The single most important line in the President’s State of the Union speech to Congress last night hasn’t gotten a lot of attention. Here it is:
Over the next ten years, nearly half of all new jobs will require education that goes beyond a high school degree. And yet, as many as a quarter of our students aren’t even finishing high school.
Everyone wants to blame China and India, the rich, the poor, the “elites”, the government, illegal immigrants, the insurance companies, the Republicans, the Democrats, the gays, the straights, the old folks, the young folks, the corporate CEO’s, the Christians, the Muslims, the Red States, the Blue States. It seems like everyone, everywhere wants to fault someone or something for the economic condition in which we find ourselves.
The United States Population Isn’t Educated Enough in Math, Science, and Computer Technology
The reality is, America is facing a situation where the rate of technological advancement has reached a point where a growing percentage of the population is unprepared to do the work required to meet society’s needs and wants. As the President pointed out in his speech, and I have written about numerous times in the past, it used to be that you just had to go down to the local factory to get a job. If you were willing to work hard, you could provide for a family and retire in comfort. Those days are over and they are never returning.
Unless you can do something that is needed so that you can charge an above-average rate for your skills – such as design a power plant or design and code amazing software programs – you are going to be doomed to a below average life, economically speaking (which is different from life satisfaction – there are more important things than money). You already know this, though. Although there are individual exceptions, as a group, America’s doctors, lawyers, accountants, engineers, biologists, and chemists are doing just fine.
A story from The New York Times and Yahoo Finance illustrates this:
You often hear that income has stagnated in recent years, but it hasn’t exactly stagnated for four-year college graduates. They have received a 19 percent raise since 1979, on top of inflation. People who went to college without getting a four-year degree — a combination of dropouts and two-year graduates — suffered a 7 percent pay cut.
[mainbodyad]Think about the modern-day Ford and General Electrics. Mark Zuckerberg was able to start Facebook, create jobs, and bring untold wealth to the United States because he had high level computer programming skills. When he had the idea to create the site, he had the ability to execute that idea and bring it into reality and, just as importantly, to find other people who also had those skills so he could leverage their combined knowledge and get the project done. When Larry Paige and Sergey Brin created Google, they had the mathematical skills necessary to design the algorithm that made their product return more relevant results than competitors, leading to ever-increasing rates of consumer acceptance until they came to dominate the market.
This is one of the reasons I cringe when I hear someone talk about how they have lived in a depressed area of the country and waited for “two years” to find jobs but “there aren’t any”. Then go into a different industry! Software and hardware development and engineering are the same today as automobiles and airplanes were last century. One of the top applications on the iPhone apps store was designed by a kid in 8th grade. If he inserts ads into his code, he could make a few hundred thousand dollars in profit, which is more than the annual salary of several of his teachers’ combined, simply because he has skills that they don’t!
The new economic world order is that results matter. Tenure, loyalty and job passion are meaningless unless they lead to results.
This problem is exacerbated when you consider that due to the population difference between the United States and China, the smartest 1/5th of people in China outnumber all of the citizens in the United States, meaning they have an enormous workforce advance. But the size difference between the United States and, say, Switzerland didn’t stop the latter from becoming wealthy and specializing in high net worth banking. It just means that America is going to have to become the world’s Silicon Valley in energy, technology, and finance.
It’s Time We Start Talking About Reality
I was so happy to see a sitting President finally acknowledge what every economist alive has known for a long time :
In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an internet connection.
This could be a huge benefit for the nation. If the 900 people who don’t work at the steel mill were instead retrained to become pharmaceutical researchers so we could solve the ailments of old age and disease, society prospers, the steel mill reports higher profits for its stockholders, and the government collects more tax revenue. If, instead, those 900 people sit around waiting for “good jobs” to come back, the nation enters decline, the acrimony of class warfare begins to flare, and the government starts trying to redistribute wealth from those who work to those who don’t.
To Make Money, Build Your Marketable Skills
[mainbodyad]I try to retain as many marketable skills as possible. God forbid, if I lost everything and had to start over, I could feed myself by playing piano in a bar or at weddings, I could code websites and earn at least $75,000 a year or more once I had some time to build a name brand for my company, I could design software applications and then outsource the development to more experienced programmers, I could write books, I could open an embroidery company, I could offer search engine optimization services, or I could walk into a money management firm and get hired for six-figures to manage an institutional portfolio or mutual fund due to my record, which I would turn over at the time.
Don’t wait for someone else to show up and create jobs. Build your marketable skills to increase the chances of getting hired. If you know that your skills are worth money but can’t find someone to hire you, you have the option of hiring yourself by going into business.
And there is a bright side. We can fix this as a nation. The United States of America represents less than 5% of the global population yet we control roughly 50% of the world’s wealth. We are the richest, most prosperous nation in the history of mankind. The average middle class citizen today, with access to air conditioning and heating, running water, medical care, the Internet, cell phones, endless varieties of clothing, food, and shelter lives better than the princes, dukes, and earls of yesteryear. That is a fantastic head start on the rest of the world.