In President Biden’s vision for the U.S. economy, technological supremacy goes arm in arm with high-paying jobs for American workers. But what happens when those two objectives don’t line up perfectly? What has to give?
This question is playing out right now in Arizona, where Taiwan Semiconductor Manufacturing Company is struggling to ramp up manufacturing capacity. It has pushed back the planned start of production by a year to 2025. Mark Liu, the chairman of TSMC, told securities analysts in July that one key problem is that “there is an insufficient amount of skilled workers” to install the sophisticated equipment.
Liu added that TSMC — the world’s biggest maker of advanced computer chips — was trying to open the bottleneck by “sending experienced technicians from Taiwan to train the local skilled workers for a short period of time.”
The lesson: The United States can become a world leader in making computer chips or it can rely entirely on American workers, but it can’t do both at the same time.
That’s not the message that Biden conveyed last year when he spoke at the groundbreaking for the TSMC factory, in Phoenix. Biden said: “The reason why business should be hiring union folks, if you don’t mind my saying, is simple: They’re the best in the world. They’re the single-greatest technicians in the world.”
Biden’s faith in the American worker may be well placed, but even the greatest technicians in the world are going to face a steep learning curve building something they’ve never built before, especially something as complex as a chip factory, which contains the most sophisticated machines ever built.
If companies that are attempting to reshore chip manufacturing from abroad can’t get the expertise they need when they need it, there’s a possibility that a good part of the $50 billion in federal grants from the CHIPS and Science Act will go to waste, leaving the United States reliant on other nations for technology that’s vital for both civilian and military gear.
Immigrants helped build Silicon Valley. Andy Grove, for example, escaped from Hungary in 1956 and went on to become the third employee of Intel, building it into a global chipmaking powerhouse. The United States still excels at designing chips but has lost the lead in making them. “Our U.S. work force is of insufficient size, but also, large populations of our technical work force are focused on learning A.I. and software development, which makes immigration of semiconductor technologists even more imperative,” Larry Pileggi, a professor of electrical and computer engineering at Carnegie Mellon University, wrote in an email.
There is a solution. That’s for the United States to bring in temporary foreign help, particularly from Taiwan, which has become the world leader in chipmaking (and which, not incidentally, faces the threat of an armed takeover by China, which claims it as its own). Foreign assistance from Taiwan can serve as a bridge to a future in which the United States has generated sufficient homegrown talent to meet its production needs.
The Economic Innovation Group, a public policy group, has floated the notion of a “chipmakers visa” that would be auctioned off to semiconductor manufacturers in need. There would be 10,000 new visas each year for 10 years, with recipients being put on a smooth path to a green card when their visas expire. (The visas would last five years and be renewable once.)
That may seem like a lot of foreign workers, but in the long run, the group says, temporarily relying on help from abroad will create more chipmaking jobs for Americans, not fewer. The use of an auction is intended to make sure the visas go to the companies that value them most, not ones that manage to jump through bureaucratic hoops best. Revenue raised from the auctions would go toward training American workers for jobs in chipmaking.
The Economic Innovation Group describes itself as bipartisan. It’s definitely pro-technology. Its founders circle includes Sean Parker, the founding president of Facebook, and Dan Gilbert, the founder and chairman of Quicken Loans. Its economic advisory board includes Kevin Hassett, Glenn Hubbard, Robert Litan, Kenneth Rogoff, Matthew Slaughter and other economic luminaries.
Not everybody thinks the chipmakers visa is a good idea. Ron Hira, an associate professor of public policy at Howard University who is also a research associate at the Economic Policy Institute in Washington, pointed me to Bureau of Labor Statistics data that U.S. employment in manufacturing of semiconductors and electronic components had fallen 49 percent from its 2001 peak by January 2021, when Biden took office. Despite the hubbub about a manufacturing renaissance, it has risen only 5 percent since, indicating to Hira that there are plenty of Americans with industry experience available for hire.
“I think it’s a bad approach to create just another alphabet soup visa program instead of fixing the ones we have,” such as the H-1B, the L-1 and the E-2, he said. Daniel Costa, an attorney who is the director of immigration law and policy research at the Economic Policy Institute, added that the figure of 10,000 visas appeared to be plucked from the air.
Adam Ozimek, the chief economist of the Economic Innovation Group, responded that the gross employment figures in manufacturing are irrelevant because the needs are concentrated in a relative handful of state-of-the-art roles. He said the 10,000 figure was based on a rough calculation of industry needs, but “if someone has a bigger number in mind, I’m all ears.” As for making room in existing visa programs, he said they are too complicated and uncertain. The important thing, in his view, is giving the semiconductor industry the “certainty of a dedicated pathway and access to the human capital that they need to succeed.”
Ozimek’s big point is that the United States is running a big risk of losing the new semiconductor industry it’s trying to build, just as it lost the first one to foreign competition. “Look at countries that have succeeded in chips,” he said. ”They have prioritized it, politically and economically. We need more focus and more ruthlessness. This is not like an industry that we have a firm grasp on.”
The Readers Write
I read your newsletter about DoorDash’s warning to customers who don’t include a tip. I am a part-time Dasher and full-time school employee. I’m going to decline a $2.25 order in almost every instance. That’s a no-tip order. I’m using my car, which I fuel, insure, repair, and maintain with no contributions from DoorDash. So, in essence, the no-tip or low-tip orders are going to sit as Dashers are not doing this side gig as a public service.
You quoted the great economist Frank Knight. Here is a story about Frank Knight and George Stigler you might find interesting. In 1962 I was a research assistant to George Stigler at the University of Chicago. That year he acquired an original copy of Adam Smith’s “The Wealth of Nations.” Knight, who was then very senior and was developing eccentricities, asked to borrow it. Stigler let him have it, with me as the delivery boy. A few weeks later I was told to pick it up. On opening it, I saw that Knight had scribbled the ends of sentences either at the bottom or top of pages, because he found having them go from page to page irritating. I was flabbergasted and immediately showed George, expecting him to be aghast. He smiled and said, “I will be right back.” I asked him where he was going. He responded, “I am going to get him to sign it. I now have a copy of ‘The Wealth of Nations’ that I can prove was read by Frank Knight.”
I have never told anybody this story.
Richard R. West
The writer is a retired dean of New York University’s Stern School of Business.
The deficit reduction discussion has focused on cutting spending or raising taxes. There’s been little discussion about a third option: legal immigration. While most of the developed world is starting to feel the effects of declining birthrates on their economies, America is uniquely positioned as an attractive destination for immigrants and with a successful history of assimilation.
Jersey City, N.J.
There is a point where a fiscally irresponsible big government becomes a threat to the whole country. Like a 5-pound tick on a 4-pound Chihuahua.
There are so many relatively painless ways to increase revenue in this country, it’s like falling off a log.
Quote of the Day
“Politics is a strong and slow boring of hard boards. It takes both passion and perspective.”
— Max Weber, “Politics as a Vocation,” speech at Munich University (1918, published 1919).