The Human Capital Imperative and the Dynamic American Economy

By Nick Schulz, NCF Scholar

Randy Johnson and Michael Hendrix both had thoughtful observations on the economic effects of skilled immigration.  What’s interesting to me in looking at the issue is how the evidence keeps accumulating in favor of bringing more skilled workers to America and deepening the pool of human capital in the United States.

For example, in a recent paper for AEI, economist Madeline Zavodny crunches some new data and discovers:

  • Immigrants with advanced degrees boost employment for US natives. This effect is most dramatic for immigrants with advanced degrees from US universities working in science, technology, engineering, and mathematics (STEM) fields.
  • An additional 100 immigrants with advanced degrees in STEM fields from either US or foreign universities is associated with an additional eighty-six jobs among US natives.
  • An additional 100 immigrants with advanced degrees—regardless of field or where they obtained their degrees—is associated with an additional 44 jobs among US natives.
  • Temporary foreign workers—both skilled and less skilled—boost US employment.

Now, these findings may strike some as counterintuitive.  How can adding more workers to the labor pool boost employment for those already here?

The answer, as I discuss in the paper “The Human Capital Imperative: Bringing More Minds to Market,” is that the U.S. economy is not a zero-sum game.  New skilled workers should be considered assets in the context of the broader American economy. This means they can generate incomes and jobs for themselves and for others by raising productivity and increasing the nation’s wealth.

This is especially important when we consider the nature of the American economy.  Think about a sector like manufacturing.  The United States has by far the most productive manufacturing sector in the world.  One reason is that we have been able to cultivate home-grown worker talent that has developed and embraced the use of new technology. Another reason is America’s major manufacturing firms have been able to attract top foreign talent needed to keep American manufacturing setting the pace when it comes to productivity.

The American economy is constantly evolving; so are the needs of companies within the American economic ecosystem. This includes established, best-in-class giants like Honeywell, Microsoft, Intel, and 3M; recent high-growth firms like Google; and brand new players like Facebook who are only just now reaching the IPO stage. They all need to harness the best human capital to propel the US economy forward. And to do so we need to make sure the world’s best minds are welcomed here on U.S. soil.