If you didn't read last weekend's really interesting New York Times article on Apple and why the iPhone is made in China rather than the United States, you really ought to read it. One area the reporters discuss is how US immigration policy has factored in to Apple's decision. The article looks at labor costs and while there are some savings with making the iPhone in China, that is not the primary driver in why the phone is not made in America.
But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.
One interesting part of the article is discussed at the very end. Steve Jobs hosted a dinner for President Obama and which was attended by leading Silicon Valley executives. A few ideas were discussed on ways to encourage companies to bring manufacturing back home.
At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.
Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.
This is a point I've raised many times in this column. Immigration is not a zero sum game where hiring a foreign worker means a loss of a job for an American. In the Apple case, tens of thousands of manufacturing jobs could be created in the US to make iPhones if perhaps a few hundred or thousand highly skilled immigrants were readily available to fill positions where there are too few qualified Americans.
That's why I am encouraged to see Newt Gingrich promoting completely eliminating the H-1B visa cap. Our current H-1B cap was created in 1990, before there was an Internet. We are essentially handcuffed by rules set three decades ago for a very different American economy. And we are paying dearly for Congress' unwillingness to modernize our immigration policy.