Unemployment and the economy

THE KAHUNA'S RANT O' THE WEEK: Blinding Flashes of the Obvious
-- By Tobin Smith

OK, it’s blinding flash of the obvious time.

Sometimes I think investors get so caught up with the BIG
questions about the market and their stocks that they miss the
HUGE transformational changes (i.e. opportunities and dangers)
occurring every day right in front of them.

I start this session with perhaps the most obvious: skilled labor
in this country is NOT in surplus, but in short supply.

I refer to today’s Washington Post Business section story on
employers’ lament about the “declining ranks of capable workers.”

As I hear the Dems cry out about the “Herbert Hoover”-like labor
conditions in America today, I think they are doing a terrible
disservice to the millions who lived through the depression. To
make an analogy about the ’30s to today’s labor environment is
like comparing John Kerry’s charisma to Ronald Reagan’s. It’s not
only unfair, it’s not even possible.

For Pete’s sake, the story of the Florida survey company that
can’t find a dozen people with enough math skills to do basic
surveying is played a hundred times a day in the REAL U.S. that
Kerry speaks about so ineloquently in those bore-a-thons he calls
stump speeches.

I know it is hard for a man who has NEVER actually held a real job
or built a real business to understand, but for many public and
privately held employers in our country, a 5.5% unemployment rate
means nothing.

What’s MEANINGFUL is the 2.7% unemployment rate for workers with
four our more years of college. What’s meaningful is the 5.1% rate
for workers with high school diplomas and 8.3% rate of
unemployment for workers who didn’t graduate high school.


THE REALITY OF THE LABOR MARKET

I’ve talked about the reality of a skilled labor SHORTAGE in this
country for ages, and I’ve talked about the impending knowledge
labor CRISIS that is brewing in many, many industries.

The reality of the U.S. labor market right now is BLINDINGLY
apparent to most employers and seemingly INVISIBLE to most
politicians:

1) If you are looking for engineers, machinists, information
technology technicians, radiology technicians, nurses, healthcare
finance or auto mechanics today, you are having a VERY hard time
filling positions.

2) There ARE two Americas: One that is educated and one that is
NOT. Those with a college degree or the equivalent make 74% higher
wages than those who don’t. That figure has doubled since 1979,
according to the Labor Department. Greedy Republicans and tax cuts
did not create two Americas -- people who chose to pursue
educations and turn those educations into wealth did. If you chose
NOT to make the effort and sacrifice to educate yourself, YOU put
yourself in the “other America,” not George Bush.

3) We are already in labor shortage crisis mode in the healthcare
and pharmaceutical industries -- almost 18% of our entire GDP.
Healthcare-related jobs will comprise more than 30% of the jobs
created over the next decade, and we are already short 40,000
nurses TODAY. If you are trying to find drug discovery scientists,
lab technicians or medical equipment technicians in this country,
you can’t. You MUST go to foreign countries or close your doors.

THIS is the reality of labor market today -- not enough skilled
workers and knowledge-based professionals to meet demand.

What masks this problem is that best-sourcing is a reality in
business today. There are foreign resources that can be brought to
bear to solve some of these problems in a pinch.

But best-sourcing is only a Band-Aid for the coming crisis in
knowledge work -- the retirement of Boomers that starts to hit at
a rate of 2,000 to 3,000 EVERY DAY in 2007. We are facing a
skilled labor and knowledge worker shortage of EPIC proportions at
the start of the next decade.

If politicians had a CLUE about the real world of the economy they
would come clean instead of coming with B.S. scare tactics to try
to appeal to poorly educated citizens with low-level skills, or
high-level engineers who unfortunately have skills in areas where
we hold NO competitive advantage in the U.S.

They would create the biggest crusade since the Marshall Plan or
the Iraq rebuilding program to help those who want to improve
their lot in life -- by getting a freakin’ education.

This is why we have to win the war on terror. We have to get those
resources back to the U.S. to solve our biggest looming economic
problem: gaping shortages of skilled labor in our fastest-growing
industries.

We are not victims in this country -- we are doers.


QUIT YER COMPLAINING

I’m tired of hearing from the victims who get the TV ads and the
PAC money to tell their woe-is-me stories about how their jobs
were taken by $5-a-day Asian workers. Even more ridiculous is the
blatantly redneck jargon about how “illegal immigrants” are taking
jobs from Americans, overwhelming the welfare system and not
paying their fair share of taxes. (As if these complainers are
willing to work the hard hours and menial jobs that
uneducated-but-hard-working immigrants perform in this country
every second.)

If you listened to the politicians, you’d think the U.S. labor
market was in the midst of a job crisis. The blinding flash of the
obvious is on this Labor Day is that we are on the verge of a
skilled labor and knowledge worker SHORTAGE.

If this fact of life is not blatantly obvious to you, you are
either a politician or one of the poor, unfortunate souls whose
vocational skill set is NOT up to date for the reality of the 21st
century.

I’m sorry, but I’m from the tough love camp on this one. IF your
job has been exported to another part of the country, or to a
whole ‘nother country, the blinding flash of the obvious is your
skill can be easily automated or templated and can be done by
someone somewhere else for much less.

The answer is re-education -- and don't tell me there isn't the
time or money to do it. If your skills are easily replicable via
automation or software virtualization, you need new skills.

Sell that $500,000 house and $50,000 truck and pay off the credit
cards and downsize your life to one you can afford.

On the other hand, with the shortages ahead in the knowledge work
industries and skilled labor, your future looks very bright IF you
bring the education and basic skill set to the table for the 21st
century.

If your skill set doesn’t cut it, don’t cry to the presidential
candidate on TV that you were unfairly fragged by some foreign
worker. There is WAY too much opportunity in this country to build
a great life for this woe-is-meism.

I see people every day in Washington, D.C., and New York City
re-tooling their lives to meet the opportunity they did NOT have
in their native land. They are the workers who understand the real
opportunity here.

Victimhood is not what made this country great -- hard work, risk
taking and education did. On this Labor Day, I’ll salute the great
American labor force as the most formidable economic power in the
world.

If you are not a part of that great force, that choice was yours.

Toby