Thursday, March 8, 2007

Bring Them All Here

Bill Gates says that we should have an infinite number of visas for skilled workers.

I agree wholeheartedly and while I think that some effort has to be made to make sure that an orderly flow is maintained and suspected terrorists don’t slip through in the mix, we should take as many as we can get.

In fact, I would be glad to take them all here. Not just here in the United States but here in Wake County, NC – The Research Triangle.

I believe that skilled workers can offer increasing returns to scale. That is, unlike most cases in economics where the second unit is never quite as satisfying as the first (this is especially true with pizzas and nights in Vegas) knowledge workers build on one another. They share ideas and make each other more productive.

If ten researchers is great then twenty researchers is more than twice as good. Of course this pattern can’t continue forever. There does reach a point when researchers get in each others way and can’t effectively communicate with one another.

However, increases in information technology keep pushing that point further and further out. Moreover, there are more basic reasons that skilled workers would make the US in general and Wake County in particular an even more spectacular place.

Lots of skilled workers create thick markets. It’s not uncommon for skilled workers to join projects for 6 – 36 months and then leave that project and even that company for something else. Because it’s very easy to measure a knowledge workers productivity and pay her accordingly firms don’t mind swapping around workers.

This only works, however, if there are lots of workers and lots of firms all in the same place. To some extent the consulting world solves this problem by flying knowledge workers around the country to where they are needed. However, most workers would prefer to be able to stay close to friends and family on regular basis.

Concentrating workers also brings side benefits to the rest of the economy. As noted by Mankiw, more skilled workers reduces the overall tax burden per person. More importantly, however, they increase the demand for semi-skilled services.

Knowledge workers have a greater demand for hand crafted goods and personal services like butchers and bakers. The west side of Wake County faces Research Triangle Park, where most of technology jobs are clustered. There the dominate grocery store is Harris Teeter where wine specialists and artisan bread bakers are there to interact with customers and help them find exactly what they need.

The west side also features famously employee friendly Whole Foods. The east side on the other hand is dominated by Food Lions. While Food Line is a strong company that provides jobs to thousands the worker satisfaction and pay are considerably less than in the West Side chains. This is quite simply because Food Lion’s clientele cannot afford the attention to details and elegant environment that Harris Teeter provides.

More skilled workers means more Harris Teeters, more Costcos, more stores that pay higher wages. For slightly more complex reasons, increases in the affluence of a customer base almost automatically increase the productivity of retail workers, but that is for another day.

Lastly, more skilled workers place more pressure on the school system to perform. They raise the expectations for teachers, administrators and students. My personal research indicates that there is a critical mass of involved parents necessary to dramatically transform a school. More skilled workers thus implies more high performing schools.

For all that I say bring them here.


dWj said...

Agreed. For one, I make too much money, and should have my wage competed lower, but, for another point, if it isn't competed lower now by people paying taxes to the U.S. government, it will be competed lower soon enough by people paying taxes to (and creating economies of scale in) foreign countries. I'm enough of a jingoistic nationalist to prefer a healthy influx of foreigners.