Investing in Talent is Good for the US and the World

Karl Marx predicted capitalism would ultimately fail because paid work would alienate us from our true selves. Fast forward 250 years, and we view what we do at work as an essential part of who we are as people. That is why today’s worries about the future of work are so important – not only economically, but also socially and psychologically.

At Wharton's 2016 People Analytics Conference Byron Auguste, former number two in President Barack Obama’s National Economic Council, told me that the cause of America’s jobs problem isn’t outsourcing, automation, or migration; it's “market failure” in the labor market – both how we hire people, and how we develop talent. 

Byron helped found Opportunity@Work to “re-wire” the American labor market, with an agenda that Reid Hoffman believes could significantly move the dial on inclusion and diversity in Silicon Valley. He made two big points in our conversation:

1. Resumes (what we have done) matter too much in the hiring process relative to capability (what we can do), and this is being made worse by the recent move to algorithmic sifting of job applications.

2. Developing talent suffers from a big collective action problem. For any employer, it is rational to spend scarce resources luring talent developed than to develop talent in house. Do otherwise, and you risk losing the talent you have invested in. Rational individual behavior generates a badly suboptimal societal outcome.

Auguste thinks the solution to both problems is "just-in-time," skills-based training. If government won’t pay for this, philanthropy and non-profits should. I agree with him. That is one important reason Wharton has made such a big push in MOOCs and online learning. They provide a convenient and affordable way for people all around the world to acquire the business skills they need to succeed at work. 

At the Penn Wharton China Summit, another recent conference, the focus was different. Imagine a large auditorium full of Chinese citizens studying in the US being pitched (in Mandarin) to come back to China to start their careers by real icons in Chinese business, including Lei Jun – the founder, chairman, and CEO of smartphone giant Xiaomi.

I felt several things at once watching this call to arms to a standing room only audience to “reverse the brain drain” by a tech rock star who is the fourth richest person in China.

We insist all our Chinese students speak English well. When I am in China, many people speak with me in English, the global language of business. But the recent Wharton conference was a Chinese language event (with simultaneous translation for the tiny number of non-Mandarin speakers, me included). Using their native tongue was convenient for everyone involved. But it also sent a subtle but powerful cultural message of pride and solidarity too.

Lots of our Chinese students would like to stay in the US to live and work after they graduate. But with restrictions on H1-B visas affecting all our international students, the chances they will be able to stay are not great.

I wrote last year about why increasing high skills migration should be a priority for the US government because of the powerful immigration-innovation nexus that has helped drive the American economy for more than a century, and because coming to the US for graduate school transformed my own life.

What about the flip side? How should we think about our Chinese students returning home? Reversing the brain drain has long been an economic development siren song. We tend to think about this in terms of Africa and very poor countries, but the same logic applies for big emerging economies like China.

I think there is more powerful reason to support our Chinese students going home to build their careers, call it educational diplomacy. They will go home with new ideas as well as new skills. Their perspectives on work, life, and the world will be broader and different from when they left for the US. This can only help China. At least as important, people are the bonds that tie countries and cultures together.

US-China geopolitical frictions are an inevitable consequence of China’s rise. Economic engagement between the two countries provides stabilizing ballast to the relationship. People-to-people connections that promote mutual learning and shared understandings are the bonds that will promote peace and prosperity going forward.

It is important for me to participate in the ceremonial aspects of our student conferences. But they have also stimulated me to think harder about America’s jobs challenge and about the global role of higher education. Professors teach students for sure. But at Wharton we learn an awful lot from our entrepreneurial students too, who put on at least 150 conferences a year from nuts to bolts, expanding thought leadership in areas so relevant to the industry.

Geoffrey Garrett is Dean, Reliance Professor of Management and Private Enterprise, and Professor of Management at the Wharton School of the University of Pennsylvania. Follow Geoff on Twitter.