So, you lost your job to outsourcing and can't pay your bills

Handprints said:

I think this is well worth talking about but I wonder how we're going to do it: I'm not the type to argue from a philosophical basis,

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But philosophical bases were crucial to the very formation of democracy and even capitalism. That's the human element.

This is the problem with purist capitalism - you can't reduce humanity to ledger entries without some major problems.

so I'm not really going to contribute much to discussions of motive or moral rights. I'm also not American: I think I'm middle class because I don't have a title and I don't come home from work with machine oil and metal shavings in my hair (although some of my middle class friends do, so I suppose that one's out of date).

So let's set some boundaries for who we're talking about and what's happening to them, if we can?

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First, let's bring some facts into this. I'll assume people will read and spare the quotations, but here's some of the documentation:

The shrinking middle class, and a solid numerical standard for proving it:
http://www.factcheck.org/article249.html

Workers' salaries are lagging behind productivity growth - the rich CEOs are making a killing while workers have only gained 1% since 2000:
http://www.economist.com/world/displaystory.cfm?story_id=7055911

Middle class neighborhoods are going away:
http://www.nytimes.com/2006/06/22/nyregion/22income.html

Middle management: 2nd quartile of the US income range as a proxy? Some professional body that's not subject to one industry's economic tides? Which group's numbers are we going to look at?

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I'm still working on that part.

Consumer spending out of surplus income is usually good. Consumer spending out of debt usually backfires. If wages really are going down, is that a problem if the pre-surplus costs are also falling?

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It is a problem if you're the one without a job; it is a problem nationwide when the price of essentials are not falling as fast as wages are. Essentials being rent, gasoline, food, etc. - all of which are rising.

"Always the low prices, always" is something a business can only do if its offering a commodity good or service: supermarkets, nickel producers, chip makers, blood tests and the like. Everybody else competes on something other than price: service, customisation, amenities, whatever. There are fewer businesses (as a percentage) in the US competing with price as their main competitive strength than in just about any other country and hundreds of thousands, if not more, fewer than there were 30 years ago.

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That might explain why we've utterly lost our automobile industry - and countless jobs. Where do people thing those workers are going to "retrain" to? What proof do we have that they're not dropping out of the economy? We have great proof that they are - see: Detroit, Michigan.

It's the refusal to compete on price (or the recognition that it's America's weakness, in light of cheaper labour elsewhere, if you prefer) that has changed the working class' typical job location from the factory floor into call centers, malls and Humvee detailing shops.

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So we compete on innovation. Do you see there being 300 million inventors and innovators?

You don't seem to prefer service sector jobs to shopfloor jobs, if I've understood your previous posts correctly. I work in the service sector, as do Buffett, Gates, and A-Rod; it's been pretty good to us. (Ok, better for them even though I can hit a curveball in the post-season just as well as any of them.) I'm not sure I see how one's economic prospects become more circumscribed by moving out of industry.

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The rise of the service sector is the doom of a country's economy. Rgraham is right - every time you abandon manufacturing, you are doomed to become a has-been. Fact of history.

By the way, who do we mean by working class? Is it the lowest quartile of household incomes? Is it defined by educational level? Is it the old joke about jobs where you need a shower before your wife will kiss you?

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Let's start with entry level jobs.

I'll go with tech, for one. You could earn a reasonable living by jumping right into a tech company as a lowly support rep and learning the system until you became a higher end worker (software tester, then project manager) and then an innovator (product designer). Nowadays? Companies are looking for the super hot shots. They don't even have room for rank newbs. Don't even bother looking for "no experience necessary; we'll train" except as a cashier at Wal Mart. You can, however, find that in India or China. Or Eastern Europe, if the water line has already risen that far in Asia.

Big problem, though... where do hot shots come from? They train up from the level of rank newbs. Which aren't getting any chance at all in America any more. Which is why you see all the hottest tech gadgets coming out of Asia, and being sold only to the Asian markets (most of them laugh out loud at the practically prehistoric "iPod" ). Then there is the freedom that their cell phone networks have that our Corporate-dominated, cult-of-the-proprietary America doesn't have, butidigress. China and India have talked about a tech alliance. Our tech industry is on the verge of becoming the auto industry... but I will have to wait until it happens and I change roles from a "chicken little prophet of doom" to a historian on this subject.

America is already losing its tech edge; this is a known fact. Corporations trump this fact when it is convenient for them: http://www.usatoday.com/tech/news/techinnovations/2005-03-09-competitive-edge_x.htm

In fact, some now say that we are losing our edge in innovation in general: http://www.businessweek.com/magazine/content/07_43/b4055111.htm?campaign_id=rss_topEmailedStories

Why is this happening? Partially because fewer Americans are now interested in tech:
http://www.usatoday.com/tech/news/2004-08-08-computer-science_x.htm
I'll explain why fewer Americans are getting into tech: it's because they know these jobs simply are not here in America any more. The market has spoken, and the market has spoken right back to itself: the tech jobs are going overseas, so few people want to take it up as a curriculum. Supply, demand.

I think the biggest factor behind the sub-prime crash was a large number of people taking on mortgages they couldn't hope to pay. I'm not yet convinced, because you haven't yet had an opportunity to tell me which group we're discussing, that there is significant pressure on wages to force them down. I also don't understand what force is capable of putting upward pressure on middle class debt. If you mean the prospect (or reality) of job loss, that's (I'd have thought fairly self-evidently) the time to put your life on e-Bay and pay it all off as there's not going to be any income to service it with.

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Wages for the middle class have risen 1% since 2000. The mortgages have risen faster than that. Even the Cato Institute - the high priests of laissez-faire capitalism - can't reasonably fudge the wage figures to put them at a higher growth rate than these mortgages: wages are essentially stagnant for those who did not get outsourced and who are not at the top of these corporations. Also, don't forget about all those people recently put out of work.

I'll reiterate: it's not just the stunningly steep subprime resets that hit Joe Mortgage holder. It was also his super slowly rising wages; his skyrocketing gasoline prices; his rising utility bills (in some states); medical bills; and so on.

And yes, part of this was about people purchasing homes they could not really afford. I warned people that homes were becoming incredibly unaffordable 3 years ago and I got utterly flamed about it on the General Board. Now they're saying "duh, we knew that was gonna happen (*cough* bullshit *cough*)". Go figure. Now the fact that these homes were unaffordable, has hit home. But many other big, nasty things, aforementioned above, also hit home at the same time.

I stand by my assessment that if wages had not stagnated since 2000 to now, these resets would not be a crisis. It would be an ugly and annoying newspaper footnote.

Now, what is putting upward pressure on middle class debt? Simple. Stagnant wages, rising mortgage rates, rising rent, rising gasoline prices, rising utilities, rising food costs attendant to rising gasoline (transportation), and so on.

Again, stagnating wages:
http://www.nytimes.com/2006/08/28/b...d527e44a0&ei=5090&partner=rssuserland&emc=rss
http://www.workforce.com/section/00/article/24/50/02.html

The only way I can construe the first part of that to make sense is if we're measuring poverty comparatively: "I'm getting poorer because my earnings, expressed as a percentage of the richest man's earnings, are getting smaller." America's poor (Bottom quartile of the income range, bottom decile? You pick.) are making more money every year, at a rate that has exceeded inflation in each of the past 20 years, according to the Bureau of Labor Statistics.

Give me a group called "middle class" whose numbers we can measure over time and I'll tell you whether or not I think it's dwindling.

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Done.



I'm middle class, I'm overrated. You can continue the poll when you find time.

Regards,
H[/QUOTE]

LovingTongue said:

First, let's bring some facts into this. I'll assume people will read and spare the quotations, but here's some of the documentation:

The shrinking middle class, and a solid numerical standard for proving it:
http://www.factcheck.org/article249.html

Workers' salaries are lagging behind productivity growth - the rich CEOs are making a killing while workers have only gained 1% since 2000:
http://www.economist.com/world/displaystory.cfm?story_id=7055911

Middle class neighborhoods are going away:
http://www.nytimes.com/2006/06/22/nyregion/22income.html

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Let's take them in order: the first analysis of the census figures is an awfully good illustration for the problems of proxying the middle class. The 25K-to-75K earning group has declined in one year, according to the census figures, with more moving down than up.

I think that's an interesting datum, so I went to census.gov to learn more. The numbers are reported at 90% confidence, which means we ought to take a change as small as -0.4% with a grain of salt but I'm willing to believe it. What troubles me quite a bit more about using median income as a proxy for the middle class is that two significant demographic changes are acting on the median, both of which ought to have the effect of reducing it: retirements and immigration.

An increasing chunk of the US population was, in that period, over 60 and eligible to retire (or already retired), if they were willing to accept that reduction in income. Immigrants tend to make less than the median income (especially the illegal ones, who are also sampled in the census count). We don't have any numbers to help us understand what effect those two large groups are having on the median income. We have at least some feeling that they both might have been growing in the period

Economist piece: sorry, I'm not at work - can't see it without a sub. I've already suggested that poorer-relative-to-the-richest-guy seems to me to be a silly way to calculate your economic health. Rich-relative-to-the-poorest guy seems much more sensible. I don't have a problem with income inequality: I don't think an economy's a zero-sum game. More for you doesn't mean less for me.

NYT piece: happy to accept, without argument, that middle-class neighbourhoods in New York are disappearing. Who, I wonder, would prefer to live on what 60K a year gets you in the Bronx when the rest of the country will rent you twice the living space at less than half the cost?

LovingTongue said:

It is a problem if you're the one without a job; it is a problem nationwide when the price of essentials are not falling as fast as wages are. Essentials being rent, gasoline, food, etc. - all of which are rising.

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To what extent, when we're discussing the American consumer, do we think that's a larger problem than the problems caused by excessive debt? I'd suggest, just as a thought experiment - no evidence to back it up - that if no American's mortgage exceeded 2.5 times income, and no credit card debt (in total) exceeded 2% of income, that we might not be so worried about their upcoming belt-tightening. I wonder if that's perhaps a better target for blame assignment than corporate wage machinations?

LovingTongue said:

So we compete on innovation. Do you see there being 300 million inventors and innovators?
The rise of the service sector is the doom of a country's economy. Rgraham is right - every time you abandon manufacturing, you are doomed to become a has-been. Fact of history.

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Probably not 300m but, since you're in IT, I think you'd accept that people working with information, whether it's a modest little feature on a user interface or a better layout for the hotel dining room, have more room to add value than a guy spot-welding on a multi-million dollar, mostly-robotic production line. The higher return on capital you tend to get in the service sector derives in part from its flexibility and the order-of-magnitude-higher range of people that can innovate to improve its function.

RGraham is dead wrong (sorry RG - I still make a point of reading your posts for the humour!):

Accountants add value by allowing a business' management to see whether or not (and where) they're making/losing money, by allowing investors/bankers to assess the health of a company and by helping assess where a company is most exposed to risk.

Lawyers add value by ensuring that your contract-signing clients are actually obliged to pay and by giving the rule of law documentation of agreements to be enforced.

Advertising: this old saw's just too easy. You don't seriously mean to tell me that Nike would have sold just as many "Air Anonymous" shoes without the admen, Jordan, and Jones? Or, for that matter, that their shoes actually represent the best price-adjusted tools for the job? The difference in price, I'd suggest, is the measure of brand equity - a function of advertising, among other contributors.

Also, if you make a list of the countries in the world which have enjoyed the greatest PPP GDP per cap growth in the past 20 years, then erase the oil economies, you'll find you've just created a list of the countries whose service sectors have expanded the most in the period. Try it! It's fun!

LovingTongue said:

Let's start with entry level jobs.

I'll go with tech, for one.

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I'm not coming with you: as I said in the last post, I have serious doubts that any one industry's conditions are a good proxy for the mass and I'm especially suspicious of using one of the most extreme examples. Tech support is, unlike most industries, about the most easily commodifiable thing going - it doesn't need to be local, it's doable across national boundaries - and it's unlikely that an industry undergoing wholesale change as part of the first wave of services offshoring is representative of the broader economy. I'll come along for a reasonable example, if we can find one.

LovingTongue said:

Wages for the middle class have risen 1% since 2000. The mortgages have risen faster than that. Even the Cato Institute - the high priests of laissez-faire capitalism - can't reasonably fudge the wage figures to put them at a higher growth rate than these mortgages: wages are essentially stagnant for those who did not get outsourced and who are not at the top of these corporations. Also, don't forget about all those people recently put out of work.

I stand by my assessment that if wages had not stagnated since 2000 to now, these resets would not be a crisis. It would be an ugly and annoying newspaper footnote.

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Where did 1% come from? The Census Bureau puts 2000 median income at USD42,148 and 2006 median income at USD48,200. That's an increase of 14.36% despite the factors which I believe are dragging the number down. You've lost me a little bit here.

LovingTongue said:

Now, what is putting upward pressure on middle class debt? Simple. Stagnant wages, rising mortgage rates, rising rent, rising gasoline prices, rising utilities, rising food costs attendant to rising gasoline (transportation), and so on.

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CPI rose 15.9% since 2000. Do I believe that retirement and immigration reduced median income by more than 1.54% in that period? I do. The median American doesn't look any worse off in income terms to me, just more indebted.

Can we find a middle-class measure we like, or an industry that's not so exceptional? Then we might have something richer to work with...

Hope that's of interest,
H

Well I don't see it that way, H. I'm not saying that service functions aren't handy, or even necessary, but they do not add value to the product itself. They are secondary to the production process.

And when these things are regarded as more important than the creation of products, as they often are, they become a barrier rather than an aid.

Also some things are analysed as service when they are production. As I recall the software industry is regarded as a service industry. Which I regard as wrong. They do produce new products.

As to the middle class, I'm recalling a statistic from the Congessional Budget Office cited by Krugman in one of his NY Times columns a few years ago.

Adjusting for inflation, the income of families in the middle of the U.S. income distribution rose from $41,400 in 1979 to $45,100 in 1997, a 9 percent increase. Meanwhile the income of families in the top 1 percent rose from $420,200 to $1.016 milllion, a 140 percent increase. Or to put it another way, the income of families in the top 1 percent was 10 times that of typical families in 1979, and 23 times and rising in 1997.

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Shrugs. Doesn't matter to me. I'm poor and will be for the rest of my days.

rgraham666 said:

Well I don't see it that way, H. I'm not saying that service functions aren't handy, or even necessary, but they do not add value to the product itself. They are secondary to the production process.

And when these things are regarded as more important than the creation of products, as they often are, they become a barrier rather than an aid.

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Not sure I follow you there. Why would restoring an old car to prime condition be a less valueable act than manufacturing a new car?

Both is taking one thing (a chunk of metal or an old car), apply work, and produce something, a functioning vehicle.

One is regarded manufacturing and one a service. But really, is there a difference? The repairing service added a hell of a lot of value to the bucket it repaired.

The only difference that I see is that the first isn't consuming raw material.

Also some things are analysed as service when they are production. As I recall the software industry is regarded as a service industry. Which I regard as wrong. They do produce new products.

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...which may be the case with the sortware industry too. It doesn't take natural resources and turn it into commodities. The main part of software "manufacturing" is R&D. Which for all intents and purposes, is a service. Once you've developed a program, you don't put much into the manufacturing process. Hell, you just put it on a website for distribution these days, and cash in on licensing fees.

And it's a value adder of ginrmous dimensions to the manufqactured product it lives in symbiosis with, the computer.

Just like driving education (a service) can be said to add value to cars.

True enough, Liar.

Shrugs. I don't understand everything. Maybe the problem is my perception, maybe it's the way thing are categorized. I do know that here in North America at least most people are becoming poorer. I have trouble expressing the reasons why, but I do believe that it has to do with the way manufacturing has been leaving our shores. And why places like China, India and even Europe are improving.

If a society creates things, it becomes wealthier. If it doesn't it becomes poorer. All the management and bureaucratic functions attached to that are not a substitute.

Handprints said:

Let's take them in order: the first analysis of the census figures is an awfully good illustration for the problems of proxying the middle class. The 25K-to-75K earning group has declined in one year, according to the census figures, with more moving down than up.

I think that's an interesting datum, so I went to census.gov to learn more. The numbers are reported at 90% confidence, which means we ought to take a change as small as -0.4% with a grain of salt but I'm willing to believe it. What troubles me quite a bit more about using median income as a proxy for the middle class is that two significant demographic changes are acting on the median, both of which ought to have the effect of reducing it: retirements and immigration.

An increasing chunk of the US population was, in that period, over 60 and eligible to retire (or already retired), if they were willing to accept that reduction in income. Immigrants tend to make less than the median income (especially the illegal ones, who are also sampled in the census count). We don't have any numbers to help us understand what effect those two large groups are having on the median income. We have at least some feeling that they both might have been growing in the period

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But immigrants still count. If they disappeared from the economy the universe would implode (or so farmers and Wal Mart would have you believe).

I'm not sure how important it is to single out retirees and illegals in all of this.

Economist piece: sorry, I'm not at work - can't see it without a sub. I've already suggested that poorer-relative-to-the-richest-guy seems to me to be a silly way to calculate your economic health. Rich-relative-to-the-poorest guy seems much more sensible. I don't have a problem with income inequality: I don't think an economy's a zero-sum game. More for you doesn't mean less for me.

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Well, I'm still waiting to see the "more for the working class" part.

NYT piece: happy to accept, without argument, that middle-class neighbourhoods in New York are disappearing. Who, I wonder, would prefer to live on what 60K a year gets you in the Bronx when the rest of the country will rent you twice the living space at less than half the cost?

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Well, NYC had the sharpest decline, but other cities were in decline as well.

To what extent, when we're discussing the American consumer, do we think that's a larger problem than the problems caused by excessive debt? I'd suggest, just as a thought experiment - no evidence to back it up - that if no American's mortgage exceeded 2.5 times income, and no credit card debt (in total) exceeded 2% of income, that we might not be so worried about their upcoming belt-tightening. I wonder if that's perhaps a better target for blame assignment than corporate wage machinations?

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Ok, let's blame the consumer.

So if the consumer stops putting themselves in debt so much, then maybe that means they'll stop spending as much.

Off the top of your head, imagine everyone reducing their debt to zero by cutting up their credit cards except for medical/car repair emergencies, etc.

What might that do to our economy?

Probably not 300m but, since you're in IT, I think you'd accept that people working with information, whether it's a modest little feature on a user interface or a better layout for the hotel dining room, have more room to add value than a guy spot-welding on a multi-million dollar, mostly-robotic production line. The higher return on capital you tend to get in the service sector derives in part from its flexibility and the order-of-magnitude-higher range of people that can innovate to improve its function.

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In IT, you start out as a grunt coder, and you work your way up to becoming an uber coder.

Companies want paid experience that proves you have trained up to uber status. You hear about prominent Linux kernel/highly popular open source project programmers getting hired from doing years of volunteer work, but a) where did they work to keep a roof over their heads; and b) how many people actually get jobs that way? (not many) (If this paragraph doesn't make sense, I apologize; I'll be happy to clarify)

Anyhoot, grunt coding has mostly gone overseas.

How do most programmers manage to establish that paid grunt-to-uber progression? They don't. That's why so few people are getting into IT now, and why uber coders are so rare, and will be incredibly rare in the future.

Corporations are crying about the lack of IT talent but they won't hire anyone in America to do the work. There's little or no fertile soil in America for new uber coders to grow from.

Rinse and repeat for network admins and so on.

I'm not coming with you: as I said in the last post, I have serious doubts that any one industry's conditions are a good proxy for the mass and I'm especially suspicious of using one of the most extreme examples. Tech support is, unlike most industries, about the most easily commodifiable thing going - it doesn't need to be local, it's doable across national boundaries - and it's unlikely that an industry undergoing wholesale change as part of the first wave of services offshoring is representative of the broader economy. I'll come along for a reasonable example, if we can find one.

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Okay, then let's go for paralegal work, banking services, and so on - I can show you examples of companies already offshoring this work, undermining the fertile ground needed for new American workers coming into said lines of work, hoping to train up to become future hot shots.

Where did 1% come from? The Census Bureau puts 2000 median income at USD42,148 and 2006 median income at USD48,200. That's an increase of 14.36% despite the factors which I believe are dragging the number down. You've lost me a little bit here.

CPI rose 15.9% since 2000. Do I believe that retirement and immigration reduced median income by more than 1.54% in that period? I do. The median American doesn't look any worse off in income terms to me, just more indebted.

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Two things:
a) Help me out here. If CPI rose by 15.9% since 2000 and median incomes rose 14.36% since 2000, is that roughly 14.36% (wages) minus 15.9% (prices)? Or am I missing something?

b) Indebtedness comes from what? Consumer spending above and beyond one's means? I believe that's what it means, and if we pare down the indebtedness, a lot of industries will suffer as a result. One can imagine how that will affect the economy... but, in your opinion, how would it affect the economy?

Can we find a middle-class measure we like, or an industry that's not so exceptional? Then we might have something richer to work with...

Hope that's of interest,
H

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You mean, a middle class measure we both like?

LovingTongue said:

But immigrants still count. If they disappeared from the economy the universe would implode (or so farmers and Wal Mart would have you believe).

I'm not sure how important it is to single out retirees and illegals in all of this.

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Yeah, I kind of tangled up the point, so let me untangle it. The top article you cited in turn cited data which suggested that the percentage of American households with income in the USD25-75K range may have declined in 2000-2003. The article took that data to suggest that "a large number of households have slipped out of the middle group and into the lower-income range." I wondered if that was the only - or best - way to understand that data. (We'll do the change in median income bit in a minute.)

There were more households in the US in 2003 than in 2000 - partly because of legal and illegal immigrants - and there were more retired people in the US in 2003 than in 2000. The Census Bureau figures don't track specific households from year to year, they just sample a population which is representative of the broader mass at 90% confidence every year. They sample retired people and both kinds of immigrants every year.

New immigrants and retired people, I think we'd both agree, are more likely to earn less than the median income than they are to earn more. We might also agree that they're both more likely to earn less than USD25K a year than more. If the percentage of US population that is either retired or a new immigrant grew in that three year period, that should increase the numbers of people earning less then USD25K but also - by increasing the total population through arriving or by moving to a lower income group through retirement - decrease the percentage of the population that earns a higher number.

I didn't think of it at the time, but there were also more divorced and separated people in 2003 than 2000: that's two new households for the same total income. Another downward pressure on the percentage of households likely to fall into the USD25K to USD75K group.

That, to me, seems a more obvious explanation of why the percentage of people in the USD25K-75K group is falling than speculating that some large proportion of fully-employed people in that group are suffering significant falls in income.

These same two groups are also, in my view, likely to be one of the reasons that the median income data cited by the article might not mean that the "average American's" wage is under any serious threat.

Let's imagine the process of finding a median as listing every person sampled on a giant scroll, staring with the highest income and ending with the smallest. Joe Median 2000 is the guy with same number of names above his and below his. When we look for him in 2000, we find that he earned USD44,853. We do our scroll thing again in 2003, and we find our Joe Median 2003 (almost certainly not the same guy) earned an inflation-adjusted USD43,318. What's the best explanation for why the number fell: retirees and immigrants, I think.

A lot of people retired between 2000 and 2003. I'd bet a majority of those who appeared above JM2000 earned less in 2003 than JM2000 did in 2000. Also, more new immigrants arrived in those three years and I suspect the overwhelming majority of them were earning less than JM2000 did in 2000. Now, when we assemble the 2003 scroll, we've got one existing population whose income has declined and one low-earning new population. That means we should expect our scroll to be longer and JM2003's earnings to be less than JM2000's.

You don't need a can't-find-it-in-the-stats theory of middle-class income rot to understand how these numbers have changed. It would be enormously more surprising to find median income rising in a greying population whose numbers are increasing mostly through immigration.

LovingTongue said:

Well, I'm still waiting to see the "more for the working class" part.

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Aren't we having enough problems defining one class' membership?

LovingTongue said:

Ok, let's blame the consumer.

So if the consumer stops putting themselves in debt so much, then maybe that means they'll stop spending as much.

Off the top of your head, imagine everyone reducing their debt to zero by cutting up their credit cards except for medical/car repair emergencies, etc.

What might that do to our economy?

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Wonderful things. No joke - I'm not having fun with you. You'll have a serious and unpleasant 36-odd month recession, then your economy will really start rocking. If you can put your government on the same diet as the populace, you've got a superb chance of Clinton-era economic growth for the next couple of decades. I can't recommend this course of action strongly enough. Start with yours! Set a trend!

LovingTongue said:

In IT, you start out as a grunt coder, and you work your way up to becoming an uber coder.

Companies want paid experience that proves you have trained up to uber status. You hear about prominent Linux kernel/highly popular open source project programmers getting hired from doing years of volunteer work, but a) where did they work to keep a roof over their heads; and b) how many people actually get jobs that way? (not many) (If this paragraph doesn't make sense, I apologize; I'll be happy to clarify)

Anyhoot, grunt coding has mostly gone overseas.

How do most programmers manage to establish that paid grunt-to-uber progression? They don't. That's why so few people are getting into IT now, and why uber coders are so rare, and will be incredibly rare in the future.

Corporations are crying about the lack of IT talent but they won't hire anyone in America to do the work. There's little or no fertile soil in America for new uber coders to grow from.

Rinse and repeat for network admins and so on.

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You're making perfect sense to me. At least I think you are: if this answer is completely unrelated to your points, you'll know you weren't.

My industry's a perfect example of this trend: big financial companies are the loudest screamers about the lack of IT talent and among the biggest adopters of IT outsourcing. In my view, there are two reasons why.

About a decade ago, they formed the belief that American CS grads weren't working out well at solving their most difficult problems. These grads - not just at undergraduate level - were being taught a lot of theory and (in some places) a lot of good coding habits but they weren't nearly as good as one other available group of potential hires at what the industry needed them to do: develop complex analytical models; spec, design and develop new functions for internal users who could only specify inputs and desired outputs; create and maintain clean, robust development environments. (I'm not in IT but I've been hearing variations on these complaints for a decade from my friends trying to hire into those positions.)

They had much better luck hiring hard science, finance and engineering postgrads who had learned enough CS skills to solve real-world problems with them. There were a lot fewer of them to hire - and still are in the US and Europe - but your odds of them adding value were significantly higher.

Mentally, the finance industry split IT into two kinds of work: the complex, innovative stuff that gives us a competitive advantage and the stuff that, as long as it doesn't fail, is a commodity service. For the second group, why pay more for a commodity service? It went to India just as fast as they could sign the contract. For the first group, it has also become much more international, with most large financial companies having at least four or five global IT development centres: NY, London, Eastern Europe, Tokyo, and China. There just aren't enough physics PhD's with experience of simulating quantum chromodynamic effects on parallel architecture in any one country to go around...

Where are the uber-coders going to come from: grads from heavily quant disciplines, not CS.

I do honestly feel bad for the people who learned, after the fact, that their CS degrees weren't much valued by employers. Still, my undergraduate degree's in art history - they've got a better foundation to build from, if they want to work in IT, than I had in finance.

LovingTongue said:

Okay, then let's go for paralegal work, banking services, and so on - I can show you examples of companies already offshoring this work, undermining the fertile ground needed for new American workers coming into said lines of work, hoping to train up to become future hot shots.

Click to expand...

Here are the inflation-adjusted rates of salary growth for four middle-class US fields of employment between 2000 and 2006:

Insurance employees: +10.57%
Motion picture company employees: +29.33%
Legal services employees: -2.32%
Real estate employees: 0.59%

If you want to look for others - be warned, the industry classifications are really broad - you can look here.

I think the number shows that if you work in a commodity job, you're in trouble. Of course, we never really disagreed on that.

LovingTongue said:

Two things:
a) Help me out here. If CPI rose by 15.9% since 2000 and median incomes rose 14.36% since 2000, is that roughly 14.36% (wages) minus 15.9% (prices)? Or am I missing something?

b) Indebtedness comes from what? Consumer spending above and beyond one's means? I believe that's what it means, and if we pare down the indebtedness, a lot of industries will suffer as a result. One can imagine how that will affect the economy... but, in your opinion, how would it affect the economy?

Click to expand...

a. looks fine to me
b. as above

LovingTongue said:

You mean, a middle class measure we both like?

Click to expand...

My point is, we're not going to find one: there isn't a representative industry for something that broad, in the same way that 50s Ford assembly line guys are emotively representative of that era's working class but not so much in practice.

H

I'll be happy if I get to the upper edge of the poverty line.

I'm old, have no salable skills and have a long history of mental illness. I'll never have a decent job.