Friday, November 06, 2009

International Labor Mobility

The theme of Richard Herman's new book is that international migration is under-appreciated as a tool for regional economic development. We can learn much from the immigrant experience. I contend that international brain drain policy serves up important lessons for domestic talent concerns. Consider one of the suggested agenda items for the upcoming APEC Summit, labor mobility:

A [report] commissioned by ABAC and carried out by the University of Southern California's Marshall School of Business also urges APEC leaders to create what it calls a "labor mobility task force" to address temporary worker movement.

"A rationalized policy framework for the movement of people to include all levels of highly skilled, skilled and lower skilled, will give APEC economies benefits of economic development, and do so in an inclusive way," says the report, titled Facilitating Labor Mobility within APEC: Opportunities and Challenges.

It warns, "Much is lost if protectionist tendencies prevail and the topic of international labor mobility continues to be neglected."

The report says that while the issue may be "uncomfortable" to address in times of recession when economies are haunted by fear of job losses, the lowering of local wages and unwelcome burdens on social services, "real shortages of skilled and lower-skilled workers exist in many APEC economies, even during this recessionary period."

"And these labor shortages and imbalances of skills and jobs are predicted to become increasingly critical because of the changing demographics of aging populations. This gives business real concern as access to workers is directly correlated with business and competitiveness and growth," it says.

Since few economies are capable of addressing these imbalances internally, or with immigration, external sources of labor are needed.

The study voices concern over current temporary worker policies, saying they "have tended to focus on controlling and limiting worker movement rather than facilitating it."

"The important circular dimension of temporary worker flows has not been well addressed; often resulting in problems of overstaying workers becoming a drain on resources of receiving economies, and a brain drain for sending economies," it says.

"Collective courage and political will is needed to create an effective policy framework that addresses these concerns, and produce inclusive growth."

The study cites statistics that project labor shortages throughout the world to increase to staggering proportions.

The United States is estimated to require an additional 35 million workers by 2030, as more than 75 million baby boomers will retire by 2012 and by 2020 fertility rates will drop below replacement levels.

I emphasized what I think is the key passage. Restricting talent migration is counterproductive. Given the projected labor shortages, coming to grips with this reality has never been more important. Policies designed to limit geographic mobility undermine economic development. Approaches to deal with brain drain in states such as Michigan ignore all the research on the subject, favoring only homegrown solutions.

I suggest that Rust Belt communities embrace brain circulation models. In Eastern Europe, the trend is taking hold. Talent is returning home where better opportunities exist. Economic growth trajectories are now greater in the Rust Belt, particularly in cities such as Youngstown, OH. I can already see the legacy cost bubbles expanding in Texas cities. I see Rust Belt states as analogous to countries such as Poland. Perennial brain drain losers are now calling out to their expatriates. At least, they are in Eastern Europe.

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