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Overlooked aspects of current issues
Issue 1: Immigration Reform
We all understand the United States has a desperate need to modernize our immigration system. Apart from that, does the average citizen know what is desirable beyond better border security? An article in The Wall Street Journal (March 26, 2014) points out often overlooked facts. Matthew Slaughter of Dartmouth College and a former member of the Council of Economic Advisers for George W. Bush argues that the current H-1B visa quota is very inadequate. Only 85,000 three-year visas are granted annually. These individuals from other nations must possess a bachelor’s degree (65,000) and 20,000 must have a master’s degree, at a minimum.
The payoff for the U.S.? Since 1995, one-quarter of all high-tech startups in the United States has at least one foreign-born founder. Those companies have created 450,000 jobs and average over $50 billion in annual sales. If our companies can’t hire through the H-1B provision, they may have to hire from overseas as they can’t find the talent they need domestically. Microsoft Founder Bill Gates testified before Congress that for every immigrant hired at a technology company, an average of five additional employees are hired. And each new Microsoft job adds eight jobs in supplier companies to Microsoft.
This restrictive policy on H-1B visas is responsible for 500,000 lost jobs per year. Stated differently, the 2.37 million new jobs created in 2013 could have been 21 percent higher at 2.87 million. Let’s watch this area carefully as immigration reform is eventually debated by Congress.
Issue 2 : Baby Boomers and Retirement
Do you really think you can survive living on Social Security? There must be a lot of Americans who just don’t get it. The Wall Street Journal (March 31, 2014) reports only 57 percent of workers report they are currently saving for retirement. 31 percent of those between ages 45-54 and 33 percent of those 55 and over said they needed to save between $250,000 and $500,000 to live comfortably in retirement.
So, let’s do the math and assume you can find a nice five percent return on $500,000 before taxes. That’s $25,000 per year, and if your home is paid for and you have reasonably good health, that $25,000 (before taxes), along with Social Security, may keep you afloat.
The sad fact is that of those 55 and older, only 23 percent have $250,000 or more and 24 percent have less than $1,000 in savings! Another 10 percent have between $1,000 and $9,999. Five percent earnings on $10,000 is $500 per year or $41.67 per month. Good luck to them—and there are millions of them out there.
As inflation begins to come back into focus, how will these folks going into retirement afford utilities, food and other necessities? Will we see a mass-scale return of retirees needing to move in with their adult children? Or will there be a huge jump in homelessness among the elderly?
There are a lot of things to ponder as one surveys economic issues around the globe. Some answers lie in intelligent legislation, such as immigration reform. Other answers may come by necessity as older workers find they cannot retire and need to continue working as long as possible.
That has actually been the plight of mankind for the past century. Isn’t it too bad so many of our citizens, living in an economy based on capitalism, are ignorant of how this capitalistic system works?
Roger Doerr is a retired professor emeritus of business and economics at Hastings College where he taught for 44 years.
He was two-time President of the Nebraska Economics and Business Association.
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