hardships that Washington, D.C. can create for a manufacturing company such as ours.
Tom Manzo is the President of Timely Industries in Pacoima, Calif.
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