Friday, December 21, 2012

On Careers, Graduates Need More Than Current Pay and Today’s Growth

Online and in bookstores, you will see a lot of material purporting to provide the ‘best jobs’ or ‘best careers.’  They consistently emphasize two things – current demand, and average pay.  But for today’s graduates, and even people well into middle age, those are not the critical factors.  Why?
More than any other consideration, people deciding among careers must be aware of the future situation, not the nature of the past or even the present.  Therefore, we should not overemphasize possibly temporary advantages, or look at too short an upcoming timespan.  One large book on the “best jobs” names as its first- and third-highest-ranking ones developers of applications and systems software, citing their average annual earnings of over $80,000, high expected growth percentages through 2018, and 15,000 openings apiece each year.  Developers of uncategorized software ranked first on the CareerCast website in its piece on the 200 best jobs of 2012, and second in a like U.S. News & World Report article.   These sources do not incorporate any outlook later on, and fail to consider that software development can be done from anywhere in the world, by people willing to be paid a lot less.  Over the next twenty years, prospects for American software developers are not great – in fact they are poor.     
Similarly, other positions look different from a longer perspective.  This same career book rates pharmacists, with annual earnings over $100,000, 17% growth projected through 2018, and over 10,000 annual openings, at 13th overall.   I also rate this job poorly, since pharmacy as a profession is currently buoyed by outdated prescription-filling requirements and the lack of comprehensive electronic-based medical records, and when these situations end a long time before 2033, far fewer will be needed.  Another is accountants and auditors, 11th out of 400 “best jobs overall” with growth over 20% and almost 50,000 annual openings,  and mentioned first in another U.S. News & World Report piece, about six “hot jobs”  – I again disagree, since auditing and accounting, even if demand is currently strong, are very susceptible to both automation and globalization.  People may do well with positions rated highly by others for the next five years, and that’s all there are until 2018, but spending much time and money for, say, pharmacy education, in expectations of a solid career for life, would now be a serious mistake.  Many people graduating college this year will be 27 in 2018, and numerous new high school graduates will be 23, hardly the best horizons for their career planning. 
The opposite can also be true, as positions considered poor in most sources can look much better for 2033.  In the CareerCast listing of “the 10 worst jobs of 2011,” the fifth and sixth ones named, taxi driver and emergency medical technician, happen to have exceptionally good two-decade projections – their work will not go away. 
Another dissent I have with other things you may read is on science-related opportunities.  Some are indeed fine areas, but the field is hardly the wide-open hiring area implied by those who say American universities do not produce enough science graduates.   Many want to work in academia, but as of 2009, only 14% of new degree-holders in the life sciences were able to get university positions teaching or researching within five years, a share shrinking steadily since 1979, and reports published in 2010 and 2011 show that private industry has not hired enough science doctorates to make the degrees financially worthwhile.   As one example, between 2000 and 2012 American drug companies cut 300,000 positions, many formerly providing work for Ph.D.’s in chemistry.  As a result of poor job opportunities, many scientists with doctoral degrees in various disciplines have now been working as low-paid postdoctoral fellows, customarily one to two-year apprenticeships of sorts, for as long as ten.
One factor, level of pay, is overemphasized for four reasons.  First, amount of income will increasingly become an individual issue, as all jobs will allow survival.  Second, more money means more competition, which means positions that pay more will be harder to get for that reason alone.  Third, high-income jobs have the disadvantage of attracting replacement by robots, computer systems, and lower-compensated foreign workers.  Fourth, in order to get the money involved, you must be employed in the field – a jobless nurse’s aide earns 100% as much for work as an unemployed computer systems manager – so the chances of actually working at a given position can be as important, if not more so, as how much it pays.  Along with quality of work conditions and compatibility with other involvements, it is up to you – and not any experts – to decide how important they are.

Friday, December 14, 2012

Right to Work Laws, Minimum Wages, and Work’s New Age

A historic development happened this week.  Michigan, long the most union-heavy state in the country, passed laws commonly referred to as ‘right-to-work,’ meaning that people can no longer be forced to join unions or pay union dues in order to have jobs at certain locations and in some industries. 
There is a stunning correlation between which states are right-to-work, and which voted for Mitt Romney in the recent election.  Of the 50, all but five – Alaska, Montana, Missouri, Kentucky, and West Virginia – of the states going Republican in November have these laws.  Likewise, all of the Barack-Obama-choosing states do not, except Nevada, Iowa, Virginia, Florida, Indiana, and Michigan, the last two of which changed their laws this year.  That makes 39 of 50 states aligning their union laws with their overall presidential choice, and 41 as of last January.  While correlation does not mean causation, in this case right-to-work laws appear to be a politically-related issue. 
Michigan’s shift drew some expected criticism from Democrats, starting with Obama, who called it “the right to work for less money.”  Republicans, led by that state’s governor Rick Snyder, cheered the move as being more pro-business and giving workers a choice, which Charles Krauthammer said, in his column today, was appropriate for a free country.
So what is right from a 2012 perspective?  It is clear.  There should be no laws requiring union membership or payment of union dues.  Why?
Unions were critical to offset the abuses of the early Industrial Revolution, when we did not know how many hours people could work and under what conditions, and people were dying as we found out.  As Krauthammer pointed out, matching what I wrote in Work’s New Age, unions were valuable during the post-war Winning by Default years, when the United States was the prime source for most industrial products and jobs were plentiful.  Since then, as Robert Townsend put it in Further Up the Organization, unions became “part of the problem,” and as Krauthammer similarly wrote, American companies were “saddled with protected, inflated, relatively uncompetitive wages, benefits, and work rules.”     
The jobs crisis is happening because America now has excess capacity in workers.  It is inevitable that compensation come down, and until it does, there will be even more severe job losses.  As Krauthammer said, the positions themselves are most important, and right-to-work states have consistently lower unemployment.  Recently, more companies have closed American plants, or, in the case of Hostess, gone out of business entirely, when they could not come to terms with unions who would not accept lower pay. 
The problem is the same with minimum wage laws.  While higher cash compensation, especially for workers at the bottom, has a considerable stimulus effect, it is inappropriate in a time of decreasing job opportunities to mandate that workers be more expensive.  Pay will find its own level – New Jersey’s proposed minimum wage increase from $7.25 to $8.50 would help few in the likes of Princeton or Newark, where their labor commands that much anyway, but would cut jobs in the less developed south.  It is true that companies have had record profits recently, but that is a case for higher taxation of them in general, especially for those whose jobs are outside the country, not one for forcing them to pay for unions or to raise their lowest wages. 
That is the real choice we have – more jobs, as the market will allow them, or fewer positions at higher pay.  Work is already being concentrated into fewer and fewer Americans, and these laws only encourage more of that.  The peak times of unions have passed, and neither they nor the vast amount of manufacturing their members did will return.  We will not put the country back to work by pricing our workers out of world markets, and unemployed people each earn the same for their labor.  With the most unionized state changing its laws, it is possible that the entire country will be right-to-work by decade’s end.  That will be a good thing for the United States.  

Friday, December 7, 2012

November AJSN: Unemployment is Down – but Latent Demand for Jobs is Up

The official unemployment rate dropped again, from 7.9% to 7.7%.  But does that mean fewer Americans would work if they had the chance?  No. 

The American Job Shortage Number (AJSN), the definitive measure of underlying job demand in the United States, shows that the number wanting to work increased 41,000 in November.   The AJSN, rounded, is unchanged at 20.6 million, as follows:

Latent Demand %
Latent Demand Total
Family Responsibilities
In School or Training
Ill Health or Disability
Did Not Search for Work In  Previous Year
Not Available to Work Now
Do Not Want a Job
Non-Civilian and Institutionalized, 15+
American Expatriates
Consistent with the fall in the official rate, the number of unemployed (the AJSN is not seasonally adjusted) dropped from 11,741,000 to 11,404,000, or 337,000.  The less publicized numbers, though, more than offset that improvement.  Those who left the technically unemployed category for not looking for work over the past year rose 117,000, those describing themselves as “discouraged” jumped 166,000, and those still jobless but not available to work now, shot up from 475,000 to 643,000.  These three increases, in percentage terms, were 3.4%, 20.4%, and 35.4% - they are only monthly changes.  America now has more, not fewer, people wanting to work. 

Other indicators were unimproved.  Per the BLS news release, there are still about 4.8 million unemployed for 27 weeks or more, those working part-time for economic reasons stayed at 8.2 million, and the labor force participation rate, which had increased to 63.8% in October, gave up that gain, returning to 63.6%.  The actual number of Americans working, not seasonally adjusted, dropped almost half a million. 

These are not good numbers.  It is true that Superstorm Sandy had a real effect on some of them, but not in the rise of people becoming discouraged, not looking for work, or suddenly ruling themselves unavailable.   The jobs crisis made no progress in November.  Perhaps, with the election over, all can admit that, and we can look for some real solutions.