Complacency About an Inadequate Recovery

We have officially emerged from the economic downturn that began at the end of 2007, but for many workers, it really doesn’t feel that way. Yes, employment has finally returned to prerecession levels, but many of the jobs that have come back are inferior to the jobs that were lost.

A report by the National Employment Law Project (PDF) finds that “lower-wage industries accounted for 22 percent of job losses during the recession but 44 percent of employment growth over the past four years. Today, lower-wage industries employ 1.85 million more workers than at the start of the recession.” The report finds the opposite is true for mid-wage and higher-wage industries, with greater losses and smaller gains.

Yet it’s surprising how often I encounter cavalier attitudes toward the economic plight of working Americans.

Sunday’s Review section of The New York Times featured an op ed piece called “Fear Not the Coming of the Robots,” by the investment advisor Steven Rattner. The article features a nifty graph that you really must view to appreciate. It shows one column with bars representing occupations that used to employ large numbers of workers but have been decimated by automation. These occupations include word processors, telephone operators, computer operators, proofreaders, travel agents, and switchboard operators, among others. For each occupation, the graph shows not only the number of jobs lost but also the median wage, which tends to be in the thirties. Bars in a second column represent occupations that have gained workers, including computer systems managers, physical therapists, financial analysts, registered nurses, financial managers, and accountants. The wages for these occupations are much higher, with the lowest (for accountants) at $63,550.

Rattner concedes that technology has changed the nature of work, making advanced training increasingly necessary, and resulting in a sharp rise in income inequality. But he argues that the main culprit is globalization, not technology, “particularly the ability of companies to substitute far less expensive and increasingly skilled labor in developing countries.”

So what is Rattner’s proposed solution? “To address these very real challenges, we should be embracing technology, not fearing it. That means educating and training Americans to perform the more skilled jobs that cannot yet be performed by workers in developing countries.” I’m all for that, too, but where is the funding for this education and training going to come from? Not from a Congress that is incapable of passing legislation that invests in human capital. And how much more can young people and displaced workers mortgage off their futures for tuition loans?

There’s also the problem of those people who lack the ability to learn advanced skills even if somehow a training program were available. Rattner breezily comments, “Of course, not every worker can be retrained, and so we must help those who aren’t suitable for the new jobs through more robust social welfare programs.” Do you see any indication that Congress is about to beef up support for jobless people? I see the exact opposite. Even the idea of creating jobs through a program such as the Civilian Conservation Corps is a nonstarter in the current political climate.

So, yes, I do fear the one-two punch of robots and global competition. Rattner is like the captain of a ship who tells the passengers, “Don’t worry that the ship is sinking, because you can go merrily sailing in the lifeboats”—but the lifeboats aren’t there.

What Skills Reward Improvement with the Highest Payoff?

I have sometimes looked at the monetary payoff for skills by running correlations between skills and earnings. This time, to use the most recent skill ratings (from O*NET release 18) and earnings estimates (for May 2012) available from the Department of Labor, I decided to use a different technique.

In the O*NET database, occupations are rated on 35 skills on a scale (representing level of mastery) that ranges from 0 to 7. (Actually, the highest rating of any occupation on any skill is 6.1.) I divided the occupation-skill combinations into five levels of skill:

Level	Rating	Example
1	less than 2	Barbers, rated 1.1 on Equipment Selection
2	2 or greater but less than 3	Librarians, rated 2.4 on Mathematics
3	3 or greater but less than 4	Veterinarians, rated 3.8 on Learning Strategies
4	4 or greater but less than 5	Hydrologists, rated 4.2 on Writing
5	5 or greater	Physicists, rated 5.6 on Active Learning

Then, within each skill level, I computed the weighted average earnings of all the occupations linked to each skill. To calculate a weighted average, I multiplied the workforce size of each occupation by its median earnings, summed these products, and divided this sum by the sum of all the workforces. This gave me an average dollar figure for each skill that gave greater weight to occupations with larger workforces.

Next, I calculated the difference between the earnings at levels 1 and 2, levels 2 and 3, and levels 3 and 4. (I did not look at the difference between levels 4 and 5 because only 17 of the 35 skills are rated that high for any occupation.) Finally, I computed the average of those three differences.

By using this approach, I achieved a measure of what difference in earnings is achievable by an increase in skill level. These are the skills that showed the largest differences:

Skill	Average Boost in Pay
Complex Problem Solving	$26,930
Judgment and Decision Making	$24,398
Active Learning	$23,196
Time Management	$23,159
Science	$22,463
Negotiation	$21,789
Coordination	$21,367
Systems Analysis	$21,329
Writing	$20,929
Management of Personnel Resources	$20,864

This approach is actually not that different from a correlation, because it attempts to show how an increase in one factor (skill level) is associated with an increase in another factor (pay). However, this approach has the advantage of showing you in dollar terms what it would mean to improve your mastery of a skill.

Of course, getting into a higher-paying occupation often is not simply a matter of improving skill. You may need some credential that reflects your higher level of skill: for example, a college degree, a certificate, or journeyworker status within a trade. But your achievement of this credential depends on your improving certain skills. And it makes sense to focus on the credentialing programs that boost the highest-payoff skills.

The Hottest Specializations in Health Informatics

In my book The Sequel: How to Change Your Career Without Starting Over, I wrote about how it is often possible to move from one occupation to another that uses knowledge of the same field, but in a different way. For example, a teacher might move into educational sales. An entertainer might move into booking gigs for entertainers. A chemist might move into technical writing about chemistry-related topics. One kind of sequel career that I did not mention was managing information about the field with which you are familiar.

Every occupation generates information, and often it is possible to make a living by organizing that information and serving as a conduit for it. A stellar example is Michael Bloomberg, who earned his billions by realizing that the best business to be in was information about business. As his Wikipedia entry notes, “His business plan was based on the realization that Wall Street (and the financial community generally) was willing to pay for high quality business information delivered as quickly as possible and in as many usable forms as technically possible (such as graphs of highly specific trends).”

Health care is our biggest and fastest-growing industry, and it generates terabytes of information daily. As a result, health informatics has become a fast-growing field. The data wizards at Burning Glass, whom I mentioned in last week’s blog (and who are another example of spinning data into gold), have measured a 36 percent increase in the number of job postings for health informatics careers in the period from 2007–2011. This dwarfs the 9 percent increase in health-care job listings, not to mention the 6 percent growth of all job listings. (See the PDF of their report, “A Growing Jobs Sector: Health Informatics.”)

The field is still small compared to the nursing occupations, but Burning Glass found that job postings for health informatics now represent the eighth-largest share of health-care occupation postings. The fastest-growing specializations in this field are the occupations that require high levels of skill. For example, the number of job postings for medical coders—who usually need the Certified Coding Specialist credential—increased by 31 percent over the time period Burning Glass studied. Demand for these workers is being pushed by the switch to electronic medical records and the increased complexity of turning doctor visits into bills submitted to insurers, including Medicare.

But health informatics is about much more than billing. The Affordable Care Act, otherwise known as Obamacare, has created incentives for hospitals and physicians to avoid the expense of follow-up treatments and readmissions. This, is turn, encourages health-care providers to coordinate treatment and monitor its quality. Other uses of clinical data will be for rating health-care providers and for determining which interventions are most effective. Taken together, these uses of data create a need for workers—clinical documentation and improvement analysts—who have experience with clinical care and who understand the data that clinical care generates. Burning Glass found a 124 percent increase in job posting for this specialization 2007–2011. This is career seems a natural doorway through which nurses can move from providing health care to manipulating data about health care. Their key to this door might be to get certified as a Registered Health Information Technician. In fact, 37 percent of RHITs surveyed by the American Health Information Management Association received their certification with less than 1 month of coding experience, 74 percent of them held an associate degree, 16 percent held a bachelor’s degree, and only 4 percent had no more education than a certificate in coding (PDF).

Burning Glass also found rapid growth in the job postings for supervisory positions in this field: 46 percent growth for medical records and coding department supervisors/managers, 53 percent for health information managers.

Contrast these high-skill specializations with medical records clerks, which had a decline of 46 percent in the job postings 2007–2011. Within this field, medical records clerks would be considered low-skilled, but consider that they are in the middle range of skills when viewed within the full range of health-care occupations. (Home health care aides, for example, would be found near the bottom.)

What these examples show about the health-care field is that it resembles so many others: The workforce is being hollowed out as high-skill and low-skill jobs grow, while middle-skill jobs shrink or, at best, stagnate. The low-skill jobs barely pay a living wage, if that. High skills now are necessarily to gain even a toehold in the middle class.

Transferable Skills with the Biggest Payoff

Everyone understands that improved skills are the key to higher income. But perhaps you’re wondering which skills carry the most clout. To make this comparison, I’m going to focus on the transferable skills in the taxonomy used by the O*NET database.

To identify the most lucrative transferable skills, I used the statistical procedure known as correlation, which measures how closely one characteristic varies along with another characteristic.

For example, when cigarette smoking first became popular, doctors noticed that heavy smokers were more often afflicted with certain diseases. Long before researchers were able to pinpoint the mechanisms by which the smoke caused harmful biological processes, they were able to demonstrate a statistical correlation between these two factors. To be sure, sometimes correlations are misleading. Some doctors once believed that there was a connection between polio and ice cream because the disease struck most often during the summer, when the most ice cream was eaten. Eventually the polio virus was discovered, and swimming was found to be an excellent way to acquire it.

Nevertheless, correlations often indicate a cause-and-effect relationship. And when it comes to the relationship between skills and employability, any employer can tell you that this is a real relationship, not like polio and ice cream. Employers look for highly skilled workers and pay them premium salaries.

So computing the correlations between the 35 O*NET skills and the occupations in the American workforce can be a useful indication of which skills have the highest value in the job market. A perfect correlation would be 1.0, meaning that any difference in skill levels between any two occupations is accompanied by a commensurate increase in the wages paid by those occupations. It would also mean that the difference goes in the same direction: higher pay when there’s higher skill. If skill increases were linked to wage decreases, the correlation would be a negative number. If no relationship existed between the two factors, just random variation, the correlation would be zero.

The following table shows, from highest to lowest, the correlations between each of the 35 O*NET skills and the median wages paid in the 747 occupations that are included in both the O*NET database and the salary surveys of the Department of Labor.

Correlations Between O*NET Skills and Occupational Wages

Skill	Definition	Correlation
Judgment and Decision Making	Weighing the relative costs and benefits of a potential action.	0.8
Complex Problem Solving	Identifying complex problems, reviewing the options, and implementing solutions.	0.7
Active Learning	Working with new material or information to grasp its implications.	0.7
Reading Comprehension	Understanding written sentences and paragraphs in work-related documents.	0.7
Critical Thinking	Using logic and analysis to identify the strengths and weaknesses of different approaches.	0.7
Time Management	Managing one’s own time and the time of others.	0.7
Systems Evaluation	Looking at many indicators of system performance and taking into account their accuracy.	0.7
Monitoring	Assessing how well one is doing when learning or doing something.	0.7
Active Listening	Listening to what other people are saying and asking questions as appropriate.	0.6
Writing	Communicating effectively with others in writing as indicated by the needs of the audience.	0.6
Systems Analysis	Determining how a system should work and how changes will affect outcomes.	0.6
Operations Analysis	Analyzing needs and product requirements to create a design.	0.6
Speaking	Talking to others to effectively convey information.	0.6
Science	Using scientific methods to solve problems.	0.6
Instructing	Teaching others how to do something.	0.6
Management of Personnel Resources	Motivating, developing, and directing people as they work; identifying the best people for the job.	0.6
Persuasion	Persuading others to approach things differently.	0.6
Coordination	Adjusting actions in relation to others’ actions.	0.6
Learning Strategies	Using multiple approaches when learning or teaching new things.	0.6
Social Perceptiveness	Being aware of others’ reactions and understanding why they react the way they do.	0.5
Mathematics	Using mathematics to solve problems.	0.5
Negotiation	Bringing others together and trying to reconcile differences.	0.5
Management of Financial Resources	Determining how money will be spent to get the work done and accounting for these expenditures.	0.5
Management of Material Resources	Obtaining and seeing to the appropriate use of equipment, facilities, and materials needed to do certain work.	0.4
Service Orientation	Actively looking for ways to help people.	0.4
Programming	Writing computer programs for various purposes.	0.4
Technology Design	Generating or adapting equipment and technology to serve user needs.	0.3
Quality Control Analysis	Evaluating the quality or performance of products, services, or processes.	0.0
Operation Monitoring	Watching gauges, dials, or other indicators to make sure a machine is working properly.	–0.1
Installation	Installing equipment, machines, wiring, or programs to meet specifications.	–0.1
Troubleshooting	Determining what is causing an operating error and deciding what to do about it.	–0.1
Equipment Selection	Determining the kind of tools and equipment needed to do a job.	–0.1
Operation and Control	Controlling operations of equipment or systems.	–0.2
Repairing	Repairing machines or systems, using the needed tools.	–0.2
Equipment Maintenance	Performing routine maintenance and determining when and what kind of maintenance is needed.	–0.2

Sources: O*NET database, release 16.0; May 2010 Occupational Employment Statistics survey. Tabulation produced by the author.

I’ll acknowledge that transferable skills are harder to learn than many job-specific skills such as Excel. You can’t take a four-week course in critical thinking and expect to boost your proficiency from zero to a level that employers want. On the other hand, critical thinking is something we all have been learning since childhood (even though certain benighted politicians are trying to keep it out of the classroom), so nobody starts from a zero level of proficiency.

Innovation and Job Opportunity in Manufacturing

One of the central points in my new book, 2011 Career Plan: The Best Moves Now for a Solid Future, is that it’s important to upgrade your skills if you want to compete in the economy of 2011. The book has many specific suggestions for how to do this. But maybe you’re wondering why a high level of skill is so important.

It’s because of the current nature of our economy. The days are long past when an American kid fresh off the farm would be put in front of a machine that stamps out auto parts (or something comparable), could learn how to use that machine in a few minutes or hours, and would take home a comfortable paycheck at the end of the week. Those hayseeds-turned-factory-workers are now working in China and other low-wage countries.

But does that mean manufacturing in America is dead? Not at all. Manufacturing was actually one of the first industries to bounce back from the depths of the recession. It has seen its growth slowing in recent months, but no more so than almost all other industries. This week, Ford Motor Company reported that it just had its most profitable quarter ever, netting $1.69 billion and paying down it debt faster than planned.

Innovation is what has kept American manufacturing successful and will allow manufacturing to continue to provide jobs. It’s particularly striking to see how manufacturing compares to other industries in a study (PDF) by the National Science Foundation that looks at innovative products and processes. NSF surveyed 1.5 million for-profit companies and asked them about their practices for the years 2006–08.

The study found that “22% of the manufacturing companies introduced product innovations (one or more new or significantly improved good or service) and about 22% introduced process innovations (one or more new or significantly improved method for manufacturing or production; logistics, delivery, or distribution; support activities).” Compare this to the mere 8% that is reported for both kinds of innovation in the nomanufacturing industries.

I’m particularly interested to note that the 22% figure applies to both kinds of innovation. It indicates that the high level of innovation is motivated by more than just the need to compete with low-wage overseas workers. If wage competition were the only issue, American manufacturers would simply be upgrading their processes--for example, using more robots or economies of scale. But American manufacturers are being equally innovative in the products they offer. New products open new markets and draw new purchases from existing markets.

What does this mean for job opportunities? If all the innovation were happening only in manufacturing processes, most of the resulting jobs would be for engineers and engineering technicians. But new product development (NPD) is a multidisciplinary field that also involves marketing managers, technical writers, artists, commercial designers, logistics specialists, cost estimators, and perhaps even anthropologists. (Not long ago I did a presentation for an NPD team, and the most effective presenter that day was an anthropologist.) NPD work is highly collaborative, so it requires excellent people skills and communication skills. It also requires a high level of creativity.

So America’s most innovative industry sector is going to need a wide variety of highly skilled workers. This drives home the most important point in 2011 Career Plan, that today’s economy requires you to hone your skills.

The Recession Has Ended?

By now you’ve probably heard the news that the Great Recession officially ended in June 2009. That’s the verdict of the economists on the Business Cycle Dating Committee of the National Bureau of Economic Research. This means we have already been in a recovery for 15 months. Why doesn’t it feel like that? And what does this mean for your job prospects?

Many of the indicators of recovery that the economists examined show that this recovery is weak. For example, the gross domestic product in the second quarter of this year advanced only 1.6 percent, a slowdown from the 3.7 percent of the first quarter. In July, existing home sales were at their lowest level in a decade.

But not all indicators show weaknesses. To me, the most startling figure is that corporate profits last quarter ($1639.3 billion) were only 1 percent lower than they were at their pre-recession peak ($1655.1 billion). They have risen steadily for the past six quarters. In other words, companies are sitting on a mountain of cash.

That’s why it’s all the more startling that job creation has been so dismal. In fact, we have actually lost more jobs than we have gained since the recovery began.

You may be wondering how corporations can be making such big profits while economic growth is tepid and so many people aren’t working. The reason is productivity gains. American workers who are still employed keep on producing more output relative to what they’re paid. It’s important to understand why this is happening. Some of it is because the workers are putting in longer hours. Some of it is because businesses have invested in machinery and computers that increase workers’ output. And much of it is because we have a leaner, meaner workforce. So many low-skill workers have been laid off. The work that they used to do has either been shipped overseas or is being done by machinery and computers operated by high-skill workers.

Here’s an indication of how lean and mean our workforce has become: Workers over 25 who have a bachelor’s degree or higher had an unemployment rate of 4.6 percent in August, while those with only a high school diploma had a rate of 10.3 percent. Compare that gap of 5.7 percent to the gap of only 2.6 percent when the recession began. Figures for the duration of unemployment tell a similar story. In August, the median duration of unemployment for the college grads was 18.4 weeks, compared to 27.5 weeks for the high school grads. Three years ago, there was only about one unemployed day of difference between the two groups.

There’s little reason to think that this lean, mean workforce will be able to get fat and lazy anytime soon. A report this week from the Federal Reserve Bank of San Francisco says that "capital utilization" (i.e., investment in machinery and computers) has been one of the main drivers of recent productivity growth but notes that the level of investment has been below historical averages. The report concludes that businesses will be able to squeeze still more productivity out of the employed workforce through increased capital utilization rather than through increased hiring.

What is the implication for your job prospects? To be part of the leaner workforce, you need to be meaner. By “meaner,” I don’t mean more ruthless (although you do need to be aggressive in your job-hunting), but rather that you need to be one of the high-skill workers. You need to aim for the highest-skill work that you’re capable of and--better yet--you should plan to upgrade your skills. If you’re still in school, plan to get a higher-level degree than you might have had in mind originally. If you’re out of school, think about formal or informal training to upgrade your skills. And be sure to do more than thinking and planning. Commit to some specific action.

This is the central theme of my latest book, 2011 Career Plan: The Best Moves Now for a Solid Future, and it’s why I take a rather pushy tone in that book. It’s also why so many of my recent blogs have been about the theme of improving your skills. Your job survival in this economy depends on taking action to be one of the highly skilled workers.

Improving Your Skills, Part 3

In two previous blog postings, I wrote about getting ahead in your career through informal learning. This kind of learning is a frequent method for advancing a career, and so I cover it in some detail in my new book, 2011 Career Plan. But, in the same book, I also discuss formal coursework. This does not always have to mean earning a college or graduate degree. It can consist of a single course.

About 15 years ago, I was fortunate to get my employer to pay for me to be trained in Microsoft Access. I had three days of training in the basics and, later, two days covering intermediate topics. What I learned in these two courses I now use on the job virtually every day.

Here are some of the features of a formal class or program that differentiate it from informal learning:

• The learning goals are clearly spelled out.
• The instructor (whether it’s a human, a computer program, or a booklet) has a reputation for knowing the subject and being able to teach it.
• There’s some way to measure how much you learn.
• When you’re finished, you get some kind of recognition for what you’ve learned—for example, a piece of paper or a mention on your performance appraisal.

The last bulleted item is what makes this form of learning especially valuable to you.

However, some courses are a better choice for your career than others. Following is a checklist that I developed for the 2011 Career Plan to help you assemble the facts about a course or workshop and decide whether or not it’s a good choice.

Facts to Know Before Signing Up for a Course or Workshop

__ The expected learning outcomes of the course are clear to me.

__ The learning outcomes match the skill needs of a current or potential employer.
__ The learning outcomes contribute to a skill I want to develop.
__ The learning outcomes do not repeat what I already know.
__ The course has no prerequisites I can’t meet.
__ I have evidence that the course provider can teach me successfully. (Examples: reputation of provider; testimonial of a course completer; demonstrated skill of a course completer; recommendation by my employer.)
__ I will learn more or better than I could by teaching myself instead.
__ I will be able to show evidence of how the course has improved my skills. (Examples: certificate of completion; documentation of a completed project.)
__ The course is offered at a time convenient for me.
__ The course is offered at a place convenient for me.
__ I can afford the cost of the course (perhaps by getting my employer to pay).

Note that you don’t have to check off every statement, but the more you agree with, the better. If several of the statements are not checked, maybe this course is not a good move for your career.

Improving Your Skills, Part 1

This blog is a departure from my usual focus on career information. It’s about career advancement. Many people who want to get ahead in their careers think their only option is to get an additional college degree, certification, or other formal credential. In my book 2011 Career Plan: The Best Moves Now for a Solid Future, due out in September, I explain some other strategies for getting ahead.

You advance in your career by improving your skills. Degree programs and other formal courses are not the only way to do this.

Let’s face it, nobody knows exactly what to do on the very first day at the worksite. Every new worker needs at least a little informal on-the-job training from experienced workers. Why should this end once you’ve learned the job? When you see co-workers using a skill that you don’t have, ask them to show you how. Most co-workers will be happy to teach you, if it doesn’t take up too much of their time.

Another way to learn informally is through independent study. In fact, this may be your only option if the skill is so arcane that local classes are not available. A few years back, I was involved in a project for a university in Saudi Arabia and realized it would be useful for me to learn some Arabic. This was before 9/11, and it would have been difficult for me to find an academic course in the language, so I undertook a self-instruction program using a textbook and homemade flash cards.

I managed to teach myself a smattering of Arabic, but the program eventually ran aground because I lacked a study partner. Study partners help reinforce each other’s learning and keep the learning program on track. Without a study partner, you’re more likely to give up quickly.

In 2011 Career Plan I include a checklist of characteristics that are good to have in a study partner:

Characteristics of a Good Study Partner

__ This person is interested in learning the same skill that I want to learn.

__ For the skill that I want to learn, this person is now at roughly the same level.

__ For the skill that I want to learn, this person has roughly the same aptitude for learning.

__ This person is as committed as I am to keeping the study program going and staying on task.

__ This person and I can agree on what book (or other learning resource) to use in our program of study.

__ This person and I can get along reasonably well.

__ This person’s schedule and mine allow time to meet regularly for study sessions.

__ This person is able to find time to do the homework required between meetings.

When you’re filling out this checklist, it helps if you know which statements you feel positive about. However, you may be unsure about some statements. For example, you may not know how committed the study partner is until you have started studying together. If you feel neutral about some statements, you may choose to give the person the benefit of the doubt, start studying with this person, and eventually decide whether the arrangement is working out.

On the other hand, if you already feel negative about several statements, maybe you should consider finding someone else as a study partner