It’s Time to Give the Knowledge Economy the Ball
In October 1986, then-Los Angeles Lakers Coach Pat Riley confronted a major challenge: How to restore a talented basketball team to dominance in a highly competitive league. His response proved to be the most pivotal strategic decision of his career: He made his most innovative playmaker, Earvin “Magic” Johnson, the focal point of the team’s offense.
Riley believed Magic had not reached his full offensive potential. Up to that point, Johnson played largely a supporting role, artfully distributing the ball to his teammates. By giving Johnson the green light to shoot more, Riley was certain the Lakers’ overall performance would improve. And he was right. For the next five seasons, the Lakers reached the league championship four times, winning the title twice. One strategic decision to let one key player achieve his full potential resulted in the entire team playing at a championship level. It was the Lakers’ game changer.
Like the ‘86 Lakers, our economy is at a strikingly similar crossroads. Talented and innovative, our economy has the essential ingredients to succeed in an increasingly competitive global marketplace. Yet, last week’s anemic jobs numbers – a disappointing 88,000 private sector jobs created in March -- suggest the U.S. economy is underperforming. It’s time for our policymakers to realize that the knowledge economy -- the diverse array of existing innovative businesses, along with the cadre of current and future entrepreneurs -- is being underutilized and needs to become the focal point of U.S. economic growth.
The knowledge economy can begin to reach its full potential if Congress modernizes outdated immigration policies. The central reason why the knowledge economy is underutilized is simple: The current and near-future supply of U.S.-based innovators and entrepreneurs can’t keep up with demand. A modern skilled immigration system combined with investments to improve our domestic supply of skilled talent are needed to fill the gap here in the U.S., or knowledge-based businesses will look elsewhere to call home.
A December 2012 analysis from the Information Technology Industry Council, the Partnership for a New American Economy, and the U.S. Chamber of Commerce found that numerous sectors of the U.S. economy that depend on Master’s and Ph.D. graduates are experiencing underemployment -- i.e., a workforce shortage. These findings are not surprising given the following:
- Dice.com -- a website that aggregates publicly posted listings for information technology (IT) jobs -- today reports more than 83,000 U.S. IT job openings.
- Business Insider reported last month that ten leading U.S. tech firms together had more than 26,000 U.S. job openings.
Smart immigration policies would enable companies to fill these high-pay, high-return jobs, generating economic activity that sparks faster, stronger job creation throughout the U.S. Solving the knowledge economy’s underemployment would help to reduce the U.S. economy’s unemployment.
An additional factor contributing to the underutilization of the knowledge economy is the enormous backlog in permanent resident visas, or green cards. Right now, hundreds of thousands of skilled foreign-born professionals are waiting for a green card. Those waiting while working in the U.S. on a temporary visa have a difficult time advancing professionally in the U.S. due to legal restrictions on promotions and transfers. More and more individuals are giving up and returning home, contributing to a reverse brain drain in the U.S.
Our knowledge economy can be a far more productive, innovative, and effective part of the U.S. economy than it is today if our immigration system gave existing businesses the green light via more green cards to hire and promote skilled foreign professionals.
Our immigration system can also do more to make the U.S. knowledge economy a business- and job-creating haven for foreign entrepreneurs. As Robert Litan and Carl Schramm noted in their book, Better Capitalism, all the net new jobs created in the U.S. economy from 1980 through 2007 came from start-up firms that were less than five years old. During the last several decades, the knowledge economy was the major source of new, scalable business start-ups, and more than half of those startups in the Silicon Valley from 1995-2005 were founded or co-founded by foreign entrepreneurs.
The knowledge economy can be better utilized as a driver of U.S. economic growth and job creation than it is today. And two bipartisan bills -- the Immigration Innovation (I-Squared) Act (S. 169) and Startup Act 3.0 (S. 310) -- together could be the knowledge economy’s game changer. I-Squared would boost temporary and permanent visas so U.S.-based companies can compete for, hire and retain foreign talent, especially graduates of our own U.S. university system. I-Squared also would increase fees on new temporary visas in order to invest in expanding our own home-grown talent pool, enabling the U.S. knowledge economy to be the global innovation leader over the long term.
Startup Act 3.0 would give the knowledge economy targeted green cards for emerging entrepreneurs. Some estimates of the potential impact of Startup 3.0 by the Kaufmann Foundation point to job creation of at least 1.6 million during the next decade.
The so-called Gang of 8 in the Senate is considering these and other ideas as part of a major overhaul of our immigration system. It is they who will have the first word on the most important strategic decision for Congress and the President this year, and it is they who should be asked one simple question: Does their bill move the knowledge economy toward its full productive, innovative, and creative potential for the benefit of the entire United States?
Let’s hope the answer is a resounding “Yes!”