Tech Investments Create Few Jobs says Intel’s Andy Grove

While every few thousand dollars invested in a company used to create a job, today it takes more than $100,000 per job created, writes Andy Grove, senior advisor to Intel in an article in this week’s Business Week. Grove points out that one Chines computer company, Foxconn, employs 800,000 people, more than Apple, Dell, Microsoft, HP, Intel and Sony combined.

While it is fine that more and more of the high value is being created in the United States, Grove worries that we are creating a society in which there are a few highly paid workers doing high value work and masses of unemployed.

Grove points out this dilemna is particularly troubling in new fields like alternative energy where massive investments in the field have tended to create far more jobs in China than in the United States. We have gotten into the bad habit, he argues, of starting companies locally but then scaling up elsewhere. Because we have completely given up on consumer electronics, for example, we have no battery expertise. The result is that a new generation of electric cars, which depend heavily on battery technology, will likely end up being produced overseas.

Grove argues that the problem with the U.S. is undervaluing manufacturing. While the U.S. has a strong faith in free market principles, many other countries understand that the strength of an economy depends on its ability to create jobs and guides its policy with that in mind. Grove argues that tax policy should favor companies that keep jobs local over those that don’t.

Would such a policy discourage investments in technology companies. Unlikely. There is no foreign equivalent to Silicon Valley or Seattle in our ability to launch start ups. Companies would still be able to manufacture overseas. The policies would simply create more incentives to keep jobs at home.

Since companies that keep jobs local also generate more payroll taxes to support local schools and other services, that makes some sense.