In today's hyper-competitive global environment, emerging trends are forcing companies in Western New York and around the world to redesign business models and enhance value propositions. At the same time, access to talent is becoming just as critical as access to capital.
With elevated unemployment levels, an abundance of qualified labor should be available to employers. But it's not. New economic realities are making old assumptions obsolete.
The news that U.S. gross domestic product (GDP) growth was revised slightly downward to 2 percent in the third quarter still is positive. It's well above the first half of 2011 and reduces concerns of a double-dip recession. However, it's far from what's needed to significantly reduce the high U.S. unemployment rate, which stood at 9 percent in October.
To drive it down, the U.S. economy must produce many more jobs. According to a McKinsey Global Institute report, "To return to prerecession employment level by 2020 and accommodate the new entrants into the labor force, the U.S. needs to create 21 million net new jobs this decade." This is a tall order.
Throughout the 1970s, 1980s and 1990s, the net gains or total number of people employed in the United States rose by 20.9 million, 18.5 million and 16.1 million, respectively. In the last decade, the number of employed rose by less than 5.6 million, according to the Labor Department's household data.
Moving forward, what will drive American growth and create jobs?
For decades, a major contributor to job growth was consumer spending, which represented $10.2 trillion or 70.5 percent of GDP in 2010. When accounting for inflation, it's less than it was in 2007. And when considering the steep decline in purchases of newly built homes, which dropped by more than half from 2005 to 2010, the picture becomes even worse.
Consumer demand has slowed for a variety of reasons, including less use of credit cards, tighter home mortgage restrictions, higher consumer savings, the desire to pay off debt and higher unemployment. In turn, less demand has translated into less output from businesses, which require fewer employees.
Replacing this loss of demand is difficult, as demonstrated by several ineffective stimulus programs. Some analysts believe the output in new alternative energy sectors that produce "green jobs" will pick up the slack. Unfortunately, technologies required to make this a reality still may be years away. Although not a panacea, in the short term, the United States may help boost output by giving green cards or permanent residency status to more foreign investors and brilliant foreigners studying at American universities.
What do foreigners contribute?
"In a quarter of the U.S. science and technology companies founded from 1995 to 2005, the chief executive or lead technologist was foreign-born. In 2005, these companies generated $52 billion in revenue and employed 450,000 workers. In some industries, the numbers were much higher; in Silicon Valley, the percentage of immigrant-founded start-ups had increased to 52 percent," said Vivek Wadhwa, visiting scholar at UC-Berkeley.
Former Apple CEO Steve Jobs stressed to President Obama that the United States needed more trained engineers and suggested foreign engineering students be given visas to remain here. A policy that educates the world's brightest students and then sends them home to compete against us is a failed policy.
Today's only sustainable competitive advantage is knowledge -- the driver of innovation. Unfortunately, the United States has one of the lowest high school graduation rates in the industrialized world. As a result, it's essential to attract the world's sharpest minds and enhance corporate training and lifelong learning programs. And since companies need to increasingly specialize in their core competencies in order to retain leadership in their ever-more-competitive industries, their employees need to continually enhance their skills.
Louis Gerstner, former CEO of American Express and IBM, said most good job prospects in the future will be complicated and involve juggling data, symbols and computer programs regardless of the task. To do this, he continued, workers will need to be educated and often retrained.
Jobs that require left-brained routine quantitative functions increasingly will be automated or moved offshore. Those that require critical thinking and reasoning, as well as abstract analytical, intuitive and creative problem-solving skills, increasingly will be demanded. The problem: there are too few workers to satisfy demand in the United States.
In fact, the Manpower Group, a leader in work force solutions, said 52 percent of American survey respondents cited difficulty in filling jobs in the first quarter of 2011. Many employers attribute the problem primarily to a lack of skills or knowledge. This isn't only an American problem. One in three employers surveyed in 39 countries reported difficulties in filling positions, the Manpower Group indicated. These shortages will become more severe once the global economy picks up.
The costs of the American skills shortage are steep. According to a McKinsey & Co. report, if the United States had raised its academic performance levels to those of Finland and Korea between 1983 and 1998, U.S. GDP would have been between $1.3 trillion and $2.3 trillion higher in 2008.
Simply put, the future success of American businesses very much will depend on their ability to find talented employees who can quickly learn new skills and implement increasingly sophisticated technologies. And these companies must develop creative strategies to retain them.
Consequently, employers will need to establish more attractive working conditions, invest more in employee training programs, continually refresh and upgrade employee skills, and work with local universities and community colleges to ensure that courses offered satisfy market demands.
Even if we overcome current biases against increased spending for public education, those investments may require two decades to fully bear fruit. Until then, we need to supplement our current supply of home-grown talent by making it easier to hire and retain foreign-born skilled workers and professionals.
John Manzella is a frequent speaker, author of "Grasping Globalization" and president of Buffalo-based Manzella Trade Communications (ManzellaTrade.com), a strategic communications and public affairs firm focusing on global business and today's leading economic issues.