Bloomberg News

U.S. Urged to Halt Skilled-Worker Flight or Lose Innovation Lead

October 06, 2011

Oct. 6 (Bloomberg) -- The U.S. risks losing its global lead in innovation if it fails to halt an exodus of skilled foreign workers from the country and doesn’t do more to support research and development.

That was a message delivered by five corporate executives and seven university leaders at an event yesterday sponsored by Harvard University and the Business Roundtable and hosted by Bloomberg News. They argued that the development of ideas is vital to U.S. economic growth and job creation and said the nation can’t afford to take its preeminent position for granted.

“The United States has long been a leader in innovation, but we believe it needs a more focused, national innovation policy,” said Harvard President Drew Gilpin Faust.

Besides backing more working visas, group participants also called for more stable and predictable funding of research and development by the federal government and said an R&D tax credit should be made permanent. They also urged Congress to keep its pledge to let the U.S. Patent and Trademark Office have control over all the fees it collects to promote innovation.

House Republican leader Eric Cantor and John Holdren, President Barack Obama’s science adviser, voiced sympathy for the panel’s plea for more visas for foreign workers, though they stopped short of promising immediate action, in separate appearances at the event.

‘Alarming’ Trend

“We have an alarming rate of exodus, if you will, of foreign nationals in this country who come here to attend your universities and then find it too difficult to stay here,” Cantor, of Virginia, told the university chiefs and executives, who included John Lechleiter, chief executive officer of drugmaker Eli Lilly & Co.; Bill Green, chairman of consulting firm Accenture Plc and Tim Solso, CEO of diesel truck-engine maker Cummins Inc. “We intend to try and address that.”

Some executives called on the government to decouple the issue of obtaining more visas for skilled workers with the move for a broader immigration overhaul, which has been stalled on Capitol Hill over issues such as border security.

Holdren told the group, which also included Ellen Kullman, CEO of DuPont Co., and James Goodnight, CEO of SAS Institute Inc., that Obama administration officials “would like to get the high-tech part done if we can.”

Members of the panel contrasted the U.S. government’s piecemeal approach to innovation with that taken by the country’s overseas competitors.

‘Mixed Messages’

“Individual countries -- Ireland, the U.K., France, China, Singapore come to mind -- are very aggressively pursuing high- end research-based kinds of opportunities and jobs” through tax credits and other incentives, Lechleiter said. “We get mixed messages sometimes in this country.”

John Engler, president of the Business Roundtable, agreed. “There’s no national strategy,” he said.

“It’s also about the rise of the emerging market multinational and that the competitors of the future are companies whose names we can’t pronounce,” said Green of Dublin-based Accenture. “That is the competitive threat.”

Added Stanford University President John Hennessy, “We’re going to have to step it up.”

The leaders focused much of their attention on the nation’s immigration policy.

The corporate quest for more skilled workers from overseas has been stymied in Washington, with many lawmakers and the public more focused on the country’s estimated 10 million illegal immigrants. That drew frustration from the academics and industrialists at the “Innovation and the Economy” event.

‘Sausage-Making Process’

“We have a crisis,” said Green. “The sausage-making process of getting an outcome, I think, puts us at a huge disadvantage.”

The issue is economic because workers with essential skills are leaving the U.S. and contributing to the competition, the executives and university leaders said.

“There are jobs today that are open because we don’t have the skilled workforce here,” said Kullman of Wilmington, Delaware-based DuPont. “If we want to continue to create economic growth we have to fill those jobs with the best and the brightest no matter where they come from.”

The business agenda calls for increases in worker visas for skilled and unskilled labor, and more employment-based green cards -- proof of permanent residency in the U.S. that can allow for a lifetime career.

Lechleiter said it takes Indianapolis-based Lilly five years on average to get green cards for the students it hires from Harvard in Cambridge, Massachusetts.

‘Stop Messing Around’

“An innovative solution is that we take these really talented graduate students that we have that we’re granting Ph.Ds. to and we staple that green card right to that Ph.D.,” said Sally Mason, president of the University of Iowa. “And we stop messing around and really diverting talent from the United States back to other places.”

Engler said it would be difficult politically to separate the issue of skilled foreign workers from broader immigration reform. “Nobody will let it loose,” he said.

Panel participants also stressed the importance of government support of research and development in promoting innovation and faster economic growth.

Lechleiter said lawmakers should permanently renew the research-and-development tax credit to make it easier for companies to compete globally.

Targeted Tax Breaks

The credit is among dozens of targeted tax breaks set to expire Dec. 31. It was first enacted in 1981 and has been renewed 14 times since then. In 2008, the most recent year for which data are available, companies claimed $8.3 billion in research credits, according to Internal Revenue Service data.

Stanford’s Hennessy voiced concern that federal R&D spending would be cut in the drive to reduce the U.S. deficit, which the Congressional Budget Office estimates was $1.3 trillion in the fiscal year that ended Sept. 30.

The entire federal research-and-development investment in universities is a “tiny piece of the federal budget,” he said. To cut that funding off “will just result in weaker economic growth for the country and fewer jobs.”

Researchers need to be assured of a steady stream of funding to carry out their work, added Linda Katehi, chancellor of the University of California at Davis.

“It’s absolutely critical,” she said. “We find we have been having difficulties in getting our researchers to participate in this process early in their careers.”

About 60 percent of spending on basic research comes from the federal government.

The situation is different in some foreign countries, Harvard’s Faust said. Institutions in China, Singapore and Europe “are assuring our faculty that they will have almost unlimited support for their work,” she said.

“All these other countries want to be like us,” said Accenture’s Green.

--With assistance from Laura Litvan, Susan Decker, Eric Engleman, Alison Fitzgerald and Kristin Jensen in Washington. Editors: Mark McQuillan, Jim Rubin.

To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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