When you can’t change the direction of the wind – adjust your sails. – H. Jackson Brown Jr.
In the prior part I American Dream post, I described 6 technology advancements which will transform and revolutionize our world and every day life as we know it today. The trouble is, most middle class workers are working harder for longer hours, yet wages have stagnated for them.
Traditionally, the mainstream view of the path to the American Dream was:
- Get a good education
- Land a job with a good employer
- Work hard and prove your value
- Save and invest some of your money every month
- Retire with a pension or IRA money
Rapid advancements in technology combined with expansion of global commerce and competition have radically changed the landscape.
In the 70s, a worker with a high school diploma could work in a variety of factories doing repetitive mechanical tasks on a production line (riveting door panels in auto production for example) and earn a solid income doing so. Now industrial robots do the bulk of such work more quickly, at a lower cost with fewer errors. There are still jobs for humans in US factories, but they are fewer in number and typically require a college education and computer skills.
Similarly there used to be garment factories in America with workers seated at long tables with sewing machines. The work was tedious and arduous, but paid well. Technology and global economics moved most of these jobs offshore. It would make no sense to pay someone in the US $30 per hour to do a task that someone in China could do equally well for $1.50 per hour or that could be done by an industrial robot.
While many lament the loss of manufacturing in America, very few would sign up to be workers in a new American manufacturing paradigm where the wages for low skill work could be $3.50 per hour. In fact, very few would sign up to be paid even minimum wage for such tasks.
Large American corporations are pressured by shareholders (including those who work at the companies) to increase their earnings every quarter. On the one hand, the corporations must maintain their profit margins to stay in business, but shareholders want “juiced up” results every quarter forcing the companies into cost-cutting measures – layoffs. Labor is a large cost and immediate, temporary “savings” are realized through layoffs to reduce the labor force. Wall Street investors like the artificially produced earnings, they buy the stock, causing the stock prices to rise. Everyone seems to win but the workers who must work longer and harder (less employees doing the same work volume) and expect paltry raises and frequent layoffs.
Until the artificial short-term what have you done for me lately paradigm changes, stagnant wages will be the result.
There are at least two good solutions to the problem described above:
- Work in industries where labor demand is high and supply is limited
- Start up a small business part-time that is aligned with your talents and can be grown
1. The medical profession is growing and millions of aging Baby Boomers will require more, not less healthcare. A nurse just graduated from college can soon be earning $70,000 per year. There will be increasing demand for medical technicians and a variety of other medical services. Computerization is rapidly increasing and demand for software developers is very high. For the non college educated, there will always be demand for welders, mechanics and similar trade skills. A person with these skills can earn a good living.
2. For anyone who is an employee, it is a good idea to start up a small business part time. The business might not succeed, but if the business is run carefully and it taps your skill set, it gives you another option for income beyond the 9 to 5. If and when the next corporate layoff comes your way, it might be the opportune time to make the leap to full time in your business.
Both recommendations above require a change in thinking: instead of bemoaning the wind direction (changes in the corporate landscape that don’t favor workers), adjust your sails (your skills, your career or small business) so you can chart your course to success.