As I See It: Still Buoyant After All These Years
December 10, 2012 Victor Rozek
IT is a buoyant profession. It stays afloat in turbulent economic waters. Just in the last four years, it has weathered recession, high unemployment, offshoring, outsourcing, looming austerity, and two rounds of quantitative easing courtesy of Ben Bernanke. (Quantitative easing is a banker’s euphemism for printing tons of money with little benefit to anyone but the bankers.) Nonetheless, it appears the U.S. economy is on the road to recovery.
If so, IT remains the one indispensable asset across all sectors and enterprises. Consider that during the ravages of Sandy, not every business was able to save its inventory, but you can bet everyone safeguarded their data. For that matter, if my house was on fire and my wife could only save me or her computer, I’m pretty sure she’d pick me, but she’d think about it first. It is this centrist role that information plays in our lives, (as well as the technology that stores, manipulates, and interprets it), that guarantees IT professionals will remain highly employable and well compensated through 2013 and beyond.
How well you will do, will, in good measure, be determined by how old you are. Like 3-D movies, experience and institutional knowledge are again in vogue. Not long ago, data centers were alternately centralized and decentralized when the problems solved by adopting one alternative created new problems best solved by the other. Likewise, the outsourcing craze has been around long enough to expose its flaws and limitations. Language barriers, travel requirements, loss of process control, and the demise of team synergy all have hidden costs. Jobs are coming home and experience is at a premium.
Even manufacturing, once the wellspring of middle-class aspirations, is making a slow comeback. Oil prices are three times what they were in 2000, making shipping an expensive proposition. And natural gas prices at home are low, substantially dropping the cost of running energy-intensive factories. Additionally, Chinese wages, once so attractive, are five times what they were in 2000, and are expected to rise 18 percent a year. Little chance of that happening here.
But even if these other inducements were not available, when Chinese factories must be equipped with suicide netting to keep workers from choosing death over servitude, it is time to re-evaluate. And companies have. Suddenly, abandoned manufacturing facilities in the U.S. are being reclaimed by corporations such as General Electric, Otis, Whirlpool, and Wham-O. Even Apple, accused by human rights advocates of employing “iSlaves,” announced it is bringing a fraction of its manufacturing home. The long and winding road for American jobs turned out to be circular. And IT jobs in the manufacturing sector are expected to increase.
In the near term, those already fat and happy are most likely to remain so. Since the recession, participation in the workforce has fallen for every age group except one: people 55 and over. Discovering that your retirement investments are worthless tends to focus the mind. And those Boomers with enough mind left to focus are making a decent living. Granted, they make about $100,000 less than Kobe Bryant makes per game, but that’s still good money, especially if you don’t have an outside shot. According to CNN Money, software architects at the top of their profession can expect a salary of $162,000. Median pay is $119,000. That’s per year. Kobe pockets $236,933 every time he steps onto the court. But the ten-year IT job-growth predictions top out at 24.6 percent, with the expectation that 3.4 million new jobs will be created. You’re not going to see 3.4 million tall guys in baggy shorts finding work.
Those numbers are optimistic, and because optimism is often overstated, it needs to be placed in context. Conveniently, investigative reporters Donald Barlett and James Steele provide one in their disturbing book The Betrayal of the American Dream. Back in 1990 “there were 565,000 programmers in the United States,” and the Department of Labor was bullish on IT job growth prospects. But by 2002, “the number of computer programmers had slipped down to 499,000.” It slipped again in 2006, down to 435,000. By 2008, “the last year for which figures are available, the number had dropped to 427,000.” The trend was not encouraging, and this during a time when the overall workforce increased by 24 percent.
The culprits are by now familiar: NAFTA, the H-1B guest worker program, and above all, offshoring.
While Congress ignored the plight of domestic workers, foreign competitors built formidable infrastructures to support growing software industries. “India’s software exports totaled a mere $10 million in 1985; by 2010 they had reached an estimated $55 billion.” It is therefore particularly gratifying to see nascent reversals of that trend, with 43,000 systems designers were added to the workforce in 2010, a gain of 52,000 IT jobs since 2007. Another 6,000 jobs were added by Internet-based companies. Those numbers don’t grab and shake you like the business end of a taser, but they do reflect the steady, albeit tentative, nature of the recovery.
The resuscitation of the economy, however, will have no immediate impact on the relentless decline of the middle class. And here’s where age again becomes a factor: The younger you are, the more tentative your hold on a middle-class lifestyle. Those 18 to 24 years old have a 15.7 percent unemployment rate, more than double the national average. If you’re in college, you’re probably amassing your share of the biggest private-sector debt in the history of the world. Student loans recently surpassed credit card debt, topping the $1 trillion mark, a burden that will hobble an entire generation (perhaps two) and could morph into the next recovery-crushing bubble. Since, statistically speaking, if you’re under 25 you’re still living with your parents, you may want to consider staying longer.
If you’re lucky enough to have a job, know that years of recession suppressed starting wages so that you entered the work force making 9 percent less than you ordinarily would. “During normal times,” writes Keith Hall for the Los Angeles Times, “the average person sees 70 percent of his or her career wage growth in the first ten years on the job.” But it may take you the better part of a decade just to recover that 9 percent hit. All told, younger workers start further back and carry a bigger load than those who came before. Still, if there is a single profession that will best facilitate closing the gap, it is the rapidly expanding world of information technology.
Signs of domestic revival notwithstanding, the wild card in the economic recovery deck may be Japan. Europe, dancing to Frau Merkel’s austerity jig, appears to be stabilizing the euro at the expense of Europeans. If Greece should suddenly sink into the Aegean, few Germans would shed a tear. But, according to an article by Peter Boone and Simon Johnson in the October issue of the Atlantic, “only Greece has government debt approaching the Japanese level.” So deep in debt is the Japanese government, that “for every $10 that Japan’s economy generates this year, the government will need to borrow $6.”
Like the U.S., Japan has an aging population. About half its annual budget goes to pensions and interest payments. But unlike the U.S., Japanese debt is not widely held: “95 percent of it is in the hands of locals.” One of the ironies of Japan’s past cultural isolation is that public savings are funding public pensions, and that debt is “not backed by hard assets.” One possible outcome is the collapse of the yen. Unlike Greece, the ramifications of Japan sinking into the Pacific would be global and tsunami-esque. As the authors point out, we may be entering an era when large financial institutions (and nations) are not too big to fail, they have become too big to save.
Still, in spite of the sluggishness of the recovery and the uncertainty of global financial systems, IT remains one of the few constants in a schizophrenic world. As the song from Casablanca says, “On that you can rely.”
That is, of course, unless those pesky Mayans are right. Then, all bets are off.