Official unemployment levels are down, showing fits and starts at improvement. Setting aside arguments about whether these figures are ignorant of the real picture, signs of improvement have taken root. Nevertheless job creation still isn’t what it should be, and the amount of time it takes find a lost job is hovering around a record of 35 weeks — longer in many cases. So, what’s the hold up?
Are we experiencing a jobless recovery, or facing something much more fundamental? Should we be challenging the assumption that job recovery will automatically follow on the heels of economic recession?
Historically job recovery has always followed times of recession. However, if we are facing new, fundamental shifts in the economy, history need not necessarily repeat itself. The changing economic landscape could be forcing the U.S. into a structural change, not a cyclical one.
This article originally appeared in 2011, but has been updated and reposted here as we move to our new system. We hope you find the revised article interesting. We feel that the changes to the U.S. and global economies discussed here are still very relevant, and just beginning to take root.
The Shifting Job Landscape
The influence of the global economy is undeniably bringing about changes that are both new and unanticipated. As information flows around the world instantly, new possibilities open up — particularly in markets that deal with intangible assets, such as intellectual property, market data, and ideas. Technology is combining with the global landscape, forever altering how we do our work, and what the end product of that work looks like. The result is a truly global work force, where our “office mates” could well be halfway around the world, where companies leverage 24-hour work cycles by spreading their staff around the globe, and formerly distant economies are suddenly right next door.
Combined with the effect of a global work force — in fact, fueled by that very force — comes the inevitable realization that the U.S. market is a small part of a much bigger system. Coca-Cola saw its revenue more than triple in Q4 of 2010, bringing in nearly 75% of its revenue from international markets while domestic growth lags at 7% compared with 11% internationally. At the same time, IBM has more workers outside the U.S. than inside it. As international barriers and distance continues to shrink, the U.S. will increasingly find itself a member of a global community — one with nearly 7 billion members, of which less than 5% live inside the country.
The influence of the global economy, technology, and developing globalization trends have combined to create a “megatrend,” a fundamental change in the nature of the job market. With massive numbers of workers available, and markets that dwarf the value of domestic markets, the U.S. must change its perceptions. We have to realize that the manufacturing jobs that have left the country aren’t coming back. Likewise, the global nature of information and intellectual property means we must adapt to a world in which global workforces play a part in domestic economics on a daily basis.
Surviving The Shift
U.S. businesses need to learn new tricks, and U.S. workers need to keep pace. The global economy is not tolerant of insular economies or attitudes. In contrast to shrinking distances, the consumer market is growing faster than ever before. We have to face that realization that companies such as Coca-Cola are seeing a world where domestic markets matter less than global ones.
To survive in this new landscape, the U.S. will need to strengthen its global position. This means a greater focus on education, not only to strengthen our domestic work forces’ position in the new economy, but to re-establish the U.S. as the preeminent source of higher education. Many countries have long regarded the U.S. as the best possible place to send their best and brightest for education, but that distinction has slipped in the past decade or two.
Having a strong education program won’t, by itself, solve our long-term concerns. As a whole, the U.S. needs to integrate into a global culture that represents this newly emerging market. Formerly, the U.S. has been notoriously insular. We are one of very few countries in the world where the educated speak only one language. Our appreciation for the arts, culture, and mannerisms of foreign people is poor, at best. As a people, U.S. citizens pay precious little attention to world politics. The effect is like that of a child raised without adequate social interaction. We don’t know how to play with the rest of the world, and are often perceived as ignorant of social and economic events. In the landscape of this shifting economy, we need to develop a better understanding for who our neighbors are, and fast.
This means a more educated professional work force, and business services that are more attuned to the needs and wants of a global people. Executives of the future will be expected to converse with global partners, understand the subtle nuances of international communication, and readily connect with counterparts in foreign countries. Americans without international skill sets and only one language to rely on will be left behind.
The Good News
According to the Bureau of Labor Statistics; Moody’s Analytics, 37.6% of forecast shares of newly created jobs in 2012 will demand a Bacholor’s degree or higher, up from less than 8% in 2010. Moody’s indicates that in 2011 the better educated will control 60.1% of all new jobs, but by 2015, the projection rises to 66.4% even after construction bounces back. According to Time (Where The Jobs Are, January 17, 2011), the University of North Carolina at Chapel Hill’s career services office reports that 7% more interviews were scheduled by companies on campus this past fall than the year before, a fact that seems to support Moody’s projections.
Time also reports that Gautam Godhwana, CEO of SimplyHired, is seeing dramatic signs of job market improvement. “Before the downturn happened, we had 5 million job openings. This dropped to 2.1 million job openings in the first months of 2009, and lo and behold, in the second half of 2009 the bottom fell out of the economy.” But he notes that the reverse is now happening, “In the last six months we’re back to 5 million jobs in our database. So there are some reasons to be optimistic.”
All of this seems to support the idea that the U.S. is beginning to perceive the need for change. The education market and professional services will do well in this climate. According to Moody’s, technology is leading the way. The strongest growth (defined by more hires combined with more job openings) will be in professional and business services, specifically, the technology sector. Network systems and data analysts, and professionals suited to global IT projects, are among the fastest growing sector after biomedical engineers. Bill Saporito, Time Magazine, writes:
And [the recovery] will favor companies that sell abroad rather than those that depend solely on domestic demand. “Any industry that is very focused on exports will do well,” says Nariman Behravesh, [chief economist for IHS Global Insight]. “Agriculture, aircraft, high tech.” He would include education in that segment, since so many foreign countries send their best and brightest here.
Education, professional services, and technology are the gateway into the new global economy. It will take time for the shift to take root, likely years before we find out if the U.S. can successfully discard outmoded ideas about where the jobs are. Until then, we still have record levels of unemployment to deal with, and a work force that needs to adapt to change.
But the U.S. still has a stable economy that is the world’s largest. It can handle short term unemployment and restructuring, provided that it stops treating the current change as temporary. Many jobs in sectors such as manufacturing and even technology are gone forever. The next step is to assess the new landscape and begin to change accordingly. We need to refocus our sights on superb education and technological leadership, where the U.S. was once undisputed leader. Likewise, cutting-edge infrastructure will be necessary to deliver on the promise of being a world leader once again. The U.S. has to change its perceptions — and until we do, we’ll keep playing catch-up.