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Convergence of the U.S.’s Mid-Market and Low-Skill Work Forces

Sunday, August 26th, 2012

As I discussed in my August 2 blog, The Great Recession, especially when combined with the rapid growth in the automation and globalization of jobs, has exacerbated the bifurcation of the U.S. labor force. Those who have traditionally performed mid-skill jobs face the biggest dislocations. Low-skill workers, however, face the most pain.

The Disappearance of Mid-Market Jobs

The vast mid-market, in which millions of moderately skilled high-school and college graduates had made rewarding, life-time careers, is under siege. True, the number of such mid-market jobs will certainly grow when a cyclical recovery really begins to take hold. The problem is that the four big structural trends—automation, globalization, flexible hiring and unpredictable volatility—promise to keep a tight lid on both the pace and the extent of the mid-tier jobs recovery. They will also keep a lid on both the compensation and the security of these jobs.

What will happen to those mid-skill/mid-income blue- and white-collar jobs that form the foundation of great American middle class?

That future is already being played out. Even as the economy begins to recover, globalization (offshoring) and technology (i.e., automation) will continue to eliminate and/or significantly change the type of skills required to perform these increasingly routine, relatively low-discretion jobs. Think, for example of how computer numerical control (CNC) machine tools eliminated the need for millions of assembly line workers and created new demands for computer-literate, numerically-proficient operators.

What happens to the people who have been displaced by these jobs? They must either learn these new skills (for which there are orders of magnitude fewer jobs available), re-train for other functions (often with very mixed success) or compete with millions of other less-skilled workers for much lower-paying low-skill/low-pay non-tradeable service jobs (jobs which must be performed locally and are difficult or impossible to automate).

The same forces are affecting mid-skill/mid-pay office workers. Secretaries and switchboard operators have lost their jobs to automation and accountants, and financial and marketing analysts have had to learn entirely new skills and provide new types of value. Meanwhile, millions of mid-level office jobs, such as accounts payable/receivable, account reconciliation and computer programming have long-since been at least partially automated or moved offshore, to be performed by much lower-cost, and in some cases, better educated workers.

Employees who have traditionally performed these functions can, in theory, be reeducated or retained to perform higher-level functions. In practice, the relatively small number of very higher-skill jobs that are being created are being overwhelmed by the losses in huge, well-paying mid-skill segments, such as construction and manufacturing, and among the ranks of mid-level administrative and supervisory and low-level managerial workers. Meanwhile, efforts to retrain/educate these people for higher-value functions often yield very mixed results.

And, as if these job losses weren’t bad enough, these workers are now joined by millions of government employees and educators who are falling victims to big cuts in government funding.

The Plight of Low-Skill Workers

Meanwhile, growth at the low end of the jobs market has been growing (albeit very slowly), even during the recession. Perpetual high-growth segments, such as healthcare, continue to grow while industries such as retail and hospitality have begun to rehire. The problem is two-fold:

  1. Many such jobs typically offer very low-pay and little job security and
  2. Mid-skill workers and recent college graduates, locked out of traditional markets for mid-range jobs, are now competing with high-school graduates and even drop-outs for these low-skill jobs.

So, while the recession, combined with forces including automation and globalization, are taking a bigger toll on mid-skill jobs than they are on low-skill jobs, it is the least educated workers who are, by far, the biggest losers. If you think the market for new college graduates is grim (and it certainly is), the market for less-educated workers is appalling.

Employment prospects and salary levels fall precipitously as education levels decline. These combine to result in huge disparities in lifetime earnings.

Is higher education the Great American Hope? The answer, as I’ll discuss in my September 30 blog is, yes but………

Posted in Job and Career Opportunities, Skills Requirements, Workforce Trends | No Responses »
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Occupational Opportunities for the Next Decade

Sunday, July 25th, 2010

In my June 27 blog, Payoffs of a College Education, I discussed that the Department of Labor’s Bureau of Labor Statistics (BLS) 2010 Occupational Outlook Handbook portrays particularly strong growth in jobs for college graduates. These jobs will grow at a faster rate (15% versus 10%) than those that typically require less education and yield higher weekly and lifetime earnings and greater job security. In fact, every step up the educational ladder, from high school diploma, through some college, bachelor degree and professional degree (with a small exception for PhDs), tends to improve virtually every aspect of a person’s career path.

But the level of educational obtainment is a pretty high-level view of the job market. Although it does emphasize the value of graduating from college, it does not, in and of itself, provide much guidance as to which occupations offer the best employment opportunities, the highest earnings potential and the best opportunities for advancement.

Tomorrow’s Largest Growth Occupations

In 2006 (the study’s benchmark year), about half of all jobs (see Chart 3 of the handbook) in college-level occupations were concentrated in three broad categories—education (21%), healthcare (14%) and computers (13%). Adding two others, management (12%) and business and financial operations (11%) covers more than 70% of all college-level jobs.

A nice start, but still too macro a view to provide meaningful help in career planning. Medical jobs, for example, run the gamut from physician assistants to surgeons. Management jobs run from education administrators to CEOs. Jobs within each category have very different educational requirements (from bachelor or below through post-graduate) and are likely to produce vastly differing numbers of total job openings through 2018 (from 66,000 physician assistants to 1 million registered nurses) and growth rates (2% for CEOs to 50% or more for some IT jobs).

The tables supporting the Bureau’s conclusions provide details for multiple occupations in each of these categories. As one would expect, the greatest number of projected openings are concentrated in the three largest college-level job categories: education, healthcare and computers. The first two categories share a few similarities.

Both, for example, are:

  • Being driven largely by population growth and demographic trends;
  • Characterized by especially strong growth in one very big class of occupations;
  • Consist of a large number of moderate and relatively low-paying jobs, and more modest numbers of higher-paying (especially in healthcare) jobs that typically require a minimum of four years of graduate school.

Health care growth, for example, is driven overwhelmingly by the growth in need for RNs, which is projected to grow at a 24% rate and account for almost two-thirds of all listed healthcare openings. Although there will be big needs for teachers at all levels, the demand for K-2 teachers is growing at only a 10.8% rate, while that for post-secondary teachers (and some small specialty teachers) is tracking at 23%.

IT Professions

IT-related job trends are very different. First, although the handbook profiles only five distinct occupations (out of ten that BLS specifically tracks), all four of the specialized, high-skill occupations (network systems and data communications analysts, computer software engineers, systems analysts, and network and systems administrators) are slated for hyper-growth through 2018, at rates ranging from 28% to 53%.

These jobs, most of which require “only” bachelor’s degrees, also provide some of the highest salaries—more than twice the median for all occupations. Many, even during the depths of the recession, are already characterized by strong levels of college hiring, rising salaries and shortages of qualified applicants at all levels of experience.

Moreover, the need for IT skills is being driven not by demographics, but by the rapid, increasingly critical need to incorporate IT into virtually every business, every process and every “machine” (from PDAs and televisions through office buildings and jumbo jets). And this is just the start. Business decisions increasingly require real-time analytics and seamless, real-time collaboration tools. The Internet, meanwhile, is creating new businesses and new job requirements every minute of every day.

This being said, not all IT jobs are created equal. As I mentioned, four of the five listed categories are growing at hyper-rates. The number of openings for the fifth—computer programmers—is actually declining. This is not at all surprising. The demand for the lowest skill IT occupation, data entry clerks, has been plummeting for years. BLS now anticipates similar (albeit slower) declines in the number of openings for computer programmers. These positions, as I’ve discussed in a number of previous blogs, will be increasingly replaced—and compensation reduced—by a combination of:

  • Technology, including more automated development and test processes, software reuse and tools that can be used by non-IT professionals; and by the
  • Rapid growth in the availability and use of lower-priced, offshore IT professionals.

Moreover, while these forces are initially felt in relatively low-skill IT professions, they are already beginning to be felt in ever more demanding occupations. Increasingly sophisticated, policy-based IT management software, remote diagnostic tools and a growing trend toward the delivery of IT as an outsourced service will slash the number of people required to maintain an application, manage a given number of servers or support a given number of users. Moreover, as I have discussed in previous blogs, the number of offshore IT professionals is exploding, their education and training is getting much better and they are moving rapidly up the IT value chain, providing increasingly sophisticated services—including services that integrate IT skills into other college-level occupations.

So, while highly demanding technical specialties may offer promising opportunities for the next decade, IT professionals, like sharks, must continually move forward—or they will die. They must continually evolve their skills to address the most promising career opportunities. Most importantly, they must learn to apply these skills in ways that deliver not just “IT value”, but true “business value” to their company’s line-of-business constituents and especially their customers.

But as the number of opportunities for dedicated IT professionals is large and rapidly growing, this does not even scratch the surface of the need for IT skills in tomorrow’s job market. Virtually every college-level job in America is becoming, to one extent or another, an IT job.

This is not to say they must develop, manage and maintain their company’s IT infrastructure or applications. They must, however, be able to integrate a broad range of increasingly sophisticated IT tools into every aspect of their work. And I don’t mean that people must use word processing and email. Those are yesterday’s skills. Today’s professionals must also be fluent in Internet search, in computer-based collaboration and in social networking. Tomorrow’s professionals must seamlessly incorporate sophisticated information access and analytics tools into their day-to-day tasks and learn dozens of new tools and techniques that most of us can barely identify.

Over the next decade, virtually every professional will have to be an IT professional, as well as a professional in his or her own specific field.

Posted in 21st Century Careers, Business Trends, Community/Other Colleges, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Education System and Institutions, Job and Career Opportunities, Skills Requirements, Societal Forces, STEM Careers, Technology's Impact on Job Skills, Universities and Grad Schools, Workforce Trends | No Responses »
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The Jobs of Today—and Tomorrow

Sunday, February 14th, 2010

I have written extensively about the jobs of tomorrow and the critical role of STEM (science, technology, engineering and math) skills in preparing applicants for these jobs. (See, for example, my recently completed free report, “IT Companies as Catalysts in Creating the 21st Century Workforce.“) As explained in a new CareerCast study, these skills also critical in preparing applicants for the jobs of today—or at least many of the “best jobs”.

“Best Jobs”

What are these “best jobs” and what makes them “the best”? The study, which compiles U.S. Bureau of Labor Statistics and Census Bureau data, evaluates jobs in terms of five criteria:

  1. Stress;
  2. Working environment;
  3. Physical demands;
  4. Income and growth potential; and
  5. Hiring outlook.

While not necessarily the highest skilled (neurosurgeon, corporate M&A lawyer), highest paying (bond trader, hedge fund manager) or most glamorous (movie star, professional athlete), these jobs are available in reasonably high numbers and are available to people with relatively moderate (typically a four-year degree) degree of education.

Just what are these jobs? The top ten are, in descending order: actuary, software engineer, computer systems analyst, biologist, historian, mathematician, paralegal assistant, statistician, accountant and dental hygienist. All but two (historian and paralegal) require some form of specialized STEM education.

Perhaps none of these jobs are quite your cup of tea. Or, perhaps unlike CareerCast, you do not weigh each of the five criteria equally. You may, for example, be motivated primarily by income and advancement potential, or you may actually prefer a physically demanding job.

No worries. There are dozens of other jobs. But be forewarned: 37 of the CareerCast’s 50 “best jobs” (out of a total 200 ranked jobs) require some form of explicit math, science or technology background. Moreover, as I have discussed in previous blogs, a number of the 13 additional jobs (such as historian, sociologist, anthropologist and archeologist) increasingly require specialized IT and math skills, such as in compiling and analyzing huge quantities of information and data.  

Of course, this doesn’t suggest that ALL jobs that are intellectually, emotionally and financially rewarding require STEM educations. You can, for example, become a philosopher (11), attorney (80), author (74), clergyman (96) or artist (104), although most such professions require extensive training or specialized skills. There are also somewhat lower skill jobs. You can be a damn good paralegal (7), medical records technician (20), purchasing agent (40), jeweler (61) or actor (163) with little or no math or science training and few, if any, computer skills. But if you want to find jobs with no specialized training requirements or long apprentices, you generally have to move much further down the CareerCast list into lower-skill, more physical and/or more repetitive jobs such as waitperson (125), bus driver (137), retail salesperson (142) or mail carrier (191). And if you really want to live on the edge (literally and figuratively), you can always become a lumberjack (199) or roustabout (200).

Skills Requirements

But regardless of which type of career you choose, the work environment of the 21st century will not be like that of the 20th century. Jobs will remain scarce for at least the next five years, more positions will become temporary or freelance, and a growing number of jobs will be devalued or disappear as a result of increasingly pervasive globalization of knowledge work and the automation of functions that used to require human discretion and labor.

Success in this new environment will require much more than strong, specialized domain skills (whether STEM-based or not). Traditional left-brain analytical skills will, in fact, become the ante required for success in tomorrow’s jobs. Knowledge workers who hope to capture and retain the best, highest-value and most secure jobs must also complement these capabilities with increasingly large doses of left-brained conceptual and empathic skills. And, with all due respect to technophobes, virtually all high-value knowledge jobs will also require at least basic quantitative, statistical and IT skills. IT, in fact, will increasingly have to become the second language for almost all 21st century knowledge workers.

Posted in 21st Century Careers, Business Trends, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Job and Career Opportunities, Skills Requirements, STEM Careers, Technology's Impact on Job Skills, Workforce Trends | No Responses »
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Tom Kucharvy’s 2010 Research Agenda

Sunday, January 17th, 2010

The IT Industry’s Role in Addressing the U.S.’ Technology Skills Gap: How the industry can secure its own future while providing unique value to employees, customers and society

Over the last six months, I have focused my research around two broad questions:

  • What types of skills will U.S. knowledge workers require to build careers that will deliver the highest value and be most sustainable in a global knowledge economy?
  • What must individuals, schools and corporations do to prepare for these jobs?

I recently wrote a report “IT Companies as Catalysts in Creating the 21st Century Workforce”, which I summarized in my January 11 blog. While working on it, I was particularly struck by three key conclusions:

  1. The particular risks that the IT industry will face from a paucity of required skills and the unique role the IT industry can play in creating the next generation workforce;
  2. The combination of foundation skills (including IT, Internet, math and communications) that all knowledge workers will require and how these skills can be most effectively taught and learned;
  3. The critical role that multi-faceted academic (especially university)/private sector partnerships must play in designing and delivering curricula that prepare knowledge workers for tomorrow’s careers.

I have certainly learned a lot from my research over the last six months and, hopefully, readers have valued from my posts and reports. Ultimately, however, this research ended up doing what most research does—it raised more questions than it answered. Some of these new questions are forming the foundation of my 2010 research agenda.

Here’s a peek into what I’ll be working on in 2010.

Q1 2010 Research Agenda

My 2010 research will continue to examine the changing nature of knowledge work in the 21st century and the requirements for the U.S. to build a workforce that will be truly competitive in the Global Knowledge Economy. I will, for example, drill down into a number of issues that I have touched on in my 2009 research including:

  • The skills and attributes individuals need to compete in a world in which knowledge work is increasingly defined by global competition, the automation of increasingly discretionary tasks, a deluge of data and information and the need to collaborate in increasingly fluid physical and virtual teams;
  • The relative roles of academia and the private sector in developing these skills and in creating and enabling the environments in which individuals can contribute ever higher levels of value;
  • The increasingly central role that the IT industry is playing in redefining work requirements and environments and the unprecedented opportunities for IT companies to shape the workforce in accordance with their and their customers’ needs.

Among the primary issues I plan to explore are:

  • Emerging best practices for recruiting, developing and retaining effective knowledge workforces
    • What approaches are proving to be most effective for companies—especially IT companies—in building and maintaining effective development, sales and services teams?
  • Opportunities for building high-payoff private sector/university partnerships
    • What expectations, contributions and commitments must each party bring to effective relationships, what best practices are emerging for collaborative curricula, course and platform development, research and recruiting?
  • Private sector roles in addressing primary and secondary math and science gaps
    • Although university education is critical, educators must instill interest and teach the basic math and science skills on which university educations can build. What role can IT firms play in enabling and facilitating these efforts? What rewards can they gain?
  • Using technology to improve the education process
    • Which types of technologies and techniques can be most effectively employed in schools and universities and how they can best be acquired, taught, implemented and managed?
  • The roles of IT service providers in addressing customer skills shortages
    • How can IT service providers best help clients evolve their own workforces, supplement their skills gaps and prepare new generations of business architects, technical professionals and CIOs?
  • Building and enabling an “innovation workforce”
    • What are the combinations of technology, management practices, collaborative processes and industry skills that will be required and what role can the IT industry play in developing these skills within companies, in conjunction with universities, and across ecosystems and technology and community clusters?
  • The roles of government in addressing—and exacerbating—the U.S.’s technology skills and innovation gaps
    • Can federal, state and local government organizations play productive roles in laying the foundations for addressing educational needs and enabling potential growth industries, or should they just stay out of the way?
  • The IT industry as test bed and role model for new private sector skills initiatives
    • IT vendors are among the leaders in establishing successful private sector/academic partnerships and in developing systematic employee skills development programs. What role can they play as role models for, enablers of or coaches in helping other industries?

Although my primary interest is in understanding the skills that will be required for sustainable 21st century careers, and the roles that IT companies can play in preparing U.S. knowledge workers for these careers, even I do not live on workforce development alone. After 30 years in the IT industry, I still have a deep interest in, and retain an irresistible drive to express my opinion on any of a broad range of industry-related issues. So, interspersed with blogs about jobs, skills, university programs and the globalization of knowledge work, you can also expect occasional discourses on important IT company initiatives, industry trends and especially, the unique opportunities for IT service providers to address a broad range of business and societal needs.

Posted in 21st Century Careers, Business Trends, Community/Other Colleges, Corporate Social Responsibility, Creating the 21st Century Workforce, Education System and Institutions, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Role in Education, IT Industry's Role, Job and Career Opportunities, K-12, Other Schools, Skills Requirements, STEM Careers, Technology's Impact on Job Skills, Universities and Grad Schools, Workforce Trends | 2 Responses »
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IT Companies as Catalysts in Creating the 21st Century Workforce

Monday, January 11th, 2010

The following is a high-level summary of a more detailed report that summarizes the findings of six months of research into the changing nature of U.S. knowledge work and the requirements for creating a generation of knowledge workers who will not just be able compete, but will not be able to add differentiated value in a global knowledge economy. For a free copy of the full report, click here.

We’ve all seen the statistics and the anecdotes surrounding the declining technical skills of American workers. Although unemployment is at record highs, many positions go fulfilled for lack of qualified applicants. U.S. student interest and skills in science, technology, engineering and math (STEM) education is plummeting relative to other those in other countries and the U.S. is making it increasingly difficult—and unattractive—for talented foreign students and professions to enter and remain in this country. U.S. manufacturing workers lack the skills to work in new-generation factories and promising green tech firms are leaving the U.S. in favor of countries with larger markets and more sympathetic governments.

Unfortunately, most signs suggest that things will get worse, before they get better.

IT vendors and service providers that are based in or have operations in the U.S. face particular challenges:

  • They will find it increasingly difficult to find sufficient numbers of graduates with appropriate skills and will either have to implement “remedial” programs or increase their use of offshore talent;
  • If IT vendors/providers will have trouble finding skilled people, customer IT organizations are likely to face desperate skills shortages;
  • A decline in math and IT skills among customer’s business professionals threatens to limit appreciation for, experimentation with, and adoption of new IT capabilities.

But while IT vendors face some of the greatest challenges from a U.S. skills gap, they are also the best positioned of any major type vendor to address the problem. These vendors, after all, created and will continue to create the tools that are revolutionizing work. They are also pioneering many of the organizational and business revolutions that transform the work environment of the future. IT companies, for example, have been among the leaders in transforming, automating and optimizing traditional business processes, in disrupting revenue models of traditional industries and in globalizing knowledge work and business processes that few ever dreamed could go offshore.

It’s only logical. Companies that are this involved in shaping and defining the future of knowledge work, are also among the best positioned to understand the skills that tomorrow’s workers will need. Although many such companies are already using their large, established training organizations to directly prepare some of their customers and their partners’ employees, a growing number are going much further.

They are forming increasingly innovative partnerships with universities (and to a lesser extent, all types and levels of schools) to help foster the educating of next-generation employees. Schools, including some that traditionally shunned such collaboration as an infringement on their academic integrity, are increasingly welcoming this help as a means of better preparing their graduates for jobs in one of the most challenging job markets in memory.

These types of partnerships, which can include access to free or low-cost hardware and software, help in designing curricula, courses and Internet-based delivery systems and joint research, are beginning to yield some big benefits to the companies and schools alike. In the end, however, students are probably the biggest beneficiaries.

We are, however, only early in to the second generation of such partnerships. The real benefits—to IT companies, schools, students and to the IT companies’ customers and communities—are still around the corner. So, as discussed in some of our recent articles and reports, some vendors and some universities are already beginning to reap some big strategic and financial dividends from their initial partnerships.

Posted in 21st Century Careers, Business Trends, Corporate Social Responsibility, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Education System and Institutions, Globalization, Immigration and Offshoring, Innovation/Entrepeneur, IT Industry and Companies, IT Industry Role in Education, IT Industry Trends, IT Industry's Role, Job and Career Opportunities, K-12, Skills Requirements, Societal Forces, STEM Careers, Technology's Impact on Job Skills, Workforce Trends | No Responses »
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Technology Vendors’ Roles in Addressing the College Conundrum

Sunday, October 4th, 2009

My September 27 blog, Leveraging University Education into Careers for the New Economy, suggested how college students can structure or supplement their coursework to make them more attractive to potential employers. Many of these approaches, such as selecting appropriate majors and minors, independent study programs and thesis topics and developing strong social networking competencies, are generally within students’ own control. (Even these approaches, however, are dependent on the college/universities’ ability to fund these classes—a condition that can no longer be assumed.)

However, while many of the requirements for creating university experiences that will better prepare students for the knowledge jobs of the future are within the control of students, many others will depend on proactive efforts by the colleges. These include:

  • The teaching of math, statistics and the use of IT tools as core academic offerings and the deep integration of these tools into all coursework;
  • An increasingly interdisciplinary design and delivery of courses; and
  • Availability of proactive career counseling to help students identify career options, career pathways and the types of work that will best prepare students for opportunities in their chosen fields.

Unfortunately, many of these changes are totally antithetical to many universities’ organizational structures and cultures. For example, as I discussed in my previous blog, most universities are organized in discrete stovepipes that implicitly discourage cross-disciplinary collaboration. Professors, meanwhile, are typically hired and rewarded on the basis of their depth of knowledge in their particular specialty (rather than as interdisciplinary thinkers) and many consciously shun practical applications of their work and involvement of corporations in tuning curricula. On the other hand, most university career centers are culturally attuned to these objectives. However, they often lack the number of career counselors and the degree of interaction with the companies most likely to hire their graduates.

What’s a university to do? How can it overcome the inherent challenges of culture, tenure and a lack of resources to provide their students with the help required to prepare them for the careers of the future?

One approach is for universities to actively solicit the help of corporations that are in a position to hire graduates. Many corporations already have large, well established and very active university relationship programs. Some, such as JP Morgan Chase and Wal-Mart, help universities (Syracuse University http://globaltech.syr.edu/ and the Universities of Arkansas and Arizona respectively http://sustainability.uark.edu/15347.php) develop and fund programs under which the university creates and teaches courses and conducts research that are aligned to the company’s needs, and the companies provides internships and job opportunities for selected graduates.

But while all type of companies in virtually every industry offer programs to help universities prepare students for new jobs, as explained in my September 5 blog, The IT Vendor’s Employee Readiness Burden, I believe that IT vendors are particularly well suited to help. Why? Through their products and practices, these vendors are playing disproportionately large roles in shaping the environments in which tomorrow’s graduates will work. These vendors, for example, are developing the technologies that will redefine the nature of knowledge work and pioneering practices, such as globalization and seamless collaboration that will determine the type of students who will be best suited for different types of work. Just as importantly, IT vendors will also have some of the first and greatest needs for graduates with these new skills.

I recently wrote a report (IBM’s Role in Creating the Workforce of the Future) which talks about how IT vendors are helping universities in a myriad of ways. I’ll also continue to follow this topic in future blogs.

Posted in 21st Century Careers, Business Trends, Corporate Social Responsibility, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Education System and Institutions, Global Forces-General, IT Company Strategies, IT Industry and Companies, IT Industry Role in Education, Job and Career Opportunities, Skills Requirements, STEM Careers, Technology's Impact on Job Skills, Universities and Grad Schools, Workforce Trends | No Responses »
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How IT Services Providers Can Help Clients Address the Coming IT Skills Gaps

Saturday, September 5th, 2009

The growth of the IT industry has depended on broad availability to people with IT skills-people to work both at IT vendor and customer organizations. Although it may be tempting to scoff at the emergence of a skills gap during a period characterized by a combination of recession (when companies are being forced to lay off and defer the hiring of qualified people) and globalization (with a huge growth of IT skills in India, China and dozens of other emerging countries), three fundamental trends will combine to jeopardize the availability of the type of skills that will be required to allow developed country companies (especially U.S., Western Europe and Japan-regions on which IT vendors still demand for the vast majority of their revenues and profits) to effectively apply IT to addressing the business needs of their companies. These trends are:

  1. Demographics, a combination of a dearth of Gen X and Y’ers to replace retiring baby boomers, insufficient transition planning by many companies, and simultaneous declines in both the percentage of young adults graduating from colleges and, especially, those majoring in IT or other technical curricula.
  2. Globalization, whereby the rapid growth of offshore labor supplies and skills (and the pressures this will impose on developed country entry jobs and salaries) will initially reduce both the attractiveness of IT careers and, longer term, jeopardize the development of the type of higher-level skills that developed countries will need to mange their own environments and, most importantly, effectively apply IT to their company’s business needs.
  3. Industrialization/Automation, in which lower-level entry tasks (those that are instrumental in helping people learn the foundation skills that are necessary to learn higher-level skills) will increasingly be instantiated into software.

At first glance, it may appear that the combination of 2 and 3 will address the shortfalls created by 1. Moreover, the combination of all three of these trends could very well result in IT organizations that are much more cost-efficient -and effective-than are traditional organizations.

But while the globalization and Industrialization of IT work will certainly reduce the demand for IT-trained “bodies” in the U.S., it will simultaneously reduce the supply of people trained to provide the types of high-level skills that are required to:

  • Architect and manage sophisticated projects and, most importantly, those that best understand how to
  • Apply IT as a tool to address business needs and achieve strategic advantage.

From where will such skills come? True, offshore sources may well produce many of the architectural and managerial skills required to offset a dearth of developed country skills. Although companies may prefer to retain these and other high-level IT skills onshore, many can probably make do with offshore talent. And since few end user organizations are likely to have the scale or the best practices required to build, staff and manage world-class offshore IT organizations, they may even be able to justify outsourcing these functions to third-party providers.

But what about that mix of deep business process, IT architectural and business strategy skills, combined with the type of corporate cultural sensitivity, that is required to identify and sell the need for, and align the types of organizational resources required to drive such projects to fruition? Such capabilities cannot be offshored, much less outsourced. How will developed countries in general, and individual companies in particular, recruit, develop, nurture, manage and retain such skills? Even more fundamentally, what type of skills should companies look for in people who can grow into these roles, where are such skills being taught, what career paths are most effective in developing these skills and what cultures are required to develop skills into talents?

True, the “mere tasks” of increasing college graduation rates, the percentage of students who major in IT and related disciplines and the quality of the educations these students receive, may well increase the pool of raw materials from which such talent may be developed. But the use of such blunt instruments to increase the genetic probabilities of creating the new generation of such talent is not an effective or efficient means of developing these skills. This is particularly true given a probable decline in the number of entry jobs from which such students can percolate to the top.

Neither the country, nor individual companies need huge numbers of raw skills-they need a totally new approach to selective breeding on the type of talent that will be required for the skills that businesses really need to be competitive in the future. They need entirely new types of education, entirely new career paths and entirely new ways of looking at the type of value that IT must provide in a more global knowledge-based economy. 

Since IT vendors in general, and IT service providers in particular, are playing such key roles in driving the  globalization and industrialization/automation tends, they are best positioned to determine the ways in which these trends will redefine the needs for next-generation IT skills. And since they have so much to gain from the availability of such skills-and so much to lose from death of these skills-they have huge incentives to help create them.  Some, as I will discuss in future reports, are already working to define and help universities create the foundation for these new skills.

Posted in 21st Century Careers, Business Trends, Corporate Social Responsibility, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Education System and Institutions, Global Forces-General, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Role in Education, IT Industry Trends, IT Industry's Role, IT/Business Consulting/Outsourcing, Job and Career Opportunities, Skills Requirements, Societal Forces, STEM Careers, Technology's Impact on Job Skills, Workforce Trends | 1 Response »
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Is the Great Recession Creating Two Lost U.S. Generations?

Sunday, August 30th, 2009

We have all heard of Japan’s “Lost Generation”, the young adults who entered the workforce during Japan’s decade of economic stagnation (generally the 1990s). Since the Japanese economy did not create sufficient numbers of new jobs to absorb these new entrants, these youths-including highly-trained graduates from good universities-ended up taking whatever type of work they could get. 3.3 million people who planned to enter Japan’s lifetime employment economy ended up taking menial odd jobs, contract work or temporary jobs. As explained by BusinessWeek in May 2007 , many of these jobs:

  1. Paid poorly, forcing many to live with their parents, rather than their own homes;
  2. Provided limited job security, which diminished marriage prospects; and
  3. Offered few benefits, which discouraged pregnancies (thereby exacerbating Japan’s falling birthrate).

Worse still, these jobs did not make use of these peoples’ existing skills and did not provide the type of new skills that would prepare them for more responsible positions. So when Japan’s growth resumed in the 2000s, companies shunned these workers in favor of younger, more recent graduates whose skills were current and who were not tarnished by spotty, low-level and non-traditional job histories.

What will be the long-term fate of this Lost Generation? Although it’s always dangerous to predict the future, it’s hard to foresee a future that will be kind to this generation.

So what does this mean for the U.S.?

The Gen Y Challenge

Although I ‘m certainly not predicting that the U.S. will suffer a full lost decade, we could easily suffer a lost half decade. U.S. employment peaked in December 2007 and, according to The Wall Street Journal’s article The Great Recession: A Downturn Sized Up, Stanford economist Bob Hall states that job losses have been piling up at a faster rate since any time since 1948–a pace that Hall expects us to surpass over the next couple months.

These job losses are expected to continue at least through the end of 2009, and possibly well into 2010. Even when the recession ends, growth rates are expected to remain low and most companies will increase the hours of current employees before hiring new people. And as we now recognize, a number of these lost jobs in industries ranging from automotive manufacturing to financial services are unlikely to come back at all. Although growth fields, such as healthcare, education and, increasingly, government are likely to sop up some unemployed workers, it is not yet clear which other industries are going to offer large numbers of sustainable, high-value job opportunities for newly minted knowledge workers—or over what timeframe they will do so.

True, the U.S. is not Japan. Workers who—due to no fault of their own—miss the first step of the employment ladder, are less likely to suffer a lifelong personal stigma. Moreover, some of those new graduates that are financially able are making the best of employment situation by going to graduate school. Even so, many of those Gen Y’ers who are forced to divert from their chosen career paths will face a big challenge. After all, when new jobs do become available, who are companies most likely to hire:

  • Applicant A, a 22-year old that just graduated; or
  • Applicant B, a 27-year old with the same educational qualifications, that has spent the last 3-5 years in menial or temporary jobs that did not exercise existing skills or create new ones?

Okay, newly graduating Gen Y’ers have the potential of becoming one of America’s new Lost Generation. Who will make up the second potential Lost Generation? Consider the Baby Boomers—Gen Y’s parents.

Baby Boomer Lost

It’s ironic. Two years ago, labor force economists and far-sighted corporations were in a panic. Baby Boomers were preparing to retire en masse and there were not enough Gen Y’ers to replace them. Even those companies that expected to be able to attract new entrants were struggling with challenges of capturing and managing the transfer of knowledge from retiring workers to their replacements.

That was before the Great Recession. Baby Boomers, in their mid- and late-50s, are now among the most prominent victims of the layoff ax.

It may be a something of a stretch to consider these people part of a Lost Generation. After all, most have already enjoyed 30 to 40 year careers. Moreover, weren’t many of these boomers planning early retirements, anyway?

Many of them were. But that was before the recession and before many of them recognized that their savings were far below what would be required to fund retirement, much less accommodate unforeseen medical costs or the growing potential of outliving their savings. According to an AARP study that was conducted before the bust, 73% of people over 50 did not even have sufficient income or assets to meet emergencies. Now, as explained in careersecretsauce,  many of these “reluctant retirees” are finding themselves out of work at a time when:

  • Their 401K and home values have been decimated;
  • They have years before becoming eligible for Social Security or Medicare and
  • Many will have trouble securing or affording health insurance once their COBRA plans expire.

Worse still, given the tough time that most older people have in finding new jobs, and the limited number of new jobs that the recovery is likely to produce, few have much hope of finding productive, well-paying jobs in their fields.

Even if these involuntary employees do find productive jobs or manage to create sustainable businesses of their own, many will lose the promise of a secure retirement.  Fewer will be able to muster the spending that will be required to fund new jobs for either themselves, or their children.

Am I overstating this problem? If not, what can be done to reverse or moderate this spiral? Although I plan to address these and other perplexing dilemmas in future blogs, I need your help. What do you think?

Posted in 21st Century Careers, Business Trends, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Global Forces-General, Globalization, Immigration and Offshoring, Job and Career Opportunities, Skills Requirements, Societal Forces, Technology's Impact on Job Skills, Workforce Trends | No Responses »
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