How Foreign-Owned Companies Shape the US Labor Market

• One in nine US workers are employed by firms headquartered outside the US, meaning their jobs may ultimately be affected by decisions made abroad.

• The UK and Canada account for the largest shares of foreign-headquartered employment in the US. This likely reflects a combination of linguistic and cultural similarities and relatively low barriers of entry for these firms when expanding to the US.

• US branches of foreign-headquartered multinationals often perform more market-facing functions, employing a disproportionately larger share of workers in engineering, sales, and operations roles relative to US firms.

Foreign-owned companies employ millions of workers in the United States, adding jobs and contributing to local economies across the country. As trade policy and global supply chains face renewed scrutiny and uncertainty, understanding foreign firms’ investment in the US and their contributions to the US labor market becomes increasingly relevant. This week, we explore the composition of US employment at foreign-headquartered firms, including which states and industries foreign employers are most prevalent in and which countries they come from.

More than 11% of the US workforce works for a foreign company

Our sample includes all employees who are currently working in the US, and we classify a firm as “foreign” if its ultimate parent company is headquartered outside the US. We first look at overall employment at foreign firms. Overall, our data show that 11.4% of people currently employed in the United States work for firms whose ultimate parent company is headquartered outside the US. With more than one in ten US workers potentially affected by choices made overseas, changes in international trade relations, foreign investment, and geopolitical policy can have meaningful implications for a substantial share of the US workforce.

Where are these employees located? Looking at the share of employees in each state who work for a foreign firm reveals substantial geographic variation in foreign employment exposure across regions in the US. Texas, New Jersey, and New York stand out as the states with the highest shares. In these states, foreign companies not only have a direct effect on the local economy by employing more than 13% of the workforce, but also contribute indirectly through state and local tax revenues, supplier relationships, and employee spending. In contrast, states in the Southwest and Mountain regions have lower shares of foreign employers.

The geographic distribution of foreign employment likely reflects how prevalent foreign employers are by industry. Some industries may have a particularly large foreign presence and because these industries are often concentrated in specific regions, they help explain why foreign employment is more common in certain states than others - for example, manufacturing in Texas and pharmaceuticals and financial and consulting services in New Jersey and New York. To better understand these patterns, we next show the industries with the highest shares of employees working for foreign companies.

40% of US employees in the IT consulting industry work for a foreign employer

We find that the IT consulting services industry has the highest share of employees working for foreign firms, at 41.1%, dominated by firms such as Accenture and Infosys. This large share may be driven by the US demand for consulting services and the importance of having a local presence to maintain client relationships. Foreign firms also play a major role in food and hospitality services, with 36% of US employees in this sector working for a firm headquartered abroad - often through subsidiaries of large global hospitality and food service conglomerates such as 7-Eleven, Anheuser-Busch, Unilever, and Nestle. Pharmaceuticals and automotive services are also included in the top ten, consistent with the long history of European and Japanese investment in these sectors.

Relatedly, the composition of top foreign employers also varies by headquarters country. UK-headquartered firms account for the largest share of total US employment among foreign employers by a large margin, employing around 2% of US workers, which is nearly twice as many as the share employed by Canada in second place. This is partially driven by the large number of UK-headquartered professional services and financial firms with substantial US operations. The prevalence of UK, Canadian, Australian, and Irish firms in the top ten countries likely reflect the relative ease of operating in the US market, such as shared language and similar business environments. German, Japanese, and French firms employ around 0.85% of US workers each, making up the next of the top five and reflecting long-term investments from major European and East Asian multinationals.

Foreign employers are more likely to hire for operations and sales roles

Next, we examine the employees at these firms themselves: Who are these foreign firms hiring, and how do they differ from employment at domestic firms? Comparing the US workforce composition of foreign- and US-headquartered firms, we find that foreign firms employ a larger share of workers in engineering, sales, and operations roles than US-headquartered firms. Employees in engineering roles comprise nearly 25% of the US workforce in foreign-headquartered companies, while they make up only 18% in US companies. This overrepresentation of engineering roles may reflect the comparative advantage of the US in such roles; foreign firms may want to operate in locations with access to US tech talent, such as Silicon Valley, Boston, and Austin. Sales roles, which often require fostering local relationships and knowledge of local markets and culture, also benefit from being based in a local branch. Finally, and perhaps expectedly, operations roles likewise comprise a larger share of employment, reflecting the need for a physical presence to support US business activities. On the other hand, foreign companies prefer to keep administrative, financial, and R&D functions closer to leadership at HQ.

Finally, which specific firms employ the most US workers? Perhaps unsurprisingly, the list is consistent with the broader industry- and country-level patterns shown above. At the firm level, Deutsche Telekom tops the list with more than 103k US-based employees, primarily through its T-Mobile subsidiary, making it the largest foreign employer in the country. Accenture, headquartered in Ireland, comes in a close second place with more than 101k US-based employees, followed by UK-headquartered firms PwC, Ernst & Young, and Compass Group.

Even among this list of top foreign employers, companies may have different approaches to managing their US operations. For example, the US branches of PwC and other Big Four accounting firms operate as legally independent entities rather than subsidiaries, giving them a large degree of autonomy and control. On the other hand, companies such as Siemens take a more hands-on approach to its subsidiaries in the US, and its German headquarters may have a more tangible influence on company strategy, structure, and culture. Similarly, as Deutsche Telekom potentially pursues a full merger with its US subsidiary T-Mobile, its actions and any potential restructuring could potentially have an impact on thousands of Americans. Differences in culture may result in sentiment among US employees being lower overall at foreign-owned companies rather than domestic. Nevertheless, workers at these particular ten companies still seem to rate their companies on average more highly than employees at US companies in the same industries, indicating that some differences, at least, may be for the better.

Foreign investment and foreign employers play a large role in the US economy as a result of mutually beneficial relationships. Foreign firms extend their operations to the US to gain access to the large American market or to the talent in areas such as tech and engineering, while US states and local communities may benefit from foreign investment through employment, taxes, and products generated by firms headquartered abroad. The state of these relationships significantly shape US employment, particularly for the 10% of US employees employed by foreign firms, indicating the need for a careful and nuanced approach to trade and foreign policy.