Why Andy Grove Is Wrong About Job Growth

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Proposals for Job Creation

So, what types of policies will lead to job creation?

Let's start by first recognizing that globalization will disrupt industries and cause job losses in one industry while creating jobs in another. We need to upgrade our investment in workforce training and development as a national priority. We need to have the concept of lifelong education become part of our culture. Education doesn't end when you graduate from college; that is when it begins. This is the best way of staying ahead in the global race for skills.

Second, we need to foster entrepreneurship at the source: the workforce. My team's research has shown that most high-growth companies are founded by middle-aged workers who have extensive industry experience, want to capitalize on their idea, and want to build wealth before they retire.What inhibits Americans from starting companies is a lack of knowledge of how to do it, lack of financing, and fear of failure. Clearly, not everyone is cut out to be an entrepreneur, but a significant proportion of the workforce can be taught to start successful companies and create jobs.

Third, we need to recruit the world's best and brightest to the U.S. and do all we can to keep here those already in the U.S. on temporary visas. My team's research has also shown that during the recent tech boom, immigrants founded more than half of Silicon Valley's startups. In recent times, they have contributed to more than a quarter of U.S. firms' global patents and helped boost U.S. competitiveness. These skilled workers tend to be highly educated, to understand foreign cultures and markets, and to be highly entrepreneurial.

Fourth, we need to more effectively tap the gold mine of knowledge and innovation locked in our universities. We've invested on the order of a trillion dollars in university research over the years. Yet we have consistently failed to convert all but a tiny fraction of these lab breakthroughs into actual products and further economic activity. We need to harness this innovation treasure by building mechanisms to break the innovation logjam at the source—the nexus between the scientists who make the discoveries, the universities that market the discoveries to the world, and the entrepreneurs with domain experience who could take these discoveries and turn them into products.

Last, we need to provide incentives to American companies to keep research in the U.S. Grove didn't mention the huge incentives that countries like China provide to Intel and other tech companies. The lure for them isn't just cheap labor (with lax labor regulation), but also heavily subsidized infrastructure and cash subsidies. We may have to level the playing field in industries where other countries aren't playing by the rules. But we need to be smart in how we do it.

There is no doubt that the U.S. has reason to worry about its competitiveness. China, India, and many other countries have learned the secrets of America's success—its open economy and capitalist ways. They are trying very hard to become like us. Let's not become like they used to be.

Wadhwa is a visiting scholar at University of California at Berkeley and a researcher at Duke University.

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