Education

This is a guest post by Robert Maxim, research associate, competitiveness and foreign policy, for the Council on Foreign Relations studies program. Manufacturing is growing in the United States, but many companies claim that they face a “skills gap.” These companies have unfilled vacancies, but say that unemployed workers and recent high school graduates do not have the technical knowledge needed to fill them. Apprenticeships have historically taught students the necessary skills for a career in manufacturing. However, there has been a sharp decline in apprenticeships across the United States, some 40 percent over the past decade, and cash-strapped state budgets have forced schools to cut technical education in favor of four-year college preparatory curricula. I recently attended a National Press Club event put on by several manufacturing industry representatives who were in town for the One Voice legislative conference, a federal government advocacy event put on by representatives of the metalworking industry.  They described some encouraging initiatives that companies and communities are taking to address the problem. In Batesville, Indiana, for example, some companies have begun working with local schools to attract and train students for careers in manufacturing. Batesville Tool & Die, which makes metal stamping for vehicles and appliances, has partnered with three other local businesses to help the town’s high school students develop the skills those companies are looking for. Students take a tech-heavy high school curriculum, including technology and engineering classes in partnership with Project Lead the Way, a non-profit that develops STEM curricula for schools. In their junior and senior years, students have the opportunity to take technology classes in Indiana’s Ivy Tech Community College system, and they participate in a weekly eight hour co-op with four local manufacturing companies. At graduation, students in the program are only one semester short of an associate’s degree and have received on-the-job training, without taking on any debt. Additionally, the students have developed personal relationships with local companies that are looking to hire, and have the specific skill set that those companies are looking for. As my colleague Rebecca Strauss has observed, in many cases there is more of a “location gap” than a “skills gap.” There may be unemployed workers who are qualified to fill a skilled position, but if they don’t live in a specific community then they may never hear about available opportunities. Programs like those in Batesville help ameliorate that problem by training local workers and placing them into the local job market. Training programs are most effective in communities with jobs available for workers to enter. Mark Volk knows how important local industries can be to a community’s employment prospects. As president of Lackawanna College in Pennsylvania, he said he has seen the local natural gas industry take off as a result of the development of the Marcellus Shale. Volk has worked with petroleum and natural gas companies operating in the state to develop associate’s degree programs to train students in the technical and business management sides of the industry. Seventy percent of the program’s graduates are hired by major oil and gas companies, and many continue to work in their local Pennsylvania communities. Nonetheless, establishing effective training programs may not be enough. Jody Fledderman, CEO of Batesville Tool & Die, said that many Americans now see technical school as a “second class” education, which makes parents wary and students hesitant to enroll. Ted Toth, CEO of Rosenberger-Toth, which makes parts for satellites and cell phone towers in Pennsauken, New Jersey, said the general public still perceives manufacturing as a “dark, dirty, dangerous, and dumb industry.” Both Fledderman and Toth emphasized that this perception can only be changed on the community level. In Germany, blending technical training with secondary education is common, and many credit that model for Germany’s low level of youth unemployment and strong manufacturing base. According to the New York Times, about 60 percent of German high school students participate in an apprenticeship program. These programs can lead to a formal certification in a chosen field, and more importantly to a job at the company where the student trained. The U.S. ranks poorly among developed countries at developing “middle skills”—education beyond a high school diploma, but less than a bachelor’s degree. Although the U.S. ranks second in the share of its population with a bachelor’s degree, it ranks sixteenth in share of its population with a middle skill degree. The United States won’t be able to improve that ranking without a serious national effort. Programs like those in Batesville and Lackawanna College can create opportunities and change attitudes in a community, but more state and federal support is needed to solve the broader skills mismatch. Manufacturing is growing in the United States again, but this growth could be limited unless more young Americans have both the skills and the desire to take on the job.

Emerging Voices features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This article is from Benjamin D. Stone, director of strategy and general counsel at MicroCredit Enterprises, CFR term member, and vice chairman of Indego Africa; and Karen Yelick, CEO of Indego Africa. Here they discuss how Indego Africa’s Leadership Academy for female artisan entrepreneurs in Rwanda aligns with the country’s twenty-year history of empowering women leaders. On April 7, 2014, the world commemorated the 20th anniversary of the Rwandan Genocide, when more than 800,000 people were killed over three months of unimaginable violence. After the atrocities ended, women made up 70 percent of the country’s population. The Rwandan government wisely adopted ambitious policies and programs that invested in the power of these women to rebuild the shattered country. In the words of Rwandan President Paul Kagame: “Empowering women and ensuring gender equality ultimately enriches communities and entire nations.” In 2007, Rwanda turned to the handicraft industry as part of its strategy to tap into the economic potential of women entrepreneurs. Yet, despite their impressive artisan skills, Rwandan women struggled to engage with global handicraft markets. Indego Africa, a nonprofit social enterprise and lifestyle brand, aimed to fill this gap. By generating market demand for products made by Rwandan women, building an international supply chain, and delivering formalized business training to female artisans, Indego strove to help women lift themselves out of poverty and become the country’s next business leaders. Seven years later, Indego partners with more than 600 female artisans in Rwanda who run for-profit businesses called “cooperatives” and sells their jewelry, accessories, and home décor on its online store and through dozens of brands and retailers. Indego’s artisan partners, 65 percent of whom are their household’s primary earner, have re-invested their increased income in food for their families, school fees for their children, improvements to their houses, livestock, and new business ventures. At the same time, they have embraced Indego’s training programs in business, literacy, technology, health, and human rights, taught at each cooperative by Rwanda’s top university students. As a result, these female artisans are now increasingly competing in the global markets as independent, empowered businesswomen. As long-time artisan partner Emelienne Nyiramana explained, they are “dreaming dreams that before they never could have dreamed.” Many of Indego’s artisan partners, like Nyiramana, have emerged as inspiring leaders. They help their cooperatives engage with major retailers visiting Rwanda, such as Nicole Miller and Anthropologie. They hold prominent leadership roles in their communities. They teach and mentor other women across Rwanda. And a few have even traveled to the United States to meet designers, buyers, and investors. But as these leaders surfaced, Indego realized that it could no longer effectively or efficiently deliver the same level of business training to all of the women. In 2013, focus groups of artisan partners confirmed this view and suggested that Indego concentrate more on the dynamic leaders poised to take the cooperatives to even higher levels of success, while delivering basic, less time-intensive training to other women who just want to go to work and earn a steady income. The artisans also recommended that Indego’s training programs include more real-life examples and exercises. Based on these insights, Indego is evolving. This summer, Indego will launch a Leadership Academy to provide advanced business training to its most ambitious and entrepreneurial artisan partners. Every six months, Indego’s partner cooperatives will collectively select 25 participants for tailored, twice-weekly leadership sessions at Indego’s Kigali office. Classes will cover subjects ranging from customer care to technology to financial literacy to marketing. Each lesson will include assignments that are directly applicable to the women’s businesses, including writing emails to clients, sourcing raw materials, managing their cooperatives, and researching design trends. The Leadership Academy will also encourage women teaching other women by hiring Teaching Fellows from the pool of nineteen Indego artisan partners who graduated from the Goldman Sachs’ 10,000 Women initiative. Indego will also organize networking events, field trips, and seminars led by successful local and international female entrepreneurs and educators. In the end, Leadership Academy graduates can use their training to not only help their cooperatives generate more income, but also to serve as mentors and inspirations for their co-workers, families, communities, and country. Perhaps one day some will even join Rwanda’s Parliament, where women hold an unprecedented 64 percent of seats, the highest proportion in the world.

With House Republicans increasingly looking like they will again block immigration reform this year, pressure is growing on President Obama to use his executive authority to block further deportations of most unauthorized immigrants. I have an additional suggestion: use that same executive authority to expand admission of highly-educated temporary migrants to help boost the U.S. economy. It took just a week this year to reach the annual quota on skilled immigrants under the H-1B program, once again shutting the door until next April. While not without its flaws, the H-1B visa is the primary way in which highly-educated migrants are first able to work in the United States. Most applicants are required to have at least a bachelor’s degree, and special preference is given to foreign students who graduate from a U.S. university with a master’s degree or higher. The visa offers a temporary, three-year work permit which can be extended, but for many the goal is permanent migration to the United States. But there aren’t very many of them handed out each year. The current quota set by Congress is just 65,000, with another 20,000 reserved for those with advanced U.S. degrees. That quota has been reached every year for the past decade, even during the depths of the recession that followed the 2008 financial crisis. In the last two years, it has been reached within the first week, which requires that the U.S. government hold a lottery to select the winners. It's been obvious for years that the number of visas is too small, and numerous academic studies suggest that a larger H-1B program would be good for the U.S. economy. And there is widespread agreement in both the Senate and the House that having such a rigid quota on skilled migrants hurts the economy. The Democratic-led Senate’s comprehensive immigration reform bill, passed last year, would raise that cap to as high as 180,000, depending on market conditions. The Republican House Judiciary Committee last year passed the Skills Act, which would raise the quota to 155,000, along with 40,000 for graduates with higher degrees. Both bills would also make important reforms to the program by enabling spouses to get work permits, making it easier for H-1B holders to change jobs, and cracking down on fraud. In his State of the Union address in January, President Obama said that, while he would try to keep working with Congress, where Congress is stalled he would “take executive actions and administrative actions that move the ball forward.” Expanding the H-1B program is a perfect opportunity to make good on that promise. Critics of course would accuse him of trampling on the constitution. I am neither a constitutional nor an immigration lawyer, but what I have read suggests to me that both the constitution and various court rulings are at least unclear on the subject. While it is generally accepted that the federal government has complete authority over immigration laws, the division between the congressional and executive branches is less clear. Among the enumerated powers explicitly given to the Congress under the constitution is the power to establish a “uniform rule of naturalization.” But an H-1B visa does not grant citizenship, only a temporary right to live and work in the United States. The Commerce Clause, which gives Congress the power to “regulate Commerce with foreign nations” is also cited as authority for Congress to establish immigration quotas, though temporary migration is not obviously a form of “commerce.” Such ambiguities are precisely what allowed the White House to halt deportation and offer work permits to the young immigrants who otherwise have no right to remain in the United States, the so-called DREAMers. President Obama is now said to be considering an even broader use of his “prosecutorial discretion” to halt removal and give working papers to most of the more than 11 million unauthorized migrants in the United States. There is no good reason that same power could not be stretched to give more temporary work permits to highly-educated immigrants who would help the U.S. economy. A radical idea? Sure. And it would almost certainly invite a court challenge. But with Congress paralyzed, some new approaches are clearly needed. In an economy increasingly dependent on innovation, the economic cost of continuing to drive away tens of thousands of talented young would-be immigrants is enormous. If President Obama is finally prepared to flex his muscles on immigration, he could create a program far better suited to the needs of a modern economy. There is no question it would be preferable for Congress to act. But given the broad consensus among members of Congress on the need to expand high-skilled migration, the White House should take a serious look at finally doing for them what they have been unable to achieve themselves.

After failing to find a permanent solution, Congress is poised to pass another one-year patch to prevent major cutbacks to doctors who treat Medicare patients. In a new column for Bloomberg View, CFR Adjunct Senior Fellow Peter Orszag argues that healthcare providers are already anticipating a shift toward a system based on value of care, not volume of services. A responsible Congress would pass permanent legislation clearing the path for that shift.

I have long been a strong advocate of foreign investment in the United States, and have argued against discriminatory tax rules, short-sighted security restrictions, or other government measures that discourage foreign companies. Now Volkswagen, the German carmaker, has given me one more reason to like foreign investors; the company could play a role in changing what has become a self-destructive anti-union ideology that permeates too much of American business and political culture. A little background. Volkswagen is betting big time on the United States. The company three years ago invested $1 billion in a new plant in Chattanooga, Tennessee that employs nearly 3,200 local workers to make the Passat for American buyers. Over the next five years, it plans to invest another $7 billion in North America, with the goal of selling a million vehicles a year in the United States by 2018. Companies like Volkswagen have raised hopes that the United States could see a significant manufacturing revival. While foreign direct investment (FDI) growth remains too weak, nearly half of it is in manufacturing, in sectors like pharmaceuticals, electrical equipment, and cars. About 17 percent of the U.S. manufacturing workforce is employed by foreign-owned companies. Wages at foreign-owned companies are about 30 percent higher than the U.S. average, likely because that investment is concentrated in better-paying manufacturing jobs. The Obama administration has recognized the importance of FDI--the “Select USA” summit hosted in Washington last fall was the highest level effort in U.S. history to attract more of this sort of investment. Some of that investment growth, especially in the auto sectors, has taken place in southern states where generally lower wages and an anti-union culture are attractive to many companies. In the 30 years since Toyota and Honda started building cars in the United States, not a single foreign automaker has been unionized. That may change this week. The United Autoworkers Union (UAW) has launched a drive to unionize VW’s Chattanooga plant. And to the surprise and horror of many local politicians, the company has encouraged the union. The vote at the plant begins today and ends Friday. Volkswagen is in a difficult position. Its German factories are all unionized, represented by the powerful IG Metall union, and it would be awkward at least for the company to actively oppose unions in the United States. More importantly, VW would like to establish in the factory a German-style “works council,” which are cooperative arrangements between management and employees designed to promote efficient operations and a happy staff--not exactly radical ideas. The council helps the company to plan staffing and set working conditions; the company generally shares with the council details of its finances, so that employees better understand the competitive pressures that management is facing. The works councils were very helpful in allowing German companies to avoid big layoffs during the financial crisis, for example, agreeing instead to spread shorter hours across the workforce. The works councils do not bargain directly on issues like wages and benefits the way a union can. But under the peculariaties of U.S. labor law, the only way to establish such a works council is if the employees are first unionized. "Our works councils are key to our success and productivity. It is a business model that helped to make Volkswagen the second-largest car company in the world," said Frank Fischer, chairman and CEO of Volkswagen Chattanooga. So, while remaining formally neutral during the UAW drive (which is precisely what companies are supposed to do under U.S. labor law), VW has been supportive of the idea. That stance has enraged some politicians. Senator Bob Corker (R-TN) has warned that the union would hurt the city and state and discourage future investment. Governor Bill Haslam has spoken out against the union, and several state politicians have threatened to withhold any future tax or other incentives for VW to expand in the state. And that threat is coming exactly when VW is poised to make a decision on whether to expand its Tennessee plant to build a new midsized SUV, or locate the production in Mexico instead. The big question, of course, is whether the UAW will hurt Volkswagen, which is already falling short of its North American sales targets, and perhaps discourage other companies from investing in the state. There is a history to be sure, in which the generous labor contracts and inflexible work rules negotiated between the UAW and the Big Three U.S. automakers played a role in pricing those companies out of the market in the 1970s and 1980s, opening the door for import competition. But that is ancient history at this point; over the past 20 years, the UAW--which is just a fraction of its former size--and the other big industrial unions have made one concession after another to try to save American manufacturing jobs. Ford, Chrysler and General Motors are now earning record profits, and sharing some of it with their unionized workforce.  Arthur Wheaton, a professor at Cornell University's School of Industrial and Labor Relations, told USA Today, "Volkswagen considers their works councils their strategic competitive advantage.” The company should at the least be able to test that theory in Tennessee. Other companies may see things differently. And workers at other foreign auto plants in the south may well decide, as they have in the past, that they have no need for the union. But the employees at VW should be free to make their own decision. If the local politicians would take a deep breath, they might actually discover that a little unionization is good for the company, good for its workforce, and good for the state.

This is a guest post by Lynn ElHarake, research associate for the Women and Foreign Policy program at the Council on Foreign Relations. “Africa is now the world’s youngest continent,” writes Makhtar Diop, vice president for Africa at the World Bank. “These young people have high expectations, and African policy makers are increasingly concerned about how to meet them.” Diop’s words open a new report from the World Bank on Youth Employment in Sub-Saharan Africa. The report was released just days after the end of the 2014 World Economic Forum, where Africa’s U.S. $2 trillion economy was a hot topic for discussion. Experts predict the continent will hold 25 percent of the global workforce by 2050, and with rising GDPs, large government investments in education, and a booming mobile industry, economic development is only expected to accelerate. Much of this growth will be driven by Africa’s young population who hold the potential to transform not only Africa’s economy, but the world’s as well. As many as eleven million African youth are expected to enter the job market each year for the next decade, and 362 million youth expected to call the continent home by 2050. As African youth continue to move into the economy, one group’s road to employment will prove especially difficult: women. For young women, finding work means transitioning from education to employment and asserting control over their own future. Due to social and economic gender disparities (including education, health, political participation, and finance) women are usually unable to compete in markets and are left to earn less than their male counterparts. The World Bank report recommends cultivating a business environment that provides better opportunities for young men and women. Government-sponsored education and vocational training can prepare youth for sectors like agriculture, nonfarm household enterprises, and modern wage employment. Banking systems should provide services for young people that give them greater access to capital, credit, and savings, while land laws in agriculture should allow youth to own and manage farms. Both local and international investors should support the informal sector, which contributes to 55 percent of Sub-Saharan Africa (SSA)’s GDP and 80 percent of the labor force. Where the benefits outweigh the costs, infrastructure development in rural areas should be prioritized. While women experience unique challenges, ensuring inclusive opportunities—such as extended education, less restrictive land laws, and financial inclusion—for male and female youth will open new doors for women. African women have already proven that they can contribute to their economy: female labor force participation in SSA is the highest in the world, and female entrepreneurs are surpassing their peers in entrepreneurial activity. Technology has given women increased access to financial services, allowing them to gain credit and reserve savings more easily than ever before. Taking on youth unemployment may seem daunting, but the social and economic returns will pay great dividends. In order to ensure stability and sustain growth in African private and public sectors, policy must inspire job opportunities and home-grown entrepreneurship. If Africa is to reach its full economic potential, governments, foreign aid donors, and local populations alike must work to move women, especially young women, into the work force.

This is a guest post by Stephanie Leutert, a research associate here at the Council on Foreign Relations, who works with me in the Latin America Studies program. Secretary John Kerry and Vice President Joe Biden recently announced the new State Department directed 100,000 Strong in the Americas Innovation Fund. It ambitiously aims to have 100,000 U.S. students in Latin America and 100,000 Latin American students in the United States by 2020. This initiative builds on the increasing interest in the region; during the 2011-2012 school year over 44,000 U.S. students headed south. Still these growing numbers hide the changing geographic interests, including the increasing popularity of Brazil and Costa Rica and the steep declines in semesters abroad in Mexico. At the turn of the twenty-first century, over a third of Americans studying in Latin America went to Mexico, with over 8,000 students enrolled in classes in Mexico City, Monterrey, Puebla, and the country’s many other cities. Then the fifth most popular country in the world for U.S. study abroad, it placed well ahead of other Latin American countries, as well as popular destinations such as Germany, Ireland, and Australia. Today fewer than 4,000 Americans venture to their southern neighbor to study, a number surpassed by regional peers Costa Rica, Argentina, and Brazil, and on par with much smaller countries such as Ecuador. One reason for students’ disinterest is the well-documented violence in many parts of the country, as shown in the graph below. Gruesome media headlines paired with travel advisories from the U.S. State Department led many universities to shutter their Mexico-based programs and even restrict professors’ academic research. Many commentators often note the economic and social costs of Mexico’s violence and crime, including shaving off over a percentage point of GDP growth, holding back micro-enterprises, and making more Mexicans feel unsafe walking alone at night in their cities. The decline in the number of American students choosing to study in Mexico adds yet another layer to the negative effects. Beyond the direct economic losses that come when thousands of foreign students forego studying in Mexican universities—with effects for job creation and local economies—both Mexican and American students also lose out on less tangible benefits. Foreign exchange programs broaden both basic knowledge of places as well as mutual understanding (one of the primary goals of the 100,000 Strong program). For Mexico, this avenue for promoting people-to-people bilateral ties is just one more casualty of the violence.

Last week, the United Nations Educational, Scientific and Cultural Organization (UNESCO) released the eleventh edition of its Education for All Global Monitoring Report, an annual update that reviews the status of access to education around the world and highlights the crucial role that education plays in achieving development goals. This year’s report, titled “Teaching and Learning: Equality Achieved for All,” finds that even after a decade of increased resources and commitments dedicated to achieving universal access to education, many—if not all—of UNESCO’s goals will not be met by 2015. If current trends hold, fewer than half of the 141 countries examined in the report will achieve UNESCO’s goal of 80 percent pre-primary education enrollment rates. As of 2011, there were still 57 million children out of school, with around half of them living in conflict-affected countries and many never expected to re-enroll. In addition, only 20 percent of the world’s low-income countries have achieved gender parity in primary education, and only about 10 percent have equal enrollment for boys and girls in lower secondary school. The stakes are high: education remains one of the most powerful ways to break the poverty cycle. The report estimates that if all students gained basic reading skills, 171 million people could be lifted out of poverty. Education helps inoculate against poverty by providing higher wages and diversifying sources of income. For those already employed, earnings can increase up to 10 percent for each additional year of school. Yet although the number of illiterate adults has fallen 12 percent since 1990, the number has only gone down 1 percent since 2000, leaving 774 million adults without reading and writing skills. In 2012, the World Literacy Foundation estimated that illiteracy was costing the global economy $1.19 trillion. Women comprise two-thirds of the world’s illiterate, which not only limits the status of women and girls, but also hinders economic growth. The benefits of education extend beyond the individuals: families, communities, and future generations benefit as well. In Senegal, for example, UNESCO found that children with educated parents were more likely to find employment and lift themselves out of poverty. And children of educated mothers are more likely to be well nourished, vaccinated, and educated. An educated population is also vital to curbing rising unemployment rates. In its recent Global Employment Trends report, the International Labour Organization (ILO) found that unemployment went up by 5 million people in 2013. Young people were disproportionately affected, with youth unemployment reaching 13.1 percent worldwide and over 50 percent in some countries. Lack of access to education remains a major stumbling block for many young people hoping to enter the labor market. Without proper skills and education, youth are left unemployed or with unreliable jobs in the informal sector. But education, from vocational to university training, can give young people the tools they need to overcome some of these barriers. By prioritizing education at all levels, governments can reduce unemployment rates, inspire entrepreneurship, formalize the job market, and ultimately, build more resilient economies.

Last week, the United Nations Educational, Scientific and Cultural Organization (UNESCO) released the eleventh edition of its Education for All Global Monitoring Report, an annual update that reviews the status of access to education around the world and highlights the crucial role that education plays in achieving development goals. This year’s report, titled “Teaching and Learning: Equality Achieved for All,” finds that even after a decade of increased resources and commitments dedicated to achieving universal access to education, many—if not all—of UNESCO’s goals will not be met by 2015. If current trends hold, fewer than half of the 141 countries examined in the report will achieve UNESCO’s goal of 80 percent pre-primary education enrollment rates. As of 2011, there were still 57 million children out of school, with around half of them living in conflict-affected countries and many never expected to re-enroll. In addition, only 20 percent of the world’s low-income countries have achieved gender parity in primary education, and only about 10 percent have equal enrollment for boys and girls in lower secondary school. The stakes are high: education remains one of the most powerful ways to break the poverty cycle. The report estimates that if all students gained basic reading skills, 171 million people could be lifted out of poverty. Education helps inoculate against poverty by providing higher wages and diversifying sources of income. For those already employed, earnings can increase up to 10 percent for each additional year of school. Yet although the number of illiterate adults has fallen 12 percent since 1990, the number has only gone down 1 percent since 2000, leaving 774 million adults without reading and writing skills. In 2012, the World Literacy Foundation estimated that illiteracy was costing the global economy $1.19 trillion. Women comprise two-thirds of the world’s illiterate, which not only limits the status of women and girls, but also hinders economic growth. The benefits of education extend beyond the individuals: families, communities, and future generations benefit as well. In Senegal, for example, UNESCO found that children with educated parents were more likely to find employment and lift themselves out of poverty. And children of educated mothers are more likely to be well nourished, vaccinated, and educated. An educated population is also vital to curbing rising unemployment rates. In its recent Global Employment Trends report, the International Labour Organization (ILO) found that unemployment went up by 5 million people in 2013. Young people were disproportionately affected, with youth unemployment reaching 13.1 percent worldwide and over 50 percent in some countries. Lack of access to education remains a major stumbling block for many young people hoping to enter the labor market. Without proper skills and education, youth are left unemployed or with unreliable jobs in the informal sector. But education, from vocational to university training, can give young people the tools they need to overcome some of these barriers. By prioritizing education at all levels, governments can reduce unemployment rates, inspire entrepreneurship, formalize the job market, and ultimately, build more resilient economies.

Americans are increasingly marrying people of similar income and educational backgrounds. In a new column for Bloomberg, CFR Adjunct Senior Fellow Peter Orszag discusses the effects of this phenomenon, including increased inequality, changes in women’s participation in the workforce, and reduced geographical mobility.

The decision yesterday by House Republicans to release a broad set of principles for immigration reform may or may not lead to successful legislation this year. There are still many political and substantive hurdles to overcome to reach a bipartisan deal. But regardless, the announcement should be recognized for what it is – a huge and consequential change in the Republican Party’s approach to immigration reform. When my boss Richard Haass asked me in 2008 to direct the CFR Independent Task Force on U.S. Immigration Policy, the GOP – with a handful of exceptions like former Florida governor Jeb Bush, who led that Task Force along with former White House chief of staff Mack McLarty – was unreservedly hostile to any legalization for the nearly 12 million unauthorized immigrants in the United States. The House Republicans at the time were advocating legislation that would criminalize all unauthorized presence in the United States, making felons out of people who had been living and working here for years. The GOP had succeeded in 2006 in pushing through a bill, the Secure Fence Act, that authorized hundreds of miles of fencing on the Mexican border, and directed the administration to somehow prevent all illegal entries. And when the DREAM Act , which would legalize children brought here illegally by their parents, passed the Democratic-controlled House in 2010, it was killed by Senate Republicans. That hostility to anything that smacked of “amnesty” remained the party’s stance right through Mitt Romney’s disastrous adoption of “self-deportation” as the core of his immigration platform in the 2012 presidential election. In contrast, the principles released yesterday by House Speaker John Boehner (R-OH) are a serious effort to balance competing priorities in immigration reform. The GOP is insisting, rightly in my view, that it is “the fundamental duty of any government to secure its border.” In our bipartisan Task Force report, we wrote: “The United States has the right, and the duty, to control and secure its borders.” But the Republicans are no longer insisting on an impregnable border, and instead have set up a sensible and verifiable scheme though the Border Security Results Act, which was passed unanimously last year by the House Homeland Security Committee. Much of that bill is closely in line with our recent report Managing Illegal Immigration: How Effective is Enforcement?, which I co-wrote with two former Department of Homeland Security officials, Bryan Roberts and John Whitley. The GOP principles call for all employers to verify that their workforce is legally authorized; the CFR Task Force report recommended “a mandatory system for verifying those authorized to work in the United States.” The GOP called for attracting and retaining foreign students and other highly skilled individuals; our Task Force wrote that while in the past rationing admission had been the main priority of U.S. immigration policy, in the future “recruiting the immigrants it wants must be the highest priority.” Most remarkably, Republicans have now declared themselves in favor of the DREAM Act, as well as a broader measure that would finally allow most of the unauthorized to “live legally and without fear in the U.S.”; our Task Force recommended the same, calling for “earned legalization” for those who demonstrated “a history of contribution to the United States through work and taxes, a commitment to remaining by learning English and adopting U.S. democratic values, and a willingness to pay some restitution.” Principles are not legislation, for course, and there is a long way to go. The biggest hurdle will be the GOP’s insistence on “specific enforcement triggers” prior to any legalization. Those triggers can be made reasonable and workable, or unreasonable and unworkable. The underlying issue here is continued Republican mistrust of President Obama; there is widespread fear that, as one of the leading opponents of the legislation, Mark Krikorian, put it recently, that “once that population has legal status, immigration hawks lose the only leverage they have.” In other words, the only way to ensure that enforcement is carried out seriously is to continue to hold the unauthorized population hostage. Given the history, that is not an unreasonable fear, and there is no simple solution to that mistrust. Obama certainly helped with an interview he gave to CNN last night in which he praised Boehner’s efforts. “If the speaker proposes something that says right away: Folks aren’t being deported, families aren’t being separated, we’re able to attract top young students to provide the skills or start businesses here and then there’s a regular process of citizenship, I’m not sure how wide the divide ends up being,” he said. The key is not the White House, however, but rather the Department of Homeland Security. In a CNN.com piece last year, I argued that Congress needs to focus not on the president but on the Border Patrol and other permanent elements of the U.S. immigration enforcement effort. I wrote: “Even potential Republican supporters do not trust the Obama administration on enforcement, particularly on securing the Mexican border, and there is little reason to think this view will change. Fortunately, these lawmakers don't need to. This bill will set immigration rules for a generation; President Barack Obama will be gone in a few years. What is needed is a closer, ongoing relationship between Congress and the professionals responsible for border security -- the Border Patrol and Customs and Border Protection agents….For the GOP to reject the new border enforcement resources that will come with an immigration bill because they don't trust Obama is like refusing to pay for new Pentagon weapons programs as long as Democrats are in charge. Border security must be an ongoing mission of national importance that, like national defense, requires a close working relationship between the professionals in uniform and the politicians--one that transcends the party in power.” For all the progress represented by the principles announced yesterday, politics will obviously play a big role in deciding whether reform gets over the finish line. Here too the Republican leadership seems to be waking up to the obvious: that with a growing population of first-generation Americans that today votes overwhelmingly Democratic, the GOP’s long-term electoral prospects are grim unless they can get past the immigration policy issue and talk to those voters about something else. As I have argued elsewhere, the Conservative Party in Canada figured out how to do this, and as a result the Tories have won the past three elections, the first time a conservative party had done so in Canada in more than half a century. Again, it would be naïve to suggest any of this will be easy. But the shift in the Republican Party stance represented by the new principles is enormous and historic. At the very least, it marks a new and hopeful day in our country’s long and difficult debate over immigration.

There is no question that income inequality has been increasing since the 1970s in most of the world. And it has been the general assumption that as inequality went up, class mobility between generations would go down. This relationship, cleverly named the “Great Gatsby Curve,”  was thought to hold across nations, and previous studies about domestic U.S. trends had reinforced that conclusion. But a groundbreaking study could throw that long-held convention about U.S. social mobility to the dust bin. Social mobility is defined as the likelihood of moving up the income bracket ladder compared to your parents. The study, from Harvard’s Equality of Opportunity Project, finds that the chance of going from the bottom quintile to the top quintile has in fact remained relatively constant at about 8 to 9 percent for everyone born in the second half of the 20th century. If you dig further into the details and count decimal points, social mobility on average may have improved (slightly) for Americans born in the early 1990s. We can likely trust these results more than any other social mobility study to date; its datasets are more precise and claim a larger sample size. The findings do not mean the picture is all rosy. Even if Americans are no more stuck in their economic classes than they used to be, rising inequality means that the “birth lottery” of who your parents are matters more now than before. And U.S. social mobility is still very low compared to other wealthy nations. As is so often the case with socioeconomic trends in the United States, there are huge regional differences. The Deep South and Rust Belt cities have the least mobility. Regions that are generally doing worse on other indicators—poorer, with higher inequality, worse schools, more single parents, and less social capital—also tend to have less mobility. Still, even in these regions, the level of mobility has not changed over time. But how could it be that the trend line for social mobility has somehow remained insulated from the inequality trend?  One theory offered by the study’s authors is that the spike in inequality in recent years has been driven by outliers in the top 1 percent income bracket. What’s going on with the middle class, they argue, could be more relevant for social mobility than the super rich at the tail end of the income distribution. That explanation, as they freely admit, is not wholly satisfying since the lower and middle classes have not fared so well in recent years either. Their findings are especially surprising given the mounting and definitive evidence showing socioeconomic gaps growing over time in student test scores and parental investment. It could be that social mobility is set to decline for the generation born after the mid-1990s, birth years that fall outside their dataset. Whatever the reason for flat mobility, the Harvard study injects some healthy and honest analysis to the inequality debate now consuming the chattering classes of America. The policy lessons are unclear. A great deal of federal discretionary spending—through the Departments of Education, Labor, HHS and HUD—is aimed at closing socioeconomic gaps. But any claims that these programs have helped to keep social mobility from falling are hard to square with rising inequality. And we still know too little about why the social mobility trend is charting off its predicted course. We may have to wait until researchers make better inroads cracking this conundrum before any grand pronouncements can be made about which policies should be changed.

For several decades, the exciting promise of microfinance has been to provide the world’s poorest with access to financial services. But along the way, microfinance has too often become conflated with micro-credit. This is not surprising, given that most of the first microfinance institutions (MFIs) were non-profit organizations that took grants from donors and recycled them as loans. Now, however, many MFIs have reincorporated as banks with the ability to accept savings, and the full promise of microfinance is beginning to be realized. Indeed, the expansion of efficient and effective saving mechanisms and other financial services such as insurance is one of today’s most exciting developments in the effort to tackle poverty. Savings accounts and insurance can help poor people survive unexpected financial shocks brought on by events such as family illness, crop failure, or market downturn. Savings can also improve an individual’s social mobility, ability to invest, and future earning potential. According to the International Monetary Fund’s most recent Financial Access Survey (FAS), “access to commercial bank services has deepened across virtually all regions of the world, with Africa continuing to lead growth in financial access.” In addition, more and more poor people are buying life insurance and internet connectivity and online services continue to boost financial inclusion. Still, approximately 2.5 billion people -- more than half of the world’s adult population – don’t have bank accounts. And most of this unbanked population lives in developing countries. A 2011 Gallup and World Bank poll found that in high-income countries, both rich and poor individuals usually have savings accounts. This is not the case in low-income countries, where travel distance, cost, and documentation requirements hinder individuals from opening accounts. For women, gender discrimination and financial dependence on male guardians can further limit access to formal finance. Last month, I hosted Mary Ellen Iskenderian, president and CEO of Women’s World Banking, and Steve Hollingworth, president and CEO of Freedom from Hunger, to discuss these issues as part of the Council on Foreign Relations’ ExxonMobil Women and Development Series. Our discussion touched on many topics related to financial inclusion, one of which was the important difference between microcredit and microfinance. In some situations, a loan might not be the financial tool an individual needs to climb out of poverty. The World Bank’s recently-published Global Financial Development Report 2014 similarly argues that providing credit indiscriminately can lead to financial and economic instability. In addition, financial services can be rendered ineffective without accompanying financial literacy training. As Iskenderian mentioned during our meeting, development organizations are now pioneering innovative financial literacy training programs, including educational text and voice messages that can be accessed using a cell phone. The Global Financial Development Report 2014 found that classroom-based financial education has less impact than when individuals learn through “teachable moments,” such as applying for a loan or starting a job. Popular entertainment can also be a useful tool in communicating lessons on banking and financial planning. The latest FAS report finds that financial inclusion seems closely tied to overall economic growth. In Africa, for example, there was a nearly four-fold increase in commercial bank depositors per 1,000 adults from 2004 to 2012. The region simultaneously experienced a 40 percent growth in GDP per capita. Similarly, in the Asia and Pacific region, depositors per 1,000 adults nearly doubled over the same period, with GDP per capita increasing more than 70 percent. Still, although developing countries are projected to dominate global saving and investment in years to come, that trend might not extend to the poorest populations. The Middle East and North Africa region, in particular, “has the lowest use of formal financial institutions for saving by low-income households.” The accessibility of financial services remains highly dependent on public and private sector regulation. To encourage low-income banking, governments should enact effective policies that require banks to offer low-fee accounts, allow electronic payments, and grant exemptions for documentation requirements. Less successful policies include debt relief, directed credit, and lending through state-owned banks. Financial institutions, meanwhile, should adopt new technologies such as mobile banking to make financial access easier and more secure. The African Development Bank Group and other financial organizations have already begun pioneering these types of programs. Overall, innovative programs and products that address market failures, meet consumer needs, and overcome behavioral problems can foster the widespread use of financial services. For example, financial products such as index-based insurance can mitigate weather-related risks in agricultural production and help promote investment and productivity in agricultural firms. Still, as Hollingworth lamented, widely accessible crop insurance for farmers, which would improve their financial security immensely, seems to be a long way off.