This year the Business Incubator Association of New York State – a statewide innovation network that I cofounded in late 2005 and directed through mid-2016 – invited me back to its annual member meeting (this year, an online meeting) to reflect on how we recovered from the financial crisis of 2008.
The goal was to explore what lessons that crisis might hold for recovery from the Covid-19 recession and for the members’ resilience into the future. I am grateful to Marc Alessi, the current BIANYS executive director, and Erin Daly-Hunt, the organization’s director of operations, for the invitation to participate.
Marc and Erin have told me that my presentation was well received by the directors and managers of the ~100 incubators, accelerators, and other branded programs represented in the BIANYS membership, and so I have decided to share it in this quick-take blog post. Clicking the graphic will open a pdf in a new tab. Comments are welcome below or via the sitewide contact form.
In a short and readable paper published through the Council on Foreign Relations’s “Renewing America” project, Thomas Hilliard makes some sensible recommendations about better training Americans for the “middle skill” jobs that the current trajectory of American industry is placing front and center, in both the manufacturing and service sectors.
Of course, whenever anyone tells you there’s a shortage of anything, if you believe in market-clearing mechanisms, you should be asking “at what price?” Companies complain they can’t find middle-skill workers, but don’t often put their money where their mouth is. Hilliard gets at this, but in an odd way. To me, the key paragraph in his essay is:
The middle-skills gap damages job creation and economic mobility. Employers are less likely to create good jobs with long-term advancement potential if the productivity of their workers does not cover their higher wages. A recent McKinsey study found that 86 percent of U.S. employers surveyed would pay more for a job candidate with the right training and hands-on-experience. . . In the absence of those skilled candidates, employers will compete on the basis of lower costs, a path that leads to outsourcing and widespread use of part-time and temporary workers.
While it’s true that productivity must support higher wages, I worry this gets the causation backwards. Maybe the issue is not the supply curve for labor but the demand curve. There’s a big gap between “would pay” in theory and “is offering cold, hard cash right now.” Actually, tracing back Hilliard’s reference, the McKinsey Center for Government goes on to say, “The actual likelihood of higher salaries clearly involves a broader range of factors, such as employer ability to pay and the degree of skills scarcity in the industry.” ((See p. 47 of https://dl.njit.edu/mnj/Education-to-Employment_FINAL.pdf))
In other words, the position of American industry on what they’re willing to pay for U.S. middle-skilled employees remains incoherent and unreliable, and as long as it is — and obviously so, to any thinking American — we’ll have continued trouble attracting either young people or adult learners into education and training curricula that produce the relevant skills.
A nice report on reforming the Department of Energy National Labs ((“Turning the Page: Reimagining the National Labs in the 21st Century Innovation Economy,” which joins the long line of such studies documented by Crow and Bozeman in Limited by Design
)) was released recently by an ideologically diverse triumvirate of think tanks: the ITIF, the Center for American Progress, and the Heritage Foundation (report downloadable only from the first two). Reserving the right to disagree with each other on other issues, the authors still do a fine job untangling the way DOE thinks about, funds, and manages the labs, and the report nicely spotlights the pathologies. I have few problems with any of the specific recommendations, but I wish there had been more consideration of some fundamental questions.
Excluding the nuclear energy and weapons labs, which pretty much have to be held under tight federal control, and the fundamental physics labs, where the infrastructure is so expensive no other entity could probably take the risk, do we really need the “multipurpose” national labs as federal assets at all? With so much funding awarded on a quasi-competitive basis from DOE offices other than the one officially “sponsoring” the lab, many are functioning very much like universities, but without freedom of inquiry or entrepreneurial spirit.
As the authors demonstrate, allowing these DOE labs to be managed by private sector entities (nonprofit or for profit) has scarcely improved their flexibility or market-relevance, and so maybe we don’t need them at all. What would the system look like if most research assets were held by universities or nonprofit research institutes in their own names, with full responsibility for acquiring operational funding on a competitive basis from federal agencies and industry ((Single-purpose labs and multipurpose labs with big-physics infrastructure are a harder question, but in the latter case it’s still likely the science programs and labs could be separated from the super-expensive physics assets))? Is there any reason to expect that advances in energy science & technology would be any slower in such a framework? The authors do not speculate. Perhaps it’s an area where they disagree on ideological grounds. . . .