How to Keep the Economy Growing
Wall Street Journal
May 20, 1999
The economy has been growing for nine years, and has posted strong gains for four years—longer than most people thought possible without risking higher inflation. Yet inflation remains low even as unemployment diminishes.
In part, our recent growth is the result of new technologies that have led to higher productivity. But it has also been fueled by an increase in the number of workers, as millions of people who had been previously unemployed found jobs. With unemployment now at its lowest level in 29 years, we may soon have trouble finding workers to fill new jobs.
To keep the economy growing at its recent pace, we must draw more people into the work force. Two easy steps would help achieve this goal. First, we should eliminate Social Security rules that penalize senior citizens for working. Today, workers age 62 to 64 lose 50 cents of Social Security benefits for each dollar they earn above $9,600. Those age 65 to 69 lose 33 cents for each dollar earned above $15,500. The Social Security Administration tries to compensate these workers by increasing their monthly benefits when they turn 70 or stop working. But the higher payments are often not enough to make up for what's been lost. And thanks to the complexity of the Social Security rules, some seniors considering work aren't aware of the future benefit increases.
Three years ago, Congress and President Clinton decided to raise the earnings limit for 65- to 69-year-olds to $30,000 by 2002. But to tap the full potential of our senior citizens, we need to abolish the earnings limits altogether and pay working senior citizens the same Social Security benefits we pay other seniors.
The second step we should take is to change our current immigration policy, which hampers growth by making it difficult for foreigners with valuable skills and training to work in this country. Economic research shows that skilled immigrants have little negative impact on the employment or wages of Americans, and that they pay far more in taxes than they receive in government benefits. These workers can also help develop and spread technologies that improve living standards.
Since 1990, immigration laws have set aside 110,000 permanent-resident visas each year for professionals, academics, scientists, managers and other skilled workers. But 70,000 of these visas are subject to cumbersome labor-certification rules that require employers to file extensive paperwork and complete an elaborate domestic recruitment process. As a result, many of these visas go unused. We should scrap these certification rules, which do little to protect American workers, and allow employers to hire foreign workers who meet specified skill, experience and education criteria.
Also, our high-tech sector needs greater access to temporary foreign workers. Last fall, Congress and the president temporarily increased the number of H1-B visas for skilled temporary workers—such as scientists and computer programmers—from 65,000 to 115,000 for this year and next year, and 107,500 for 2001. But even with the higher limit, the quota is filled well before the end of the year. We should raise the H1-B limit further to at least 200,000 and make the increase permanent.
The U.S. cannot afford to let a lack of workers take the steam out of its remarkable economic expansion. It's time to change government policies that keep willing and able workers out of the labor force and keep the economy from reaching its fullest potential.
Reprinted with permission of The Wall Street Journal © 1999 Dow Jones & Company, Inc. All rights reserved.