Alex Carrick: Thinking About Your Job Prospects? Give Thanks to the High-Tech Sector
Whenever I’m asked to make a public presentation, I highlight three key trends that are shaping the world economy – emerging markets, aging baby boomers and government austerity efforts.
They closely tie together and each one individually helps to explain what is happening with the other two.
More recently, I’ve come to consider that there is a fourth major influence. It is far from being a secret, but has become so pervasive that it’s often overlooked. What I’m speaking about is advances in high tech. Major companies, vertically and horizontally, in the knowledge-based arena are providing pillars to support our entire industrial structure.
What does this mean for such mainstays of employment as manufacturing and construction? In Canada, we’re lucky because the developing market effect ensures ongoing demand for our raw materials. Resultant investments at major resource sites will provide strong job levels in construction. In fact, due to the aging baby boom dilemma, a major concern in the construction industry is where the skilled trades-people will be found to do all the work that is scheduled.
In manufacturing, Canada has a higher-valued dollar to contend with as well as the tendency for jobs to migrate overseas, where labor is cheaper. This is where the high-tech sector is making such a difference. Job losses in traditional areas are being counter-balanced by job gains at firms with knowledge-based mission statements.
Such firms move well beyond hardware products and software services to encompass telecommunications, systems analysis and pretty much anything with the prefix ‘bio’. An argument can even be made that jobs in manufacturing and construction have become less appealing for many people because of alternative employment in some manner of high-tech work. But it needs to be recognized that this also means distortions are occurring in labour markets.
The qualities that have traditionally made for a good worker in manufacturing or construction – for example, using ones hands or perhaps having a love for the outdoors – may not transition well into what’s required to become a great programmer or systems person.
The latter positions are more cerebral and sedentary.
There is also a generational divide. Young people are growing up in an entirely different world than their parents. They’re used to laptops, smartphones, data streaming, looking up information on the Internet and communicating with their friends by way of social media. Older workers often find these activities less intuitive, at the very least. I say this fully conscious it’s important to be kind to people of my age. In other words, I can relate.
The U.S. economy is beginning to revive. But it continues to struggle with a persistent and difficult problem, a moribund housing sector. High-tech may be coming to its rescue.
The first stirrings of recovery in U.S. residential markets are appearing on the rental side. Young people are graduating from university and finding work in fields that demand their newly-acquired cutting-edge expertise. Setting up their first homes away from the family nest has been helping to boost condo demand in certain geographic clusters.
A not so well-known fact is that the high-tech sector in the U.S. experienced a relatively good recession. It recorded nothing like the job losses that occurred in the dot.com collapse of 2001.
Since 2009, many U.S. corporations have realized high profit levels while being tardy in hiring back workers. They’ve managed this through productivity improvements. What’s been the facilitator? High tech.
The North American stock market index that has made the greatest percentage gain since the trough of February 2009 has been NASDAQ, which has doubled in value over the past three years. It now stands above its previous peak from before the recession, although it’s still not at the heights it achieved in the dot.com boom – but that was a period of totally unrealistic expectations.
Before going overboard about the success of NASDAQ, there is something that should be pointed out. Much of its recent success has been tied to one company. Due to the acceptance of its iconic products (i.e., iPods, iPhones and iPads), the valuation of Apple has increased dramatically. Apple plays a role in NASDAQ that is twice as significant as the next closest firm, Microsoft.
But there’s more to the story. Toss an Apple product into the consumer market and what do you think happens? You get a ripple effect. There are now said to be half a million applications for the iPhone. The cellphone “apps” industry has emerged virtually out of nowhere in the past five years.
Manufacturing and construction haven’t been the only industries affected by the changing times.
Certain segments of retail are also being dramatically transformed. Think video stores. They were born out of new technology, rose to their zenith and all but disappeared within a span of 25 years. Downloading and streaming services have largely replaced them.
Book stores, book publishers and information providers know the challenges they’re facing. Their products can now be delivered much faster and cheaper digitally. Consider where you’re reading my words. The Canadian Business Journal is an Internet-only magazine.
Apple, Microsoft, Dell, Cisco Systems, Intel and several others are among our biggest corporations.
Professors and researchers are not only helping to shape the new order, they also owe the existence of their positions to accelerating advances in technology.
Many of the largest IPOs (initial public offerings) in the stock market lately have involved high-tech firms, often in the field of social media.
Manufacturing and construction aren’t divorced from these proceedings. Accounting functions, inventory management, on-site scheduling and a host of other activities have migrated to the clouds or a server in the back room. That’s not even to mention advances in 3D imaging that are part of the CAD-CAM and BIM wave.
While it’s a cliché to say we’re living in a bright new world, it doesn’t take away from the truth of the matter. A continual upgrading of skills and a willingness to embrace change will be necessary for the worker of tomorrow to stay employed.
One shouldn’t bemoan the situation. Thank goodness advances in high tech have become the rule rather than the exception.
They’re providing the job opportunities we might otherwise not have.
Alex Carrick is Chief Economist with CanaData, a division of Reed Construction Data (RCD). CanaData is the leading supplier of statistics and forecasting information for the Canadian construction industry. RCD is a division of the global publishing firm, Reed Elsevier. For more economic insight from RCD, please visit www.dailycommercialnews.com/features/economy. Mr. Carrick’s lifestyle blog is at www.alexcarrick.com and he would welcome a follow on Twitter (Alex_Carrick) or Facebook.