U.S. report sees perils to America's tech future

In report, Commerce Department looks at competitive threats and internal weaknesses

The ability of the U.S. to compete globally is eroding, according to a federal report released Friday that described itself as a "call to arms."

The report, which has a strong emphasis on technology, warns in stark terms that "some elements of the U.S. economy are losing their competitive edge."

The report, titled the "The Competitiveness and Innovative Capacity of the United States," was prepared by the U.S. Department of Commerce, which said the report reflected "bipartisan priorities."

"This is a topic of pivotal importance," said Commerce Secretary John Bryson, in a statement. "Our ability to innovate as a nation will determine what kind of economy - what kind of country - our children and grandchildren will inherit."

The report sees problems in many areas.

It points out, for instance, that the U.S. ran a trade surplus in "advanced technology products," which includes biotechnology products, computers, semiconductors and robotics, until 2002. In 2010, however, the U.S. "ran an $81 billion trade deficit in this critically important sector."

Many of the warnings raised in the report may seem familiar. It is an amalgamation of previous studies with similar warnings, coupled with updated data produced by government agencies, private-sector think tanks and university researchers.

Many of its concerns can be found in a National Academy of Science report, "Rising above the Gathering Storm, Rapidly Approaching Category 5." That report was originally released in 2005 and updated five years later with the warning that "the nation's outlook has worsened."

But the report released Friday is the work of President Obama's administration. It was required by the America Competes Act that was signed into law one year ago this month. The law allocated $50 billion for research funding and education in science, technology, engineering and math (STEM).

Despite that investment, the report sees cracks in research spending. Specifically, in 1980 the federal government provided about 70% of all dollars spent on basic research, but since then the government's share of basic research funding given to all entities has fallen to 57%. The government maintains that innovation is the key to job creation and lists companies that were created with the help of government research. Among those companies is Google, whose founders, Larry Page and Sergey Brin, received government research funding as students to develop some of their ideas.

The problems that the U.S. is facing are evident in a number of key areas, especially income.

From 1980 to 1999, real median household income increased about 20%. Since then, real median household income has stalled, "and even before the Great Recession, real median household income fell from $53,252 in 1999 to $52,823 in 2007 (in 2010 dollars)," the report said.

The report also points out that "individuals at the very top of the income distribution have fared better during this time than others; one study found that between 1993 and 2008, income grew almost 4% per year for those with incomes in the top 1% of the income distribution."

In regard to STEM training, the report makes an argument for immigration reform that enables foreign students to remain in the U.S. It doesn't offer specifics on an approach for accomplishing this, or look at the debate around this issue. In 2010, there were 7.6 million STEM workers in the U.S., representing about one in 18 workers. Computer and math occupations account for close to half the STEM employment.

The U.S., the report said, produces fewer STEM graduates relative to other developed countries. Citing data from the Organization for Economic Co-operation and Development (OCED), the report said that in 2009, nearly 13% of U.S. graduates with bachelor's degrees were in STEM fields, near the bottom of OCED countries.

"Significant economic competitors -- such as South Korea (26.3%), Germany (24.5%), Canada (19.2%), and the United Kingdom (18.1%) -- are on the long list of countries producing a much higher percentage of STEM graduates," the report said.

One in five STEM workers is foreign born, with 63% coming from Asia, the report said. The foreign-born share of STEM workers with graduate degrees is 44%.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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