As we dig out from the Great Recession, there's no silver bullet to cure the high unemployment rate. We need a robust job creation strategy to help us recover the almost 8.4 million jobs lost during the recession. Innovation must be at the center of such a strategy. Fostering innovation and transforming that innovation into start-ups and job creation was the focus of a U.S. Congress Joint Economic Committee (JEC) hearing that I chaired earlier this week.
Federally-funded university research plays a critical role in fueling new technologies and economic growth. The federal government funds almost 60 percent of basic research ($39.4 billion in 2008) in the U.S. and more than half of that research is conducted by universities. The challenge is to efficiently move these inventions from the lab into the broader community - spurring growth along the way.
New York universities are among the best at successfully taking their inventions outside the university gates. More than 50 start-ups have been created based on discoveries at New York University (NYU) alone. This week, NYU announced that they are going to take their efforts to commercialize NYU innovations to a new level, launching a venture fund to provide seed funding for companies built on technologies developed at NYU.
In Ithaca, an ecosystem of innovation exists with the federal government, a major research university, and the private sector all playing key roles. The government funds research at Cornell University that leads to new technologies, which the university and local venture capitalists help to turn into start-up companies. Those start-ups, in turn, create new jobs and boost tax revenue. It's working in Ithaca partly because Cornell supports local start-ups by investing in local venture funds. Those investments leverage additional investments and help promote a culture of entrepreneurship and innovation. It's no coincidence that Tompkins County, where Cornell is located, has the lowest unemployment rate in the state.
And on Long Island, Stony Brook University has helped to create tens of thousands of jobs, incubated dozens of companies, and anchored the region's economy. But to get the greatest bang for federal research dollars, more of the discoveries and innovations that the government funds must reach the broader public through commercialization of university inventions.
One interesting proposal to help move innovation from the laboratory to the community emerged from this week's JEC hearing. Zachary Shulman, a senior lecturer in entrepreneurship at Cornell University and Managing Partner at Cayuga Venture Fund, proposed that the government require a small percentage of a university's research grant - say ½ to 1 percent - be set aside for investments in start-ups that commercialize university-based research. The university could invest directly in companies or it could work with venture funds to make investments.
Additionally, witnesses unanimously agreed that visa reform can help ensure that immigrant entrepreneurs who want to create jobs in this country, and who already have financial support for their business lined up, can do exactly that. A recent study authored by Vivek Wadhwa concluded that immigrants founded or co-founded approximately one-quarter of all technology and engineering companies in the country from 1995 to 2006.
In testimony before the JEC last December, Dr. Robert Litan of the Kauffman Foundation shaped the national discussion on job-creator visas. The key role that immigrant entrepreneurs play in job creation led me to introduce the StartUp Visa Act of 2010, known as the Kerry-Lugar bill, in the House. This legislation would provide visas for immigrant entrepreneurs who have $250,000 in financial backing to launch a firm and create jobs. Dr Litan's colleague from the Kauffman Foundation Dane Stangler told the JEC this week, "The research is absolutely clear on this - immigrants contribute hugely to job creation in this country."
America was founded on bold innovation. This week's JEC hearing is sure to spark additional proposals to facilitate transforming basic research into American innovations that will lead to the next generation of jobs.
Congresswoman Carolyn B. Maloney represents parts of Queens and Manhattan in the U.S. House of Representatives where she is the Chair of the U.S. Congress Joint Economic Committee.