Ask the expert: Could US lose its competitive edge?

The US is closing its doors to immigrants with degrees in science, maths and engineering. Because of security concerns in the US, and improved education in their own countries, it is increasingly difficult to draw foreign students into American universities. Those who do complete their studies in the US are returning home in ever greater numbers because of visa issues or enhanced professional opportunities there.

Craig Barrett, chairman of Intel, believes these foreign-born knowledge workers are critically important to maintaining America’s technological competitiveness.

Mr Barrett answers your questions below.

……………………………………………………………………………………………………………………….

Isn’t it possible and probable, that we have untapped talent in poor schools and neighbourhoods that can be harnessed with the help of our university engineering students and supported by our IT industry?

Could the US benefit by following the example of, say, Chalmers University in Gothenburg, Sweden? Here, a group of engineering students started a project by going out to minority based high schools in the area. Engineering students from Chalmers give presentations at the high schools explaining the value of studying math and science and what type of jobs they can expect if they graduate from college with an engineering degree. This project is supported by industry in Sweden.

The project involves tutoring for the high school students at Chalmers, and they are followed for a five-year period through high school. It is turning out to be a successful attempt at recruiting minority students in segregated areas.
Jane Crothers, Mesa, Arizona

……………………………………………………………………………………………………………………….

Does Mr Barrett believe that rewarding talented, technical graduates with better pay, rather than treating them as ballast, might quickly solve the talent shortage?

I guess you have a point, but frankly it eludes me. If your suggestion is that we simply double the salary of our engineers and this action will trickle down and fix the K-12 math and science education problem and entice more folks to pursue engineering as a career, then I don’t know what we do about our competitive position in the world.

Simply doubling our payroll is a sure way to destroy our cost structure. You might as well ask that we double our salaries, increase our pensions and benefits and then end up like General Motors. Engineers are paid a competitive salary in the US - the challenge is we need more kids to get interested in engineering. That translates to more and better K-12 education in math and science.

US citizens can spend six or eight years getting an advanced degree in The hard sciences (which are really hard, after all) or engineering to earn half what a 23 year old law graduate earn, with much less job security.

The US seems to have no problem turning out adequate, even generous, numbers of lawyers. For example, how do starting salaries for Harvard or Wharton MBA graduates compare to what MS (master of science) electrical engineers start out at?

And, how many large US corporations actually have a technical career ladder that is treated (paid) on a par with the people on the management ladder?

If we are not in fact talking about a shortage of cheap technical talent, perhaps US corporations need to think about the big bucks showered on what they consider the really critical functions - finance, law, and upper management. How many of their technical staff are paid like rock stars?
Dr. Bryan DeVault, Spring, Texas

……………………………………………………………………………………………………………………….

Mr Barrett’s article, “Why America Needs to Open Its Doors Wide To Foreign Talent”, was spot-on. How does Mr Barrett think we can fix our failing education system here in America? Does he see public institutions or private organisations as the best agents for change? Does he feel that the burgeoning culture of materialism, immediate gratification and sense of entitlement in America have permanently displaced the hard work, innovation and creativity that are an inherent part of the American dream?

With children’s futures mortgaged away through a war, a mounting budget, trade deficits and seemingly pervasive corruption, it is hard to see how the US government will ever surmount this problem?
Ryan Andersen, New York City

Charter schools, private schools, vouchers, etc are probably the answer to fixing the system, but these topics are ripe with partisan politics. For any other institution that was failing as badly as our overall K-12 education system, we would demand immediate change. In contrast we endlessly debate basic testing (No Child Left Behind) methodology that is necessary to baseline current results and define where improvement is required.

The system does not want to change, it has political force with its unions and lobbying, and it has become a political football between the major parties. The net result is every graduating class is left further behind their international counterparts while we debate, debate, debate. It is time to open the system to competition and force change.

……………………………………………………………………………………………………………………….

In your FT article you argued that the US subsidises through grants the countries where foreign students come from. But considering that 1) most foreign students pay very high fees to American universities and 2) that the taxpayers of those countries financed all the primary and secondary and bachelor education of those same students. Wouldn’t those (usually poor) countries be subsidising the US if those students stayed in the US?
G Bracho

Additionally most studies show that tuition payments do not pay the full cost of the class work. So any student in our universities is partially supported by the government (read that the taxpayer).

The dichotomy is that if the student then returns to his or her native country, the US taxpayer has then contributed to the education cost associated with someone who probably contributes nothing back to the US in the form of payroll taxes.

As you point out, the home country has contributed to the primary education of the student at some cost, and if the individual stays in the US then the US benefits from that investment. So there is a certain imbalance in the equation.

But, as the earning power of the individual substantially increases with education level, and the cost of education also increases dramatically with education level, the investments and returns associated with graduate degrees probably is the more important. Hence my comment that the US subsidises foreign students who come to the US and then return home.

………………………………………………………………………………………………………………………..

With China graduating such huge numbers of engineers and scientists every year (also acknowledging the fact the numbers are increasing) and India having a great head start along with its Prime tech institutes, should we not focus our education on management of technology with a broad understanding of engineering? Because even if we graduate enough engineers, Asian labour is much cheaper.

I am pursuing a bachelor degree in management but I will have a minor in an engineering field. If I can have an engineer for less in Asia, all I need here is someone who understands how to use it. As a young entrepreneur I can understand paying less for a technology. We should do the very top part of the business and the very low part, leaving the middle to the people who can do it for less and arguably better. Let us remember the Theory of Specialisation.
Ely Fall, Sophomore, Ely Fall, Atlanta

The issue is productivity, not just wage rates. The US-based engineers have to have the education and then be given the tools to be more productive than their international counterparts. The tools can be computer resources, advanced laboratories, specialized equipment, capital intensive facilities, etc. You can certainly make the argument that these ‘tools’ can also be exported and certainly over time that is correct. But this is just the endless competition that exists in any industry. Once the world catches up with you in one area, then you are forced to move to the next level to maintain a competitive advantage.

If you have no comparative advantage, then the jobs will migrate to the lowest cost producer, and this is generally where wage rates are the lowest. But with the rapid movement of technology, there are many examples where a comparative advantage can be maintained in high wage rate areas. For example consider the areas of advanced semiconductor technology, biotech, supercomputers, etc.

………………………………………………………………………………………………………………………..

Unfortunately, I feel that political bureaucracy is deeply rooted in this country, the same as in other countries which the US enjoys criticising. Indeed, a long, endless green card process is just another way of throwing away taxpayers’ money.

What might be the best way of breaking the huge backlog in labour certification applications that is stopping so many qualified foreign workers from being productive in the US? Why do we need to apply for a permanent labour certificate after years of services? Do those offices at the Department of Labor really understand the nature of my business, or should it be determined by my employer?
Shelly Ma, Assistant VP, Equity Analyst, Kansas City, Missouri

Unfortunately we always seem to get caught up in the quota numbers in the US and this dominates the conversation. Once we get beyond the quotas I think we can start to work the details of the process.

You might want to give the DoL a little slack with regard to some of their paperwork. They are mandated by Congress to make sure that preference is not given to foreign workers and that equivalent salaries are paid to both US citizens and foreign nationals. I agree with both of these administrative challenges and would support the DoL in making sure hiring companies obey the law.

………………………………………………………………………………………………………………………..

As an Intel employee, a holder of an advanced degree from the US, and currently on a work visa, I was both pleasantly surprised and rudely shocked by reading Mr Barrett’s article. I really appreciated the fact that Mr Barrett feels strongly about easing US immigration policies for holders of advanced US degrees. However, Intel itself stopped sponsoring such employees for US green cards between April 2001 and March 2004 [some rare exceptions were allowed]. The reason given was “cost-cutting because of the economic downturn”. Mr Barrett was the CEO at that time.

My question to Mr Barrett is: If you feel so strongly about hiring the best talent in US, then why did Intel stop sponsoring green cards for three years?
D Hananjay

Most companies had massive layoffs and downsizings. Intel chose to respond to this recession with continued investment in R&D and manufacturing capability. We did dramatically slow down new employee hiring during this time period as a prudent matter to protect our P&L.

As a result, all hiring, both US citizens and foreign nationals, was slowed. Intel continued the processing of immigrant petitions already in process but due to the economic conditions we made a business decision to slow down the next step petition filing until business conditions improved.

At no time did we withdraw any petitions. Just as we try to hire the best talent in the world we also try to be prudent in our financial decisions. Slowing down the hiring process during a severe recession hardly seems to be inconsistent with our overall philosophy.

………………………………………………………………………………………………………………………..

I would say to Craig Barrett that he has the required skills within his company. Intel has invested widely abroad and can draw on the offshore skills without bringing these people to the US. My question would be: Does Mr Barrett not think that Intel’s internal organisation with assessments, focals and politics, suppresses the very skills he is looking for?
Phil Hadwell

The values upon which our company is run have been the same for several decades. We were a technology leader when the company was formed and we are still a technology leader.

Engineers and scientists have their own promotional track (equivalent to managers) and competitive pay. If the implication of the question is that employee assessment is a barrier to engineering performance I believe we have a 38 year history to the contrary.

………………………………………………………………………………………………………………………..

The only ‘brain drain’ I see is in the fuzzy logic of Mr Barrett. He would export every job but his to India and China if he could to take advantage of the lower cost basis compared to American workers but he can’t so he, along with his fellow CEOs from HP, Microsoft and Sun, continues to flog the myth of a ‘brain drain’. If there is a American ‘brain drain’, they helped create it by embracing offshoring.

They have sent all the entry level jobs in technology and programming overseas to their offshore facilities or foreign outsourcers. Why are foreign graduates with tech degrees going back to their countries rather than staying here? How, in the face of all the damage you CEOs have done to your fellow Americans by exporting their livelihoods to the third world, can you sleep at night?
Joe Berger, President, One to One Interactive Inc, New York, NY.

The ‘brain drain’ we’re talking about is the lack of US citizens interested in Math and Science.

This is the result of an increasingly noncompetitive K-12 education system in the US and results in our kids not being competitive with their counterparts around the world. It also results in fewer and fewer US kids pursuing higher education in the areas of engineering and science.

You can’t blame the likes of Intel, HP, Sun, and Microsoft for this problem. In fact, you can point out that these companies are amongst those who are pointing out the problem and suggesting solutions. Besides suggesting solutions, these companies are also putting their money where their mouth is and contributing heavily to improving the situation. Your contention that we are off-shoring all entry level jobs in technology and programming overseas is laughable. Intel has added over 10,000 new US technology jobs in the last few years. Just drive by our campuses in Rio Rancho, New Mexico: Chandler, Arizona; several campuses outside of Portland, Oregon; etc.

Ditto with Microsoft’s campus in Redmond, Washington. Of course both companies are also hiring outside of the US, that happens to be where our business is growing the fastest. But we are also increasing our investment in the US at the same time. So find another excuse to blame big business, and continue to ignore the fundamental problem that we are doing a poor job educating our kids. My point was that we need to fix the education system (that will take time) and in the meanwhile we need to remain the country where the best and brightest want to come and are welcome.

………………………………………………………………………………………………………………………..

Like several other forms of labour, engineering labour is increasingly a global commodity. That puts downward pressure on American engineering wages. Lower wage levels, as compared with wage levels for other intellectually demanding careers in the US, discourage Americans from choosing an engineering career. An influx of foreign born engineers would increase the supply of engineers here in the US and put further downward pressure on US engineering wages (despite the increasingly globalised nature of engineering labour).

Under the above circumstances, how can we attract more American students to the profession? What shall we tell our intelligent youngsters are the charms of the engineering profession in a world where American engineers will compete for jobs with Chinese or Indian engineers who will work in their homeland for a fraction of the salary an American “commands”?

Can we make engineering an attractive field for enough Americans that we do not need to import foreign labourers. Or is your call for an increase in educated immigrant labour a recognition that this is impossible?
Steven Cooper, Firmware engineer, Sheboygan, Wisconsin

With the world’s increasingly open economic system, just about everyone has to compete.

Certainly, your local plumber or policeman doesn’t have to compete with their counterparts in India or China, but most of the creative jobs in the US have competition.

Patent lawyers, radiologists, software programmers, financial analysts, etc are all seeing competition.

The challenge facing the US is to educate its young people so they are competitive with their peers around the world.

If you are competitive and given the tools to compete (read that the investment in R&D, the venture capital industry to help create new businesses, the billion dollar investments in manufacturing facilities such as those Intel continues to build in the US, etc) then it is possible for US engineers to create value in a competitive fashion.

We can make engineering an attractive field if we do the following:

• fix the K-12 education system – invest in quality teachers who are certified to teach math and science

• provide scholarships for youngsters interested in pursuing math and science university degrees

• increase the basic R&D investment in our research universities

Perhaps the biggest challenge is recognising that we have a problem and then having the patience to try and solve the problem. Today, we compare ourselves to our neighbours – California to Arizona, Texas to Florida, etc. We do not compare ourselves to the rest of the world and recognize that the bar of achievement, the level necessary for competitiveness is continually being raised.

While our universities are still the best in the world, we are doing a good job of weeding our all kids who might be interested in math and science in K-12 with teachers who have little training in the fields they are teaching. I believe all kids can be competent in math.

But it has become to common to say, ‘math is too tough’, ‘I don’t need to know math to get a good job’, ‘math is for nerds’, etc. What we need are K-12 teachers who understand the subtleties of math and science, who understand the impact of these fields on every aspect of our lives, and who have the capabilities to get kids interested in the topics. Certainly we have some great teachers in the US. We just don’t have enough to make a real difference.

Fixing the problem won’t happen overnight, which is why I suggest that we need to continue to attract and retain the best and brightest foreign students from around the world. But, long term, we must fix our educational process to create the native talent we need to succeed.

………………………………………………………………………………………………………………………..

Are there are not countervailing factors, more qualitative in nature, that mitigate some of the doom and gloom that results only when we look at “inputs” such as the number of engineering graduates?

Surely, we would not want to have the large number of engineering and science graduates in the US that China and India produce if that also meant having to adopt the teaching methods that prevail in these countries. There are dynamics in American education - its emphasis on critical thinking, creativity and entrepreneurship - that make for a competitive advantage no other major nation can replicate. I continue to be amazed by the innovation, much of it in marketing and management, but also technological, that comes from people who were not schooled in science or math.

Another aspect of American culture amplifies these success factors: the unparalleled free market of ideas that prevails in this country. In particular, China’s repressive political and social environment can only be an impediment to the efficient flow of ideas. Would you agree that one cannot only look at one trend and believe that such a trend is absolute in its consequences?
Bruce Sheiman, New York

I would like to point out two problems with this defense of the US system. First our kids do terribly in math and science when compared to their international counterparts. It doesn’t matter how you measure the results, they are always the same.

By the time a youngster graduates from the 12th grade, on average they rank in the bottom 10% of their peers around the world. They may be ‘creative’ but they don’t understand the basics.

Second, for those of us who follow or participate in the venture capital field, it is clear that there is no lack of creativity in India or China. Intel is the largest high tech VC investor in the world and increasingly more and more of our investments are going to start ups in Asia.

You imply a social environment that may be an impediment to the efficient flow of ideas. In practice this does not appear to be the case in the high tech field.

………………………………………………………………………………………………………………………..

Robert Solow, the great economist who won the Nobel prize of economics for his growth model called Solow, claims that in the long run, it’s only technology that makes a sustainable growth for the economy. But if the US graduates many MBA and economics students, that shouldn’t hurt the economy. I think it reflects that economists can be used to increase the productivity and living standards in the US, do you agree?
Lise Verga, Sweden

But any large economy like the US needs to create value in a number of areas to be successful in the long run. That value has increasingly been related to high tech fields like engineering, bio-sciences, new materials, nanotechnology, etc.

These are the areas where you can succeed only if you have a highly educated work force. And, this highly educated work force, competent in math and science, is what I was talking about in my Op-Ed piece. The US is still a leader in this area but its leadership is being challenged by other countries who are placing importance on the quality of their work force.

My message is that the US needs to refocus its efforts in this same direction. Economists can only suggest how you best use your resources. I am suggesting that unless you have the engineering and technology resources to create new products, new ideas, new companies, etc, then the economists will have very little to do.

………………………………………………………………………………………………………………………..

You say that Intel is a ‘US based company.’ I would argue that you are an ‘’Earth’ based company’’ with headquarters in the US. Until companies realise that their ‘home’ is only a location and not a reason for being, we will face the challenges you rightly highlight.  Are you optimistic that in the near future, companies will worry less where they are headquartered and more on the talent they attract wherever that may be?
Derek Lubner

I have to balance the two issues in my mind - making my company a success and providing opportunity for the next generation. In a perfect world perhaps the two challenges are perfectly aligned, but in today’s world, we have inequities everywhere around us.

So, Intel is a US based company, with employees around the world. To be internationally competitive we have to chase the best talent. But that doesn’t stop me from publicly suggesting what my country has to do to be competitive in the future.

………………………………………………………………………………………………………………………..

I’m a software engineer with 15 years of experience. I have had four different employers and survived 14 layoffs during my engineering career.

IEEE has shown that engineering salaries have declined in inflation adjusted dollars since the 1970s. My neighbour, with very little experience, sells yellow page ads and earns more than the average experienced software engineer. Let’s be honest; most people work for the paycheck. Having “National Need” scholarships is great but why would young people go into engineering when other professionals earn better salaries and have long term careers? Can you explain how access to foreign engineers will help not exacerbate declining salaries and disruptive career problems?
James West, Centennial, CO

Second, I don’t know how to tell anyone that they can be a success in their field. I can tell people to make sure that whatever you do you had better be good at it, enjoy it and get some sense of accomplishment or your 40 year work career will be pretty dreary. If the local salesman makes more than a software engineer then more power to him. A lot of software engineers make more than medical doctors.

Long term the workers that create the most value will be those that are valued the most. With regard to your question about how access to foreign engineers will help not exacerbate declining salaries and disruptive career problems, I can only respond that a strong high tech base for any economy creates more jobs than it destroys. We have seen this in the US with its high investment in technology - it is the most productive society in the world and has correspondingly created jobs and opportunity for its citizens. In contrast some countries that have remained much more closed, have suffered stagnation and high unemployment.

………………………………………………………………………………………………………………………..

I wrote recently about how the world should break down the immigration barriers and create an organisation for freer movement of labour, as the Doha rounds are spurring freedom of trade. Does Mr Barrett believe that a world labour movement a la WTO might help move things forwards in a more global and structured manner?
Philip L Letts, www.digitalbigbang.org

Rather than wait for a world organisation to solve immigration problems I would suggest individual countries work to improve their local education systems, thereby improving their local competitiveness. There is an old saying that the world is always ready to receive talent with open arms. This means that the jobs will flow to the talent and we are seeing many examples of this today.

………………………………………………………………………………………………………………………..

Should US immigration policy change to help alleviate any shortage of engineers and scientists?
Jan Czekajewski Columbus, Ohio

• The H-1B visa has a mandatory cap of 65,000 which has been met seven times since 1997. In 2005, advanced degree graduates from US universities were granted an additional 20,000 H-1B visas and that quota has been met. We are currently in a situation where both H-1B caps being exhausted until 10/1/06 when another quota will be available.

Thus, the quota is exhausted for the majority of the year.

• The employment-based system provides green cards to individuals sponsored by their employers to work in the United States. The annual cap of 140,000 was implemented in 1990 to address similar backlogs in the 1980s. Today, demand is greater than supply and coupled with long processing delays by the Citizenship and Immigration Service individuals wait up to seven years to obtain a Green Card.

These arbitrary caps undercut business’s ability to hire and retain the number of highly educated people in the fields where we need to maintain our leading position. Instead of arbitrary caps, a market-based approach that responds to demand is needed. Only then will the US. be competitive and have the ability to hire the best and the brightest, a large proportion of whom we have educated in our universities. The market-based approach can require employers to pay foreign nationals the market wage (”prevailing wage”), and indeed that is already a requirement in the H-1B and Green Card processes.

………………………………………………………………………………………………………………………..

Is the US administration addressing the problem of educated immigrants, or is focusing only on lettuce pickers?
Jan Czekajewski Columbus, Ohio

In a speech on February 3, 2006, President Bush emphasised the importance of immigration in high-tech and in particular strongly called for an increase in H-1B numbers: “There are more high-tech jobs in America today than people available to fill them…. And the reason it’s important….is if we don’t do something about how to fill those high-tech jobs here, they’ll go somewhere else where somebody can do the job. And so one way to deal with this problem, and probably the most effective way, is to recognise that there’s a lot of bright engineers and chemists and physicists from other lands that are either educated here, or received an education elsewhere but want to work here.

And they come here under a program called H-1B visas. And the problem is, is that Congress has limited the number of H-1B visas that can come and apply for a job. I think it’s a mistake not to encourage more really bright folks who can fill the jobs that are having trouble being filled here in America – to limit their number. And so I call upon Congress to be realistic and reasonable and raise that cap.

………………………………………………………………………………………………………………………..

Do you think the US should cancel H-1B visas and replace them with Green Cards instead (qualified scientists and engineers hesitate to come to US for a limited time with future status not assured)?
Jan Czekajewski Columbus, Ohio

Much of that work is done by graduate students, many of whom are foreign nationals. We believe the US should do more to keep those talented students who graduate from our universities here to work. By forcing these individuals outside of the US we are in effect educating the talent for our global competitors.

Intel uses the H-1B visa to hire individuals with advanced, university level education in engineering and the hard sciences. These are PhD and Master’s level employees who typically are already in the US at a US university. We expect to continue to sponsor employees for H-1B and permanent residence in the future for the simple reason that we cannot find enough US workers with the advanced education, skills, and expertise we need.

………………………………………………………………………………………………………………………..

Why is the US government afraid of bringing in a few hundred thousand foreign engineers but tolerates 11m illegal immigrants whose educational standards are often low
Jan Czekajewski Columbus, Ohio

The US must focus on highly skilled legal immigration or we will lose our competitive edge. We are educating the best and the brightest, but make it impossible for them to stay in the US and immigrate. In order for the US to compete in the global marketplace, we must have major immigration reform that welcomes instead of pushes out highly skilled workers.

………………………………………………………………………………………………………………………..