The Future of the American Workforce – Knowledge, Iowa vs India and Globalization v3.0


My assumption and educated guess is that America’s economic recovery is still far off, despite the occasional cheery talk of recovery being just around the corner.

Let’s first define recovery: the restoration of levels of employment to pre-recession levels, and increased employment to account for the natural growth in our population.

Keeping in mind that we need to generate 100,000 jobs per month just to keep up with population growth, we will easily recognize the beginning of economic jobs recovery when we see numbers like those below.

+300K Jobs/Month
Recovery Period:  2 Years, 1 Month

+250K Jobs/Month
Recovery Period: 2 Years, 9 Months

+225K Jobs/Month
Recovery Period: 3 Years, 4 Months

+200K Jobs/Month
Recovery Period: 4 Years, 2 Months

+150K Jobs/Month
Recovery Period: 8+ Years

Critical Assumption: the recovery period numbers above are only accurate if we were to stop hemorrhaging jobs today. Or soon. Jobs loss may well continue into early or mid-2010; if so then a full recovery could well take a decade or longer.

The World is Flat and Spiky!

In his book The World Is Flat, Thomas Friedman suggests that jobs fall into three categories.

Below are my interpretation and names for Friedman’s job categories:

Community Anchor Jobs: these folks have jobs that require physical presence. Salaries are very dependent upon supply and demand of local talent; expect flat salaries.

Can Be Done Elsewhere/Anywhere Jobs: any job that is information-based can probably be done elsewhere, and done cheaper. If these jobs are done locally then pressure will be on to minimize salaries — or else to move the job elsewhere. A surprisingly large number of jobs fall in this category.

SME Subject Matter Experts: SMEs are a hybrid of the above two categories. A true SME will have the best employment prospects over the next decade just so long as they follow the jobs. Mobility and the ability to work remotely is essential. This may be the only category where salaries continue to rise.

Often posed as a counter-theory to Friedman is Richard Florida’s The World is Spiky thesis.

Florida’s view is that dense clusters of creative and talented people can reach a critical mass (spikes) that causes flow of economic activity to become become concentrated — jobs and wealth are attracted to these spikes. Yes, it all sounds so academic.

Why this matters: our current economic situation will be so prolonged that industry will  naturally evolve to account for doing more with less, and working in the most efficient manner and/or location and/or method possible. There will be an expectation by industry that we cannot return to pre-2007 economic structures. (Think about it: Foreign auto manufacturers are actually building car plants in the USA while GM and Chrysler are busy declaring bankruptcy). Efficiencies may occur which are not readily capable of supporting the pre-2007 workforce numbers without a physical shift in the geography of the workforce also occuring.

I view both theories as complementary, and both are right. The future of the American workforce is moving into unchartered territory. Waiting for the end of the recession and a return to normalcy is both misguided and dangerous. The future arrived yesterday. The recession will be prolonged and we will emerge a very different workforce — and there will be both big winners and big losers.

Globalization v3.0

Globalization v1 pitted the resources of one country against another. Version 2 saw the rise of ever larger mulitnational corporations. Globalization v3 allows cities, regions and individuals to compete on a larger scale than ever previously possible.

Globalization and the forces of The World is Flat brought great wealth to India. New ways and methods of working were developed. Perhaps most importantly is that the recession will cause parts of the American economy to reflect and to Indianize their economic base. Not a quick and easy task to be sure. To be competitive also requires a workforce and the local economic base to consider changes in standards and methods of living — both at the personal and community level. America 2010+ cannot afford to live and work the same as in the decade prior, probably a good thing.

Iowa has been quietly laboring away at reinventing itself for some time now. A recent Iowa television news report lamented that unemployment had hit 5.8% (1 in 17 unemployed, May 2009), which is actually among the lowest rates within the USA.

An educated workforce, an aggressive outreach plan to business, and a statewide focus on preparing Iowa communities to be knowledge competitive has made it possible for Iowa to take business away from other American locales. Iowa is both Flat and Spiky (the spikes may be small but they are growing).

If you think back to the three categories of jobs listed above, Iowa has focused on all three categories. And the state’s current unemployment level shows the results.

Why this matters: there has always been competition for what the other fellow has. Recent trends make it possible for Americans to become more competitive, even to gain a significant edge on the competition. But for the first time perhaps globalization is possible where the threat to one part of the economy is not just India or China, but Iowa, Georgia and Utah and any other city, state or region that moves to embrace the flattened leveled playing field of globalization v3 and to embrace spikiness (if they have any – those that don’t:  bad news).

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1 Comment

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One response to “The Future of the American Workforce – Knowledge, Iowa vs India and Globalization v3.0

  1. WilliamG

    From New York Times OP Editorial (2009.06.27):

    Three-quarters of the workers let go over the past year were permanently displaced, as opposed to temporarily laid off. They won’t be going back to their jobs when economic conditions improve. And many of those who were permanently displaced were in fields like construction and manufacturing in which the odds of finding work, even after a recovery takes hold, are not good.

    Source: http://www.nytimes.com/2009/06/27/opinion/27herbert.html?_r=1&th&emc=th

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