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FYI Number 67: July 2, 2007

Globalization and the U.S. High-Tech Workforce

How is globalization affecting U.S. high-tech workers? What steps should the government take to ensure sufficient jobs and a robust high-tech workforce in the future? What are the roles of community colleges and industry in producing highly-skilled employees for technical and manufacturing jobs? The House Science and Technology Committee addressed these issues in two recent hearings. Witnesses at the first hearing indicated that not enough is yet known about the consequences of offshoring of high-tech jobs. They were united in opposition to protectionist policies, arguing that the United States instead should take actions to support a flexible and creative environment for innovation. The second hearing highlighted the fact that many highly-skilled manufacturing jobs are still available in the U.S., but employers face difficulties finding qualified people to fill them and community colleges are having trouble attracting students to technology training programs.

In what Chairman Bart Gordon (D-TN) called "the first in a series of fact-finding explorations," the full committee on June 12 heard from experts in economics and international R&D. The number of jobs that can be done electronically, and thus are vulnerable to being relocated, is "destined to increase greatly," according to Alan Blinder, Director of Princeton's Center for Economic Policy Studies. He testified that the types of jobs moved overseas did not necessarily correlate to wage or education level; those least vulnerable were those that required the most face-to-face contact between people outside the same work unit. Globalization will not lead to mass U.S. unemployment, he noted; it will also create jobs in the U.S., but he warned that more Americans may need to find personal service jobs. Thomas Duesterberg, President and CEO of the Manufacturers Alliance/MAPI, testified that U.S. multinational companies, even as they increase employment among foreign affiliates, also generate employment growth in the U.S. that "equals or exceeds" that of other U.S. companies. He added that more R&D is insourced to the U.S. by non-U.S. firms than is outsourced by U.S. firms.

Other benefits of globalization mentioned at the hearing included lower prices, improved products and services, and access to new technologies and business practices. Alfred P. Sloan Foundation President Ralph Gomory, however, warned that the old theories of free trade assumed that production capabilities are fixed. If those are now mobile, he said, it will lead to "a whole new ball game." According to his analysis, increased production in a trading partner may be beneficial to the U.S. if the trading partner is very low wage, but may become harmful as the partner becomes better developed.

All four witnesses were adamantly against trade barriers and protectionist policies; Blinder called protectionism "a loser's game." Suggestions for maintaining U.S. economic prominence included policies to ensure that the U.S. business environment remains flexible and innovative, such as support for R&D, creative business strategies, the venture capital industry, competition and free trade, intellectual property protection, and risk-taking. Also encouraged were tax policies that would reward companies for locating production and high-value-added jobs in the U.S. In addition, the federal government should take steps to "ameliorate the downsides" of globalization, as Blinder put it, including addressing the costs of health insurance, litigation and regulatory burdens, ensuring sufficient unemployment insurance and worker retraining, tackling budget and trade deficits and the national savings rate, and addressing the undervaluation of certain Asian currencies and intellectual property theft. Blinder encouraged the U.S. to move away from a 19th century education system that stressed rote learning, and he worried that the No Child Left Behind Act was "pushing us in the wrong direction."

Some of these same themes arose in a June 19 hearing of the Research and Science Education Subcommittee. According to the hearing charter, as manufacturing jobs have become more specialized, companies are reporting difficulties in finding workers with the necessary skills. Chairman Brian Baird (D-WA) cited a National Association of Manufacturers survey indicating that "80 percent of…respondents report difficulties in finding qualified people to run their production processes and serve as technicians."

The witnesses described how community colleges and other two-year institutions, in partnership with industry, frequently fill the role of training high-tech production and technical workers. Community colleges often rely on local businesses to provide information on their needs and develop appropriate curricula, and in many cases an industry advisory board oversees the training programs, provides feedback, and ensures that courses remain current. In addition to oversight of curricula, witnesses stated that businesses could also offer internships, guest speakers, equipment donations, job placement for graduates, and marketing and recruitment efforts.

Even though manufacturers are reporting a need for more skilled workers, one of the biggest challenges remains attracting sufficient numbers of students to such programs. As reasons, witnesses suggested parents' advocacy of a four-year college education, students' aversion to and lack of preparation for science and technology careers, and lack of awareness or a poor opinion of manufacturing as a career. All stressed the importance of good marketing to get the word out, but agreed that community colleges rarely have the funds for effective marketing. It was suggested that political campaigns discuss the importance of high-tech jobs remaining in the U.S. In echoes of the previous hearing, Stephen Fonash, Director of the Center for Nanotechnology Education and Utilization at the Pennsylvania State University, said that the U.S. must "innovate or perish," and Monica Poindexter, Associate Director for Corporate Diversity at Genentech, Inc., questioned whether the U.S. education system was ready for the 21st century. Eric Mittelstadt, CEO of the National Advisory Council for Advanced Manufacturing, said the federal government should assist workers in dealing with short-term displacements in a rapidly moving economy. Baird and other subcommittee members mused that perhaps the allocation of H1-B visas should reward businesses that play an active role in attracting students to, and helping educate them in, high-tech careers.

Future Science and Technology Committee hearings will explore additional aspects of globalization and its impacts on the science and engineering workforce.

Audrey T. Leath
Media and Government Relations Division
American Institute of Physics
fyi@aip.org
301-209-3094

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