To middle-class workers who have lost their jobs or seen their wages sink, free trade can seem like a nice way of saying foolish trade. We lose jobs overseas to manufacturers who pay Third World wages, poison the environment and ship back dangerous and defective products. (Then we buy those products because the price is right.)
The temptation is to fight back with tariffs and treaties. But protectionist remedies are a recipe for spending your life in litigation before the World Trade Organization.
A smarter approach is to figure out ways to compete more effectively in the global marketplace. Here's how.
First, get American workers ready. That means retraining displaced "old economy" workers to compete in market sectors with potential for job growth. 
Training layoff survivors
"A lot of Western European countries -- Germany, Denmark, Sweden -- do it better," says Christopher King, who directs human-resources research at the University of Texas at Austin. "Between industry and government, they spend 4% to 5% of gross domestic product on career education and retraining; the United States spends .085%."
In today's fiercely competitive global marketplace, that kind of disadvantage can leave American middle-class workers out in the cold.
A few companies, like Marriott International and Procter & Gamble, are standouts at training employees and bringing them up through the ranks. Some cities have shown leadership as well, hoping to attract better jobs. For example, in Houston, says King, city and county governments and the chamber of commerce have pooled their money with federal funds to develop training programs tailored to the needs of local companies. And in Fort Worth, local manufacturers and unions have collaborated on an aerospace training initiative. The federal High Growth Job Training Initiative helps, but King says it needs better funding -- plus some provision for evaluating effectiveness.
Keep immigrant programs from harming U.S. workers. Federal programs that allow skilled immigrants to work in this country need a major reform, says Ron Hira, assistant professor of public policy at the Rochester Institute of Technology and co-author of "Outsourcing America." Right now, Hira says, immigrant workers often displace homegrown tech workers and drive down salaries. And outsourcing companies take advantage of the guest-worker program to train foreign workers before rotating them -- and their jobs -- back to India or elsewhere.
How to fix it? Require companies to demonstrate first that they cannot find comparable American workers, says Hira. Close loopholes that now let companies pay below-market wages to immigrants. And introduce
adequate oversight, including audits, to ensure that the program really does serve U.S. interests.
Once we've done that, Hira says, such programs can benefit the U.S. economy by serving as a bridge for the best and brightest foreign workers.
Make more jobs for Americans by accepting more immigrants. CNN's Lou Dobbs may sputter in disbelief, but look at the numbers: A recent Duke University study found that one in four U.S. engineering and technology startups between 1995 and 2005 had an immigrant founder. In 2005, those companies employed 450,000 U.S. workers and generated $52 billion in revenues. In roughly the same period, the percentage of U.S.-based foreign nationals on international patent applications tripled to about 25%.
What makes skilled immigrants so entrepreneurial? They've already taken a big leap leaving their home countries, says Ganesh Venkataraman. So starting a new company may not seem so risky. Venkataraman grew up in southern India and is now an American citizen. He's also a co-founder of Momenta Pharmaceuticals -- which employs about 160 people in Cambridge, Mass., just down the street from MIT, his alma mater. 'Ready to fail'?
Use universities to recruit science and engineering talent. Some Americans value colleges mainly for how well they do on the football field or the basketball court. Other countries know better. They outsource the education of their brightest students to American universities, widely considered the best in the world. Of those immigrant company founders, 74% had advanced degrees, most of them from U.S. universities.
We don't do so well with the next step -- getting top students to become a permanent part of the American economy. There are twice as many skilled immigrants applying to become "probationary Americans" as there are H-1B visas to go around. It's even harder to get a green card and become a legal permanent resident.
Country quotas make the process particularly slow for immigrants from India and China. So instead of being able to settle down and make their lives here, potential company founders get stuck in immigration limbo. Or they go home and compete against us. The answer: Allow more visas for the brightest immigrants.
Invest to capitalize on research talent. A recent report by the National Science Foundation called attention to the enormous benefits the American economy has obtained from investment in research and development -- particularly in the information technology, pharmaceutical and manufacturing industries. But other countries also see that pot of gold and are increasingly aggressive in going after it, says A. Stephen Dahms, CEO of the Alfred E. Mann Foundation for Biomedical Engineering.
To reverse its "brain drain" and lure back leading scientists now working abroad, China has begun offering U.S.-style academic settings and comparable research money. Singapore, facing the loss of low-wage manufacturing jobs to China and India, is investing $300 million to develop a life-sciences research center called Biopolis -- an effort to build a higher-wage economy with biomedical innovation. So far, Biopolis has cherry-picked talent -- including a Nobel laureate -- from MIT, the Salk Institute, the National Cancer Institute, Harvard University and the California and Texas university systems.
The United States still has the resources to fight back. For instance, the Alfred E. Mann Foundation is working to establish the equivalent of a dozen Biopolises at major universities across the United States, bankrolling the planned institutes with $200 million apiece. The aim, says Dahms, is to help bring ideas out of the laboratory and into commercial production.
In the new global marketplace, that's the sort of strategic thinking it will take to create decent jobs for middle-class American workers.
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Published Feb. 1, 2008
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