Getting Ready: The Future Of Jobs

  • Posted by a hidden member.
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    Nov 29, 2011 4:31 PM GMT
    The economy is changing. Here are a number of trends to be aware of. When it comes to politics, there will be those who will try to fight the trend and claim it's the fault of the rich, fault of their parents, society, etc, but a lot of these things are like gravity. We can create barriers to what's coming and make the transition more difficult and painful when it actually happens or we can deal with them, thrive and prosper. Regardless of how you feel about government's role in all of this - I think this is a useful starting list to consider for anyone to position themselves accordingly -

    1. Automation enabled by the Web continues to eliminate or reduce the role of human labor in production and services. The low-hanging fruit may be gone, but labor-intensive industries such as health care, government, and education are ripe for software/Web automation and streamlining.

    2. Cost Structure of the US economy.the system-wide cost of housing, food, energy, transport, education, health care, finance, debt, government, and defense/national security--is high and rising, even as productivity is lagging. This reflects the growth of "friction" in the economy—unproductive expenses that add neither value nor productivity.

    This high-cost structure drives the cost of labor ever higher, even as employees’ share of compensation stagnates. For example, if health-care costs rise 10% a year, the employer must reap 10% more surplus from labor to pay the higher compensation costs, while the employees see no increase in their take-home pay.

    Rising systemic costs make employers wary of hiring more workers unless they create enough surplus value to keep ahead of the rising systemic costs and generate a return on investment. In low-productivity, high-cost basis economies like the U.S., the incentives shift from expansion to reducing labor costs by via automation and replacement of stable workforces with flexible freelance contract labor.

    3. The stress of operating a small business in a stagnant, over-indebted, high-cost basis economy is high, and owners find relief only by opting out and closing their doors. I call this exhaustion and loss of faith “when belief in the system fades.” Pundits may speak of our fraying “social contract,” but small-business owners increasingly feel betrayed by a system that constantly increases the burdens on enterprise at every level.

    Much of Main Street America is stuck in two unenviable roles: tax-donkeys saddled with ever-higher taxes and fees, and/or debt-serfs working just to service crushing debt. Many are planning for the day they escape the burdens of enterprise by shutting down their business.

    4. The Central State has been co-opted or captured by concentrations of private wealth and power to limit competition and divert the nation’s surplus to Elites within the key industries of finance, health care, education, government, and national security. The rising friction within these vast systems is distributed over the entire economy via cartels and taxes, raising costs in every sector and lowering the nation’s productivity.
    As a result of central State intervention and politically expedient controls, the prices charged for these services are “sticky,” meaning there is little to no market pressure to lower prices, as competition has been largely eliminated by collusion, cartels, and/or government control.

    At some point, these top-heavy, protected industries will experience a “stick/slip” event in which their fixed pricing and funding will collapse once the dwindling productive economy can no longer support this enormous dead weight of unproductive friction.

    5. Financialization of the economy has incentivized unproductive speculation and malinvestment at the expense of productive investment. Financialization has been driven by low interest rates and abundant credit for speculation while credit for capital investment is restricted. In the boom years, money was effectively diverted into consumption such as luxury McMansions while the productive segments of the economy stagnated.
    The direct costs and lost opportunity costs of zero-interest rates and malinvestment have been spread over the entire economy, as income that once flowed to savers was diverted to “too big to fail” banks and speculators. Speculation creates vast profits for financial Elites and a modest number of service jobs catering to the Elite: clerks in luxury retail shops, personal trainers, dog-walkers, etc.

    6. The U.S. economy has bifurcated into a two-tiered regulatory structure. Politically powerful industries such as finance, education, health care, oil/natural gas, and defense benefit from either loophole-riddled regulation or regulation that effectively erects walls that limit smaller competitors from challenging the dominant players. Enterprises outside this politically protected circle are treated as adversaries by state and local government regulatory agencies.

    7. Selective globalization and political protection has created a two-tiered labor market in the US. Industries exposed to direct competition from low cost-basis economies with low labor costs must either close, automate or rely on minimum-wage immigrant labor. At the top end, global corporations are increasingly hiring talent in their offshore markets. Jobs, which remain in the US at the top tier of global companies are well-paid, but increasingly insecure.

    The domestic industries that cannot be outsourced (education, health care, government, national security) have gained political power as their share of the national income has increased, and their domestic position astride the economy has been enhanced by political protection. As a result, the pay scales in these sectors are much higher than those in globally exposed private sectors.

    These industries have thrived as Federal government spending has continued via borrowing 11% of the nation’s GDP every year. In this sense, these domestically protected industries are prospering at the expense of future taxpayers, who will be burdened with servicing this stupendous debt that has been taken on to fund these politically protected sectors.

    8. Financialization and the two-tiered labor market have led to a two-tiered wealth structure in which the top 10%'s share of the nation’s wealth has outstripped not just the stagnant income and wealth of the lower 90%, but of productivity, the ultimate driver of national wealth. This trend towards concentrated wealth also plays out in the top 10%, as the share of national income flowing to the top 1% has outstripped the wealth growth of the other 9%.

    These trends are all visible and well established. Looking farther out, there are emerging trends I call “the five Ds:” definancialization, delegitimization, deglobalization, decentralization and deceleration. Though these may not be visible to the mainstream just yet, they will slowly influence the job market and our definition of work.

    9. Definancialization. Resistance to the political dominance of banks and Wall Street is rising, and the financial industry that thrived for the past three decades may contract to a much smaller footprint in the economy.

    10. Delegitimization. The politically protected industries of government, education, health care, and national security are increasingly viewed as needlessly costly, top-heavy, inefficient, or failing. Supporting them with ever-increasing debt is widely v
  • Posted by a hidden member.
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    Dec 04, 2011 2:23 PM GMT
    Related - on the disconnect between what's viewed as being important by society/industry and how we're educated -

    Just last week, the New York Times, normally a big fan of higher education, ran an article on "The Dwindling Power of a College Degree." In our grandparents' day, a college diploma nearly guaranteed a decent job.

    Now, not so much: "One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from non-elite schools. A bachelor's degree on its own no longer conveys intelligence and capability."

    This is a simple case of inflation: When you artificially pump up the supply of something (whether it's currency or diplomas), the value drops. The reason why a bachelor's degree on its own no longer conveys intelligence and capability is that the government decided that as many people as possible should have bachelor's degrees.

    There's something of a pattern here. The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle class people go to college and own homes, then surely if more people go to college and own homes, we'll have more middle class people.

    But homeownership and college aren't causes of middle-class status, they're markers for possessing the kinds of traits -- self-discipline, the ability to defer gratification, etc. -- that let you enter, and stay in, the middle class.

    Subsidizing the markers doesn't produce the traits; if anything, it undermines them. One might as well try to promote basketball skills by distributing expensive sneakers.

    Professional basketball players have expensive sneakers, but -- TV commercials notwithstanding -- it's not the shoes that make them good at dunking.

    If the government really wants to encourage people to achieve, and maintain, middle-class status, it should be encouraging things like self-discipline and the ability to defer gratification. But that's not how politics works.

    Passing out goodies generates more votes, even though doing so undermines the character traits upon which prosperity depends. That may change as the global political class, pretty much everywhere, runs out of other people's money, but it hasn't quite changed yet.

    For higher education, the solution is more value for less money. Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years -- but with the school that received the money on the hook for all or part of the unpaid balance.

    Up until now, the loan guarantees have meant that colleges, like the writers of subprime mortgages a few years ago, got their money up front, with any problems in payment falling on someone else.

    Make defaults expensive to colleges, and they'll become much more careful about how much they lend and what kinds of programs they offer. China, which has already faced its own higher education bubble, is simply shutting down programs that produce too many unemployable graduates.

    So far, Sinophile pundits like the New York Times' Tom Friedman don't seem to be pushing this idea for America. I wonder why not.

    Another response is an increased emphasis on non-college education. As the Wall Street Journal has noted, skilled trades are doing quite well. For the past several decades, America's enthusiasm for college has led to a lack of enthusiasm for vocational education.

    That may be changing as philanthropists ranging from Andy Grove of Intel to Home Depot's Bernie Marcus work to encourage the skilled trades. We need people who can make things, and it's harder to outsource a plumbing or welding job to somebody in Bangalore.

    Of course, the thing about skilled trades is that they require skill. Even with training, not everyone makes a good welder or machinist any more than just anyone can become a doctor or lawyer.

    And there are dangers in focusing too narrowly on a career path that looks good right now: The biggest constant in the global economy of the past several decades has been wrenching change. Jobs that look great today may not look so good in a few years.

    The answer to that, I think, is adaptability. Whether their training is liberal arts, engineering or a trade, most people getting out of high school today will probably have to navigate multiple career paths over a lifetime.

    How do we teach adaptability? That's a subject for another column, but you might ask yourself: Are tenured professors the best people to do that?