Citizenship path is answer to promoting economic growth
The 1980s decade was known for the beginning of the second-longest peacetime economic expansion in our history. The gross domestic product (GDP), a barometer of economic growth, grew at an average of 3.5 percent annually. In comparison, our economy has grown at an average of a little over 2 percent in the last five years. Economic expansion can only be sustained by demand for the products and services it produces and increases productivity, monetary capital to fund these improvements and most of all human capital (skilled workforce).
Since the Great Recession of 2008, economic instability has caused companies to dramatically increase their capital reserves. U.S. company account balances include $2.5 trillion held overseas and $1.94 trillion held domestically, which has increased 20 percent over the last two years. The largest holders of these rainy-day funds include Microsoft, GE, Apple, Pfizer, IBM, Merck and Alphabet (parent of Google). The U.S. corporate tax rate of 35 percent, highest in the world, is thought to be discouraging use of these funds within our borders. The new administration has indicated it would like to cut this rate to 15 percent to encourage this inflow.
Other available financial capital includes $2.66 trillion in individual investor money market accounts and excess bank reserves of $2.15 trillion being held by our Federal Reserve Bank. Unleashing these funds to invest in state-of-the-art equipment and technology could help increase industrial productivity, something that has risen on average of 1 percent annually since 2008, half the historical average.
In the 1980 led expansion over 21 million jobs were added. The unemployment rate fell from a high of 11 percent in 1982 to 5.5 percent. The current unemployment rate is 4.8 percent, very close to what economist refer to as the “natural unemployment rate” that accounts for people switching jobs or changing careers.
Though the Economic Policy Institute estimates there are 1.85 million that have stopped looking for a job, therefore not included in this number, they have found roughly 50 percent have skills to re-enter the workforce immediately. In December 2016 the Bureau of Labor Statistics found there were 5.5 million job openings left unfilled, almost 3 times the number of openings in July 2009. CollegeGrad.com just released a survey of more than 400 employers that hire college graduates, inquiring about their talent needs for 2017. They found that employers will be increasing their hiring by 8.5 percent in 2017, the highest rate increase in 15 years.
The U.S. Census Bureau reported that in 2015 the median household income rose 5.2 percent, the first increase since 2007. An increase is also expected in 2016.
The Consumer Confidence Index is also rising, which is expected to manifest itself in increase consumer spending. With consumer spending making up 70 percent of our GDP, the foundation of increased demand is being laid.
Unlike in the 1980s, we do not have the “slack” in our labor force to meet the immediate talent demands of industry for STEM labor. The most available source of talent exists in our colleges and universities. We are currently educating over 480,000 students from across the globe in high demand STEM-related fields. They are future doctors, researchers, and engineers with over 200,000 also available in business management.
This diverse talent pool could be our only hope to return the prosperous growth of the 1980s, done by increasing the number of H1B visas available for them to work here (currently capped at 85,000 annually). Add a path to U.S. citizenship for these gifted individuals, and we just might win our most important war, the international fight to obtain and retain talent.
Steve Patchin is director of Career Services for Michigan Technological University.