Other Countries Are Gaining in the War for Talent

The Australian Parliament recently eased immigration laws with a goal of attracting more high-skilled labor. This was in recognition of the fact that given past and future decreasing birth rates coupled with increasing demand for skills will make skilled labor the quintessential scarce resource for the next fifty years. In this hemisphere Congress wisely spent the time passing resolutions recognizing July as National Watermelon Month and declaring soil an essential natural resource (it’s about time).

Change We Don’t Believe In

Complacency about attracting high-skilled talent can have severe negative consequences. The Bureau of Labor Statistics projects a growth of 40%, or over 500,000 new jobs in IT-related positions through 2016. Domestic supply is not enough to cover this need at current levels. The number of degrees granted across all IT-related categories is about 54,000 annually, and trending downward. Adding to the supply-demand gap is that the number of workers in the 55-and-older group will grow by 47% in the next eight years — approximately 5.5 times the 8.5% growth of the labor force overall, with significant numbers looking for early retirement. The direct impact of this is a reduction in GDP of several hundred billion dollars and billions in losses of taxes to the government. Indirectly, the impact from lesser innovation and output will only magnify these losses.

While our legislators seem to be gorging on spiked watermelon, other countries are treating issues relating to talent with far more seriousness. Many countries have liberalized their immigration policies for high-skilled talent. That poses a major challenge to America’s historic domination in innovation and attracting high-skill immigrants. Australia, Canada, and New Zealand are the most aggressive; they conceive of immigrants as a source of economic growth, and consider highly skilled immigrants to be especially valuable contributors. Accordingly have long-standing immigration policies to attract them.

While a disproportionate number of skilled immigrants still come to the U.S., the numbers that are staying home or are going elsewhere is increasing. Over the last five years, the U.S. attracted an average of 73,000 skilled immigrants annually, down from about 107,000. That may still seem like a lot, but Canada attracted 56,000, Australia 20,000, and even tiny New Zealand managed to get 10,000.

The U.S. has had an extremely muddled approach to immigration and has done little to tilt the balance towards attracting high-skilled talent. As a consequence, barely 22% of immigrants are high-skilled workers. Other countries typically seek to have the highly skilled comprise 50 percent or more of total permanent immigration; the most recent figure for Australia was 65 percent.

The Audacity of Dopes

A big reason for lack of progress on changing immigration policies has to do with misinformation and myths pertaining to immigrant labor. Some stems from ignorance and some is nothing more than naked bigotry perpetuated by anti-immigrant groups. Some self-styled “experts” will indulge in any amount of demagoguery to further their agenda. For example, among the more ludicrous claims is that no education is required for any IT job; any programming language can be mastered in 30 days; and scientists and engineers possess no special skills.

These people often manage to find outlets for their rants, on certain news shows and even in hearings before Congress. The evidence they present tends to follow a fairly predictable pattern. It involves dubious statistics peppered with stories designed to evoke sympathy for their cause. A recurring theme is the case of some poor waif, who despite being brilliant, having excellent skills, and a great personality, is unable to find a job deserving of him. The sole reason for this unfortunate’s sufferings are all those employers engaged in a conspiracy to deprive anyone of a job if they can save a buck by finding a poor immigrant to do the work. What never gets mentioned is that immigrant workers make up less than 5% of the high-skilled workforce; in fields like IT, unemployment averages about 3% and wage growth has been consistent at about 3.9%. In fields like architecture and certain types of engineering, unemployment has averaged under 2%.

These numbers belie any claims that immigrant workers have negatively impacted employment or wages. Exceptions can always be found that prove the rule. The reasons a particular individual, despite being seemingly qualified, is struggling in finding employment is usually not because of a conspiracy among employers — it could be a case of misplaced expectations, a mismatch between the person’s skills and available jobs, or just an ability to interview well.

There are a lot of extremely talented and highly qualified automotive engineers who are out of work, but not because their jobs were filled by lower-paid immigrants. If there was even the smallest shred of evidence to support a claim that employers are systematically engaged in hiring immigrants to discriminate against citizens, then rest assured some state attorney-general would have turned it into a cause célèbre in her quest to become governor.

Losing the Edge

It isn’t just in attracting high-skilled immigrants that we’re ceding ground to other countries. The ability of the United States to attract foreign students is also deteriorating. The flow of students declined by about 70,000 per year after 2001, or some 25 percent, and rose elsewhere — in Australia, New Zealand, the U.K., and Canada. And this is likely to worsen as more countries enter the fray. We have no coherent national policy in regards to talent – either for developing or attracting. Without changes in our approach to talent, this is rapidly becoming a zero-sum game where there will be winners and losers.

Some of this was inevitable in a post-9/11 world. But we seem to have moved too far in the wrong direction, while ignoring the fact that other countries are not sitting idly by. Demands by industry that the number of H-1B visas available should be linked to gaps in supply and allocation of Green Cards should be tilted toward skilled workers are largely ignored. Then again, employers could just sign employees up for 30-day courses in programming and engineering.

  • Bryan StLaurent

    The US approach to Talent is a train wreck coming down the tracks. One can only conclude a few things, most people in power are too stupid to see it, or entirely irrational, or at some high ‘conspiracy’ level, the superclass of this country has no problems with 78 million people retiring and ultimately vacating jobs because all those jobs will be outsourced to India, China, and whatever other location is most desirable from a labor arbitrage POV. The result is the US will be downsizing like we can’t imagine over the next 25 years. On top of that they want to build a fence across the southern border to make sure no low skilled people slip into the country.

    Make no doubt about it, innovation and economic growth will follow talent, and talent is as a-national as capital.

    Bryan St.Laurent

  • Ross Clennett

    As an Australian I can validate Raghav’s comments. The Australian Government has recently announced its intention to increase immigration by approximately 60% in the next two years (from, already, a record high) with a clear emphasis on skilled immigrants. South East Asia and Southern Africa countries are likely to be the most aggressively targeted regions.

  • Simon Evans

    I agree with the writer’s assessment of the blinkered vision shared by the political elites with respect to this issue. I was able to attend a briefing held by one of the top economic advisors for the Obama campaign recently (one of the advantages of living near DC!) I asked for information on the stance Obama was taking with respect to highly experienced immigrants, in particular considering his comments on the need to drive “Green” innovation. The advisor admitted he had seen no papers or statements on the matter and on reflection was equally perplexed. To his credit this advisor contacted the chief campaign advisors that evening and by the morning had a response for me….it was depressing reading.

    Basically Obama is taking the stance preferred by the “old guard” in the IT related unions, basically blaming H1 foreigners for the scourge of outsourcing and salary reductions in the IT industry. He does not support expanded immigration for top talent although they did have some vague meaningless platitudes about wanting to build up an innovation eceonomy through retooling the US workforce…as if!

    The sad thing is the McCain camp is just as bad on this subject.

    So much for change 🙂

  • Jeremy Samuel

    In speaking to a wide range of employers and recruiters while developing 2Vouch, we certainly found that companies are having difficulty finding skilled people.

    It is interesting, because the “skills shortage” has been a hot topic of discussion in the media. More recently, we seem determined to talk ourselves into a recession here Downunder, so there is a lot of chatter about a “slow down”. Now, both threads are running in parallel.

    What our clients are telling us is that is it not uniform. In highly skilled fields such as IT, engineering, accounting, medical and legal there will be strong demand for talent for the foreseeable future. In less skilled areas, demand is dropping. So policy responses need to focus on the areas where the demand exists.

    Jeremy Samuel
    General Manager

  • Pingback: Opening New Channels : AllianceQ Blog()