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Where the Jobs Are … and Where They Are Not

A summary of the Time magazine articles, “Where the Jobs Are,” and companion article, “Where the Jobs Are Not,” part one of a yearlong series for 2011

“It’s true -- employment is finally growing again. But this won’t be the recovery as you’ve known it.”

In some of the most depressed national areas, such as Detroit and Louisville, KY, some employers cannot find qualified talent. Kent Neiderhofer needs qualified mechanical engineers in Detroit for Ricardo, an engineering consultancy that designs high-tech power trains for such vehicles as unmanned aerial vehicles and Bugatti sports cars.

General Electric is searching for engineers for its expansion at Appliance Park and three other U.S. locations to build new, green technology home appliances, to comply with new Federal regulations effective by 2014. GE is investing $1B in its appliance sector, which will create 1,300 new jobs at all levels in the next four years. Deloitte is scouting at colleges to hire in all its lines of business. They need tax specialists, lawyers, auditors, and other ’bright minds’ who can learn to solve global business problems. Chinese, Brazilian, and Indian companies are transforming markets. “Deloitte sees the global economy as accelerating, and now gets over 50% if its revenues from fast-growing overseas markets.”

A Possible Turning Point

“Flexible, outwardly focused companies such as Ricardo, GE, and Deloitte are the main force behind an optimistic and underplayed fact: last September, the U.S. stopped bleeding jobs. And now job creation may be a crucial turning point.” Other factors cited include the rise in overall GDP to 3% this year, softened inflation, and movement of stocks.

Cyclical vs. Structural Job Loss

The Great Depression from 2007-2009 saw skyrocketing job losses- close to 8 billion - more than in the previous four recessions combined.

The sharp increases in unemployment since the 1970’s have been cyclical-- a direct reaction to a crisis or recession, with employment then recovered in sync with overall economic recovery.

Structural unemployment, according to economists, results from deeper issues. Megatrends -- growth in technology, the rise of globalization, emerging global markets in Brazil, China, India, and elsewhere; and hyperefficiencies produced by technology allowing businesses to generate record revenues while shedding record numbers of workers-- are critical factors that will not change.

Good news from a major corporation

Applying lean manufacturing methodologies has enabled General Electric to produce appliances at much lower cost, and avoid outsourcing overseas. In this endeavor, their new trend is building multiple “centers of excellence” within the U.S, both preserving and creating new jobs in America.

At GE this means “everyone involved in making a product -- design engineers, suppliers, labor, marketing, and salespeople -- works together on it from concept through finished production. Because the team is focused on one product, there is a cycle of continuous improvement resulting in cost savings,...[and the] increased skill set of the combined workforce.”

The tough news - “Jobs are returning unevenly.”

The economic landscape will not return to the “old-fashioned economy,” and will highly favor those with college degrees over blue-collar workers. Career development director Ray Angle of Chapel Hill, NC, reports intense talks with recruiters who want assurances of the top 10% - 20% in their graduating class as candidates; they are no longer satisfied with ’qualified’ candidates’.

The “education premium” has high pay off. In 2011, those with degrees will control 61% of all new jobs; by 2015, the projection rises to 66.4%. The changed economy will also favor:

Cities that have developed industry clusters where skills match demand.
The Dakotas over states such as Florida, Nevada, and California.
Those who work in the private sector over the public sector.
Companies that sell abroad over those that only sell domestically.

What are the new job sectors?

Technology leads the way. In demand are network systems and data analysts, followed closely by biomedical engineers.
Healthcare and education will generate highest demand for those with graduate degrees.
Professional and business services will create 119,000 jobs for those with bachelor’s degrees.
Salespeople -- 27% across all sectors plan to hire from entry-level to team leaders. At the same time, these same companies will add IT and call center jobs in equal numbers.
Artists, animators, designers, and programmers will also be in demand for companies such as Activision Blizzard, a gaming and entertainment software company.
Energy and mining-increased demand for ores, coal, oil, and gas, by-products of growth in China and India -- is one reason North Dakota’s unemployment rate is only 3.8%.

Where the jobs are not

The construction industry cut 2 million jobs in the past 3 years, and isn’t positioned to restore very many in 2011. The same holds true for the domestic auto industry, “still rationalizing its manufacturing capacity to match market share.” Many men in those industries will remain on the sidelines because they don’t have resources to move to more promising locations. Two opportunities for them may lie in the energy and mining industries. Manufacturing jobs that have been lost are gone forever.

Where is there hope?

Baltimore, MD, lost its middle class in the exodus of some 313,000 residents over the past 60 years. Yet John Hopkins University and Medical Center employs 53,532 and is a “force in emerging fields like bioengineering.” Hopkins has set up training programs for positions such as lab technicians to allow Baltimore residents a chance for jobs it continues to create. It’s one way to help lower the 16% unemployment rate for blacks.

Smith & Wesson, located in Springfield, MA, plans to expand its manufacturing site and will create 225 new jobs at all levels over the next two years. They will have plenty of skilled workers because the company sends all its used equipment to vocational schools and local community colleges. They do this to help develop the skilled workforce required to run the numerically controlled machining used to precision cut metal.

GE in Louisville, KY, has reversed direction in its appliance manufacturing from outsourcing to producing new product lines domestically. This was made possible by converting to lean manufacturing practices used in the auto industry that lower costs, reduce waste, and thus create new jobs.

As more companies apply lean manufacturing across the country, unit labor costs have fallen, setting a model for a competitive U.S. workforce in high-end manufacturing.

Note: The complete article contains many interesting statistics in tables and graphic illustrations you may find interesting.

Source: Time magazine,pp. 26-35, published January 17, 2011

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