Brad Smith: Education and Immigration Reform: Reigniting American Competitiveness and Economic Opportunity
Sept. 27, 2012
Remarks by Brad Smith, General Counsel and Executive Vice President, Legal and Corporate Affairs, Washington, D.C., Sept. 27, 2012

DARRELL WEST: Good afternoon. I'm Darrell West, vice president of governance studies and director of the Center for Technology Innovation at the Brookings Institution, and I'd like to welcome you to today's forum on Education and Immigration Reform.

We are webcasting today's event. So, I'd like to welcome those of you who are watching live from around the country, if not around the world. Oftentimes we get about 10 percent of our viewing audience from outside the United States.

We're also going to be live tweeting this event using the hash tag techcti. That's techcti for those of you wishing to post comments or ask questions during the broadcast event.

And then during the Q&A we will take questions both from the live audience here at Brookings, as well as our virtual audience.

And we will be archiving the video from today's event, so people can go back and evaluate your own performance if you're a speaker or take in additional comments.

I think today when we think about our situation in terms of training our leadership is threatened by a skills and talent deficit, largely due to the lack of professionals trained in various science, technology, engineering and mathematics fields.

Employers report that they are unable to fill all the positions that they have in these areas, and there is a gap between those who go into those areas versus those who do not.

So, today's employers and policymakers are facing a similar type of challenge: How can we restructure our educational system to prepare for the next generation of students so that they're better able to compete at the global level, what are the policy changes that are necessary in education as well as in immigration to make a real impact on the workforce and our economy, and how can corporations, educators and policymakers produce meaningful change?

To help us answer these questions we brought together an outstanding set of speakers. Today's featured speaker is Brad Smith, the executive vice president and general counsel of Microsoft. He's been general counsel since 2002. He oversees numerous negotiations leading to competition law, intellectual property agreements with governments around the world. He has spearheaded Microsoft's intellectual property portfolio, and he's launched numerous global anti-piracy and digital crimes initiatives. In 2010 he chaired the Washington state higher education funding task force, and successfully advocated for a number of major policy recommendations.

Following Brad's speech we will have a panel. Michael McShane will be on the panel. He's a research fellow in education policy studies at the American Enterprise Institute. His first book is entitled, "President Obama and Education Reform," which was just released earlier this month and it provides a comprehensive description and analysis of President Obama's education agenda. At AEI he focuses on federal education policy and the politics of education reform, including school choice and the common core standards.

Nicole Smith is a research professor and senior economist at the Georgetown University Center on Education and the Workforce. In this capacity she leads the center's work and has developed a framework for restructuring long-term occupational and education projections. She puts out a help wanted report, which projects educational demand for various occupations in the U.S. economy through the year 2020. And she's a co-author of an article on the inheritance of education inequality.

Our last panelist will be Stan Jones. He is the president of Complete College America, which is a national nonprofit which seeks to work with states to increase the number of Americans who obtain quality career certificates or college degrees. He was elected to the Indiana House of Representatives at age 24, and served as a member of the House Education and State Budget committees. He also served for more than five years as an advisor to then Governor Evan Bayh. He worked as Indiana's Commissioner for Higher Education for 12 years.

So, we're going to start with opening comments from Brad Smith, and then we will hear from our panel of experts. So, please join me in welcoming Brad Smith to Brookings. (Applause.)

BRAD SMITH: Well, thank you, Darrell. Thanks to all of you who've spent a little bit of your time this afternoon. I know your time is valuable, and I really appreciate it.

I have been to Brookings before to talk about cloud computing. I've often had the opportunity to meet with people here and talk about competition law or intellectual property, but today I want to talk about something that I think is more important still: I want to talk about people. Because we've had the opportunity as a company from a firsthand experience to get a perspective on what's happening with people in the country with education, with immigration.

But as I've talked with others, including a week spent at the Republican Convention in Tampa and a week spent at the Democratic Convention in Charlotte, one thing has become increasingly clear: Our experience is far from unique.

But let me start with what we're experiencing ourselves. When I went to the two political conventions I participated in a number of conversations where I did something that frankly is a little difficult to do when you work for a company. We started to share some of our more confidential information about what we were experiencing with respect to our hiring.

Today, in the United States Microsoft has over 6,000 open jobs. That's 15 percent more open jobs than we had a year ago.

Of those 6,000 open jobs, over 3,400 of them are for engineers and software developers and researchers, and that's an increase of 34 percent year over year.

The reality is that in the United States we are creating unfilled jobs faster than we are creating new filled positions.

And yet I know we are not alone. I know we are not alone because when I describe these numbers, people from other companies come up to me and say, you know, I'm glad you said that because our story is exactly the same. And I know we are not alone because one hears it not only in the stories that other business leaders have to tell, but one sees it in the numbers statistically across the country. The government estimates that there are over 3.7 million open jobs in the United States today. If you look at the occupation that we know best, computer-related occupation, the unemployment rate is only 3.4 percent. Since the traditional definition of full employment is about 4 percent, that tells us that we have a shortage. And it is therefore not surprising that when one talks to people who work in companies, they experience the shortage firsthand.

Part of what one needs to think about is not only about the shortage but why the shortage exists, and I think the answer has become increasingly clear. One set of numbers brings it into bold relief; it is this: This year, the United States economy will create 120,000 new jobs that require a bachelor's degree in computer science. But as a country, all of our colleges and universities put together will produce only 40,000 new bachelor's degrees in computer science.

What that tells us is not only why we have a shortage today, it tells us this shortage is going to get worse, because these same numbers are projected to persist each and every year through the remainder of this decade.

As I talk to other business leaders, one conclusion is inescapably clear: For many companies seeking to recover from the recession one of their biggest problems is finding people with the skills to fill the jobs they are creating. And increasingly we fear that if we cannot provide or produce the people in the United States who have the skills to fill these jobs, the jobs will start to migrate to other countries who do have people with the skills that are needed.

And if the situation is challenging overall, and it is, the truth is it's even more dire for the minority population.

Consider this: In the United States last year there were 1,603 new PhDs in computer science. Only 349 of those degrees went to women. Only 47 went to African-Americans and only 17 of those degrees went to Hispanics.

When we look at the education and the degrees that are going to move the country forward, it is becoming clear that some minorities are being left behind. And when we see the continued persistence of unfilled jobs and unemployed people at the same time, it's clear that we're not only talking about a problem, we're talking about a tragedy. And it is a problem and a tragedy that requires new steps for us to address effectively.

Certainly, as I talk to people across business one other thing is inescapably clear: We're not just talking about IT companies here, and we're not just talking about companies in one particular part of the country. If you want to think about the future of manufacturing or the future of retail or the future of health care or the future of any industry in this country, you're thinking and talking in part about the future of software, because virtually every industry and every business in it today increasingly relies on automation and computing technology for core business processes. So, this isn't just an issue that comes to the forefront in the IT sector, even though in some ways we may be a little on the earlier side to experience some aspects of it firsthand.

The real question is not whether we have a problem, because we so clearly do. The real question is, what can we do to solve it?

We've been giving a lot of thought to this as a company. We've been given a wonderful opportunity to listen and learn from many other people, experts in the field, people in other companies, people in industry associations, people in government, people in Congress, people in both Houses and in both parties.

And so we've put together a few ideas that we wanted to share today. I would never for a moment think that a problem as big as this is going to be solved in an afternoon, but maybe there are some new thoughts that we can bring to the conversation, and maybe there are some new paths forward that we can identify that we can take here in Washington, D.C., and across the country in the year ahead.

We've concluded that there is a path forward. There's a path forward that in part builds on some successful efforts in recent years. There's a path forward that, in fact, combines some ideas that to date people have been talking about separately.

What we propose, what we've written about in the white paper that we've put out today, is in effect a two-part solution. One part looks at investments the country needs to make in education and STEM education in particular to create new and better opportunities especially for the next generation of our panel. And the second part involves overdue reforms in our high skill immigration arena. But in part what we're suggesting is that we use the second piece, immigration reform, to raise the money to help pay for the first piece, the education investments that the country so clearly needs.

Let me take a few minutes to highlight each and then we'll have I think a very interesting conversation about all of these issues with the panel.

First, when it comes to STEM education it has become so clear that we need to take a number of new steps. As a company we've concluded that we should borrow from and learn from some of what worked in the Race to the Top initiative in recent years. We need a new national initiative. We need a Race to the Future, a race that will bring together the resources and invest them in the areas that will make a difference.

There are many people with good ideas about where investment is needed, but we've highlighted four in the white paper that we've published.

The first is to focus on stronger STEM education in the K–12 system, to train and recruit new teachers in math and science and technology and engineering, and to raise standards in schools across the country, building on what is already starting to work with the Common Core standards and the next-generation science standards, and to provide funding for the states that want to make the investments and take the steps that will lead to stronger STEM education across the board. That's the first of the four things that we think merit some new investment.

The second is this: It's computer science in education and in high school in particular. If you think for a moment about some of the people who have remade our world, people like Bill Gates or Steve Jobs or Mark Zuckerberg, and you ask: What did they all have in common? There is one thing they each had the opportunity to do: They each learned computer science before they graduated from high school. They were the fortunate few. They happened to have families or friends or mentors that made it possible for them to work with computers and not just play computer games but create them and build programs at a very young age.

We live in a country today where any young person should have the opportunity to become the next Bill Gates or Steve Jobs or Mark Zuckerberg. But consider this: In our country today there are over 30,000 public high schools, there are over 12,000 private high schools. We have over 42,000 high schools in the United States, and yet only 2,100 of them last year offered the advanced placement test in computer science, only 2,100 schools.

But more disconcerting still is this: That number is shrinking, not growing. It is 25 percent lower than it was five years ago. That means that four decades after Bill Gates and Steve Jobs were teenagers, we still live in a country where you have to be one of the fortunate few to be exposed to this field at an early age. And that is true even though I would argue that computer science is to the 21st century what physics was to the 20th; it is the foundational science for the potential advances of the future, whether you're talking about computers or biology or chemistry or microbiology or any field in the life sciences. It is absolutely fundamental.

And it's not just that computer science isn't offered in most high schools, it's that it's not recognized in most states as a course that will qualify to help a student meet their math or science requirements for graduation. Forty-one of our 50 states today fail to treat computer science as either a math or a science course. It will get you just as close to graduation as it will if you take woodworking. I love wood -- (laughter) -- but it is not the future of our economy.

We feel it is time to put a stake in the ground. We should aspire as a country to ensure that by the end of this decade every high school student in America has the opportunity to take part in a computer science course before they graduate from high school. It doesn't mean that every high school student should be required to, but they all should have the opportunity to get exposure to and learn what is important in such a vital field. And we have some specific ideas in our proposal about investments that can help accelerate that.

The third of the four ideas that we believe merit investment focus on expanding computer science capacity in our higher education institutions, community colleges and four year institutions.

The facts are clear: If we're producing only 40,000 bachelor's degrees in computer science while we're creating 120,000 jobs every year that require that degree, we need to grow computer science in colleges and universities. We are going to need to invest as a country in more professors who can teach computer science in more departments that focus on computer science. And our public community colleges and universities are going to need to help lead the way. And at a time when the state budgets are so constrained, perhaps especially when it comes to higher education, we need to find some creative ways to increase the level of investment.

And then the last area that we believe would make a real difference is to focus on the college completion crisis that currently exists in the United States. This is the great crisis that far too few Americans have had the opportunity to think about, and one of the things we should all aspire to do is to help focus more attention on this problem.

When most people of my generation, especially in a place like Washington, D.C., talk about a young person going to college, it usually inspires an image of someone leaving home, moving into a dormitory, perhaps working part-time like I did when I was in college, but being a full-time student. That still exists, but it exists for only 25 percent of the young Americans attending college today. The reality is that our demographics have changed and three-quarters of the young Americans who are attending college are having to do so when they are juggling work, perhaps a family, a complicated life, and college study at the same time.

And we should be clear, the problem today is not that Americans are failing to go to college. They are starting college in very high numbers. The problem is they are not finishing.

And one sees this so clearly in the available data. If you look at the American population that is in community colleges today, if you look at the people who have signed up and enrolled in two-year certificate programs, we find that less than 30 percent of them finish that two-year program in three years, and only about half of the students who are enrolled in four-year degree programs get that four-year degree in six years.

We have not yet adapted and evolved our system of higher education to meet the needs of a new generation of people, a generation that can't necessarily find the time to attend one class from 9:00 to 10:00 on Monday and Wednesday mornings and a different class from 2:30 to 3:30 on Tuesday and Thursday afternoons. They are trying to go to work and earn a living and use that to help pay for their college. In fact, in community colleges today 60 percent of the students who are attending are, in fact, holding jobs that require more than 20 hours of work during a typical week.

And at a time when most of us think about the ratio between students and faculty, there's another ratio we need to start talking about: That's the ratio of students and counselors. You know what that ratio is across the country? Seven hundred to one. That means that if you walk across community college and four-year campuses today, every time you shake the hand of 700 students you should have the opportunity to meet one counselor. But what it tells you is that most students don't get a lot of time with counselors to help them navigate their way through their college education.

There are some relatively straightforward steps we can take that would make all the difference in the world, and I know from Stan Jones we'll have the opportunity to talk about some of them in this panel.

What we propose in short is that we invest $5 billion over the next decade and spend $500 million a year and get the money into the hands of the states that want to take action, that want to innovate and want to improve STEM education in the various ways I've described today.

And, of course, I appreciate full well that if you come to Washington, D.C., in September of 2012 and you have an idea that's going to cost money, you'd better figure out how to pay for it, and that's what we've done.

What we therefore propose is a second step. It's a step that's needed to meet the economic issues we face today but it's a step that will pay for the opportunities of tomorrow, and that's high skilled immigration reform.

We're proposing two steps in particular. The first would be to add a new and additional quantity of 20,000 visas per year that would be focused on STEM disciplines that would supplement the existing number of H1B visas. But importantly these visas would be more expensive. They would cost a sponsor $10,000 per visa. And believe me, we've done a lot of work to think through from a cost perspective what is feasible, what is feasible for a big company, what is feasible for a small company, what is feasible for a mature company, what is feasible for a startup. I believe this number is economically feasible. And if those 20,000 visas were used next year, as they almost certainly would be, at a cost of $10,000 per visa, that would raise $200 million.

But we should also address the green card backlog that has become so enormous, and therefore what we're proposing is that the Congress recapture 20,000 green cards per year over the next decade and make them available for people who are working in STEM fields. And those should cost $15,000 per green card. And if they are all used, those would raise $300 million per year.

And if you put that all together, it really would enable us to do two things. First, it would enable us across the economy, in the business community, to start to fill some of these jobs that are simply sitting open today, and we get people to work in these jobs by bringing them from overseas, and we let them put the multiplier at work that we know is also applicable today, typically over five additional jobs for each of these engineering jobs we fill. We would ensure that these jobs stay in the United States by filling them here, and we would bring together the financial resources that would enable the federal government to provide the investment to the states to make the various STEM investments that I've described. Put together, it does offer us a new path forward.

As I've had the chance to talk to people about these ideas, I become increasingly optimistic that we actually can get something done. I become increasingly optimistic that in the next year it's actually feasible, it's actually realistic to ask the Congress to consider and pursue this type of new Race to the Future. Oh, there will be many additional ideas that undoubtedly should be added and things should probably be adapted, as they always should and they always are, but the critical question is, can we get something done?

I had the chance to talk with Republican leaders in Tampa and Democratic leaders in Charlotte. I had the chance to talk with people in both Houses of Congress. Frankly, some of the ideas that you see here today are ideas that evolved and changed and that we adapted based on the good feedback and the suggestions and the constructive criticisms that many of these people offered.

But it left me with two conclusions overall. People are increasingly aware of this problem. They understand that the future of our job growth is at stake, and more than that, the future of the country's technology leadership is at stake as well. And second, people do want to find a path forward.

One of the things I've learned from all of the various antitrust and intellectual property negotiations I've handled over the years is this: Sometimes when a small problem proves intractable, you have to make it bigger. You have to make the problem big enough so that the solution is exciting enough to galvanize people's attention and generate the will to overcome the hurdles that have been holding us back. I believe that if we can combine what we're doing with respect to education with what we need to do with respect to immigration we have that opportunity ahead of us.

We need to do something new, we need to try something different. Maybe we'll find something even better. But we're pretty excited about this path forward.

Thank you very much. (Applause.)

END

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