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Tuesday, May 18, 2010

74 percent of all jobs created in America will be high-paying jobs for high-skilled workers by 2020.

What Jobs Won't Return by Ira S. Wolfe
Our Misplaced, Displaced, and Replaced Work
By Ira S Wolfe, Success Performance Solutions

Download a pdf version of "What Jobs Won't Return."

Two storms blasted across our labor markets. The first, driven by a gale of creative destruction, was kicked strong a decade back by outsourcing, offshoring, and cybertechnologies that began scrambling whole industries. And the second came last year when bursting financial bubbles magnified the longer term furies with the severe recession. We asked Ira Wolfe to peer through the receding clouds at the employment landscape that’s coming into view again to search for those jobs that were blown away like the buggy whip makers of long ago. And we invited a panel of distinguished educators to review Ira’s discoveries through the lenses of their best strategic information. Here are their views of the emerging job horizon. — Ted Byrne, editor

“The picture of the U.S. economy that emerges is of abundance and poverty,” says Edward Gordon. “Abundance of labor, poverty of talent.” In other words, despite high unemployment rates, the U.S. as it stands does not have enough people to fill the jobs that should be created and an oversupply of people to fill jobs that are or should be obsolete.

The economy now sits in a hole more than 10 million jobs deep. How and when we can climb out of that humongous pit seems to be the linchpin for a full-blown economic recovery. According to Gordon, author of Winning the Global Talent Showdown, the United States is headed for this major talent meltdown with 12 to 24 million vacant jobs between 2010 and 2020, mostly high-paying, high-skilled jobs.

The canary has been singing in the labor mine for several decades warning of our growing lack of talent as we enter a transitional labor-market era. Partially due to ignoring the warning and partially the result of the most recent economic crisis, businesses and government are now confronting a day of reckoning: prolonged joblessness for the unskilled, low-skilled, and under-skilled. “We’ve been hearing alarms about the skills gap for years,” according to Gordon, president of Imperial Consulting. “But if ever there was a time to get serious about helping workers acquire the right skills, this is it.”

Thomas Friedman, of The World is Flat fame, suggests that a critical reason for the recent Great Recession is “an education breakdown on Main Street” that has undermined the ability of the average American worker to compete in the global arena.

The September 2009 Employment Dynamics and Growth Expectations Report from the staffing firms Robert Half International and Career Builder also reported that human resource managers judged 47% of their applicants unqualified. Many of these vacant positions were STEM jobs or those that are in science, technology, engineering, or mathematically-related areas.

Unfortunately change in the way we train and educate workers and prepare students for the future is not what you’re hearing in the news. What we’re getting is the same old theme of denial. To re-boot the economy and sustain growth, we can’t just reframe existing jobs. We need to stop creating jobs that employ the current talent pool of low-skill workers. Instead we need to stimulate middle and high skill job growth and start creating talent. Gone forever are the days of semi-skilled, well-paying blue-collar factory jobs that can provide a 19-year-old dropout or high school graduate with a living wage. Today counting on a low-skill manufacturing or service job to keep you in the middle class is as sensible as buying a BETA tape for a Blue Ray DVD player.

Ten million is the conservative number required to get the unemployment rate back to 5 percent. And because the population is still growing and many unemployed return to the job market, we need to produce 1.5 million new jobs a year just to keep pace. That assumes we can create jobs that the country needs and can match idle workers with the right skills to do those jobs.

According to Gordon’s research, “between today and 2020, it is expected that 74 percent of all jobs created in America will be high-paying jobs for high-skilled workers. While there will be a need for 123 million of those talented people, only 50 million Americans will qualify. By contrast, low-paying, low-skill jobs will shrink to just 26 percent of the total jobs in the U.S. Worst of all, just 44 million people will be needed for those jobs, but 150 million or more candidates will be seeking those jobs.”

Click here to read about job extinction - jobs that are gone for good.

In Pennsylvania, the skills gap is hitting middle skills jobs the hardest. According to the 2007 National Skills Coalition report, about 53% of Pennsylvania’s jobs were in middle-skill occupations. But only 42% of the state’s workers likely have the appropriate training for these jobs. That’s significant because 51 percent of all jobs in Pennsylvania are middle skills, with another 30 percent of jobs in the high skilled segment. If you’re doing the math, less than 19 percent of all jobs will be low-skilled. Pennsylvania’s excess labor capacity for these low-skill jobs is over 42 percent and you just can’t move low-skilled workers into middle- and high-skilled jobs without considerable education and training investment. The report concluded that Pennsylvania would require 4.6 times more annual investment in workforce development and education than was currently funded…and that was before the budget cutbacks of 2010.

Even more compelling is Gordon’s prediction that reducing joblessness might be realistic if a lot of the jobs that were lost were coming back. But that just isn’t going to happen – not now and not in the future. “That’s the hard truth that a lot of people don’t want to face,” says Joe Watson, author of “Where the Jobs Are Now.”
What will happen to those 100 million-plus low-skilled American workers? Unless something changes quickly and dramatically, they will either be unemployed or employed by a manager who believes that a poorly skilled employee is better than no employee at all. That might work short-term for an economic boost but it’s a prescription for disaster for business.

For almost two decade beginning with War for Talent paper released by consulting firm McKinsey and Company , a shortage of skilled workers has been forecast. This crisis is by no means unexpected. Beginning in 2001 and accelerated by the Great Recession, job creation models were shattered. Out-sourcing and automation became a fact-of-life for many organizations. Many businesses resisted change, hanging onto processes and people that were inefficient, unproductive, and costly.
Many people ignored the warnings. Others challenged the logic. They argued that the Baby Boomers would retire, tech-savvy Millennials would replace them, and improvements in education and training would turn any shortage of skilled workers from a disruptive gap into a productive bond.

Well, the Boomers aren’t retiring just yet. The Millennials are unemployed . Gen X aren’t advancing up the career ladder. Education is desperately attempting to play catch up with fewer and fewer resources and dollars. And workforce training is just plain under-funded, under-utilized, and just too bureaucratic to re-tool and re-equip over 100 million workers with the skills they need quickly … and desperately.

The recession changed all that. It’s like the recession justified a business cleansing – wholesale lay-offs, plant closings, and outsourcing for the sake of avoiding bankruptcy or closing a business entirely. “Many businesses took the recession as an opportunity to clean house and raise quality,” says Mustafa Kapadia, an outsourcing advisor with EchoPoint Consulting. “The political and moral sting and backlash from replacing five people with one piece of software or equipment and outsourcing entire departments abated, at least temporarily, under the veil of business survival. Employees weren’t sacrificed for the sake of a few extra bucks on the bottom line but for survival and sustainability.” What happened in 2008-2009 should have happened voluntarily in many businesses years ago. The recession just provided the excuse.

Watson agrees. Up until now there has been a “gradual shift in the United States from an industrial based job market to an information-based one. The recession however precipitated a sudden, radical shift in the market toward information and service jobs, pulling the rug out from under what was left of an industrial-agrarian economy.”
The residual effect of this accelerated shift ultimately left at least 15 million workers out in the cold and potentially another 10 million underemployed looking for jobs. And those numbers don’t even take into account all the under-skilled workers hanging on by a thread. How soon will it be until another wave of workers receive pink slips because their jobs aren’t needed anymore or automation and/or outsourcing can replace them? Finding jobs for all those people is simply not going to happen - at least not quickly – even if re-hiring and new job creation rebounds.

Many out-of-work workers, particularly in construction and manufacturing – simply don’t have the skills to pick up where they left off when the economic train leaves the station. “In a sense, says Gary Burtless, a labor economist with the Brookings Institute, “every time someone’s laid off now, they need to start over.”

“What is happening now,” says jobs and growth expert Tom Gimbel, “is no different than 100 years ago when workers who forged horseshoes had to learn to make tires.” Gimbel, who is also CEO of Chicago-based staffing and recruiting firm Lasalle Network, sees the elimination of many jobs due to automation and efficiencies. He recalls that 20 years ago every attorney in a law firm had a personal assistant. The requirements to be a legal assistant consisted of the ability to take shorthand, type 80 words per minute, and make coffee. Today 4 partners share one assistant and associates are expected to do their own word processing.

Another factor making it harder than ever to fix the joblessness mess is that a significant number of workers laid off during the latest recession were men. And men, for the past several decades, simply haven’t kept up with changing minimum education requirements. Women outnumber men in college and make up over half of graduating classes in many, post-secondary, professional, graduate, and business schools. Many of the men will need to retrain and find new careers. That is easier said than done since re-tooling an assembly line worker or carpenter to become a nurse requires more than just a few years of schooling.

But blue-collar workers aren’t the only casualties of technology and a recession. Many professional jobs in finance, media, and even law and accounting will never be the same. The out-sourcing of white-collar work has become possible. “While the number of law school graduates is up,” says Gimbel, “many of these new attorneys never end up practicing law.” Likewise, medicine has been outsourcing the interpretation of x-rays to India and Australia for years. Accounting firms are outsourcing the preparation of tax returns for a fraction of the cost of hiring young college graduates. Businesses are outsourcing payroll and sometimes even the entire human resource function to online and outsourced firms. And law firms now outsource their research overseas instead of hiring new grads since access to nearly all the documents is available online. And it’s not only about saving dollars – the labor with the skills to do these virtual jobs is abundant and most times equally if not more qualified.

An information-driven company used to require hundreds of data entry workers, according to Kapadia. One of his clients started with 400 employees before they analyzed what the employees were doing and the cost of employing them. His company showed management that by scanning forms, the technology could read the data with 95 percent accuracy. “To deal with the five percent error rate, Kapadia shared, “we hired off-shore workers to review the data – to ensure our human quality check. The U.S. counterparts, mostly data entry workers, in the past now become analysts.” The client is creating jobs, Mustafa reports, but the jobs are fewer in number and the skills required are more advanced. All in all, hundreds of data entry jobs were lost but the quality of the company’s work went up. One new job effectively replaced 4 to 5 others.

While professional jobs will surely be created, the type and complexity of work that the newly hired will be expected to perform will require different and more advanced skills sets. New jobs being created require the ability to work remotely, coordinate different systems and teams, and collaborate beyond company walls and even time zones. The successful project manager of the past worked within one company, experiencing more control over the players and resources. “Today,” says Kapadia, “managing a project is extremely hard to do. You have to manage different mindsets. A project manager today is really” a governance manager, a collaboration manager, an outsource manager. A CIO friend of mine who heads up IT for a 2000-employee semiconductor business runs his entire IT department with only three employees. Their function – coordinate, coordinate, coordinate.”

Employers, workers, and politicians need to come to grip with reality. The theme of denial about joblessness is no longer effective. In fact, it’s destructive. Creating new jobs that match the skills levels of the unemployed is politically sound short term but economic cacophony in the long run. Sustainable long term growth requires the creation of new jobs that will grow and inherently stimulate our economy. Reframing existing jobs is simply subsidizing many obsolete workers and postponing the inevitable.

Read what the presidents of several schools and colleges had to say about education and skilled workers.

The definition of work and consequently, the definition of a job is changing. The evolution from agrarian and industrial age jobs to service and knowledge work is nearing its completion, thanks to the help of the latest recession. The ability to use your “head” as well as your hands, not one or the other, is a requirement today. And yet, we have graduation rates hovering around 70 percent for many high schools and science, technology, engineering, and mathematics (S.T.E.M.) scores falling well behind dozens of nations. Today knowledge is power and too many workers simply don’t have the mojo.

Employees in new jobs don’t “go to work” … and if they do, they don’t work in permanent full-time positions. They work in part-time jobs, often working for several employers at the same time. But unlike the past when working part-time was a stepping stone to full-time employment or a means to propping up personal finances, part-time work in the future will be by design. Skilled workers will work remotely, simultaneously interacting with different teams in different places and even collaborating on different projects. People with the right skill sets can do that. The contingent worker, or “just-in-time” worker, will become the norm, especially in lower skill jobs. The less versatile the employee, the more expendable he or she becomes.

People also have long complained that they have been swamped by too much information. In 1917 a manager of a Connecticut manufacturing plant complained about the effects of the telephone: “Time is lost, confusion results, and money is spent.” Despite his objections, technologies like the telephone supported economies build around mass production. Today technology and globalization has created a seismic shift from quantitative change to qualitative differences. Economies, once driven by whoever owned the machinery and raw materials, is now being outflanked by the new raw material of business –data. Joe Hellerstein at the University of California at Berkeley, calls it the “industrial revolution of data.” The Economist called it the “data deluge.” Keeping up with all the new information being created is difficult enough. Analyzing it and extracting useful information is harder still. Ignoring it is economic suicide.

This revolution requires a new skill worker – one who has the ability to process large volumes of uninterrupted data and extract valuable information from it. Gordon in a recent issue of The Futurist called for a “[a] new age [that] will require the reinvention of the education-to-employment system.”

In the meantime, employers seeking qualified workers will face unprecedented challenges to recruit and retain them. And our communities will wrestling with the societal, personal, and economic impact of prolonged joblessness.

Can you hear me now?

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