The renewed debate over immigration reform has led to some very strong opinions, but one particular issue that has been lost in the mix is the need for more high-skilled workers in the United States.
The visa system for high-skilled workers — known as H-1B visas or STEM visas — is in dire need of modernization. This system allows businesses to temorarily employ foreign workers who have college degrees in various fields, including science, technology, engineering, and mathematics.
The system, however, limits the number of workers who can obtain these visas to 65,000 per year, meaning that many high-skilled workers see employment in other countries instead of waiting to come to the United States.
Along with a number of his colleagues from both sides of the aisle, Sen. Orrin Hatch (R-UT) recently introduced legislation — the Immigration Innovation Act (also known as the I-Squared Act) — that would bring a much needed overhaul to the H-1B visa system and more economic benefit to the United States.
The Immigration Innovation Act would increase the annual cap on high-skilled workers who can obtain H-1B visas from 65,000 to 115,000 and also provide a manner of flexibility that would allow the cap to be raised even higher to meet labor demand inside the United States. The legislation would also remove the cap for high-skilled workers with advanced degrees, which is currently limited to 20,000 per year.
A coalition of freedom-minded groups — including the American Conservative Union, Americans for Tax Reform, and the Competitive Enterprise Institute — have endorsed the plan.
Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
Economists may not agree on much, but we all agree that economic output is a function of capital and labor. Ask a Keynesian, a Marxist, an Austrian, a monetarist, or any economist, and they’ll all agree that living standards are determined by the quality and quantity of these two factors of production.
So it should be very worrisome that there has been a big drop in the share of the population that is employed. Here’s a chart produced from Bureau of Labor Statistics data, showing labor force participation during the 21st Century.
There was a big drop during the recession. That’s the usual pattern, and it definitely isn’t something that can be blamed on President Obama since the downturn began before he took office.
Written by Daniel Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.
Like almost everything about the 2012 presidential campaigns, the bickering between the major party candidates over who is most responsible for shipping jobs overseas has been banal and utterly uninformative. While politicians have scared many Americans with hyperbolized sales pitches about the costs of foreign outsourcing, most people remain in the dark about the causes and benefits of outsourcing. What is foreign outsourcing anyway? Why do some businesses invest in sales operations, research and development, production and assembly operations, or the provision of services abroad? Are low wages and lax environmental and safety standards in poor countries really the magnets attracting U.S. investment? If so, why is 75% of U.S. direct investment abroad in rich countries? What explains the fact that the United States (high-standard, rich country that it is) is the number one destination in the world for foreign direct investment? Doesn’t the fact that businesses have options in our globalized economy serve to discipline some of the worst government policies?
As I suggested in this recent post:
In a globalized economy, outsourcing is a natural consequence of competition. And policy competition is the natural consequence of outsourcing. Let’s encourage this process.
Written by Christopher Preble, Vice President for Defense and Foreign Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.
It is no surprise that the defense contractors want to protect their profits by getting taxpayers to pony up more money. Now they have secured the support of Crossroads GPS in a commercial against Senate candidate and former Virginia governor Tim Kaine. The Crossroads ad follows similar ones from Kaine’s challenger, George Allen, and the National Republican Senatorial Committee. All three ads claim that spending cuts under sequestration will result in devastating job losses to the defense industry and Virginia; the Crossroads ad claims 520,000 jobs will be lost. But these estimates are wildly inflated and represent the short-term interests of the defense industry, not the American taxpayer.
President Barack Obama and Mitt Romney squared off last night in Denver for the first of three debates before next month’s election — this debate primarily focusing on domestic policy. By most accounts I’ve read, Romney did really well, while President Obama struggled (I missed the debate because I was flying back to Atlanta from Washington, DC). The Washington Post has a good overview of the first debate, highlighting the contrast between Obama and Romney:
Romney came into the 90-minute exchange after several difficult weeks but appeared rejuvenated by the opportunity to take his case directly to Obama and the American people. He was well prepared and aggressive as he hammered the president. The contrast with Obama was striking, as the president appeared less energetic even as he rebutted some of Romney’s toughest attacks.
The debate is likely to give Romney what he needed most, which is a fresh look from voters — at least those who are undecided or open to changing their minds — and will change the conversation about the campaign, which for the past two weeks has been tilted in the president’s favor. Romney now faces the challenge of trying to build on his performance and keep the president on the defensive in the days ahead.
The good news about our economy is that it hasn’t been struck down by some mysterious act of God. Acts of Government plague our nation – and acts of Government are entirely within our power to change.
Today I will not recite the dismal statistics behind the failed economic policies of this administration, nor the reasons why these policies have failed. The current Presidential campaign has plenty of that, and the fact is that every single American already knows the answer to Ronald Reagan’s simple question: “Are you better off today than you were four years ago.”
Today, I would instead like to look ahead to what the 113th Congress and the 45th President of the United States must do if we are to restore prosperity to this country.
I’d like to outline seven measures that I believe are absolutely essential to repair our economy and restore America as the most prosperous and productive nation in the world.
FIRST AND FOREMOST – IT’S THE SPENDING, STUPID.
Unless and until we dramatically reduce federal spending and the accompanying tax and debt burden, government will continue crowding out private capital and destroying job creation.
Three numbers tell the story very nicely: 39, 32 and 82. Thirty-nine percent is the rate of inflation and population growth combined over the last ten years between 2002 and 2012. Thirty-two percent is the growth rate of revenue in the same period – despite the tax cuts and the recession. Not quite keeping up with inflation and population growth, but pretty close. Eighty-two percent is the figure that’s killing us. Eighty-two percent is the growth of federal spending.
The Bureau of Labor Statistics (BLS) dropped a bomb this morning. Yesterday, there were some positive signals that job growth was increasing compared to recent months. The ADP estimate for August came in at 201,000, which was much higher than the 140,000 estimate.
But the official job report for August was nowhere near expectations. According to the BLS, the economy created 96,000 jobs in August with estimates for June and July being revised downward:
U.S. employers added 96,000 jobs last month, a weak figure that could slow any momentum President Barack Obama hoped to gain from his speech to the Democratic National Convention.
The unemployment rate fell to 8.1 percent from 8.3 percent in July, but only because more people gave up looking for work. The government only counts people as unemployed if they are actively searching.
The Labor Department also says 41,000 fewer jobs were created in July and June than first estimated. The economy has added just 139,000 jobs a month since the beginning of the year, below 2011’s average of 153,000.
That’s not good at all, folks. Remember that the economy needs to create 150,000 jobs each month just to keep up with population growth. So while the spin will be that this is positive, but the economy is still experiencing essentially a net-zero job growth and more people are giving up hope of finding work. Futhermore, James Pethokoukis notes that “[i]f labor force rate had just stayed same as last month, [the]unemployment rate would be 8.4%.”
Back in May, the Congressional Budget Office (CBO) issued a stark warning to Congress that tax hikes scheduled to happen at the beginning of the year could trigger another recession. Since that time President Barack Obama and Senate Democrats have refused to act on extension of all current tax rates, which is the position of House Republicans. Instead, they’ve only pushed for one-year extension for individuals making $200,000 and families bringing in $250,000.
But yesterday, the CBO once again stressed that the looming tax hikes could hurt the economy if the stalemate doesn’t end:
In a fresh warning about the so-called “fiscal cliff,” the nonpartisan CBO reiterated that the U.S. economy will go into a recession next year if the Bush-era tax cuts expire and automatic spending cuts take effect. Read the CBO report.
In its latest report, the CBO predicts that the U.S. economy will grow at a 2.1% clip in 2012, but fall by 0.5% between the fourth quarter of 2012 and the fourth quarter of 2013 under the fiscal cliff scenario.
Previously, the CBO said growth would be 0.5% in 2013 under the fiscal cliff. In its new report it said the “underlying strength” of the economy is weaker.
The CBO said unemployment would jump to around 9% in the second half of 2013 from its current 8.3% if the tax increases and spending cuts play out.
Recently elected socialist French president François Hollande.
While I’m not sure I always buy whole-hog the amorphous concept of “regulatory uncertainty,” brought on by the administrative state, as a catch-all explanation for everything wrong with the private sector and our nation’s current unemployment crisis, a fascinating Bloomberg Businessweek Global Economics feature from May 2012 looks at French labor policy (emphasis mine):
[France] has 2.4 times as many companies with 49 employees as with 50. What difference does one employee make? Plenty, according to the French labor code. Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons.
French businesspeople often skirt these restraints by creating new companies rather than expanding existing ones.
Cuts to defense and military spending should reflect a principled commitment to reducing wasteful spending, crony capitalism, and the size and scope of the part of the federal government with all the bullets and bombs — it should not be a matter of political convenience.
When congressional leaders sparred over whether or not to raise the debt ceiling last year, the parties agreed that if Congress failed to come up with a deficit reduction plan, automatic triggers would kick in, and would sequester $1.2 trillion in spending across the federal budget (mandatory and discretionary; defense and non-defense). That agreement, which came to fruition almost exactly a year ago to the day, reflected a trade the president made with House Republicans: he gave up demanding revenue increases in exchange for an agreement to include defense spending in sequestration. Speaker of the House John Boehner reluctantly agreed, making sure no triggers would go into effect until January 2, 2013.