Last October I was among nearly 10,000 Harvard Business School alumni who completed an in-depth survey on American competitiveness. Harvard Business School released the results of this survey last week, and they are fascinating.
The results are important to note, because many of the respondents are in key positions of authority at their organizations and thus will make a significant impact on these organizations’ strategies over the next decade, particularly in employment decisions affecting thousands of people.
Survey respondents had the following characteristics:
- More than 25% had a title of chief executive, president, chairperson, founder, owner, or the equivalent
- They were located in 49 U.S. states and 121 other countries
- The bulk of them were in finance and insurance (26%), manufacturing (15%), and professional and other services (12%)
- 79% of their firms “had business activities in the U.S., 76% had activities outside the U.S., and 78% were exposed to international competition”
- More than 17% of them were “personally involved in decisions about whether to place business activities and jobs in the U.S. or elsewhere”
Overall, the survey’s findings were pessimistic about American competitiveness with substantial weakness identified in America’s tax code complexity, political system, and K-12 education. The only spots of strength appeared to be in America’s high-quality universities, context for entrepreneurship, innovation infrastructure, sophistication of firm management, quality of capital markets, and protection of property rights. The survey’s key findings were as follows:
- 71% of respondents “expect U.S. competitiveness to decline over the next three years, with workers’ living standards under greater pressure than firms’ success”
- 66% of respondents “perceived the U.S. as falling behind emerging economies, while just 8% saw it pulling ahead”
- 70% cited lower wage rates as a leading reason for moving existing activities out of the United States (Note: respondents could select more than one reason)
- 25% cited lower tax rates as another leading reason for moving existing activities out of the United States (Note: respondents could select more than one reason)
- 30% cited less corruption as a leading reason for retaining existing activities in the United States (Note: respondents could select more than one reason)
- Over 60% cited the complexity of the tax code as much worse or somewhat worse than other advanced economies today
- About 60% cited the effectiveness of the political system as much worse or somewhat worse than other advanced economies today
- Nearly 60% cited America’s K-12 education system as much worse or somewhat worse than other advanced economies today
- Nearly 80% saw the effectiveness of America’s political system as falling behind
- Nearly 80% saw America’s K-12 education system as falling behind
- Over 60% saw America’s tax code complexity as falling behind (i.e., a significant negative as compared to other nations)
- Over 60% saw America’s logistics infrastructure as falling behind
- Regulations was the most commonly mentioned impediment to investing and creating jobs in the United States
The survey makes it clear as to the factors America’s business leaders really think are negatively impacting job creation in the United States – regulatory uncertainty, taxes, uncertain macroeconomics, politics, and talent issues (cost, immigration policy, skills, and education).
It seems business leaders view government not as the solution but as responsible for the majority of the country’s declining competitiveness.