Brookings: The Avenue: Rethinking Metropolitan America

Widening the Panama Canal and the Future of Global Trade Mapping

Adie Tomer and Joseph Kane — Fri, 17 May 2013 16:25:00 -0400

Up and down the Atlantic coast, US ports are abuzz. Dredging machines, tunnel excavators, and highway pavers from Miami to New York are preparing metropolitan economies and their ports for a newly expanded Panama Canal. As the thinking goes, an expanded Canal promises bigger ships, bigger cargo loads--and each metro wants a piece of the bigger business.

But lost in this port-related arms race is what the newly-widened Panama Canal means for the US economy . Too many metropolitan areas simply assume they’ll immediately acquire new freight business when the expanded Canal opens, or that there will be more business at all. These billion-dollar assumptions ignore a more fundamental question: how and where will the Panama Canal affect US’ global goods trade?

Answering that question requires a broader view, one less predicated on ship size and more on economy size. It also requires metropolitan areas to gain a better understanding of their goods trading relationships, and how those relationships power their local economies.

It’s time to have a frank conversation about what investments like the Panama Canal mean for US trade and economic growth.

First, let’s start with a little context. The Panama Canal, set to celebrate its 100th birthday next year, is one of the world’s most important trade assets. It primarily helps connect US Atlantic and Gulf ports to their trading partners in Asia, Oceania, and South America. Driven by those major markets, the Canal already moves over 330 million tons of freight each year.

However, the Canal suffers from capacity constraints. The world's largest ships can no longer fit through certain locks, meaning the Canal was ill-prepared for its second century. In response, Panama initiated a major overhaul including two new locks, plus widening and deepening several existing channels. When complete in 2015, larger container ships will expand potential trade volumes between the Americas and Asia--and more seamlessly connect global markets in the process. The promise of these larger ships is the inspiration behind the Atlantic ports’ major capital projects.

Yet, as ports carry out such extensive projects, questions and skepticism linger over the future direction of freight movement and the long-term economic implications. How will ports handle the extra time it takes to load and unload the new mammoth ships? How will Pacific port investments in the United States and Canada counter the investments at the Atlantic ports? These uncertainties complicate analysts’ and policymakers’ abilities to identify exactly how the expansion will shift the precise location and scope of all freight flows.

The country and its metropolitan leaders need a way to remove these uncertainties. And it begins with a better understanding of our current goods trading relationships at the metropolitan scale.

As it stands, metropolitan data is scant. There is no geographically-consistent database of what goods metropolitan areas consume and what goods they export. Similarly, there is no database of geographic trading relationships with their domestic and international peers, or which ports facilitate the international side of the trade ledger

Imagine if the United States didn’t know how much electronics it imported from China, or how much oil it imported from the Middle East. That’s the situation metropolitan economic and freight leaders face.

It’s time to get a better handle on these regional trade relationships. Local, state, and federal officials should know which metropolitan areas trade the most goods with Asia, and are therefore the most sensitive to the Panama Canal’s capacity. They should also know how these goods flow between markets—whether they’re more reliant on Pacific or Atlantic ports, and how a capacity change on either coast could shift that equation.

This kind of knowledge also extends beyond just the Panama Canal. As other freight investments come online across the United States and the world, public and private sector leaders should have the statistical tools to know what’s at stake. A more thorough understanding of the country’s metropolitan trading network would help inform local investment decisions like we’re seeing in Baltimore and Norfolk. It would also inform a national freight strategy that prioritizes investments with the highest returns.

The metropolitan reaction to the Canal widening is a microcosm for what the country misses when it comes to freight planning. In a relatively fact-free zone, it’s easy for local ports to justify these major investments. But dredging a port or building a tunnel costs significantly more than simply upgrading our knowledge base.

Even with global trade slowing its growth since the Great Recession, there’s little question that goods volumes will continue to rise in the coming decades, whether through the Panama Canal or elsewhere. It’s time we make sure our metropolitan economies have the knowledge to succeed in that environment.

The Brookings Metropolitan Policy team will aim to address that knowledge gap over the coming year. Working with a team of outside experts, we've assembled a geographically-consistent, globally-oriented goods trade database. In turn, the analytics from that database will help us provide public and private sector leaders with a better understanding of exactly what, where, and how metropolitan areas trade goods and the implications for their local economies. We are excited to start sharing those results this fall.

Authors

Adie Tomer
Joseph Kane

Strengthening U.S. Manufacturing, Region by Region

Mark Muro — Mon, 13 May 2013 16:17:00 -0400

Last week President Obama used his trip to Austin, TX to announce the creation of three more public-private manufacturing research institutes as nodes of a $1 billion National Network for Manufacturing Innovation (NNMI). On the same day, though, there was another intriguing if lower-key announcement on the Obama administration’s manufacturing agenda.

That’s the new Investing in Manufacturing Communities Partnership, the first phase of a two-phase effort aimed squarely at communities and regions, announced by the Commerce Department’s Economic Development Administration (EDA).

Focused squarely on the fact that the locus of U.S. manufacturing prowess is emphatically local and regional, the new competitive solicitation will allow as many as 25 local communities to be awarded $200,000 this year to create smart strategies for leveraging and aligning their public- and private-sector assets to provide a promising environment for advanced manufacturing. These awards will in the near term allow ambitious communities to develop “bottom-up” plans for strengthening their regions’ intellectual, human, and physical infrastructure.

But beyond that, the small grants and the resulting regional strategies will also help prepare a cadre of U.S. regions to compete for the second phase the partnership, which will next year entail a competition that will award (contingent on congressional support) five to six U.S. communities with up to $25 million for the implementation of regional advanced manufacturing strategies. That’s real money that would—like the full build-out of the NNMI initiative—allow for real strides in advancing U.S. manufacturing in the country.

Yet, while such material awards would be welcome, what is key to the Manufacturing Communities Partnership is its four-square focus on the local and regional angle. For several years now we at the Metro Program have been harping on the sub-national underpinnings of manufacturing competitiveness and the importance of recognizing those underpinnings, establishing state and regional innovation centers to foster them, and making sure to embed regional advanced industries hubs in their surrounding industry clusters and supply chains. Most recently my colleagues Bruce Katz and Peter Hamp proposed creating a “Race to the Shop” competition aimed at calling forth bold regional visions for advanced industry growth, rewarding those visions, and better organizing disparate federal programs in support of the strategy.

We believe all of this is critical because advanced industry dynamism does not grow up just anywhere. Rather, industries reach critical mass in places—most notably, metropolitan places—where firms and workers tend to cluster in close geographic proximity whether to tap local supplier networks, work with local research institutions, draw on local workers, or profit from formal and informal knowledge transfer. In this respect, smart companies are more and more deciding where to locate facilities and hire workers based on the quality of a community’s infrastructure, institutions, and human capital—what the Harvard Business School scholars Gary Pisano and Willy Shih call its “industrial commons” and others its “industrial ecosystem.” The upshot: If U.S. regions—working with their states and the federal government—can bolster the density, efficiency, and vitality of the nation’s regional industrial clusters they will add to overall advanced industry competitiveness.

Broadly then, the EDA and its agency partners are not restricting themselves solely to broad (and needed) national and macro-economic policies on research, trade, taxes, and regulations. Instead, by going local, they are getting at the regional sites in communities where manufacturing supply chains actually come together and generate prosperity. That’s a good place for federal manufacturing policy to be.

Authors

Mark Muro

Image Source: © Aaron Josefczyk / Reuters

This Week in Immigration

Nicole Prchal Svajlenka — Mon, 13 May 2013 16:46:00 -0400

The immigration reform legislation debate is ramping up with last week’s activities including hearings at the Joint Economic Committee, Senate Committee on Homeland Security and Government Affairs, and Senate Committee on Commerce, Science, and Transportation.

But by far, the star of the week was the Senate Judiciary Committee’s markup of S.744. By Wednesday, over 300 amendments were filed. You can find the Senate Judiciary Committee’s official list of amendments and actions here. The American Immigration Lawyers Association (AILA) is on the ball with the ins and outs of the legislative process—check out their compilation of each amendment’s “stated purpose” in one document.

After the flurry of amendments, no real surprises emerged, but Sens. Jeff Sessions, Chuck Grassley, and Ted Cruz, all Republicans, look to be the biggest kill-the-bill proponents. On the left, the most controversial amendment covers the rights of gay couples, filed by committee chairman Sen. Pat Leahy (D-Vt.)

The first day was focused on the bill’s first title, border security. Sen. Leahy’s office offers a “recap” on the first day of markup, including details on the 22 amendments passed, six rejected, and four withdrawn. Also helpful is AILA’s detailed summary. Perhaps the most notable accepted amendment comes from Sen. Grassley and expands the border security plan from only “high-risk” sections to the entire southern border. As reported by ABC News Univision, some of the adopted provisions on border security play a political game to attract conservative support in the House, while tougher “trigger” amendments were rejected. The markup will resume Tuesday, most likely with high-skilled temporary immigration.

We still have not seen anything from the House’s “Gang of Eight,” and as reported by The Hill, Democratic Rep. Luis Gutierrez says if they do not introduce their bill by the end of the month, they will not introduce anything. Is the glass half empty or half full?

Off the Hill, Monday’s Heritage Foundation report, claiming legalization would cost $6.3 trillion, has been hotly contested; the pushback from the right has been loud and swift. The fallout continued after details emerged about co-author Jason Richwine’s dissertation, which claimed “the average IQ of immigrants in the United States is substantially lower than that of the white native population,” and tied IQ to genetics and race. On Friday, Richwine resigned from Heritage.

There was another cost-benefit analysis last week, but it hasn’t garnered the same attention as the disputed Heritage report. According to a study requested by Sen. Marco Rubio (R-Fla.), the Social Security Administration estimated passage of immigration reform would “boost Social Security’s coffers by more than $240 billion over the coming decade and add $64 billion in new tax revenues to Medicare. It would also increase the size of the economy by a full percentage point by 2017, and increase employment.”

Tensions on temporary workers are still simmering. On Point took up the issue of H-1B workers, with a rousing debate among panelists. My colleagues Jonathan Rothwell and Neil G. Ruiz look at the misconceptions surrounding the STEM shortage and H-1B visas. On the lower-skilled side, the New York Times reported on hiring practices for farm workers that might pit native-born and foreign-born workers against each other.

At the state level, Colorado has been the site of some immigration legislation this week. The state legislature passed laws allowing driver’s licenses for undocumented immigrants and in-state tuition for some undocumented college students.

Authors

Nicole Prchal Svajlenka

Image Source: © David McNew / Reuters

This Week in Immigration: Senate Markup

Nicole Prchal Svajlenka — Tue, 07 May 2013 10:22:00 -0400

Last week, we saw the first modifications to immigration, specifically student visas, in light of the Boston Marathon bombings. Two of Dzhokhar Tsarnaev’s friends, Kazaks in the United States on student visas, were “charged with conspiring to obstruct justice.” Now, as reported by the Associated Press, “The Homeland Security Department ordered border agents to verify that every international student who arrives in the U.S. has a valid student visa.”

While many senators were visiting their districts during the recess, there’s still plenty to report on. May Day rallies in support of comprehensive reform and citizenship were scattered throughout the country, including an event with Sen. Harry Reid in Las Vegas. Sen. Orrin Hatch “appears willing to support” reform that includes a pathway to citizenship. “Gang of Eight” Sens. John McCain and Lindsey Graham were on the town hall offensive to promote their proposed legislation. Markup begins this week; be sure to check out this Politico piece, detailing what kind of amendments you can expect to see and from whom.

Representatives in the House are slowly releasing individual legislative pieces. The first, introduced by Reps. Bob Goodlatte and Lamar Smith, is an expansion of E-Verify. The second, introduced by Goodlatte, is an agricultural guestworker program. With a flexible cap but 500,000 visa minimum, it looks like there is a lot to work out between the House and Senate.

President Obama visited Mexico and Costa Rica last week, and immigration reform became a central focus. Prior to his trip, Obama held hosted an advocate briefing at the White House. As reported by the Washington Post, Janet Murguía, President of the National Council on La Raza was in attendance and recalled Obama’s remarks: “He said, ‘If the bill were presented on my desk today, I would sign it,’” and “He looked at the advocates and said, ‘We’re not going to get everything we want in this.’”

Sen. Marco Rubio continues to be at the front and center of immigration reform. Over the last week, we learned Rubio doesn’t have high hopes for the Schumer-McCain bill in the House, considers provisions for same sex couples a deal breaker, and published a high-profile op-ed in the Wall Street Journal. The New York Times also reported on the relationship between Rubio and former Sen. Jim DeMint, his one-time “mentor.”

If there is a rift between Rubio and DeMint, it looks like it will only continue to grow. Today DeMint’s Heritage Foundation released a report on the fiscal impacts of the Schumer-McCain bill, making immigration reform look very costly. The libertarian Cato Institute especially pushes back on Heritage’s methodology, already releasing a rebuttal. The reason? Heritage uses a “static fiscal scoring” as opposed to “dynamic fiscal scoring” that assesses the impact among all sectors of the economy.

While Heritage’s report on the costs of immigration reform will cause a stir, I’ve been enjoying NPR’s coverage of the economic impacts of different aspects of immigration. Stories on costs of “farmworker shortages,” impacts of reform on “low-wage black workers,” and how “major American companies benefit from undocumented workers” have all been on-point.

Authors

Nicole Prchal Svajlenka

Image Source: © David McNew / Reuters

DOE’s Clean Energy Manufacturing Initiative Leverages Regions

Scott Andes and Mark Muro — Mon, 06 May 2013 17:26:00 -0400

This spring, the U.S. Department of Energy (DOE) is launching a new Clean Energy Manufacturing Initiative that will support both clean energy and manufacturing competitiveness by promoting greater energy efficiency in the U.S. production sector. Rolled out at Oak Ridge National Laboratory (ORNL) in Tennessee last month, the new initiative advances a smart take on both the nation’s energy and manufacturing strategies. But more than that it reflects a welcome new spatial and geographic emphasis at the Energy Department.

At the most general level, the new initiative marshals a number of DOE offices, research institutions, and private sector partners to map out and implement networks that promote clean energy production and energy-efficient manufacturing. Key to the effort is that this new push—like the Obama administration’s National Network for Manufacturing Innovation (NNMI) proposal—takes an explicitly regional approach to innovation and the diffusion of next-generation technologies.

In this respect, the initiative aims to engage with regional epicenters of advanced manufacturing such as smart automation in Austin, Tex. and low-heat stamping in Denver, Colo. to drive local and national advances. These areas have established production ecosystems and are driving the technological frontier within clean energy; they are prime sites of U.S. innovation. Along these lines, the initiative has already awarded a total of $15 million to five projects in five different regional manufacturing clusters.

Yet the new focus is not just about covering the geographic bases. By supporting centers of excellence close to regional industrial clusters, DOE is leaning on a large body of literature that suggests innovation results from an iterative set of exchanges between production and research activities that more often than not thrive on proximity.

To be sure, old-line thinking continues to maintain that R&D facilities develop prototypes out of whole cloth and then transfer design requirements to manufacturers, wherever in the world plants are located. However, while this may be the case for low-tech industries, the reality for advanced industries is often the other way around. The genesis of many new technologies comes from within the production process via daily interactions with production facilities. These “co-location synergies” emerge as manufacturers adopt new techniques and equipment to increase efficiency and R&D engineers build upon shop-floor technological competencies to create innovate products and services. And within strong regional clusters, particularly metropolitan regions, such co-location benefits are able to penetrate beyond the incumbent R&D performing firm into the local supply chain—creating high-value start-ups and upstream innovation.

And in fact the ORNL launch event highlighted all of this. Led by Assistant Secretary for Energy Efficiency and Renewable Energy (EERE) Dave Danielson with Tennessee Gov. Bill Haslam in attendance, the event highlighted both a very cool DOE facility—the Carbon Fiber Technology Facility (CFCF) at ORNL—and EERE’s emergent regional stance. CFCF is a production line-sized test bed for public and private sector researchers to explore new carbon fiber composites at scale. As such, it offers to both East Tennesssee and the nation a one-of-a-kind piece of shared industrial infrastructure as well as a focal point for local technical exchange. Currently, for example, 45 firms make up the carbon fiber composite consortium that work with CFCF researchers—many of which are small-and medium-sized firms located in East Tennessee. In that way, the CFCF is emerging as the hub of an nascent “industrial commons,” where firms of all sizes can leverage not only CFCF resources but the broader R&D infrastructure at Oak Ridge, the University of Tennessee, and in firms. In other words, the carbon fiber hub and cluster being fostered in East Tennessee—like Austin and Denver—epitomizes the increasingly “bottom-up” feel of U.S. and global innovation systems and likewise highlights a new region-oriented stance at DOE.

While it’s too early to judge the impact of the Energy Department’s Clean Energy Manufacturing Initiative, the new push looks promising. By focusing more of DOE’s efforts on regions, a historically isolated, sometimes obtuse agency may be beginning to align itself with some of the most dynamic technology development exchanges of all—those that happen locally.

Authors

Scott Andes
Mark Muro

Image Source: © Jason Reed / Reuters

This Week in Immigration

Nicole Prchal Svajlenka — Mon, 29 Apr 2013 17:41:00 -0400

Following the Boston Marathon bombings, questions about the Tsarnaev brothers’ immigration status dominated last week, containing serious implications for the future of reform. Some argued that reform talks should be stalled. Some questioned our refugee program and foreign student visas. Some wondered if we are doing enough to integrate young immigrants.

Last Monday the Senate Judiciary Committee held an epic hearing (23 testifiers!) on the Schumer-McCain bill. The hearing ran the gamut of immigration-related topics, but the argument between Sens. Chuck Grassley and Chuck Schumer over attempts to delay the legislation was by far the most covered discussion of the hearing. Tuesday’s rescheduled hearing with Janet Napolitano also focused on Boston, with Napolitano reiterating comprehensive immigration reform would make our country more secure.

Is there any other action to report on? On the Senate side, mark your calendars for May 9. That’s when the Schumer-McCain bill’s “markup” is set to begin. While the “Gang of Eight” senators are hopeful the bill will pass with bipartisan support, National Journal’s Michael Catalini reports on eight additional senators that might be big influencers on that vote tally.

The House of Representatives is the next place to watch for action on reform, and last week they upped their game. In an opinion piece at Fox News, Judiciary Committee Chair Bob Goodlatte (R-Va.) announced he soon release piecemeal bills, beginning with E-Verify and a “new temporary agricultural guestworker program.” This also puts Rep. Troy Gowdy, chair of the Subcommittee on Immigration and Border Security, back in the spotlight. House Democrats are feeling the pressure, and recently briefed their party on a long-in-the-works comprehensive bill. Responding to the House announcement, Sens. McCain and Schumer reinforced the need for a comprehensive package that will not leave out any components, most importantly a path to citizenship. Rep. Paul Ryan (R-Wis.) is also making his pro-reform stance known, teaming up with Illinois Democrat Rep. Luis Gutierrez at an event in Chicago last week.

In additional to Goodlatte, some other big name conservatives penned op-eds on the reform debate over the last week: Sen. Marco Rubio, Sen. Rand Paul, and Grover Norquist.

While reform is being debated, there is also some movement related to deportations. First, as reported by the New York Times, for the first time “a federal judge in California has ordered immigration courts in three states to provide legal representation for immigrants with mental disabilities who are in detention and facing deportation, if they cannot represent themselves.” Second, according to ABC’s Ted Hesson, “The Supreme Court ruled on Tuesday that immigrants caught sharing small amounts of marijuana will not be subject to automatic deportation.” And third, not all news is good news. “A court challenge by federal immigration agents seeking to block President Obama’s deferred-deportation initiative,” led by Kansas Secretary of State Kris Kobach, “will probably succeed, a judge said.” The news is alarming for DACA recipients and immigration activists. According to the Huffington Post, the threat of repeal exacerbates the need to pass reform soon.

Finally, the Washington hardy perennial of cutting or or even eliminating the U.S. Census Bureau’s annual American Community Survey (ACS) resurfaced. The recent efforts come from Republicans Rep. Jeff Duncan, Sen. Rand Paul, and Rep. Ted Poe. Here are past but relevant responses from by Brookings’ colleagues about the importance of the ACS and how it guides federal funding.

Authors

Nicole Prchal Svajlenka

Image Source: © Mike Blake / Reuters

This Week in Immigration: A Bill Drops in a Frenetic Week

Nicole Prchal Svajlenka — Mon, 22 Apr 2013 17:20:00 -0400

What a week. Over the last seven days this nation experienced the Boston Marathon bombings and ensuing manhunt, the West, Tex. fertilizer plant explosion, and the failure of gun control in the Senate. Intertwined in all of these, the Senate “Gang of Eight” released their immigration reform bill, “Border Security, Economic Opportunity and Immigration Modernization Act of 2013”. Here is a rundown of what’s happened.

On April 15, the Gang of Eight and the immigration policy community were prepping for the legislation’s introduction. An opinion piece by Sens. John McCain and Chuck Schumer in the Wall Street Journal positioned their comprehensive bill as a true compromise that would fix our broken immigration system. However, in the aftermath of the Boston Marathon bombings, the senators delayed its release.

To whet the appetite of interested parties, the Senators released a 19-page outline of the then-forthcoming legislation on Tuesday. Though the bill is available to the public, this summary is still a good entry point before jumping into the legislation.

On Wednesday, Sen. Schumer introduced the group’s bill (S. 744), which has come to be known as the Schumer-McCain bill. The 844-page immigration bill is still being digested by the Senate and immigrant communities alike. The eight Senators held a press conference Thursday to officially announce the bill, presenting a united front and explaining key components.

Over the week, these are the helpful articles explaining the bill I’ve gone back to explaining the bill:

Wonkblog’s Q&A summary and the Post Politics crew’s “Inside the Immigration Bill” posts
The New York Times highlights some of the bill’s hidden gems
ABC News’ explanation of merit-based visas
The Immigration Policy Center, taking a fresh approach to social media launched Think Immigration, a policy wiki that explains the bill’s provisions and facilitates discussion
You might also want to check out my colleague’s reactions: Audrey Singer’s initial response to the bill and Jill Wilson and Neil Ruiz’s discussion of the changes to the H-1B program

What have the reactions been like? Start at NBC Politics, where Carrie Dann catalogued the reactions of major players in the debate. Supporters of immigration reform like Center for American Progress’ Angela Kelley want to see a quicker path to citizenship and decoupling of such from border security metrics. Opponents of immigration reform are also making their voices heard and gearing up for a fight. With his Tea Party roots, many conservative Republicans are heading to Sen. Marco Rubio with their questions and complaints. Last week, Rubio’s office set up an “Immigration Reform Facts” website, complete with a “Myth-busting” section and met with Heritage Foundation representatives about the economic benefits of immigration reform.

Two issues from the week directly reflected challenges to the immigration debate moving forward—the failed gun control effort and the immigration status of Tamerlan and Dzhokhar Tsarnaev, suspects in the Boston Marathon bombings. On the gun control front, the Post’s Chris Cillizza makes the argument that voting for both background checks and immigration reform could cost too much political capital for vulnerable politicians—maybe a good sign for immigration.

In Friday’s first Senate Judiciary Committee hearing on the bill, Sen. Chuck Grassley angled for the brothers’ immigration status to delay the legalization component of reform. On Sunday Sens. Lindsey Graham and Chuck Schumer rebuffed that idea, arguing reform would strengthen our immigration system. The Council on Foreign Relations’ Edward Alden offers a nuanced take that is worth a read.

The next big piece of the puzzle will be the on the House—how will members react and when will we see their comparable legislation? Stay tuned—with House Judiciary Chair Rep. Bob Goodlatte already voicing his displeasure it is bound to be a bumpy ride.

Authors

Nicole Prchal Svajlenka

Immigration Reform’s Bold First Step

Audrey Singer — Wed, 17 Apr 2013 12:36:00 -0400

Early this morning [April 17], a bipartisan group of U.S. senators introduced a long-awaited immigration bill after months of wrangling in a pressurized political environment. Their compromise is a complicated, but fairly balanced, set of reforms to the existing system. The bill, entitled “Border Security, Economic Opportunity, and Immigration Modernization Act of 2013,” contains three main emphases: border security, legalization, and admissions. While we take time to pore over the details of the 844 page bill, highlighted below are some of the more novel provisions of the proposal.

Stronger Border Security with New Consequences. While enforcement goals have always been to reduce the number of illegal crossings into the United States, the bill proposes increased surveillance and security on the border and measures its effectiveness. More resources will be appropriated to achieve and maintain an effective strategy. What’s new in this bill is that undocumented immigrants would be able to apply for temporary legal status only after certain security metrics are met.

Legalization of Three Groups. The second emphasis is to bring eligible undocumented immigrants into a registered provisional immigrant status (RPI), one that would give them the right to live and work in the U.S. and travel abroad. In order to qualify, immigrants must be able to show they have lived in the United State continuously since December 31, 2011, pay a penalty and application fees, and pass a criminal check. What’s new in this bill is that there are three tracks to legalization. After a five-year provisional status, childhood entrants (a.k.a. the “Dreamers”) will be eligible for green cards followed by immediate citizenship. Agricultural workers will also have an accelerated path to a green card after five years of work. For the rest, RPI will last a minimum of 10 years after which they are eligible to transition to a green card through a new merit-based visa system.

Reorganizing Admissions. The third emphasis, on future admissions, would shrink the share of permanent visas allotted based on family ties and expand the share of employment-based visas, eventually equalizing the two. Multiple cross-cutting policies would open up spaces for superlative workers in a range of high-demand fields and increase visas for entrepreneurs and investors. At the same time, reductions to existing categories of relatives and elimination of the diversity visa will shift the focus of the admissions program toward workers with America’s economic competitiveness in mind. What’s new in this bill is that, five years after enactment, “merit-based immigration” will play a greater role as immigrants will qualify based on education, employment, length of residence, and other considerations.

The intricate temporary visa program we have now will become more complex. The proposal alters requirements of high-skilled H-1B visas and allows for an adjustable cap. A brand new “W visa” creates a registry for employers looking to hire lower skilled workers, providing three years (renewable) of work during which time a worker can bring family members. A Bureau of Immigration and Labor Market Research will be established to identify shortage occupations and determine the annual cap for the new visa, and report on every aspect of the immigration system related to employment.

* * *

The arrival of the bill has already unleashed a flurry of reactions and questions. No matter the details, the bill recognizes three key tenets: immigrants are vital to our economy; we need a policy that is flexible to meet the needs of a dynamic economy; and immigrants are, ultimately, a positive force to be embraced.

A long legislative process lies ahead. No doubt, Congress has a lot of work to do to get this right.

Authors

Audrey Singer

State and Local Leaders Double Down on Infrastructure

Robert Puentes — Tue, 16 Apr 2013 10:35:00 -0400

Cautious optimism followed President Obama's FY2014 budget request to rebuild and reinvest in America's infrastructure.

The proposal highlighted infrastructure as a fundamental driver of the nation's economy and critical asset for its long-term recovery. Specifically, the request reiterates the determined proposals to create a national infrastructure bank, build-out an American high-speed rail system, invest in clean energy, modernize the air traffic control network and the electrical grid, and reinvest in state-of-good repair projects, among other things.

The president's infrastructure package has a lot of good ideas. What it does not have is a lot of money.

Undaunted, state and metropolitan leaders are coming to Washington this week with their own ambitious and creative strategies to make their infrastructure goals a reality and looking to the federal government to engage in new partnerships with government, labor, and institutional investors to accelerate the construction and deployment of new infrastructure.

In many ways, Washington is acknowledging this renaissance and moving to embrace it. Also included in the president's request are plans to cut regulatory red tape in order to prioritize projects and enable better use of public/private partnerships. These are welcome acknowledgments of the principal role state and local leaders play in selecting, financing, and building infrastructure and, given their miniscule price tag, ought to be legislative slam dunks.

Without a doubt, unfunded pension obligations and other debt burdens facing state and municipal governments limit the availability of public funds to pay for necessary infrastructure. And though interest rates remain at historically low levels, the ability of many governments to borrow from the capital markets is limited by debt caps and weak credit ratings.

So states and metros are looking beyond traditional municipal debt markets to find new lower cost, lower risk, and higher impact ways to pay for essential infrastructure projects:

Increasingly, public infrastructure investment occurs through state revolving loan funds and so-called "infrastructure banks." These institutions fund and finance a broad array of projects, ranging from local road maintenance and highway construction (e.g., Florida’s State Infrastructure Bank) to essential water infrastructure (e.g., New York’s state revolving funds) to energy efficiency (e.g., Connecticut's green bank.) While they are not for-profit institutions in the traditional banking context, they rely on principal repayments, bonds, interest and fees to, ideally, re-capitalize and replenish the fund as a perpetual source of debt financing. The model has also gained traction at the sub-state level in Chicago and in the District of Columbia.

At the same time, state officials are also working to design innovative governance and institutional tools capable of overcoming the bureaucratic and technical barriers that can slow or even derail projects. These efforts are clearing the way for new infusions of private capital and streamlined project delivery. States like Virginia, Michigan, Colorado, and Georgia have new offices designed to tackle bottlenecks in public/private partnerships, develop innovative project ideas, and protect the public interest.

To develop consistent and predictable deal flow and ensure private investors’ continued engagement with U.S. infrastructure markets, stakeholders from California, Oregon, Washington State, and British Columbia created the West Coast Infrastructure Exchange (WCX.) The WCX seeks to establish a common market for infrastructure projects on the West Coast by coordinating cross-border infrastructure investments, facilitating procurements, and creating a project clearinghouse for regional infrastructure investments. WCX aims to create a robust market for the nearly $1 trillion in infrastructure projects that the region needs to develop.

Such efforts can be replicated elsewhere around the country. One common thread to the flurry of activity is the idea that stakeholders from all levels of government and the private sector (plus bi-partisan campaigns like Building America's Future and innovative collaboratives like Living Cities) can catalyze a new field of practice, get states ready for new kinds of investment, and explicitly connect long-term economic strategies with infrastructure planning and prioritization.

Our competitors, in mature and emerging economies alike, are in the process of making these kinds of investments and, by so doing, catalyzing productive and sustainable growth. In the United States, it looks like we are finally ready to start moving.

Authors

Robert Puentes

This Week in Immigration: Tomorrow’s the Day Edition

Nicole Prchal Svajlenka — Mon, 15 Apr 2013 16:00:00 -0400

• Well, despite the speculation, last week came and went without a comprehensive immigration reform bill from the Senate’s “Gang of Eight.” But with a deal reached on temporary agricultural workers, verbal commitments to a Tuesday release, and a Senate Judiciary Committee hearing on the bill this Friday, we’d best all set aside some reading time this week.

• Lots of details about the bill have been leaking out over the last few days. So how will our immigration system change? ABC’s Ted Hesson summarizes the details we know thus far, including measurable border security “triggers,” a “cut-off date” of December 31, 2011 for provisional status eligibility, future flow of immigrants more closely related to work than family, and backlog reductions. The Los Angeles Times presents an overview of future immigration levels under the proposed reforms. Expect pushback from a whole host of unsatisfied businesses.

• Sen. Marco Rubio (R-Fla.) went “full Ginsburg” on Sunday, appearing on all five major talk shows as well as Univision and Telemundo (is “full Rubio” the new standard?). In his interviews, he announced his support for the Gang of Eight’s forthcoming legislation, disregarding claims of amnesty and outlining the steps undocumented immigrants must take before they become eligible for citizenship. More details are available from a blizzard of tweets by Rubio’s chief of staff Cesar Conda.

• Things are moving on the House side, too. Rep. Bob Goodlatte will introduce some piecemeal bills in the House Judiciary Committee he chairs and moderate Democrats announced their “framework for comprehensive immigration reform”.

• New polling data continues to show the nation’s support for a pathway to citizenship. An NBC News/Wall Street Journal poll finds 76 percent of Americans support a “pathway to citizenship [that] would require paying fines and back taxes, as well as passing a security-background check.” A Latino Decisions poll finds that 87 percent of undocumented Latino immigrants “would plan to apply for citizenship if immigration reform passes”.

• Here are some other interesting stories from the last week that fill in the picture:

Thousands marched to the U.S. Capitol on Wednesday for immigration reform and a pathway to citizenship, while thousands more showed their support in rallies throughout the country.
Conservative policy shops are debating the costs of comprehensive immigration reform.
The latest DACA numbers are in: As of March 31, over 488,000 people have applied and 268,000 have been approved.
NPR’s take on labor costs and the construction industry in Texas from both workers and contractors.
And finally, check out this slideshow about foreign students in the United States, written by my Metropolitan Policy Program colleague Neil Ruiz.

Authors

Nicole Prchal Svajlenka

Image Source: © Larry Downing / Reuters

Revving Up Manufacturing, Region by Region

Mark Muro and Jessica Lee — Thu, 11 Apr 2013 14:44:00 -0400

For some time now we’ve argued that one of the best ways to drive innovation and economic growth is by connecting critical R&D-focused anchor institutions—like the Department of Energy’s Energy Innovation Hubs or the Advanced Industries Innovation Hubs that we advocated establishing earlier this year—to broader regional strategies that seek to strengthen a region’s innovation ecosystem. In providing intentional support for regional innovation clusters, such strategies nurture these major centers of research by fostering knowledge sharing and spillovers, expediting technology transfer and commercialization, and fostering entrepreneurialism.

Now, a pair of items in the new Department of Commerce budget has picked up on that logic by placing side by side two welcome manufacturing policy initiatives.

Going beyond its funding request for the proposed $1 billion investment in a National Network of Manufacturing Institutes, the first of which was launched in Youngstown, Ohio last August, the budget also calls for the creation of a $113 million Investing in Manufacturing Communities Fund to reward and support regions that develop strategies “that build on the region’s comparative advantages and leverage private-sector resources.” Through these twinned proposals, the Commerce budget seeks funding not only to establish new manufacturing innovation institutes but also to provide incentives for manufacturing-strong regions to craft what are in effect metropolitan business plans—carefully tailored strategies that help regions strengthen their economies by capitalizing on their distinctive assets and attributes.

We’re encouraged that these proposals made it into this year’s budget request. Ideas like the Investing in Manufacturing Communities Fund offer a glimmer of the kinds of smart thinking needed to boost economic growth, one region at a time.

And though the fate of this particular budget request is uncertain at best, it points to the types of pragmatic action that production-oriented metros can take on their own to make the most of their manufacturing prowess and strengthen their economies in the process.

Authors

Mark Muro
Jessica Lee

This Week in Immigration—Will We Get a Bill Edition

Nicole Prchal Svajlenka — Mon, 08 Apr 2013 16:39:00 -0400

• Congress is back in session, and while the big question for the Senate “Gang of Eight” remains will they or won’t they introduce their comprehensive immigration reform legislation this week, there is a long list of items that could still derail reform, including provisions related to agricultural workers, temporary work visas, and Sen. Marco Rubio’s wavering support.

• The recent agreement between the U.S. Chamber of Commerce and the AFL-CIO over a temporary low-skill worker program, the W visa, is still a big deal. Now, the reactions are starting to trickle out. The first industry to lament the visa limits? As reported by Politico’s Anna Palmer, construction. In temporary worker-related news, last week U.S. Citizenship and Immigration Services “suspended adjudication” of the H-2B temporary non-agricultural worker program applications over wage issues.

• Sens. Dianne Feinstein, Orrin Hatch, Marco Rubio, and Michael Bennet are at the helm of a specific piece of the immigration reform puzzle: creating a visa system for a “more permanent agricultural workforce”.

• Ashley Parker of the New York Times details the three potential paths to citizenship in the House’s forthcoming immigration bill. Childhood arrivals (the “Dreamers”) and farm workers would “qualify for an expedited road to legal status” and undocumented immigrants eligible for adjusted status via work or family sponsorship could apply though those channels. Immigrants who do not fall into either of these categories would be subject to a lengthy (upon approval) “provisional legal status.” One item of note for the second category of immigrants would have to return to their country of origin before applying for status. That has not been discussed during this round of debates but could have serious implications; in fact, the AFL-CIO calls this a “nonstarter.” On Sunday’s CNN State of the Union broadcast, Reps. Luis Gutierrez and Mario Diaz-Balart discussed some of the tenets of the House’s legislation, including earned legalization.

• As the chair of the House Judiciary Committee, Bob Goodlatte is a major player in the immigration reform debate. On Wednesday, he hinted that the House may address reform in a piecemeal, rather than comprehensive, approach.

• When Congress wants to increase the number of visas for high-skill workers without increasing the total number of visas issued, the 55,000 annual diversity visas are first on the chopping block. However, the NAACP wants to make sure these visas will stick around. Extended family visas are also a common target. After meeting a preliminary deal with business, the AFL-CIO is partnering with faith and advocacy organizations to make sure they are not cut. Also on the advocacy front, a “Rally for Citizenship” will take place this Wednesday afternoon in front of the U.S. Capitol.

• The usual suspects, including The New York Times, The Los Angeles Times, Bloomberg, The Economist, and the Washington Post, all published immigration-related editorials over the last week. But don’t miss this op-ed from Rep. Raul Labrador, which has gotten some heavy air time.

• An ABC News/Washington Post poll shows support for potential components of immigration reform: 57 percent back a “path to citizenship,” 72 percent support “more high-skill non-U.S. workers,” and 80 percent want to see “increased border security”. A Quinnipiac poll also finds a majority of respondents (59 percent) support a path to citizenship for unauthorized immigrants.

Should be a busy week.

Authors

Nicole Prchal Svajlenka

Jobs Alone Do Not Explain the Importance of Manufacturing

Scott Andes and Mark Muro — Wed, 03 Apr 2013 12:41:00 -0400

When it comes to American manufacturing the U.S. media seems a bit confused. Last year, a bunch of stories (example here) argued that manufacturing job losses over the last decade don’t matter because productivity looks so good. Now, stories like this one are suggesting that manufacturing itself doesn’t matter much after all because the sector isn’t creating enough jobs. The current argument in vogue maintains that job growth figures just haven’t been robust enough in manufacturing to warrant policies that support the sector.

What the authors miss is mass employment is not the fundamental reason we need a healthy and vibrant manufacturing sector. Manufacturing—or rather advanced manufacturing—is essential to the U.S. economy because it is the main source of innovation and global competitiveness for the United States. Simply put, advanced manufacturing is the U.S. pipeline for new products and productivity-enhancing processes. While the sector makes up just 11 percent of the economy, manufacturers conduct 68 percent of private sector R&D, as reported by our colleagues Sue Helper and Howard Wial last year. And on average, they noted, 22 percent of manufacturers introduce new processes to increase productivity compared to just 8 percent of non-manufacturers. This is important because innovation that emerges from America’s manufacturing sector also fuels growth within the service sector because intermediary goods—the machines used by services (e.g. automated self check-out kiosks at grocery stores)—drive service sector productivity.

Some ask, meanwhile, why the nation should not simply import the advanced machinery needed for service-sector productivity. The problem with this argument is that services are, and will remain, largely non-traded. Regardless of how productive services become, the sector’s growth will be tethered to domestic demand. No amount of efficiency will allow a domestic grocery store to service international consumers. If the U.S. economy becomes one in which the U.S. imports all of the machinery that makes the service sector productive and no longer export any products of our own then inevitably we will consume more than we produce and incomes in services and manufacturing will decline. This is overwhelmingly clear in recent trade statistics. In 2012 manufacturing represented roughly 60 percent of U.S. exports despite only being 11 percent of the economy. By punching far about its weight class in exports the manufacturing sector is vital to U.S. global competitiveness.

In sum, the number of jobs within manufacturing is important, but taken by themselves employment figures miss the real reason manufacturing is an American imperative. U.S. quality of life, the ultimate benchmark of the direction of the economy, is contingent upon the competiveness of our traded sector and the speed at which innovative products and processes reach the market. On both metrics manufacturing is essential.

Authors

Scott Andes
Mark Muro

This Week in Immigration

Nicole Prchal Svajlenka — Mon, 01 Apr 2013 17:00:00 -0400

As the immigration reform debate ramps up, Metropolitan Policy Program Senior Research Assistant Nicole Prchal Svajlenka wraps up the news in the first of an occasional series of posts keeping track of this fast-moving issue.

• In what seems the somewhat-calm before a very big storm (a Senate bill is expected next week), the comprehensive immigration reform front has remained relatively quiet during Congress’s spring recess. Many of the issues coming up are things we have heard before. The biggest remaining issue, a business-labor agreement on a temporary work program, is reported to have been reached over the weekend.

• While Gang of Eight members appeared on Sunday’s “Meet the Press” and “State of the Union” shows to discuss how close they are to releasing a bill, Sen. Rubio released a statement saying reform is not a done deal.

• As reported by Elise Foley, Rep. John Yarmuth said representatives working on a comprehensive bill are also close to consensus and could possibly release their bill before passage of the Senate bill.

• Sen. John McCain hosted a Phoenix town hall meeting last Monday. As reported by Dan Nowicki, after the event McCain “bluntly let an Arizona ‘dreamer’ know that he doesn’t appreciate the demonstration tactics that the politically active young undocumented immigrants have been using at his office in their push for reform.”

• Sens. McCain, Flake, Schumer, and Bennet (half of the gang) toured the border last week, promising to take what they learned into account when drafting their proposal. Perhaps overshadowing the rest of their tour, the senators witnessed Border Patrol agents apprehending a woman climbing over the 18-foot fence. Sen. Graham is spending the recess in South Carolina, trying to get constituents to support reform. It’s slow going, but seems better than the cries of “Graham-nesty” in 2007.

• During a naturalization ceremony at the White House, President Obama praised the progress Congress has made on reform but said it needs to “finish the job” soon. In fact, last Wednesday he told Telemundo he thinks the bill could be signed before the end of summer.

•Sen. Ted Cruz is not shy in sharing he thinks this push, especially including a path to citizenship that might deter Republican votes, is a ploy to ensure Democrats come out ahead in the 2014 midterm elections. Other interested parties want to slow the process as well. Chris Crane, president of the union representing Immigration and Customs Enforcement agents and party to a lawsuit against Homeland Security, requested a meeting with the Gang of Eight to discuss enforcement issues. But House Majority Leader Rep. Eric Cantor still thinks reform is possible.

• Keep your eyes open for SEIU's immigration reform campaign, which upped its game with a commercial called “America” that will run nationally on cable networks.

• Wonkblog highlights a Sunlight Foundation analysis that catalogued immigration lobbying efforts. From 2008 to 2012, groups spent $1.5 billion dollars on the gamut of immigration issues. Here’s hoping they update that total once reform is wrapped up.

• And finally, Janet Napolitano says a border security trigger is “not the way to go,” (no comment from the White House)

Stay tuned.

Authors

Nicole Prchal Svajlenka

Image Source: © STRINGER Mexico / Reuters

Flow Oil and Gas Revenues to Cleantech R&D: Common Ground on Energy?

Mark Muro — Mon, 18 Mar 2013 00:00:00 -0400

Can Congress pass any sort of energy legislation? I’m not holding my breath. For too long now meaningful action through compromise has been a chimera. Even the most plausible deals have been dissipated by ideological tribalism.

Still, there remain potential convergence points.

Last month the Bipartisan Policy Center advanced more than 50 middle-of-the-road energy policy recommendations developed by its Strategic Energy Policy Initiative, co-chaired by former Sen. Byron L. Dorgan (D-ND) and former Senate Majority Leader Trent Lott (R-MS). And for that matter, interesting discussions surround energy efficiency issues, thoughtful subsidy reform, and steps like opening master limited partnership status to renewable energy projects.

Now comes President Obama’s modest proposal to capitalize an Energy Security Trust fund to support research into de-carbonizing the vehicle sector.

To be funded with $2 billion over 10 years drawn from royalties the government receives from offshore drilling on the Outer Shelf, the new proposal—first aired in Obama’s State of the Union address last month—represents an important check point on the potential for constructive action through compromise in Congress.

To be sure, the proposed research fund is tiny, given the scale of the nation’s cleantech research needs. And yes, it’s focused only on the transportation sector. And yes, the proposal is quite vague and so hard to gauge.

But even so, the energy trust concept represents a significant bid to test the potential for advancing energy policy.

Research on clean energy technologies remains a critical priority. Locating funding for it remains a critical challenge. And the president’s proposal probes an area of genuine potential for convergence.

For one thing a modest bargain on energy research and oil and gas royalties has always had a sound intellectual grounding. Through such an architecture the costs of investment would be internalized across the energy sector, and the revenues of “dirty” exploitation would be used to fund clean innovation. That just makes sense.

Beyond that there is the fact that the concept has some authentic bipartisan lineage and maybe traction. Some of that comes from the support for the idea by a group of retired military and business leaders, including some Republicans, called Securing America’s Future Energy. More importantly, Sen. Lisa Murkowski (R-Alaska), the top Republican on the Senate Energy Committee, has proposed a similar idea (albeit one focused on drilling on lands now off-limits, such as the Arctic National Wildlife Refuge in Alaska). This convergence might well mean there is room to negotiate a deal that pleases both sides, especially with royalty growth likely in the coming years.

Or, maybe not. Perhaps the Energy Security Trust is just another illusion of plausible potential compromise, soon to evaporate.

Yet, there is encouragement in something called the American Energy Act, the 2009 energy plan introduced by House Republicans under the leadership of Rep. John Boehner, now speaker of the House. At the center of that plan was a proposed bargain that would have paired expanded oil and gas drilling and nuclear development with new investments in renewable and alternative energy. To fund the latter the bill proposed putting hundreds of billions of anticipated new oil and gas royalties into a trust fund to accelerate clean energy innovation. Sound familiar?

That proposal may have been mostly a rhetorical counter to the big Democratic push on cap-and-trade legislation, but it was discussed widely by GOP leadership and represents a useful precedent for a new deal now.

So, we’ll have to see. Whether it’s called an Advanced Energy Trust Fund a la Sen. Murkowski or an Energy Security Trust as per the White House, a clean energy R&D fund for the transportation sector remains a meaningful test of whether there is any room at all for significant energy legislation in Congress.

Again, I’m not holding my breath. But I’m happy to be proven wrong.

Authors

Mark Muro

Finding the ‘New’ Mexico in Querétaro

Joseph Parilla and Alan Berube — Fri, 15 Mar 2013 00:00:00 -0400

Nearly five centuries after the arrival of Hernán Cortés on its shores, Mexico is being rediscovered again. After years in which drugs and thugs led the Mexico headlines in Western media, no less than the Economist, Foreign Affairs, and the Financial Times now highlight the country’s rapid federal reforms, booming middle class, and strong current and projected economic growth. Mexico City, which was largely spared from the recent wave of violence, is booming with new residential and commercial construction, including what will be the tallest building in Latin America. And upon visiting Monterrey, Mexico’s third largest region, New York Times columnist Tom Friedman described “How Mexico Got Back in the Game.”

But the “new” Mexico—site of this year’s Global Cities Initiative international forum—is exemplified best by neither Mexico City nor Monterrey. To see it, we drove two and a half hours northwest of the capital to the city and state of Querétaro. For decades, the 2 million-person state was perhaps best known as the site where Mexico’s current Constitution was ratified in 1917. Now, Querétaro is ground zero for the country’s economic revolution, achieving average annual GDP growth of 5.5 percent over the last decade, highest among Mexico’s 31 states. It is home to major multinational corporations like GE and Samsung, a burgeoning middle class, new golf courses, and what will soon be Latin America’s second-largest shopping mall, all within a stone’s throw of an immaculately preserved colonial center (a UNESCO World Heritage site).

What accounts for Querétaro’s economic energy? Both state leaders and local residents credit the 2005 arrival of Bombardier, the Canadian aerospace and transportation manufacturer, as the catalytic investment that put Querétaro on the global map. The firm was attracted to the region’s well-educated population and the promise from federal and state governments to locate a new aerospace university, UNAQ (Universidad Aeronáutica en Querétaro), to supply the budding cluster with skilled workers. Of the 1,800 workers at Bombardier, nearly two-thirds were trained at UNAQ, and the firm works closely with the university to tailor the curriculum for all rungs of the aerospace career ladder—from production workers to engineers.

Beyond its local assets, Querétaro lies at key intersection of North American advanced manufacturing. It sits at the convergence of Mexico’s road, rail, and telecommunications network, right along the “NAFTA Highway” that allows parts to be shipped to Wichita and Toronto for assembly much more quickly than from China. Bombardier’s plant abuts the brand new Querétaro International Airport, whose runways the state hopes will test the first entirely Mexican-made aircraft within a decade. And with Querétaro producing fuselages, wings, and electrical harnesses; Wichita offering design and assembly; and Montreal providing research and development, Bombardier’s supply chain for the Learjet 85 benefits from the distinct specializations of three metropolitan economies all within two time zones and one free trade area.

Queretaro’s story exemplifies the increasingly important role Mexican metropolitan areas play in advanced industry supply chains—such as aerospace, automotive, and appliances—that unite North America as one de facto economic market that not only trades goods, but co-produces them for the rest of the world. Nearly 20 years after NAFTA’s passage, 40 percent of what the United States imports from Mexico is actually American-made content. With global economic winds like the shale gas revolution, eroding cost advantages for Chinese labor, and the “just-in-time” production imperative at North America’s back, the continent has clear incentives to integrate further to compete with Asia, Europe and the rest of Latin America.

Yet the administration of newly elected Mexican President Enrique Peña Nieto recognizes that the country can no longer simply integrate into global value chains. Its economic strategy seeks to move Mexican firms up those value chains by boosting productivity, innovative capacity, and entrepreneurial dynamism in key sectors. To do so, it must build from the sort of strengths evident in regions like Querétaro, which are building expertise and infrastructure to accommodate higher-value activities like research, design, and finance.

Mexico’s rise could usher in an even more prosperous next 20 years for North America, but not without stronger cooperation between the three nations. With the Obama administration still focused on the Middle East and the “pivot to Asia,” regional and state leaders in the United States have a unique opportunity to change the conversation. U.S. cities and states should get to know Querétaro, as its progress pinpoints the challenges and opportunities of the maturing economy to our south, and holds some lessons for its northern neighbors, too. And they might learn, as we did, why signs greeting visitors say, Suertudo, vives en Querétaro (Lucky you live in Querétaro).

Authors

Joseph Parilla
Alan Berube

Targeting H-1B Visa Fees to Better Address Skills Needs

Neil G. Ruiz and Jill H. Wilson — Wed, 13 Mar 2013 09:04:00 -0400

With sequestration-related budget cuts occurring throughout the government, one of the critical challenges the nation currently faces is how to allocate funds to education and skills training more effectively.

As we outline in a new brief today, one small smart change Congress should make is to better allocate revenue generated by the H-1B visa program. Released as part of our ongoing Remaking Federalism | Renewing the Economy series, the brief, like its companions, offers another way for Washington to square budget stabilization with smarter policy than we’ve seen in recent spending fights.

Our idea stems from a lesser-known aspect of the H-1B program: the requirement that employers requesting H-1B visas for highly skilled temporary workers pay a fee that is then used to fund grants for skills training and STEM education. These grants are meant to develop the skills of the existing U.S. workforce in order to fill jobs presently held by H-1B workers. This small but important grants program funds skills training through the Department of Labor and STEM (science, technology, engineering and math) education through the National Science Foundation. Completely funded by H-1B visa fees rather than tax dollars, it is protected from sequestration.

Although modest in size, these funds potentially can create significant impact at the local level if they are smartly invested. Unfortunately, these grants have not gone to the locations where H-1B workers are in greatest demand, nor do they necessarily support programs that equip workers with the qualifications needed to fill the jobs currently being held by H-1Bs. Last summer, Brookings analyzed how this $1 billion dollar fund has been distributed over the past decade to fund skills training and STEM education across the country. It turns out that metropolitan areas that had the highest demand for H-1B workers received on average only $3.09 in technical skills grants per working-age person, compared to $15.26 for those metro areas with a lower demand for H-1B visas.

With comprehensive immigration reform on the table, now is a good opportunity to reform how these fees are allocated in order to better reflect local skills needs. We’ve been heartened by the fact that Congress is already exploring options for improving the effectiveness of H-1B visa fee use. Last week, the House Judiciary Committee spoke about using these visa fees for training the American workforce, and the Senate’s Immigration and Innovation Act of 2013 proposes to increase H-1B fees to provide funding for long-term STEM education.

Congress should continue to invest in these efforts but reform how these funds are distributed by better targeting metropolitan areas with greatest demand for H-1B workers and encouraging local employers to work with local educational and training institutions to identify skills that are especially necessary for the local job market.

If America is to compete globally, the federal government should see that local areas can get the funds they need to train workers for the jobs of today and tomorrow.

Authors

Neil G. Ruiz
Jill H. Wilson

Expand State Partnerships for Passenger Rail

Robert Puentes and Joseph Kane — Wed, 13 Mar 2013 18:39:00 -0400

As passenger rail ridership grows nationwide, Amtrak and some states are engaging in innovative new partnerships to foster this demand. To comply with the Passenger Rail Investment and Improvement Act (PRIIA) that passed in 2008, federal and state policymakers will not only need to focus on the financial and operational performance of short-distance routes, where over 80 percent of the system’s ridership occurs, but also on the future of long-distance routes.

Of course, more federal support would help. But with additional federal funding unlikely and state budgets significantly pared, policymakers will need to consider more sustainable ways to finance the nation’s increasingly intermodal transportation network. Passenger rail, in particular, has shown the importance of states stepping up and taking action.

And several states have already seized the opportunity. Before PRIIA passed, 15 states paid at least a portion of the operating expenses for 21 different routes, affirming their commitment to passenger rail and placing them in a better position to target future spending. Oklahoma and Texas, for example, have jointly financed the Heartland Flyer and contributed more than $17 million combined from 2007 to 2011. Collectively, the 15 states have allocated almost $850 million during the same span.

Some states have also invested in rolling stock and other capital improvements that have furthered economic development along different corridors. North Carolina, for instance, has actively supported the Carolinian and Piedmont by rehabilitating stations and upgrading state-owned tracks. California has continued to invest in the Pacific Surfliner, the Capitol Corridor, and the San Joaquin, all of which rank among the 10 busiest routes nationally.

By prioritizing passenger rail, states are investing in a mode that has appealed to more travelers and strengthened the economic linkages between metro areas. But as states assume greater responsibility for passenger rail, they should be given greater flexibility in how they manage routes. While a dedicated source of funding, such as a ticket tax, would certainly help, states and metropolitan planning organizations (MPOs) could also benefit from having the ability to transfer federal funds to support intercity passenger rail, as they currently can between highway and transit programs.

Still, even with this flexibility, Amtrak and the states will need to address both short-distance and long-distance routes. Although PRIIA requires states to operationally support short-distance routes only, long-distance routes should not be exempt from this requirement. Amtrak and the states need to carefully weigh the benefits—geographically and otherwise—that these routes provide relative to their high operating costs.

The goal here is not to eliminate these routes but to strengthen the federal-state partnership. Expanding PRIIA in this way should be seen as an opportunity to innovate and collaborate, allowing Amtrak and the states to shape the future of passenger rail in response to local demands and a clear national plan. If states feel that certain long-distance routes are not worth supporting, then they should be scaled back, as has already been debated for routes such as the Pennsylvanian. If anything, though, states should feel confident and emboldened in this task based on their ability to coordinate other cross-border infrastructure investments. States should lead with greater decisiveness and action.

Indeed, supporting passenger rail comes down to a simple choice for federal and state policymakers: In the long run, is it wiser to invest $6 million to construct one mile of a new 4-lane highway, or to spend that same $6 million to cover the operating expenses for a passenger rail route spanning 300 miles?

Authors

Robert Puentes
Joseph Kane

Sequestration Shock: Smart D.C. Metro Will Figure It Out

Mark Muro and Jessica Lee — Tue, 12 Mar 2013 13:00:00 -0400

Washington Post economic correspondent Jim Tankersley had a smart piece last week that brought home the potential economic implications of the sequester’s across-the-board federal spending cuts for the Washington, D.C. region.

Employing numbers crunched by my group at the Metropolitan Policy Program, Tankersley noted that of the 3.1 million people employed in the Washington area, nearly 450,000 work for the federal government or the military.

That means that fully 14 percent of the region’s workers work directly for the federal government—at a time when no other large U.S. metro area has more than 3 percent federal employment. The thrust being that the region’s economy is grossly over-reliant on the federal government, especially since these numbers leave out the additional hundreds of thousands of federal contract workers.

The implication of Tankersley’s piece: A decade of expanding federal largesse that protected the region from the worst effects of the financial crisis has now left the region vulnerable. The scary part: With sequestration, a deflation of the federal spending bubble could have implications for the greater Washington economy not unlike those of the mid-decade auto-industry crisis for Detroit or the housing crash for Las Vegas.

And yet, while all of that sounds distressing, we are not so worried. For one thing, while the region will be hit inordinately, the federal pullback likely will not be abrupt. It appears to be more of a slowdown than a crackup.

But beyond that, Washington possesses the ultimate counter to adversity: It is loaded with smart people—and smart people tend to figure things out.

In this regard, D.C. boosters are right that the region boasts one of the greatest concentrations of technical and knowledge workers in the country. Almost 47 percent of workers in the D.C. metro possess a bachelor’s degree or higher, while roughly 32 percent of adults in the United States do. This is important because people with higher levels of education tend to be more adaptable to the vagaries of the labor market, more able to translate their existing skills to new pursuits, and more entrepreneurial.

True, too much of this talent is now tied up in the government sector, as the Post’s Steven Pearlstein complains, where the staid ethos of agency life and government contracting is “almost antithetical” to the entrepreneurial culture of the private sector. And yet, the region has changed a lot in the last decade, with the emergence of a new urban character comprising a huge part of that change. As Pearlstein notes, Washington has gradually become a cool place for smart, well-educated young people to live. As it happens, that turns out to be a vital ingredient for spawning successful new companies, particularly in tech-heavy fields such as “big data,” social media, cloud technology, and app design. That’s why it’s a big deal that new energy and people are beginning to flow through the nascent innovation districts that are emerging on U Street NW, H Street NE, and along the Rosslyn-Ballston corridor. These relatively affordable yet hip neighborhoods are where the future is being figured out.

And so, while sequestration portends dislocation, and while it would have been best if the region’s leaders had sought to “diversify” the economy before now, diversification may well already be happening organically.

Times may get tougher, but the greater the stress, the more likely it is that the many smart people in this region will sort things out and invent a new Washington.

Authors

Mark Muro
Jessica Lee

Needed: Efforts to Manufacture a Recovery

Mark Muro and Jessica Lee — Mon, 14 Jan 2013 00:00:00 -0500

Though Washington can’t seem to get enough of it, the debt and deficits fixation continues to feel pretty theatrical. Far scarier, by contrast, is the state of the economy. Notwithstanding some positive signs in the housing and construction sectors, the drifting economy remains troubled.

Real domestic product has been growing at tepid rates below 2 percent per year. Pay remains stagnant for most workers. And for that matter the number of poor and near-poor people in America has skyrocketed from 81 million in 2007 to 107 million in 2011—nearly one-third of the nation’s population.

In short, it’s time for Washington to return its attention to the economic emergency and commit itself to working on a bipartisan basis to jumpstart growth.

Where should it start? One obvious place for a new push to renew the economy is the manufacturing sector—that most critical site of high-tech innovation, exports, and well-paying jobs with strong multiplier effects.

Which is why today’s latest three installments of our ongoing Remaking Federalism | Rebuilding the Economy Series call for bold actions to bolster the competitiveness of the U.S. manufacturing and advanced industries sector.

What do we propose? The three ideas from Devashree Saha and one of the co-authors of this blog (Mark Muro), Bruce Katz and Peter Hamp, and Rob Atkinson and Stephen Ezell add up to cohesive trio of proposals for improving innovation, workforce, and higher-education connections in the sector.

On the innovation front, we argue that Congress should authorize the build-out of a national network of advanced industries (AI) innovation hubs, expanding on the modest beginnings now being made through the Department of Energy’s Energy Innovation Hubs program and the Department of Commerce’s National Network for Manufacturing Innovation (NNMI) initiative. Functioning as regional centers of excellence, the new hubs would focus on cross-cutting innovation, process, and technology deployment challenges of critical interest to advanced industries by drawing universities, community colleges, state and local governments, and other actors into strong, industry-led partnerships. The creation and appropriate funding of at least 25 such hubs—funded at $25 million a year each, with a significant local, state, and private sector matching support required—would, we believe, greatly accelerate the pace of innovation and new-product development in the nation’s advanced industries and so strengthen their long-term competitiveness.

Turning to labor force development, Katz and Hamp urge the federal government to initiate a “Race to the Shop” competition (loosely modeled on the successful Race to the Top education challenge) to push states and metropolitan areas to develop long-term strategies for better addressing the workforce and training needs of their leading sectors. Under this new program, the five states and five metropolitan areas that present the strongest plans would receive a federal implementation grant as well as increased flexibility to realign or better invest existing federal resources, say from the Workforce Investment Act or Perkins Career and Technical Education funding. Ultimately winning states and regions might receive significant resources and flexibility to create a network of manufacturing high schools, for instance, or to align community college curricula to fit the varying skill demands of major local industries.

Finally, to bolster both the innovative capacity and human capital of the manufacturing commons, Atkinson and Ezell call on Congress to establish an initiative to designate 20 institutions of higher education in America as “U.S. Manufacturing Universities,” with a special charge to strengthen the position of U.S. manufacturing in the competitive global economy. Along these lines, Atkinson and Ezell would have government provide the new cadre of federally-designated institutions $25 million a year each to revamp their engineering programs to better serve the needs of U.S. manufacturers. Through such changes U.S. regions and industries would gain more joint industry-university exchanges; more undergraduate and graduate training that incorporates work-based experience in manufacturing; and more universities focused on turning out engineering PhDs who go on to work in industry.

So there we are: Three new ideas for bolstering American manufacturing that would strengthen economic growth in U.S. regions and contribute to American renewal all at once.

In sum, it isn’t hard at all to think of useful policy moves that would help renew the American economy. What does seem hard, though, is getting Washington to focus on what matters, rather than what captivates. And unfortunately, that seems nearly impossible.

Authors

Mark Muro
Jessica Lee

Publication: The Avenue, The New Republic