What happens when a city defaults?  The answer may impact your investments

This week Harrisburg, Pennsylvania announced it would miss its quarterly scheduled bond payment.  Although holders of the bonds would still get paid, thanks to bond insurance which most investors demand from municipal issuers, the default by the city nonetheless is troublesome.  The failure of a State or local government to pay back their borrowings is extremely rare, which is part of the reason the government entities can borrow money at relatively cheap interest rates.  But the financial crisis in 2007 and the continuing economic malaise has put a severe strain on government resources.  And it is not just cities that are in desperate straights: some of America’s biggest States, such as California, New York and Illinois, appear to be on the brink of default.  California has already resorted once to issuing IOUs to some of its creditors, and may be forced to do so again in the near future.

The failure of a city like Harrisburg to pay off its debt, though disturbing, is not unprecedented.  In fact, US bankruptcy law explicitly provides remedies for creditors of US local governments.  In the case of a State, however, the bankruptcy code does not apply, owing to the fact that States are sovereign political entities. If a State misses a bond payment there is no clear process for resolving claims.  The market widely assumes that the federal government would never allow a State to default, and continues to loan to troubled borrowers like California on nearly the same terms they give the most fiscally sound states like Virginia. But in today’s tea-party climate DC is in no mood for future bailouts.  If a big State defaults it is unlikely the federal government will come to the rescue.  Investors should keep this in mind when reviewing their bond portfolios.

Oregon average weekly hours data indicate that in some respects businesses are poised for economic recovery. For the state as a whole, the average workweek for manufacturing production workers is back to normal. In June, this average was 39.2 hours per week, which was close to the levels seen in 2001 through 2004, but down somewhat from the frantic pace during the credit-induced boom of 2005 through 2007. Seeing hours above 39 is a welcome sign following the dizzying downturn of the recession when manufacturing production workers averaged fewer than 36 work hours per week.

In June, production workers in nondurable goods manufacturing averaged close to 37 hours per week, which was up from the sector’s early 2009 lows, but well below typical levels in the pre-recession period of 2005 through 2007. Food manufacturing at 37.6 hours is near normal. However, much of the balance of nondurable goods manufacturing must still be suffering, as nondurable goods overall was at 37.1 hours per week. This was above the low point of 34.9 in early 2009, but well off the peaks of near 41 hours per week in prior years.

In construction, the weekly hours data doesn’t portend an imminent rebound in activity. All-employee average weekly hours in construction were 35.6 in June, about the same level as in June 2009. This was down substantially from the two prior years: 37.7 in June 2008 and 38.3 in June 2007.

Looking at private-sector all-employee hours data for Oregon’s metro areas provides insight into economic conditions across much of the state. The Bend MSA continues to drop, with 31.4 hours in June. In contrast, this central Oregon metro area, home to a diverse group from skiers to ranchers, previously saw much higher average weekly hours at close to 35 hours per week in the summers of 2007 and 2008.

The contrast is seen in the Corvallis MSA, where large employers include Oregon State University and Hewlett-Packard. This area’s hours averaged 30.1 per week in June - a continuation of an uptrend over the past 12 months. In June 2009, hours worked averaged 29.3. Note that the Corvallis figures, as is true for all the numbers in this article, only include the private sector, and thus don’t directly reflect hours worked by OSU employees.

Eugene, Medford, and Salem metro areas all show similar trends in the average workweek over the past few years, with substantial drops by early 2009 followed by a return to near normal by June 2010. Portland’s trend is somewhat different in that its average workweek only dropped by about an hour per week by 2009, and at 34.1 hours in June 2010 hasn’t quite returned to normal.

With the average workweek back near normal in most industries and in most metro areas of the state, businesses are ready to start hiring in earnest if demand for their goods and services increases. They will be compelled to hire substantial numbers of workers if and when the economy expands at least modestly.

Graph 1

Governor Kulongoski met with his Council of Economic Advisers last week. Here’s what I told him:

1. The economy is becoming more volatile. The period 1983-2007 was the calmest ever in American history, in terms of macroeconomic fluctuations. This was also the period of time when today’s leaders in business, government and non-profits learned how to be leaders. (I’ll elaborate on my forecast of greater volatility in the coming decade in a future post.)

2. State revenues are inherently hard to forecast. Fluctuations are driven by corporate profits, proprietors’ profits, capital gains, and sales people’s commissions, much more than by total employment of salaried employees.

3.  I advise business clients to tighten up the time lag between changes in underlying sales an the business reaction to increasing volatility. Companies should pay more attention to their sales pipelines, watch inventories carefully, etc. However, the Oregon legislature, like many other states, will begin debating in January 2011  a budget for the July 2011 - June 2013 period. That’s a very long way into an uncertain future. Perhaps the state should budget based on the pessimistic forecast from the state economist, with some “if-funds-available” add-ons to be implemented over the course of the biennium.

4. In a more cyclical environment, businesses should run with more margin for error, meaning less leverage and more working capital. The state policy equivalent is to re-build up its rainy day fund as fast a possible.

Last week, The Standard, Portland Business Alliance and Associated Oregon Industries hosted Glenn Spencer, Executive Director of the Workforce Freedom Initiative, US Chamber of Commerce. Mr. Spencer gave a presentation to members on the federal legislative and regulatory agenda of Organized Labor.

Organized Labor facing major challenges. Unions across the US are facing major challenges which are driving its legislative agenda. The primary challenge faced by unions today is declining membership, which has fallen from 35 percent of the workforce in the 1950’s to just over 12 percent today.  Most notably, the failure of unions to recruit private sector workers has translated into just 7.2 percent union membership in the private sector compared to 37 percent unionization among government workers. In addition to membership problems, most union pension plans are now in “endangered” or “critical” status, meaning they will have difficulty paying out promised benefits.

Unions stepping up political activity. To address their lack of clout in the American workplace, unions are stepping up their political activity in order to force employers to recognize unions. In 2008 alone, unions collectively spent over $450 million on politics. The SEIU alone accounted for $85 million. Since the last election, the SEIU has created a $10 million “retribution” fund to punish Democrats who waver on union issues. To date, unions have pledged at least $150 million for the 2010 campaigns. They’ve also established a permanent campaign of lobbying and advertising in Washington, DC to drive their agenda.

Union priorities. The political agenda of Organized Labor includes substantial changes in labor law through both Congress and various federal agencies. To meet their pressing challenges, unions have decided that edicts from Washington, DC represent their best hope for revival.

•    Card Check. The unions are still hoping to pass a Card Check bill that would effectively eliminate private ballots in union elections and allow a government arbitrator to impose a union contract on employers after just 120 days of negotiations. Such a government-imposed contract would cover wages, benefits, work rules and could even compel employers to shore up failing union pension plans.

•    National Labor Relations Board (NLRB). The new 3-to-2 “union friendly” majority on the NLRB is poised to overturn many previous decisions that gave deference to the secret ballot and broadened the definition of “supervisor.” The NLRB is also looking at new rules to shorten the time period for union elections to as little as five days; establish off-site internet voting; restrict employer speech rights; and require recognition of “mini” unions that represent just a minority of workers.

•    Weaken employer resistance. A Patriot Employers Act would give tax credits to companies that sign “neutrality” clauses. A Department of Labor rulemaking would force employers to file publicly-available financial disclosure forms if they retain lawyers or consultants during a union organizing campaign.

•    Impose unions on the construction industry. The Obama administration has already issued an executive order promoting Project Labor Agreements (PLA’s) on federal construction projects. PLA’s require non-union contractors working on federal construction projects to pay union wage scales and pay into union benefit funds. The administration is also considering requiring PLA’s on any construction project that uses federal funds.

•    Family Medical Leave Act. Proposes laws would expand FMLA to cover small businesses currently exempt and require FMLA to be paid. Other proposed laws would require employers to offer separate pools of paid sick leave that could be taken without notice or documentation.

•    Ergonomics. The Department of Labor wants to impose new ergonomics regulations covering work activities like lifting, turning and repetitive motion.

•    Increased Department of Labor (DOL) enforcement against employers. Even during the economic recession, the Department of Labor has been busy hiring more than 400 new OSHA and Wage and Hour inspectors. More than 90 new regulatory actions are underway. A new mandatory DOL compliance plan called Plan, Prevent, and Protect will require employers to create a checklist of all DOL regulations that apply to them, create a plan to ensure compliance, prove that they are implementing the plan, and report to DOL on results.

AOI will track these federal activities and report them to you in an effort bring these job-killing laws and regulations to the attention of lawmakers and employers.

Portland is one of the largest cities that has no sales tax

A recent report released by the Washington D.C. based Tax Foundation, shows how major metropolitan cities compare with sales tax.  Portland and Anchorage, Alaska have the title of the largest cities in the country with no sales tax. The study evaluated cities with population greater than 200,000, which there are 107 in the country.  Behind Portland came Honolulu, Hawaii with 4.5% and a variety of cities in Virginia at 5.0% combined sales tax.  Oregon, Alaska, Delaware, Montana and New Hampshire do not have a statewide general sales tax.  The state with the highest sales tax is Tennessee (9.4%), followed by with California (9.08%) and Arizona (9.01%).  Of the major metropolitan areas, the cities with the highest sales tax were Birmingham, AL and Montgomery, AL at 10%.

States with highest sales tax

1. Tennessee (9.4%)
2. California (9.08%)
3. Arizona (9.01%)
4. Louisiana (8.69%)
5. Washington (8.61%)
6. New York (8.52%)
7. Oklahoma (8.33%)
8. Illinois (8.22%)
9. Arkansas (8.10%)
10. Alabama (8.03%)

States with lowest sales tax

1. Oregon (0%)
2. Delaware (0%)
3. Montana (0%)
4. New Hampshire (0%)
5. Alaska (1.11%)
6. Hawaii (4.35%)
7. Maine (5%)
8. Virginia (5%)
9. Wyoming (5.17%)
10. South Dakota (5.22%)

Major metropolitan areas with highest combined sales tax

1. Birmingham, AL (10%)
2. Montgomery, AL (10%)
3. Long Beach, CA (9.75%)
4. Los Angeles, CA (9.75%)
5. Oakland (9.75%)
6. Fremont, CA (9.75%)
7. Chicago, IL (9.75%)

Major metropolitan areas with lowest combined sales tax

1. Portland, OR (0%)
2. Anchorage (0%)
3. Honolulu, HI (4.5%)
4. Arlington, VA (5.0%)
5. Chesapeake, VA (5.0%)
6. Norfolk, VA (5.0%)
7. Richmond, VA (5.0%)
8. Virginia Beach, VA (5.0%)

Two full-page advertisements stood out in the month of August for the state’s largest newspaper.

First, Wal-Mart placed a full-page ad going head-to-head with Office Depot by listing 16 school items by price comparison.   The key sell was highlighting the 45% savings and trying to nab the coveted back-to-school market.

Second, in response to the nationwide egg recall the egg farming industry put out a full-page ad.  The key phrase in their simple letter states, “The potential affected eggs, which make up less than 1% of all US eggs, have been removed from store shelves.   You may be wondering if eggs are safe to eat.   Yes they are.”

See larger size of ads below.

47.1% — Government spending
39.7% — Unemployment rate/overall health of the economy
3.5% — Energy and the environment
2.2% — National security
2.9% — Social issues
4.6% — Other

This is a “told you so” story about Measures 66 & 67 …

In December 2009, Randall Pozdena and I published research forecasting the impacts of Measures 66 and 67 on Oregon employment (a copy of the study is attached).  Our study was based on thorough research of peer-reviewed literature and a quantitative analysis of the taxes and economic growth across the U.S. and over a long period of time.  We concluded that the tax measures would have a significant negative impact on Oregon’s employment picture, as shown in Exhibit 1 of the report.

Needless to say, advocates of the tax measures lambasted our research.

Oregon State University agricultural economist William Jaeger claimed that our research was examined by a “nationally-recognized expert in state public finance” who said our findings were “without merit.”

According to the Oregon Center for Public Policy, Oregon economist Joe Cortright, chair of the Governor’s Council of Economic Advisers, reviewed our study. Cortright concluded that “neither the economic literature nor the data presented by [Pozdena, Fruits and Conerly] support the claim that Measures 66 and 67 will be bad for the Oregon economy.”

Fast forward to today.

The state economist released his latest forecast of the Oregon economy.  The attached figure shows that the state’s employment forecast is virtually identical to the employment forecast that Dr. Pozdena and I projected in our study of the impacts of Measures 66 & 67. Despite the vituperative criticism of our research and ad hominem attacks on our character, it is becoming more and more clear that our forecast was almost spot-on.

In Oregon, the union membership rate - the percent of wage and salary workers who were members of a union - rose slightly from 16.6 percent in 2008 to 17.0 percent in 2009. The rate increased even though the number of wage and salary workers belonging to unions decreased by about 9,000 (4%) due to a much larger decrease in the total number of wage and salary workers of about 95,000 (6%).

The small increase is calculated from data collected in a survey and may not be statistically significant. However, this marks the third consecutive year that the share of all workers who are union members has risen in Oregon. Since 1983, the first year for which comparable union data are available, the overall trend has been downward with brief upward ticks along the way, from a high point of 24.5 percent in 1984 to a low of 13.8 percent in 2006, just before the current 3-year rise (Graph 1).

A similar trend occurred in the share of workers - both union members and nonmembers - represented by union contracts. This share in Oregon was 27.9 percent in 1984, fell to 14.7 percent in 2006, and climbed to 18.5 percent in 2009. Over the 26-year period from 1983 to 2009, the overall declining rate of union-represented employment was caused by much greater growth in employment not represented by unions. Over that period, the number of workers who were union members or represented by unions increased by 4 percent from 262,000 to 272,000, and the number of workers who were not union members or represented by unions grew by 63 percent from 737,000 to 1,199,000.

In 2009, Oregon’s rates of union membership and representation were higher than those for the nation as a whole. Among our neighboring states, Oregon’s rates were lower than those in Washington, similar to those in California, slightly higher than the rates in Nevada, and more than twice as high as those in Idaho.

Union membership rates are much higher in the public sector than in the private sector. In 2009 in Oregon, more public-sector employees (152,000) belonged to a union than private-sector employees (120,000), despite there being almost five times more wage and salary workers in the private sector. Union members comprised only 8.9 percent of all private-sector workers but 57.7 percent of public-sector workers and 17.0 percent of both combined. For the nation, comparable figures were 7.2 percent, 37.4 percent, and 12.3 percent, respectively.

For more information, see www.bls.gov/news.release/pdf/union2.pdf and  www.unionstats.com.

“This Onerous Provision Will Cost Jobs.” A Good Letter Urging Repeal of New 1099 Rules

Many, many business groups and writers have come out against the new 1099 rules which were contained in section 9006 of the “Patient Protection and Affordable Care Act” (P.L. 111-148) (the health care reform bill). I am not aware of any commentators who are not urging the repeal of the new rules. Why? Well, because they are onerous and ridiculous.

If you are in business, and you buy goods in the course of your business, you are going to have to issue Forms 1099 to the businesses from which you buy more than $600 in goods during the year.

“Example 1: I am an independent contractor. I buy a computer from My Local Friendly Retailer for $601. I have to issue a Form 1099 to My Local Friendly Retailer. It doesn’t matter if My Local Friendly Retailer is a Fortune 1000 company.

Example 2: I regularly buy office supplies from My Local Friendly Retailer. None of my purchases are over $600. However, my aggregate purchase prices over the course of the year total more than $600. I have to issue a Form 1099 to My Local Friendly Retailer.”

The AICPA wrote a great letter urging the repeal of the new rules. The National Taxpayer Advocate has also voiced alarm about the new rules. The IRS has issued some proposed regulations which would exempt from these rules certain purchases made by credit card. However, these draft regulations would not fully alleviate the problem.

As summarized by the National Taxpayer Advocate:

“A provision in the Patient Protection and Affordable Care Act (PPACA), enacted in March of this year, added a new information reporting requirement that may present significant administrative challenges to taxpayers and the IRS. In particular, businesses will have to issue Forms 1099 for goods purchased after 2011, regardless of the corporate form of the vendor. The Office of the Taxpayer Advocate is concerned that the new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance.
Now the Independent Insurance Agents & Brokers of America has chimed in with a very good letter to Congressional leaders in the Senate and the House. You can find a text of the letter here. In key part, the letter says:

As you know, beginning in 2012 this provision will require all businesses to file Form 1099s for all payments for goods and services of $600 or more, or for a series of payments cumulatively adding up to $600 or more, during the tax year. In order to comply, businesses will be forced to institute costly new record keeping procedures for every business to business transaction, including tracking the name, address and taxpayer identification number (TIN) of the each vendor. The following year businesses will be required to file each Form 1099-MISC with the IRS and send a copy to its business counterparty.

We understand this provision was intended to close the “tax gap” of businesses not in compliance with the tax code. However, for insurance agencies and brokerages and their many small business clients, this onerous provision will cost jobs. The amount of resources that will have to be poured into new record keeping, accounting and compliance procedures will be especially burdensome for small businesses such as those in our membership. At a time when we are attempting to recover from a deep recession, this provision will stretch already thin resources to the breaking point.

In addition, although this provision is intended to target businesses evading taxes, in reality it is the compliant businesses that will pay the price. Noncompliant businesses will continue to avoid paying taxes, and compliant businesses will be saddled with increased costs and unjustified audits by the Internal Revenue Service (IRS). Meanwhile little to no net revenue will be raised for the government, especially when increased costs at the IRS are factored in.

As evidenced by the recent legislative action in both the House of Representatives and the Senate, there is bipartisan support for repeal of this provision. We are encouraged by these developments and urge full repeal as soon as possible.”

Let us hope that when Congress returns it repeals these new rules.

Kantar Media shows where ad spending has increased and decreased in select industry markets.   The time represents from Jan-May 2009 period and compares ti to Jan-May for 2010.   Government has been increasing while travel has been decreasing.

(Data source is Kantar Media.  Chart by OSBA).

With all the media attention given to the Dodd-Frank Wall Street Reform and Consumer Protection Act, there was almost no mention of a far-reaching provision (Section 342) that imposes new diversity requirements on businesses in or connected to the financial industry.
Section 342 requires that within six months of July 21, 2010, each of the following federal agencies establish its own Office of Minority and Women Inclusion (”OMWI”):

• Board of Governors of the Federal Reserve
• Comptroller of the Currency
• Consumer Financial Protection Bureau
• Department of the Treasury
• Federal Deposit Insurance Corporation
• Federal Housing Finance Agency
• Federal Reserve Regional Banks (12 separate banks)
• National Credit Union Administration
• Securities and Exchange Commission

The director of each OMWI is required by Section 342 to develop and implement his or her own standards and procedures “to ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels, including in procurement, insurance, and all types of contracts.”  (Emphasis added.)  Contractors, in turn, will be required to provide a written statement that they—and their subcontractors—have fairly included women and minorities in their workforces.  Each OMWI will also develop its own standards and procedures to determine “whether an agency contractor, and, as applicable, a subcontractor has failed to make a good faith effort to include minorities and women in its workforce.”  And if the OMWI decides there has been such a failure, the director will have the ability to recommend that the agency terminate the contract; make a referral to the Office of Federal Contract Compliance Programs (”OFCCP”); or take other appropriate action.

To whom will these new provisions apply?  Again, the language is breathtakingly broad:

“This section shall apply to all contracts of an agency for services of any kind, including the services of financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants, and providers of legal services.  The contracts referred to in this subsection include all contracts for all business and activities of an agency, at all levels, including contracts for the issuance or guarantee of any debt, equity, or security, the sale of assets, the management of the assets of the agency, the making of equity investments by the agency, and the implementation by the agency of programs to address economic recovery.”

The bottom line is that all contractors, subcontractors, and providers of any kind of service to the financial agencies listed above, regardless of size, will be subject to scrutiny of their “fair inclusion” practices by each of these agencies under its own particular rules and standards.  For providers, contractors, and subcontractors covered by other affirmative action requirements, such as the OFCCP, the new oversight by the OMWIs will be an additional and potentially troublesome layer of rules and regulations.

During the six-month period before the OMWIs become operational and develop their own rules, businesses should review their existing contracts and subcontracts to determine whether they fall within the “fair inclusion” requirements of Section 342 and, if they do, consider what outreach and other diversity strategies they may wish to explore in preparation for the coming scrutiny.

Workplace Regulations Are On The Way

1.  The Employee Free Choice Act
2  Labor Dept. rules for employers justifying worker classifcation
3.  New OHSA plan forcing employers to track injuries
4.  Federal agencies to union-only labor agreements

The Employee Free Choice Act—better known as card check—could be making a comeback. In a recent interview, AFL-CIO President Richard Trumka said, “I think you’ll see the Employee Free Choice Act come up again. I think you’ll see it, probably, before the end of the year.” If Trumka’s prediction comes true, it couldn’t happen at a worse time. With unemployment at 9.5%, it makes absolutely no sense to enact job-killing legislation that will also take away workers’ rights to a secret ballot in unionization votes.

But card check isn’t the only item on Big Labor’s wish list that should be of concern to business owners—it’s just the most visible one. In fact, many of the changes that will affect employers are taking place under the radar through the federal regulatory process. Let’s take a look at some of these rules and the impact they could have on your business.

First, is an anticipated Department of Labor regulation that would require employers to submit written analyses justifying worker classifications, such as eligibility for overtime, under the Fair Labor Standards Act. These analyses would be made available on demand both to employees and government investigators. Not only will this lead to additional paperwork for employers, but it could open the door to lawsuits based upon the alleged misclassifi cation of employees.

Second, the Occupational Safety and Health Administration (OSHA) is moving forward on a rule that would require employers to keep track of work-related injuries associated with ergonomics risks. This regulation is viewed as the precursor to a broader effort on ergonomics, such as a regulation mandating safety and health programs according to OSHA’s standards, rather than practices that will work or are working for employers. This regulation will cost employers time and money to implement, and it is highly questionable that it would result in any workplace safety improvements.

Finally, federal contractors should brace themselves for change. The administration has already finalized rules strongly “encouraging” federal agencies to require union-only labor agreements on large construction projects. This creates a significant disadvantage for nonunion contractors to bid on federal projects and will decrease competition and raise procurement costs for the government—and ultimately for the taxpayer.

Unfortunately, labor regulations are only the tip of the iceberg. The administration has unleashed a regulatory avalanche across a range of issues—health care, financial markets, and the environment, among others. This creates tremendous uncertainty for businesses and slows job creation. Let’s make American jobs—not new regulations—our top priority.

– One-quarter of companies leverage social media to recruit and research potential employees–
– Twenty-nine percent of companies with 500 or fewer employees utilize social media–
– More than half of leisure and hospitality organizations use social media; tops industries surveyed–

CHICAGO, August 18, 2010 - As companies emerge from one of the steepest economic downturns in history, they understand the significant reach and importance of using social media to promote and rebuild their organizations. A new CareerBuilder survey reports that 35 percent of employers use social media to promote their company. One-quarter (25 percent) of these employers said that they are using social media to connect with clients and find new business, while others are using it to recruit and research potential employees (21 percent), or strengthen their employment brands (13 percent). The survey was conducted among more than 2,500 employers between May 18 and June 3, 2010.

Businesses of all sizes and industries report using social media to promote their companies. Twenty-nine percent of organizations with 500 or fewer employees said they do so, followed by 38 percent of companies with 501 to 1,000 employees and 44 percent of companies with more than 1,000 workers. Comparing industries, leisure and hospitality topped those surveyed with 57 percent saying the use social media to promote their business, followed by IT, (48 percent), retail (43 percent) and sales (41 percent).

When it comes to managing social media strategy, 43 percent of employers report that their marketing department handles social media outreach, followed by public relations (26 percent) and human resources (19 percent). One-quarter (25 percent) of employers have 1-3 people communicating on behalf of their organization, while 7 percent report that 4-5 people handle the work. Eleven percent said that more than six people communicate for their company via social media. Fifty-seven percent said they didn’t know.

“As communication via social media becomes increasingly pervasive, organizations are harnessing these sites to help achieve a variety of business goals,” said Jason Ferrara, vice president of corporate marketing for CareerBuilder. “Social media allows organizations to communicate in ways that didn’t exist ten years ago, promoting their services and brands while also supplementing their recruitment strategy.”

Workers report that they are turning to social media sites for more than connecting with friends. They’re also using social media to research companies and jobs. Workers who come across company pages on social media sites shared what they would most like to see, including:

# Job listings - 35 percent

# Q&A or fast facts about the organization - 26 percent

# Information about career paths within the organization - 23 percent

# Evidence that working at the company is fun - 16 percent

# Employee testimonials - 16 percent

# Pictures of company events - 12 percent

# Video of new products/services - 10 percent

# Company awards - 9 percent

# Research or studies that the company has conducted - 9 percent

# Videos of a day on the job - 8 percent

On the flip side, workers also shared the biggest turnoffs when encountering a company via social media, including the company’s communication reading like an ad (38 percent), failure to reply to questions (30 percent), failure to regularly post information (22 percent) and removing or filtering public comments (22 percent).

Survey Methodology
This survey was conducted online within the U.S. by Harris Interactive© on behalf of CareerBuilder.com among 2,534 U.S. hiring managers and 4,498 U.S. workers (employed full-time; not self-employed; non government); ages 18 and over between May 18 and June 3, 2010 (percentages for some questions are based on a subset of U.S. employers and/or employees, based on their responses to certain questions). With a pure probability sample of 2,534 and 4,498 one could say with a 95 percent probability that the overall results have a sampling error of +/- 1.95 and +/-1.46 percentage points, respectively. Sampling error for data from sub-samples is higher and varies.

About CareerBuilder®
CareerBuilder is the global leader in human capital solutions, helping companies target and attract their most important asset - their people. Its online career site, CareerBuilder.com®, is the largest in the United States with more than 23 million unique visitors, 1 million jobs and 32 million resumes. CareerBuilder works with the world’s top employers, providing resources for everything from employment branding and data analysis to recruitment support. More than 9,000 websites, including 140 newspapers and broadband portals such as MSN and AOL, feature CareerBuilder’s proprietary job search technology on their career sites. Owned by Gannett Co., Inc. (NYSE:GCI), Tribune Company, The McClatchy Company (NYSE:MNI) and Microsoft Corp. (Nasdaq: MSFT), CareerBuilder and its subsidiaries operate in the United States, Europe, Canada and Asia. For more information, visit www.careerbuilder.com.

While most of the FCC’s political broadcasting rules have remain unchanged for almost 20 years, each year there are a few new wrinkles that arise, and seemingly a few misconceptions that make the rounds among advertising agencies that work with political candidates.

One such misconception that seems to be circulating this year is that an ad for a state or local political candidate does not need to have their voice or picture to be a “use” under FCC rules.  Only “uses” are entitled to lowest unit rates and subject to the no censorship provisions.  For some reason, agencies in several states have tried to convince broadcasters that, as long as a spot has a sponsorship identification at the end (and, for television, a textual sponsorship identification 4% of screen height for 4 seconds), that spot is a “use.”  But that is not correct.  A “use” requires that the recognizable voice or picture of a candidate be in the spot - and that is true even for spots for state and local candidates. 

Some advertisers may be confused by the change in Federal laws (now itself almost a decade old) that required that Federal candidates identify themselves in their ads and personally state that they approved the message of the ad,  Perhaps some of the advertisers think that, because the law for Federal candidate is so detailed, and because it does not specifically cover state candidates (though several state laws now have imposed the same obligation on state and local candidates in their states), there is no requirement at all for state and local candidates to appear in their ads.  But they are not correct - for a spot to be a use, a candidate him or herself must have a recognizable voice or image in that ad.

While it is not illegal for a station to run a state or local candidate’s ad when the ad does not have a candidates voice in it, there are important ramifications for the station if the spot is not a “use”.  First, without the candidate’s voice or picture, the ad is not entitled to lowest unit rates.  There has been some controversy, not settled by the Federal Election Commission and perhaps subject to interpretations under state election commission rules, about whether a station that charges a candidate lowest unit rates for a spot not entitled to such rates may be making a corporate campaign contribution to that candidate, which is prohibited under Federal law and in most states.  Most importantly for the stations, if the spot does not have the candidates voice or picture in it, the spot is not covered by the ‘No censorship” provision of Section 315 of the Communications Act.  That provision prohibits a station from rejecting a candidate’s ad based on its content.  But, because the station can’t reject the ad based on its content, the station has no liability for the contents of the ad.  Conversely, if the ad does not have the appearance by the candidate in it, then the station is free to reject it based on its content, and thus the station could theoretically have liability for the content of the ad.  As we approach a heated election season where stations don’t want the obligation to check the veracity of every claim made by one candidate about an opposing candidate in an attack ad, stations should be careful to insure that spots purchased by candidates are in fact uses, containing the recognizable voice or picture of the candidate - even for state and local candidates.

We have written about this issue of potential liability for the content of spots many times before, most recently in connection with ads by non-candidate groups that are now allowed from corporations and labor unions following the Supreme Court’s Citizens United decision.  Our most recent article on that case can be found here.  For more information about the FCC’s laws and policies regarding political broadcasting, check out the Davis Wright Tremaine Political Broadcasting Guide, available here.

A Man of Principle and Work: Dick Wendt

Dick Wendt, the founder of Jeld-Wen, passed away recently.   Back in 1996 I sat in Dick’s office turning down a job offer.  He wanted me to go to work full time on   public policy issues. He emphasized how much good could be done for people through public policy changes. I looked out the window of his office and across the street to Jeld-Wen’s large Klamath Falls plant, and remarked that a tremendous  amount of good was being done through providing people with quality doors and windows. I was trying to explain to a great capitalist the value of - - - capitalism!

Dick founded Jeld-Wen just a few years out of college, taking over the assets of a closed saw mill.  He spent 8 hours with his workers, and another 8 hours by himself doing set-up and maintenance so that his people would be as productive as possible.  The company grew to 20,000 employees and $2 billion in annual sales (accoridng to outside estimates). Dick appeared on the Forbes 400 list a few times, which embarrassed him greatly. On one of my visits to Klamath Falls, Dick drove me to lunch in an old Jeep Wagoner with a small dent in the front fender.

After building his company, Dick put a great deal of energy into public policy reforms that encouraged work and self-sufficiency. He sponsored Oregon’s landmark welfare reform program. The value of that reform was told to me by a woman who had been on welfare. When she heard that I was a consultant to Dick Wendt, she grabbed my arm and said, “Tell him that he saved my life!” I looked surprised, so she explained that on welfare she had sat around watching television, embarrassed to have her son see her doing nothing, but with no idea how to change her circumstances. On her first visit to the welfare office after reform, she was told that she would have to find work. Her future was to be self-sufficient, whether she wanted that or not.  However, she was also offered help: workforce readiness assessment, child care services, training, job interview practice, and so forth. She found work fairly quickly, was soon promoted, and came home proud to support her son and her self. None of that would have happened but for Dick Wendt’s commitment to helping people find work and self-sufficiency.

Although I declined his job offer, I became a consultant to Jeld-Wen and learned a great deal from Dick.  One lesson I’m about to share with an audience of industrial equipment manufacturers. An invoice for my consulting services had been lost at Jeld-Wen, while later invoices had been paid, so it took a bit of time with an adminsitrative assistant to sort out what I was owed. She told me that she would forward the paperwork to accounts payable and that I’d have a check in a week or so. By coincidence, I had a meeting with Dick the next morning.  As we walked into his office, he mentioned the late payment and said that he could have his treasurer cut a check that day if I needed it.  He mentioned that Christmas was in two weeks.  I told him that I could wait, but marveled that the CEO of a huge company was taking a personal interest in a late payment.  Later, another Jeld-Wen officer explained that Dick believed that prompt payment to vendors led to loyalty, and that the company benefited during times of tight supplies.  Dick would be a very hard bargainer on price, but always pay on time.

My hope for America is that there are a few young men and women just starting out who will combine  solid principles with a tremendous work ethic and duplicate the business success and philanthropic success of Dick Wendt.

Oregon’s Employment Situation: July 2010
By Oregon Employment Department,

Oregon’s seasonally adjusted unemployment rate was 10.6 percent in July, essentially unchanged from 10.5 percent in June. The rate has been between 10.5 and 10.7 percent for the most recent nine months. Oregon’s unemployment rate was 11.4 percent in July 2009.

The U.S. seasonally adjusted unemployment rate was 9.5 percent in both June and July. In July, Oregon’s seasonally adjusted nonfarm payroll employment dropped by 3,000, following a gain of 1,800 (as revised) in June.

Industry Payroll Employment (Establishment Survey Data)

In July, three of the major industries had large seasonally adjusted job declines: government (-5,200 jobs), educational and health services (-2,600), and financial activities (-900). These losses were partially offset by notable gains in several industries: construction (+3,500 jobs), professional and business services (+700), and manufacturing (+500).

There was a substantial upward revision to the June payroll employment numbers. The originally reported seasonally adjusted totals showed a drop of 3,600 between May and June.  Revised numbers show a gain of 1,800 jobs. The upward revisions were concentrated in government and professional and business services.

Government shed 32,900 jobs in July at a time of year when a loss of 27,700 is expected due to seasonality. The ending of work for 1,839 intermittent Census workers reduced both federal government and total government for July, subtracting from the 3,792 individuals who were working for the Census in June.

Local government dropped by 25,500 jobs in July as local schools employed fewer workers during summer school break. Local education employment was 83,000 in July, which was 4,100 below its year-ago level.

Educational and health services cut 5,200 jobs in July, when a loss of only 2,600 is the normal seasonal pattern. This sector has experienced an unusual period of job losses since the start of the year, compared with relatively steady growth over the prior 20 years. In the first seven months of the year, educational and health services has shed 3,500 jobs on a seasonally adjusted basis. In July, the component industry showing the biggest job loss for the month was social assistance, which plunged by 2,600 jobs to a total of 27,600. Much of the drop here was due to summer breaks in child day care services.

Financial activities was flat at a time of year when a gain of 900 jobs is expected due to seasonal factors. This major industry continues to gradually decline over the past 12 months, with all of its published components below their July 2009 levels.

Construction showed a strong gain in July, adding 5,200 jobs, when a gain of only 1,700 is the normal seasonal movement during this summer month. Gains were widespread with all published components adding jobs over the month.

Seasonally adjusted construction employment, at 69,100 in July, is now well above its low point of 64,000 in February and has added jobs in each of the past five months. Despite the recent growth in construction activity, the industry is still below its year-ago figure of 73,400 jobs. Professional and business services added 1,900 jobs, when a gain of 1,200 is the normal seasonal pattern. Services to buildings and dwellings added 500 over the month; it took a beating during the economic downturn, but seems to be clawing back with over-the-year job losses narrowing to 700 in July.

Employment services was revised sharply higher for its June reading. The latest estimates peg June jobs at 28,600 and July at 29,700, putting July 400 above the year-ago level. The recent, tentative rebound in employment services is watched closely as a leading indicator of future overall employment patterns.

In July, Oregon’s seasonally adjusted unemployment rate remained essentially unchanged at 10.6 percent compared with 10.5 percent in June. Oregon’s civilian labor force was close to 1,984,000 in both July 2009 and July 2010. During that 12-month period, the number of unemployed has dropped by 11,361, while the number of employed grew by 10,789, thus keeping the number of individuals in the labor force nearly unchanged.

The Oregon Employment Department plans to release the July county and metropolitan area unemployment rates on Tuesday, August 24th and the statewide unemployment rate and employment survey data for August on September 14th.

Look who wants to give Washington state an income tax.

The battle between taxpayers and government unions will define the fiscal future of the 50 states, and the newest battlefield is Washington state. That’s where a few rich taxpayers led by Bill Gates Sr. and the Service Employees International Union (SEIU) are bankrolling a November ballot measure to create the state’s first income tax.

And not just a toe-in-the-water tax. They’re diving into the deep end with a proposal that would immediately impose a 5% tax rate on income above $200,000, or $400,000 for married couples. The rate would climb to 9% on single filers making $500,000, or $1 million for couples.

No state has introduced an income tax since Connecticut nearly 20 years ago, and that state’s experience has not been happy. The top rate in Hartford began at 4.5% but has since climbed to 6.5%. Washington wants to leap over that and achieve California and New Jersey heights in one giant step. Washington would move overnight from one of the nine states with no income tax to having the eighth highest rate in the country.

Mr. Gates, a wealthy lawyer whose son is among the richest men on the planet, is pitching the proposal as a chance for 97% of the voters to pay the state’s bills by socking it to the richest 3%. What he doesn’t say is that Washington’s lack of an income tax is among its main comparative advantages in luring those top 3%, along with their businesses and jobs, into the state.

In addition to Washington, the states without an income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Combined they had an average 18.2% growth rate in jobs over the past decade, more than twice the 8.4% job growth of the nine states with the highest income tax rates, according to a new report based on Commerce Department data by the American Legislative Exchange Council.

The liberal Seattle Times accurately describes the state’s zero income tax as “a selling point. An asset. And more than that: It’s a bonus for living here.” Even liberal Democratic Governor Christine Gregoire begins her sales pitch to prospective business investors with the reminder: “No income tax.”

That’s an especially powerful attraction on the West Coast, where California and Oregon impose a top tax rate of 10.55% and 11%, respectively. Proponents say Oregon raised its income tax last year, so Washington should get in the game. But Oregon at least has no state sales tax. Washington has close to the highest sales tax burden in the nation, varying by area but reaching as high as 10% in Seattle depending on what you buy.

To win votes, the ballot measure resorts to all sorts of trickery. Unions describe the initiative as tax “relief” because it includes a mandatory cut in the hated property tax (only by 4%) and it eliminates various unpopular fees and taxes on business. Still, the overall impact of the measure is a $1.5 billion tax increase in 2012 and $2.5 billion a year by 2016. Small business taxes are cut, but they are also hit with a whopper of a new tax: a personal income tax paid out of their profits. Over half of the tax will be paid by Washington businesses.

The biggest deception is the description of the new income tax as “an excise tax on income.” This language is cleverly designed to dodge the state’s constitutional prohibition against an income tax and the requirement that any tax be “uniform upon the same property.” Obviously a tax that hits only 3% of taxpayers and applies graduated rates is anything but uniform. Proponents claim that because the tax is withheld from worker paychecks, the money was never the property of the person who earned it. That’s like saying if someone steals your paycheck, it’s not your property.

We hope Washington voters aren’t duped by the claim that only the rich will pay this tax. After two years, the law allows the legislature by simple majority to extend the tax to nearly everyone. The revenue from the tax will finance new spending, which will soar and lead to even higher deficits in the next downturn, which will create political pressure to expand the tax to the middle class.

Income taxes are always sold as a one-time way to reduce deficits, but they always become engines of greater spending, and eventually deficits. Just ask Californians. If Mr. Gates wants the rich to finance more Washington spending to create more SEIU dues-paying jobs, he and his son can do so by donating their own fortunes.

As State drowns in projected deficits, the soda tax looks alluring

The Oregon Public Health Division is working on legislation to enact a tax on sweetened beverages.    This would include many sodas and other sweetened drinks like Gatorade and ice tea drinks.  The cost of a half-cent per ounce would equal to be about 6-cents per soda bottle.   This beverage tax would generate over $160 million  for the State of Oregon Government.

The Health Division is advocating the proceeds be used for anti-obesity programs.     The proposal also comes at a time when Governor Kulongoski has announced that the state is $10.3 billion deficit over the next ten years.    Many product taxes start with a dedicated fund idea and then get diverted to pay for other programs.   This is the fear of every taxpayer who finds a continuing tax increase on more and more products.

The legislation which has the approval of Governor Kulongoski would be introduced in the 2011 Legislative Session.   If Oregon Legislature approves they would be following the State of Washington which passed a new tax on soda beverages and included a tax on candy and bottled water this year.

Regaining America’s Competitive Advantage: Making our Immigration System Work

..The analysis in “Regaining America’s Competitive Advantage: Making Our Immigration System Work,” released by the U.S. Chamber of Commerce and the American Council on International Personnel (ACIP), takes a balanced approach to employment-based immigration. It recognizes that problems exist that should be addressed through administrative or legislative means. Moreover, it is understood that in any dynamic situation where a market exists not all will succeed and this will result in anger towards traditional targets, particularly the foreign-born. This analysis finds the admission of high skilled foreign nationals provides significant benefits to the U.S. economy and much of the criticism levied at such foreign nationals and their employers is misplaced.

A recent report by the Department of Professional Employees, AFL-CIO – Gaming the System – gathers together arguments that have become traditional for those advocating a closed door policy for America. As such, it is worth examining the report, explaining where its portrait of highly educated foreign nationals is incomplete or inaccurate, while also addressing which immigration policies are most likely to create more jobs and innovation in the United States.

If the immigration policies recommended by the AFL-CIO had been in effect since 1990 few if any high skilled foreign nationals would have been allowed to work in the United States. The innovations, complementary jobs, and companies created by such individuals would have been lost – or created in other countries. While the arguments offered by the AFL-CIO are couched in language of concern for foreign-born professionals, there is no evidence in its report or other actions that the AFL-CIO believes highly educated foreign nationals have any legitimate place in the American workplace or even in our society.

In sum, the position of the AFL-CIO is that a) highly educated foreign nationals are underpaid, and b) even if they are paid properly, Congress should prohibit them from working in the United States because high skilled foreign nationals are not needed, and c) if U.S. employers wish to hire high skilled foreign nationals, a government commission should be established to overrule those hiring choices and prevent these professionals from being eligible to work in the United States.

The consequences of such a policy would be negative for U.S. employers, the U.S. economy and Americans in general. It would weaken the competitiveness of important industries at a time when recent economic conditions have already clouded the financial situation of many U.S. companies and organizations.

It is a common mistake among critics of immigration to assume there is only a fixed number of jobs in the economy. As discussed in this report, an examination of America’s most noted technology companies illustrates how this assumption is untrue. Between 2002 and 2009, Qualcomm, Google, Amazon, Apple, Cisco, Oracle and Microsoft all (at least) nearly doubled their overall employment (U.S. and non-U.S. employment combined). Amazon increased its employment total from 7,500 to 24,300, a 224 percent increase from 2002 to 2009, while Apple increased the number of its employees from 10,221 to 36,800, a rise of 260 percent.

To varying degrees, these seven companies have hired high skilled foreign nationals on H-1B visas. In 2009, Amazon’s net income (earnings) was $902 million and Apple’s was $5.7 billion. Can anyone plausibly argue that either Amazon or Apple – two of America’s most successful companies over the past decade – would have been more successful or experienced greater employment growth if they had been barred from hiring high skilled foreign nationals?

Those arguing to place more restrictions on hiring foreign nationals have shown little interest in whether particular U.S. employers are successful, never mind that they should have the freedom to hire employees who the companies believe will make them successful. And this is crucial: Who is in a better position to determine which employees are most likely to make Apple, Amazon or other U.S. companies successful? Is it critics of immigration, government bureaucrats, or the companies themselves? Since immigration critics and agency officials have no vested interest in whether particular U.S. companies are profitable the answer is self-evident.

This report also addresses the AFL-CIO’s lack of intellectual consistency on immigration. The unfortunate position of the AFL-CIO and some other critics of employment- based immigration is that the entry of high skilled foreign nationals should be opposed under almost any circumstances, though if the same individuals or international students had entered the country illegally they would be welcomed and provided legal status. Legalization has a place in the context of comprehensive immigration reform, but the AFL-CIO’s position of favoring those who entered illegally over highly educated foreign nationals who seek to work legally is, at minimum, intellectually inconsistent.

The findings of this report include:

* Leading high tech companies cite the role that highly educated foreign nationals have played in their success. Google and other companies cite individual visa holders who have made substantial contributions to their leading positions in the marketplace.

* The AFL-CIO and other critics argue America already has too much talent and should block the entry of high skilled foreign nationals, including international students, into the labor market. However, the real immigration-related problem is that many talented people have not been able to stay in the United States after graduation because of low quotas for H-1B visas and employment-based green cards.

* A large source of education funding in America is derived from U.S. employers. American businesses pay over $91 billion a year in state and local taxes directed toward public education, according to the Tax Foundation. H-1B visas are a large source of scholarship money for U.S. students, with H-1B training and scholarship fees levied on each petition (and renewal) having funded more than 53,000 math and science college scholarships for U.S. students through the National Science Foundation.

* There is little evidence high skilled foreign nationals on H-1B visas are in general paid less than their American counterparts. A 2009 study by University of Maryland researchers Sunil Mithas and Henry C. Lucas, Jr. showed foreign-born professionals in information technology (IT) actually earned more than their native counterparts: “This result implies complementarity among American and foreign IT professionals and supports the view that high-skill immigration can potentially make everyone (i.e., American as well as foreign workers) better off.”

* The Economic Policy Institute, a research group closely aligned with the AFL-CIO, concluded in a recent study, “the estimated effect of immigration from 1994 to 2007 was to raise the wages of U.S.-born workers.”

* Studies by University of California, Berkeley, economist Giovanni Peri reached the same conclusion on the overall impact of immigration, noting that the foreign-born fill jobs, but also create them through consumer spending, complementary skills, entrepreneurship and other means. Peri concluded, “The United States has the enormous international advantage of being able to attract talent in science, technology, and engineering from all over the world to its most prestigious institutions . . . The country is certainly better off by having the whole world as a potential supplier of highly talented individuals rather than only the native-born.”

* Critics who insist H-1B professionals are hired to “save money” fail to note that in addition to the legal requirement to pay H-1B visa holders the higher of the prevailing wage or actual wage paid to comparable U.S. workers, employers must pay significant legal and government fees. The American Council on International Personnel estimates combined H-1B and green card sponsorship costs (government/legal fees) can exceed $35,000 for one individual.

* Critics also ignore that the labor market is global and if U.S. employers were interested only in lower labor costs they would shift all their work overseas. The average annual salary in San Francisco for a systems engineer (computer networking/IT) with two years of experience is approximately $62,400, compared to $6,000 in India and $5,500 in the Philippines, according to PayScale.

* Some have expressed fears that H-1B professionals hired by Indian technology companies threaten the American workforce. In FY 2009, Indian tech companies used approximately 4,800 new H-1B visas, which equals to 0.003 percent of the U.S. civilian labor force, less than 1/100th of 1 percent. When information technology services companies – whether Indian or non-Indian – perform work in the United States it is only because U.S. companies believe such work makes their businesses more profitable. And if such service providers enable U.S. businesses to concentrate on core functions and run more effectively, then U.S. companies can hire more people in the long run.

* As evidenced by the long backlogs, it is clear many employers sponsor skilled foreign nationals for permanent residence (a green card). However, the recent argument that using an H-1B visa is only legitimate if the employer later sponsors the individual for a green card ignores the history of H-1 temporary visas, the enormous time and expense to sponsor individuals for permanent residence, and the legitimate need to serve customers on projects of limited duration.

* While concern about fraud is legitimate, the bottom line finding of a 2008 U.S. Citizenship and Immigration Services report is that there is little evidence of widespread abuse among companies with more than $10 million in annual gross income (revenues). Only seven percent of companies with more than $10 million in annual revenues (eight cases) audited were found to have suspected fraud or technical violations.

* The responsible U.S. agencies should enforce current law, rather than Congress passing new laws. An employer that commits fraud under the existing statute will not become law-abiding under a new set of complex rules. Current immigration law already contains significant deterrents to underpaying workers, including payment of back wages, civil penalties from $1,000 to $35,000 per violation, and debarment of employers from H-1B and other immigration programs.

* As proposed by the AFL-CIO and others, a government commission to set the annual number of temporary visas and green cards (or even eliminate employment categories) would possess more power than the President or Congress in deciding immigration policy matters, since its findings and recommendations would become law unless blocked by a separate Congressional vote. Commission members’ decisions would be inherently subjective. The data do not exist to determine fine gradations in particular fields, never mind to know the demand among all U.S. employers for specific specialties. In short, the labor market is global, not only domestic. A key reason a “labor shortage” may not show up in any government data is that employers find “work arounds” and take creative action, such as offshoring, to address an inability to hire people they need here. A government commission to set the annual level of temporary visas and green cards would become a new set of obstacles employers would need to overcome to hire foreign nationals and could effectively end employment-based immigration to the United States.

The vision of the AFL-CIO and other critics is of a future where American employers have little or no access to highly educated foreign nationals. Such a vision ignores much accumulated evidence about the benefits of foreign-born professionals:

* A study by the National Venture Capital Association found “Over the past 15 years, immigrants have started 25 percent of U.S. public companies that were venture-backed, a high percentage of the most innovative companies in America.”

* In electrical engineering, 68 percent of the fulltime graduate students (master’s and Ph.D.s) on U.S. college campuses were foreign nationals in 2006, according to the National Science Foundation. In engineering overall, the percentage of foreign nationals was 54 percent, and in computer science the proportion was 58 percent.

* An overlooked benefit of admitting skilled foreign nationals is the achievements of their children in America. Nearly half – 18 of 40 – of the finalists at the Intel Science Talent Search in 2004 had parents who entered the country on H-1B visas (known as H-1 prior to 1990).

* Paula Stephan (Georgia State University) and Sharon G. Levin (University of Missouri- St. Louis) performed extensive research on the contributions of the foreign-born in 6 areas of scientific achievement and concluded, “Individuals making exceptional contributions to science and engineering in the U.S. are disproportionately drawn from the foreign-born. We conclude that immigrants have been a source of strength and vitality for U.S. science and, on balance, the U.S. appears to have benefitted from the educational investments made by other countries.”

* Research by William Kerr (Harvard Business School) and William F. Lincoln (University of Michigan) shows a connection between H-1B admissions and increased patent filings both for cities and companies.

The best policy for the United States is one that sides with freedom and innovation, not restriction. It is a policy where the H-1B cap is either eliminated or set high enough that we can let the market decide on the number of new skilled foreign nationals who work in America each year. The best policy would ease the way for employers to sponsor high skilled individuals for green cards by exempting from labor certification and current employment- based immigrant quotas many who now languish in 6 to 20 year queues. Allowing top talent who graduate from U.S. universities to gain a green card directly will help U.S. employers retain the world’s leading future innovators. Keeping the door open for high skilled foreign nationals strengthens America. As is often the case, freedom, not restriction, is the right choice.