America's Economy Has Split Into Two Different Worlds, And One's About To Die Out

When it comes to getting a job, the USA has bifurcated into two employment worlds, the digital world and the brick and mortar world.

The brick and mortar world is everything you physically touch. It’s manufacturing. It’s retail sales. It’s distribution. It’s construction. Etc.

The digital world is everything defined by what you find on computing devices. It can be on your desk, in your hand or in the cloud.

What has happened is that the brick and mortar world has had every bit of intelligence that can be sucked out of it completely removed. Any information that can be created, identified or recognised is being captured in as automated a process as possible and delivered to “big data” or even small data databases in the cloud. What used to require some intelligence at the brick and mortar work place has been seeded and ceded into the cloud.

Every smart company wants to become smarter and the way to do that is not by asking their employees to communicate orally or in writing to management; it’s by automating everything.

When Starbucks introduces Square, its not to make their in store employees do more, it’s to simplify the process involved in serving customers and to allow them to spend more time on improving the customer experience.

The problem for those who work in brick and mortar is that as the intelligence is sucked out of the job. The intelligence required to do the job is reduced. Yes, you still have to be good at what you do. But you can  be great at customer service or great in a factory line with out a college education. The competition for jobs that don’t require degrees has pushed down the wages paid for brick and mortar jobs as well. When there are no specific skills beyond basic people and communication skills required, the job pool competing for any openings expands considerably, forcing down wages. Leaving more unemployed unemployed.

The other unfortunate part of working brick and mortar is that as intelligence is moved out of physical locations it also reduces the number of jobs available. Have you ever seen a cashier at an Apple Store? Unemployment is sky high in the brick and mortar world.

That’s not to say there aren’t some bright lights in this area. As the intelligence of the factory is sucked up from the floor, the cost of labour falls and makes manufacturing in the US more competitive. Hence we are seeing some manufacturing return to the US, which is of course a good thing

In the other world, the digital world, the non-brick and mortar world, there is negative unemployment. That’s right — there are far more jobs than there are people to fill them.

If you just look at the unemployment rate for recent college graduates, it’s 6.8 pct. My guess is that if you take out Sports Management majors and a few other “I did this for passion and not a job” majors (sorry had to get that in there), that rate might be under 5 pct. That is close to full employment for college graduates and even non-college graduates that had the foresight or luck to learn the skills required to get a job in the digital world.

Everything of intelligence is being moved into the cloud. There is not one business process that you can think of that makes sense to put in the cloud that hasn’t been written as an app. I get dozens of proposals for these types of apps every WEEK.

The explosion is due to the fact that digital entrepreneurship is experiencing a renaissance. Why? Because with a Laptop, a SmartPhone, a broadband connection and an account on Amazon Web Services or one of their competitors, if you understand technology and are willing to work your arse off, you have everything you need to start a cloud-based company. Everything.

I don’t know the exact numbers, but it wouldn’t shock me if thousands of these companies are being formed every month.

And those cloud-based service companies are hiring, hiring, hiring. You would be hard-pressed to find a single example of one of these companies that is not looking to hire more smart people. Experience not required.

That giant sucking sound you hear is the sound of intelligence being sucked from the brick and mortar locations into smart applications in the cloud licensed or owned by the companies that own the brick and mortar locations.

The best news is that with online educational resources coming on — and I’m not talking about the for profit schools, I’m talking about FREE educational resources — anyone with the focus and inclination and access to a PC on the net has a chance to learn a digital skill that can be of value to these new digital companies and allow you to change worlds.

What is my solution? I will tell you what I told my alma mater Indiana University and the University of North Texas committee that I am on. Every junior and senior should hold open at least 1 class in each of their junior and senior years for job skills training.

The university should make those classes fungible. Meaning each year the range of job skills classes is defined by the needs of employers in the global marketplace. If they change every 2 years, great. Employers will be thrilled and so will students who will be able to find jobs. If they change every year, students will have broader skill sets, which also makes employers happy.

Companies struggle to keep up with all the changes the latest in digital technology requires. Train people and they will hire them.

The university should also make those classes available for high school seniors. If they can test in, let them. It will allow smart kids to do smart things and get smart digital jobs. And who knows, they just might change their mind and go to IU or North Texas or be happy grabbing a great job. Either way, the school has done something good.

Trust me, if Sports Management Majors were good at Pig Latin (and if you think im talking about Igpay Atinlay, you probably could have benefited from a class like this), they could get far better jobs than they are getting today. When they get them.

Who is upset? Professors and administrators at universities. Why? Because some of the classes they have taught for years would be replaced by newbie classes. I personally think a little change in the culture  at schools is a good thing. Stop building and taking on debt and invest in new and relevant courseware. But that is me.

I’ve had a lot to say about education and you can find my blogs on the subject here.

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