Wednesday, November 20, 2013

Where the Jobs Are

You may think of this week’s blog as a book report, if you choose. The book is The New Geography ofJobs (Houghton Mifflin Harcourt, 2012), by Enrico Moretti, and it is packed with significant ideas about what causes job growth in the new economy. Moretti is an economic geographer, and his fundamental point is that job growth in the United States is clustered within certain “brain hubs,” and this clustering phenomenon is accelerating and self-perpetuating. But he also points out the threats to these engines of job growth.

The idea of brain hubs—geographical centers, such as the Silicon Valley, where the most creative work is being done—has been around for awhile. Richard Florida has popularized this concept, emphasizing how much our economy depends on creative work and on the creative people who do it. The rapid growth of dynamic, job-creating metropolitan areas serves as an important correction to the “flat-world” thesis that Thomas Friedman has made much of—the idea that modern electronic communication and cheap international shipping allow work to be done anywhere in the world where costs are lowest. This dispersal of work is indeed true for low-skill jobs in manufacturing, call centers, and several other industries, but not for the creative industries.

What the flat-world industries have in common is that they are all mature. Industries that are new or the segments of mature industries where a lot of creative research and development projects are going on are clustered in a very few locations. For example, consider your smart phone. The manufacturing happens in China or another low-wage, low-skill location, but the R&D happens in the Silicon Valley. Even Nokia and Eriksson, which are headquartered in two Scandinavian countries, do almost all their R&D in the Silicon Valley.

Why does this work cluster in brain hubs? Both Richard Florida and Enrico Moretti emphasize the collaborative nature of creative work and the labor-market advantages to both employers and employees of having a concentrated pool of high-skilled workers. They also note that these creative workers create numerous job opportunities for lower-skilled workers, thus enriching all sectors of the community.

Where Moretti parts company with Florida is over the question of what makes brain hubs grow. This is an important question, because it can lead to policy suggestions for how to transform a stagnant city into a dynamic one. Florida believes that R&D centers grow when creative people are attracted to cities that are tolerant and have many cultural amenities, but Moretti argues that these municipal attributes are the result rather than the cause of brain-hub activity. As a counter-example, Moretti cites Berlin, which is one of the most tolerant and culturally endowed cities in Europe, yet has the highest unemployment rate in Germany.

Moretti maintains that brain hubs become increasingly dense with highly-skilled workers because each newly arrived creative person contributes additional attractive power to the community. As long as the center continues to do creative work, it will continue to strengthen its pull on creative workers from elsewhere. Of course, this trend may not continue forever. Once low-skill manufacturing became the primary function of the automobile industry, Detroit lost its appeal as a brain hub, and the industry scattered to Southern states and foreign countries. The film industry has also scattered to many places, but because the work is inherently creative, Hollywood maintains its dominance as the place to find work and workers. (In fact, the same persistence of hubs is true of almost every art form.)

So what gets a brain hub started in the first place? Moretti argues that it is mostly a matter of happenstance—specifically, the arbitrary geographic choice of a creative genius who sparks an industry. For Silicon Valley, the common wisdom is that the presence of Stanford University was the driving force, but Moretti points out that there are many other universities just as prestigious that have not sparked brain hubs. What made the difference was the decision by William Shockley, the inventor of the transistor, to locate at Stanford, which had the result that some of his students and colleagues created the first integrated circuit at Fairchild Semiconductor—and the rest is clustering history. For the Seattle high-tech hub, it was the decision of Bill Gates to relocate from Albuquerque (where he had started the microcomputer software industry) to his hometown. By the time Jeff Bezos was ready to try his hand at selling on the Web (by founding, he had little choice but to move to Seattle, rather than his hometown (ironically, Albuquerque). Hollywood was a backwater until D.W. Griffith set up shop there and created the film industry’s first blockbuster, Birth of a Nation.

The main threat to America’s brain hubs—and, therefore, to America’s economy—that Moretti identifies is a shortfall of human capital. Brain hubs gain their power by drawing in brainpower, and it is questionable whether the flow will continue to be adequate, given the decline of our educational system (which used to lead the world in college graduates) and given the barriers that our immigration system creates against the entry of high-skilled foreigners. Ironically, as the creative centers become increasingly different from the rest of the nation—and Moretti points out that these snowballing differences are cultural and political as well as economic—it becomes increasingly harder for the nation to achieve political consensus on the need to fix these looming problems.

Wednesday, November 13, 2013

Workforce Trends and Personality Types (part 3 of 3)

My previous two blogs (here and here) have been about the workforce trends of the previous decade. But you may be wondering about the future. That is, as our economy crawls back from the hole of the last recession, what will be the job-growth patterns for different personality types and for different levels of skill? To answer this question, I analyzed Department of Labor data on projected employment levels and sorted the findings by Holland personality types and levels of earnings.

To see what I found, compare the following two graphs.The first one is last week's graph, for the years 2002-2012. (Click here to see a bigger version.)

Now, let's look at what the Department of Labor projects for the rest of the current decade. (Click here to see a bigger version.)

Start by comparing the red bars, past and future. These show the past and projected growth in the number of all workers in the occupations linked to each Holland type. It should be no surprise that the red bars in the second chart are higher in almost every category: The workforce as a whole grew by only 2 percent 2002-12, but it is projected to grow by 14 percent 2010-20. The most dramatic improvement is the turnaround of the Realistic occupations, from negative territory to 13 percent growth. But do keep in mind that 13 percent is still slightly behind the overall growth of the workforce. Similarly, the Enterprising and Conventional occupations score much bigger gains in the second chart (12 percent) than in the first chart (2 percent), but that 2 percent gain actually matched the overall growth of the workforce 2002-12, whereas their 12 percent growth in the second chart lags slightly behind the workforce as a whole for 2010-20. The one personality type that scores smaller gains in the second chart is Investigative: 18 percent 2010-20, compared to 20 percent 2002-12. But eighteen percent still outpaces the overall average for growth.

Next, look at the purple, green, blue, and yellow bars, which indicate the workplace growth at various levels of pay. Note the shape of each cluster of bars, and compare the two charts. One striking change between the first chart and the second chart is that the hollowed-out middles that characterized three of the personality types--Artistic, Social, and Conventional--are much less hollowed-out in the projections for 2010-20 than they were in the 2002-12 era. It seems that the middle-skill occupations that were so severely stunted by the recession are now growing at a rate closer to the rate of the higher- and lower-paid occupations.

Now, let's look at each personality type in isolation:

Realistic. In the second chart, the Realistic bars have a substantial bulge at the middle level--a great contrast to the first chart, where only the occupations at highest level of skill expanded at all. Although all levels show some gains, the expansion will be smallest at the low end, which means that Realistic workers will need more than basic skills to find work. The contrast between the performance of Realistic occupation in the two charts confirms the popular notion that the Great Recession was a "mancession," disproportionately impacting jobs held mostly by men.

Investigative. In the past decade, growth was pretty much commensurate with level of skill as indicated by earnings. That trend continues during the present decade, with bigger gains at the high end, although the upward slope is not as pronounced. This pattern reflects how important innovation is to the U.S. economy: There will be a lot of growth for those with high levels of investigative skills.

Artistic. The most dramatic change here is the great improvement at the very highest bracket. The reason for such a big difference is that two of the occupations at the high end are focused on construction and therefore took a particularly bad hit in the recession: Architects, Except Landscape and Naval--Holland code AI, median earnings $73,090, which shrank by nearly 5,000 jobs, or 6 percent, in the past decade, but is projected to gain almost 28,000 jobs, or 25 percent; and Landscape Architects--AIR, $64,180, which lost 1,700 jobs, or 10 percent, but is projected to gain 3,500 jobs, or 16 percent.

Social. As in the past decade, this group of occupations shows the most growth overall, reflecting the continuing importance of health care and education in our economy.

Enterprising. The previous decade was hard on this group of occupations, but projections are for better growth overall. Like the Realistic group, this group shows an interesting bulge, rather than a hollowing-out, in the middle. Some of the better performers there are Retail Salespersons (EC, $21,110, +706,800); First-Line Supervisors/Managers of Office and Administrative Support Workers (ECS, $49,330, +203,400); and First-Line Supervisors/Managers of Construction Trades and Extraction Workers (ERC, $59,700, +131,000).

Conventional. At the low end, the projected gains among Combined Food Preparation and Serving Workers, Including Fast Food (CRE, $18,260) are not as impressive as they were in the past decade, dropping from 47 percent to 15 percent. It seems the fast food industry is cooling off. But gains are also less impressive at the high end, where Accountants and Auditors (CEI) are projected to have gains of 16 percent (190,700 jobs), down from 27 percent (240,650 jobs); and Financial Analysts (CIE) shifted down from 50 percent (79,890 jobs) to 23 percent (54,200 jobs). My guess is that the recession focused the attention of business on how to wring every penny out of the cash flow, a less important concern during a recovery. The really dramatic difference is in the middle of the distribution, largely caused by the reversal of Executive Secretaries and Administrative Assistants (CE, $47,500), from a loss of almost 605,000 jobs (43 percent) to a gain of 156,000 jobs (13 percent).

In planning a career, it helps to consider both your personality type and the level of skill you are aspiring to--the latter roughly equivalent to the amount of education you plan on getting. Then consider the job growth expected for this combination, so you'll have an idea of the level of opportunity you can expect. This kind of planning may be more useful than looking at the outlook for any one occupation, because there is a good chance that you will change occupations somewhere down the line, but it's less likely that you will be working in an occupation associated with an entirely different personality type or that you will be working at a very different level of skill.

Wednesday, November 6, 2013

Workforce Trends and Personality Types (part 2 of 3)

As our economy has changed, it has rewarded certain interests and skills more than others. Last week I measured one aspect of these differing rewards by looking at the workplace growth over the past decade for the six Holland personality types. It turned out that during this time period, which included a whopper of a recession, Investigative and Social types had the greatest growth (in percentage terms), the Artistic type grew modestly, the Enterprising and Conventional types merely kept pace with the overall growth of the workforce, and the Realistic type shrank substantially.

But these trends deserve a closer look.

The rates of growth that I calculated were based on all workers in occupations characterized by each personality type, and that approach concealed some important differences. It turns out that when you look at workers at different earning levels, there is often more variation within a personality type than there is between different types. And these differences say a lot about how job opportunities changed over the past decade.

Let's look at a new graph and see what it indicates. (Click here to see a bigger version.)

First, note the red bars. These are the percentage figures from last week, applying to all workers in the occupations linked to each Holland type.

The purple, green, blue, and yellow bars indicate the workplace growth at various levels of pay. You'll note that for four of the personality types, workforces shrank at some earning levels but increased at other earning levels. Let's look at each personality type.

Realistic. Although this workforce shrank overall (red bar), occupations at the highest level of pay (yellow bar) actually increased their workforces. Some of these highly-paid, growing occupations were Civil Engineers (Holland code RIC, earning $79,340, gaining 50,620 workers); Mechanical Engineers (RI, $80,580, +48,920); Electrical Power-Line Installers and Repairers (RIC, $63,250, +16,410); and Commercial Pilots (REI, $73,280, +15,420). The high level of pay that these occupations command--more than $60,000 per year--is an indication of the high level of skill that the occupations require. The take-away message is that this ten-year period was good for Realistic personality types who had a high level of skill but was much less kind to those with lower skills. It's also significant that Investigative is a secondary type for all four of the occupations that I mention here.

Investigative. You may notice that there is no purple bar for this personality type; that's because no Investigative occupation earns less than $20,000. For this personality type, growth was pretty much commensurate with level of skill as indicated by earnings. That means that Investigative personalities enjoyed the best of both worlds: earnings were high in occupations where job growth was greatest. Some of these highly-paid occupations with lots of job growth were Management Analysts (IEC, $78,600, +147,770); Industrial Engineers (IR , $78,860, +68,370); Pharmacists (ICS, $116,670, +62,170); and Medical Scientists, Except Epidemiologists (IAR, $76,980, +41,580).

Artistic. First, don't pay much attention to the spectacular purple bar that represents the under-$20,000 occupations. This actually represents only one occupation, Models, which was fast-growing but from a fairly small base (2,260 workers). The pay is so low partly because so many work part-time. More significant is what this personality type shares with Social and Conventional: a hollowed-out middle. The group of occupations in the $20,000-$40,000 range actually shrank slightly. The occupation most responsible for pulling down this group was Desktop Publishers, which lost about 18,000 workers, slightly more than half its workforce, largely because new technology enabled other workers to do desktop publishing for themselves. Another drag on this group was Photographers, losing 7,000 jobs, or 11 percent of its workforce. Again, technology was the cause; businesses that need photos can usually find what they want on websites that offer stock photos. It's interesting to note that the highest-paid group here grew only at the rate of the workforce as a whole: 2 percent. It included a mixture of winners such as Art Directors (AE, $80,880, 8,370) and losers such as Multi-Media Artists and Animators (AI, $61,370, -4,880). The latter occupation lost workers because of a mix of new technology and offshoring. The most growth was to be found in the $40,000-$60,000 group, where the outstanding occupations were Graphic Designers (AER, $44,150, +49,610); Interpreters and Translators (AS, $45,430, +31,720); and Music Directors and Composers (AE, $47,350, +15,960).

Social. This group of occupations is the perfect illustration of the holllowing-out of the workforce. The two income levels that gained the most workers were at the lowest and highest ends of the distribution. The big winners at the low end were Personal and Home Care Aides (SRC, $19,910, +534,190); and Waiters and Waitresses (SEC, $18,540, +245,900). At the high end, the standouts were Health Specialties Teachers, Postsecondary (SI, $81,140, +66,360); and Physical Therapists (SIR, $79,860, +61,170). A large number of college teaching occupations were also to be found among high-paid group. The take-away lesson for this personality type is that the growth has been in low-paying health-care jobs and in high-paying health-care and education jobs, and considerably less in the middle range.

Enterprising. This group of occupations experienced a unique growth pattern: the lower the income, the larger was the amount of job growth. This distribution therefore is the mirror image of the group of Investigative occupations. The greatest opportunities were at the low end--notably Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop (ES, $18,580, +46,230); and Amusement and Recreation Attendants (ECR, $18,710, +31,300). The shrinkage of jobs at the high end resulted largely from Chief Executives (EC, $168,140, -196,460); and General and Operations Managers (ECS, $95,440, -98,890). The recession accounts for some of the job loss in the executive suite; the outlook for these occupations over the next decade is for modest growth, tempered by a high level of competition.

Conventional. This group is another good illustration of a hollowed-out workforce. At the low end, there was an impressive gain among Combined Food Preparation and Serving Workers, Including Fast Food (CRE, $18,260, +943,740). At the high end, the outstanding winners were Accountants and Auditors (CEI, $63,550, +240,650); Compliance Officers, Except Agriculture, Construction, Health and Safety, and Transportation (CEI, $62,020, +80,830); and Financial Analysts (CIE, $76,950, +79,890). Once again, note how Investigative is a secondary type for all three occupations that were winners.

The trends of the past 10 years say a lot about the effects of automation and offshoring in a period marked by recession. As you can see, it makes sense to use a combination of one's personality type and one's level of skill to explain past job growth. Next week, I'll look at job growth projected for the future and see the relationship to these two factors. As you'll see, it's a very mixed picture.

Friday, November 1, 2013

Workforce Trends and Personality Types (part 1 of 3)

In last week's blog, I looked at some occupations that combine personality types that are often thought of as opposites. This week, I want to look at trends in the workforce from the standpoint of personality types. Which personality types are seeing greater opportunities, and which are seeing opportunities drying up?

(Last week, I said that this week's blog would compare the John Holland personality types using the statistical technique called correlation. I've since decided that this topic would be too dry for this venue. If you're curious about the results I found, please e-mail me at Laurence[at]

 To create the graph that follows, I looked at the workforce sizes reported by the Occupational Employment Statistics program for May 2002 and May 2012. I clustered the occupations by their primary Holland types, and here are the changes I found:

This graph should be no surprise if you have been following workforce trends. You can see that the only personality type that actually sees a decrease in workforce size is the Realistic type. This 7 percent decrease is largely the result of the shift away from manufacturing jobs, so many of which involve hands-on Realistic work. Note that this decrease does not necessarily mean that less manufacturing is now going on in the United States. It reflects a decrease in the number of jobs, not in the amount of economic activity. Automation has replaced many of the jobs formerly held by Realistic workers.

The biggest increases are in the workforces where Investigative and Social personality types are employed. These increases reflect the growing importance of research and development, health care, and education.

The increases for the Enterprising and Conventional personality types, 2 percent each, are identical to the overall growth of the American workforce. In other words, the occupations appealing to these personality types are holding their own but not gaining in importance.

For me, the biggest surprise was the 7 percent increase in the workforce for the Artistic type. It turns out that our media-rich culture accounts for much of this increase: The number of Graphic Designers increased by 49,610 workers (35 percent) and Interpreters and Translators by 31,720 workers (171 percent).

What can you do if your personality type aligns with a workforce that is shrinking or expanding at a tepid rate? Keep in mind that even a shrinking workforce offers many job opportunities, including hires that result from attrition and turnover. In addition, you may find satisfaction in an occupation in which your personality type plays a secondary role. For example, Electrical Engineers, which grew by 10 percent (14,380 workers), is coded IR, meaning that Realistic is its secondary personality type.

Finally, you may find more opportunity for your personality type by boosting your level of skill. Next week, I'll show why this can be a winning strategy.