Not "Peak Oil" But "Peak Jobs": And Being Local Is Irrelevant

By James Santagata
Principal Consultant, Silicon Edge

Recently Andy Serwer, managing editor of Fortune, sat down with Marc Andreesen to discuss The Future of Work, Cars and the Wisdom in Saying 'No' (full, unabridged version on Forbes Magazine here: Inside the mind of Marc Andreessen).

In this interview, I was particularly struck with Marc's views on the impact of the ever-accelerating and widening technological adoption on the job market, and the elimination of entire categories of jobs as well as his comments on education and the need for re-training.

Andy Serwer: We all understand that the Internet revolution is inevitable at this point, but it’s also kind of controversial. There are scads of new jobs at Facebook and Twitter and other places, but what about the ones that are destroyed by the inroads of technology into every industry? Are you actually creating more than you’re destroying?

Marc Andreessen: Jobs are critically important, but looking at economic change through the impact on jobs has always been a difficult way to think about economic progress. Let’s take a historical example. Once upon a time, 100 percent of the United States effectively was in agriculture, right? Now it’s down to 3 percent. Productivity in agriculture has exploded. Output has never been higher. The same thing happened in manufacturing 150 years ago or so. It would have been very easy to say, “Stop economic progress because what are all the farmers going to do if they can’t farm?” And of course, we didn’t stop the progress of mechanization and manufacturing, and our answer instead was the creation of new industries.

From my vantage point, this is completely off track for one main reason -- in the earlier stages of mechanization and automation we had far, far, far fewer people on this planet so that these productivity increases could support and sustain larger and larger populations. In addition, the rate of change was far lower and more localized. It was the difference of seeing single family home burn, to the firebombing off an entire city with no where to run to the simultaneous firebombing of an entire country if not world. 

The logical implication of the initial waves of mechanization and automation was that an individual had to gain more or better skills perhaps in either designing, manufacturing, managing or servicing the production and automation manufacturing  tools (such as injection molding machines, machine vision, semiconductor fabrication tools like a CVD tool or a stepper, etc.), the automation or productivity tools to design or support the development of these tools (such as CAD/CAM software, testing software, etc.) or in some other area supporting it such as marketing, sales and so forth.

There was still great pain associated with this in parts of the US and other markets, but by and large it worked.

The new wrinkle, though, is that this automation is not only happening everywhere at once but across wide swaths of both industries and functional areas. If you look at what is on the near horizon, autonomous vehicles, drones, 3D printers, even greater factory automation, visual inspection, automation for agriculture and so on, we saw that especially in labor intensive or high wage (on a relative basis) jobs, much of this work was first offshored or moved internally/domestically to the low cost provider or region. 

For the next phase, many of these jobs that have already been offshored (such as call centers or assembly jobs),may be completely eliminated through more efficient troubleshooting algorithms and well as expert systems to handle the service call rather than people.

This is happening now in both China where Foxconn has increased its purchase of factory automation (FA) systems and robotics and in the US where higher value manufacturing is moving back on shore -- but it's highly automated, not employing large amounts of people but a few select technicians and managers who, of course, are highly trained (on a relative basis).

All and all, this wouldn't be a problem as people could and I feel should move up stream educationally and into more and more cerebral work. 

Many people then blindly shoot out that these displaced workers as well as everyone will need an "an education" or more of an "education". 

But this is completely off base. An education by itself is irrelevant unless it is the proper education. And that often means obtains some tools or skills that allow you to keep learning or give you some longer-term competitive advantage and/or are monetizable.

Your skills need to bring value to the market place in a way that you can monetize them directly or through an employer.

But wait, there are two more wrinkles: First, most of the education that is being offered now is sorely lacking in transferring the key skills that people may need to not only be able to do the job, but to keep the job and then keep moving on to the next job again and again while trying to their maintain value in the marketplace until they "retire".

Marc seems extremely optimistic on this point:
Marc Andreessen:  And then for all this to work, a lot of people will have to get retrained, they’ll have to develop new skills. Education is going to become even more important. People are going to have to be much more adaptable in this economy. This has been a trend for a long time; the days of lifetime employment are long since over. And the whole system of how everything works – from education to health care and housing – has to adapt to an era in which people are going to have a lot more jobs over the course of their career. 

The problem is if it were that easy for people to skill up, they already would have. But they haven't. Why didn't all of the autoworkers and steel factory workers do this and simply skill up in the 1970's and 1980's when their ranks were decimated?

There are many reasons but the fact is they didn't. And that was easy back then. The jump from skill level A to C was a cakewalk compared to the requirement many times to jump from skill level A to M...

In the coming years, perhaps by 2020 at the lastest, we will have almost complete elimination of truck drivers, cab drivers, many medical personnel, book keepers and yes, software developers and so on where will they all go? Who will retrain them? And most importantly what will they retrain to do?

This is especially going to be an issue for manual laborers (ironically, excluding plumbers and perhaps auto mechanics for the foreseeable future), factory workers and transportation drivers. Again how will the retrain? Do they have the ability to do so? After all, if they had the ability or resources to skill up beyond their current job, and on a relative basis it's a simple and cheap task to accomplish compared to what it's going to be, why haven't they done it?

And again, if they haven't been able now to make the small jump from skill level A to C, how does Marc expect these same folk to make the massive leap from skill level A to M in the near future?

This leads me to believe that we are at not Peak Oil (we're pumping more than ever with Mexico, as just one more example, about to float us away in crude) but Peak Jobs. As more and more automation eats away the lower and lower levels of jobs as well as the easily automated jobs albeit higher value jobs, starting with the middle class (book keeping, accounting, call centers, etc.), they'll be more and more displaced people.

The good news is this. It won't be an unmitigated disaster for everyone. No. Only the unprepared. So instead, prepare for a hyper competitive forms of global musical chairs where you competitors are humans from all around the world as well as robots, drones, bots, algorithms and expert systems.

The ability to take a seat, fortunately, won't be predicated on your reaction time when the music stops playing. Nope. It'll be predicated on both the value you can add as well as your ability to package, present and communicate that value to the employer or customer.

For those that are already skilled or who can skill up in the proper areas with the proper curriculum (going back to the traditional academic environment offering the same tired, numb curriculum not only isn't going to help but it will hurt you as you layout hard earned cash and waste time, energy and suffer forgone wages while you are out of the labor market) by redirecting their current outlay of time and energy, the future may be brighter than ever. That means more and more people will need to ask themselves:

• Do I watch the football game or learn javascript?
  
• Do I play Call of Duty or do I read a sales book? 
  
• Do I take an internship or a side job?
  
• And so on.
  

It becomes a decision of where people put their time. Now, this bar is going to be raised even higher in the US and other developed countries versus the developing world, although the developed world will most likely be able to respond, though it is doubtful about England and France. Others developed countries like Germany and the Scandinavian countries are much better positioned for this.

But where does this leave the developing countries?

Hurting. 

We can expect this compounding rapidly. I think what Marc misses is that we are now at "peak jobs" -- I'm no Luddite, just a realist. You add in all of the new automation now and in development from autonomous vehicles, drones, factory automation, 3D printing, expert systems + AI, and you'll see huge numbers of jobs being irrelevant, including soldiers, and this will become even more apparent and widespread as more and more of the cartels are broken and the enabling regulatory capture is done away with -- or as a reaction to this, regulatory capture by special interest groups and incumbents may increase or accelerate. In the face of global competition, that will be tough though. 

At the same time, the easy access to labor, technology, markets, etc.no longer assures that "average" or "below average" people are employable just by virtue of their geographic location. Forty or fifty years ago, if you were a small bar near an auto plant in Detroit, you could have subpar service or drinks but make money because you were local, Detroit was flush with cash, and people obviously drank local. Same with book shops, shoes shops, dvd shops and record shops. Not any more. You can get what you need from Amazon, Zappos, Javari, Gilt Groupe, NetFlix and iTunes among many others.

We also see this playing out in Silicon Valley, where there are many great paying jobs, but it is not the proximity to the valley or the jobs that matter but the skills you have.

So a local resident from say, Bayview-Hunters Point, doesn't have an automatic advantage over an applicant who is applying from Massachusetts, India or China (although the Indian or Chinese applicant has some barrier due to acquiring the proper work visa). In fact, if the BHP applicant has no relevant tech skills while the Massachusetts applicant is a switched on computer science graduate, guess who's getting the $150,000 software development job?

Being local is irrelevant.

On a national basis, the countries that succeed in the future in the face of this accelerated automation and mechanization will be those that empower their citizens while maintaining (on a relative basis) a small, highly-educated and tightly knit, socially-cemented population. 

Examples would include obviously Japan, perhaps Switzerland and Denmark. Other nations like the US will be a split case (have's and have not's due to the huge continuing immigration waves + the heterogeneous cultures operating within the US (see: Two Cultures In America Separated By I Do - New York Times).

And still other countries with huge and growing populations (Indonesia, China, India, Mexico) will be hard hit by virtue of having too many people, especially too many people in low wage, low value jobs, especially in assembly or agrarian roles. These populations will then shrink from this economic pressure or it will lead to massive unrest and/or forced redistribution of assets to support those that are having too many dependents and/or non-marketable skills based on the market needs at the time.

The next 10 to 20 years are going to be amazing, though not necessarily for those outside the system and without skills.

Action Items: To position yourself (or your children) now and in the future for these tectonic labor market shifts I would suggest:
1. Understand the skills you acquire should help you do a job and future proof yourself. These skills must be monetizable.
2. Understand that acquiring these monetizable skills aren't enough. You need to understand how to discover a job.
3. Understand that after discovering a job (or creating one) you must be able to package and present yourself and then close the job.
4. Understand that once you have the job you need to maintain it/keep and work to produce deliverables and takeaways for when you leave or are asked to leave your current job.
5. Understand that you still then need to know how to move to the next job (which one? when and how?) and somehow stay on track to leverage each previous skill and job and continue to build a career as you monetize your skills.


The skills you should acquire:
Start with hard skills in the sciences, computers, math, critical thinking & analysis and foreign language acquistion (even if they are basic or rudimentary). From there:

1. Communication Skills
2. Negotiating Skills
3. Influencing Skills
4. Persuasion Skills
5. Assertiveness Skills
6. Leadership Skills

Resources:

1. Can't Get A Job (or The Job You Want)? Master The Job Search Lifecycle (Career OverDrive!) 
   
2. Stop Being Anxious About Your Career & Learn How To Future Proof Yourself