Labor Market in a Flat World

A Flat World

In 2005, over 400,000 tax returns were prepared overseas.

Radiologists in other countries are reading your MRI.

Someone in India is taking your order or fixing your problem

You can pay your bills, apply for a loan and do all your banking without ever talking to anyone.

You’ve become your own ticket agent, baggage handler and concierge.

Advancements in Computer tech, Biotechnology and Nanotechnology are automating everything.

The Internet links workers and work – 24/7.

Companies can go where the talent is cheap

And they do.

Since 2000, 150 million educated workers have joined the global workforce.

There are 150 million people in the entire US workforce.

Are all 150 million people in

the US workforce in the

global workforce?

In 2005,

• 3.3 million Chinese graduated from college, 600,000 of them with engineering degrees.

• 3.1 million Indians graduated, all fluent in English. 350,000 have engineering degrees.

• 1.3 million Americans graduated, 70,000 with degrees in engineering.

$700 a month provides a solid living for a college-educated call center worker in India.

A Chinese manufacturing worker makes $265/month or $3,195/year.

Wow! That’s cheap!

How did we get here?

The Flatteners

Phase I• Berlin Wall, MS Windows• Netscape• Work-flow software

The Flatteners

Phase II• Open Sourcing• Outsourcing• Off-shoring• Supply Chaining• Information Diving• “The Steroids”

What does this mean for us?

Traditional View of Workforce

• Workplace is reasonably linear, stable and predictable

• We can predict:– What work will be available– What skills/training will be required– Career paths

• Pace of change is slow – time to change if necessary

• Traditional education/training programs will work

This is the old way of

thinking.

Traditional views won’t cut it anymore.

Work is . . .

• Chaotic and unpredictable

• Decentralized• Collaborative• Technology-intense• Information-rich• Entrepreneurial

Workers must be . . .

• Informed• Adaptable• Literate• Highly Skilled• Entrepreneurial

Three kinds of jobs . . .

• Fungible jobs• Anchored jobs• Value-added

jobs

Fungible jobs:

• Are easily digitized• Don’t require face-to-face interaction• Rely on “rules”• Require minimal interpretation or

decision-making• Can be partially or completely

automated

These jobs can be outsourced . . .

• Travel/ticketing• Junior accounting and

legal services• Bill/mortgage

processing• Medical

testing/diagnostics• Computer programming• Medical transcription

Anchored Jobs

Must be performed in a particular geographic location

Anchored – Tier 1

•Requires low skill levels •Pays low wages

Anchored – Tier 2

• Require higher skills• Pay higher wages

BUT THERE CAN BE FUNGIBLE PARTS OF ANCHORED JOBS . . .

Fungible Parts of Anchored jobs . . .

• Radiologists in India are reading X-rays for American patients.

• McDonald’s is outsourcing drive-thru ordering.• Hospitals in India now offer reasonably-priced

post-surgical sight-seeing trips.– They serve 55,000 foreign patients/year– 75% are uninsured and underinsured Americans

Value-Added Jobs•Depth/breadth of skills•Constant change•High levels of interaction, decision-making, creativity•Technological proficiency

Traditional Questions

• Demand?•Wages?•Working conditions?• Preparation?• Advancement?

Questions people considered when

choosing a career in the “round” world.

New Labor Market Questions

• Less money somewhere else?

• Could it be automated?• How will technology

change work requirements in the future?

Questions today’s students should ask

themselves when choosing a career.

Automation?

• Turbo Tax has replaced your accountant.• ATMs and on-line banking have replaced your

bank teller.• E-ticket check-in has replaced your ticket

agent and baggage handling.• Automation and “do-it-yourself” tests may

make Med Techs obsolete.

Average Global Salaries for Programmers

Poland/India/China Canada/Ireland USA

$5,000--$11,000 $23,000 -- $34,000 $60,000 --$80,000

What do you think

will happen to

these jobs?

How Does Tech Change the Job?

• With the Internet you can be your own lawyer.• “Wireless healthcare” changes how medical

professionals interact with patients.• Automotive technology – workers must be able

to work with computerized shop equipment, electronic components and traditional hand tools.

• Financial Planners – more focus on empathy, ability to work with people.

Career Plans in a Flat World

• Evaluate career paths for fungibility and potential for automation

• Monitor impact of technology.

• Anticipate & respond to job/skill changes.

• Prepare for Pier II Anchored or Value-Add jobs

• Focus on Life-time Employability.