Bob McTeer

Economic Insights
April 19, 2000

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.