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Tech Sector Expansion Blunting U.S. Job Outsourcing
xzvf writes "BusinessWeek summarizes a new report from the American Electronics Association (now known as AeA) that they think mitigates the effect of outsourcing on IT employment. US demand for tech workers is through the roof, the highest it has been since the boom of the late 90s. The tech sector added some 150,000 new jobs 2006, and there are no signs that interest will flag in the near future. 'There is so much global demand for employees proficient in programming languages, engineering, and other skills demanding higher level technology knowledge that outsourcing can't meet all U.S. needs. "There would have been a lot more than 147,000 jobs created here, but our companies are having difficulty finding Americans with the background," says William Archey, president and chief executive of the AeA. One culprit is the dearth of U.S. engineering and computer science college graduates. Second, immigration caps have made it difficult for highly skilled foreign-born employees to obtain work visas. Congress has been debating whether to increase the numbers of foreign skilled workers allowed into the country under the H-1B visa program.' "
thesedays when a plumber or car mechanic or even a house painter can make more money and doesnt have to bother with degrees etc
dont blame education blame multi-millionaire executives (and shareholders who pay their wages) who think their workers are worth less than the person that paints their house or fixes their car, why would anybody bother ?
pay peanuts get monkeys
The industry chiefs finally realized that you get what you pay for. Amazing.
That statement is true only in a perfect equilibrium.
Most equilibriums have a degree of lag. Supply increases in one area, demand takes a while to catch up so costs are low. Demand increases in an area, supply takes a while to catch up, so costs are high.
Businesses are profitable by moving faster than that equilibrium shift and exploiting it. Businesses lose profitability the closer they are to an established equilibrium and they outright lose money when they fall behind it.
India is a great example:
There were a lot of very highly skilled engineers with minimal to no demand for their talents and thus would work for next to nothing. Smart businesses identified this and exploited them. Those businesses could now get high skill levels for very low cost.
Everyone else saw these profits, Newsweek wrote articles on it, everyone moved in to the sector. As demand increased towards supply, profitability decreased. As demand exceeded supply with many dumb U.S. businesses working on articles and quotes from three or four years earlier, costs increased rapidly, the supply of skilled engineered diminished, many poor engineers saturated the market looking for the now great wages, it became a lousy area for U.S. businesses to exploit.
The same has gone for big screen TVs. A few years ago, Circuit City, Best Buy, CompUSA, etc. were making a killing on every high end unit they sold. About a year ago, Walmart finally woke up, realized there was money to be made, slashed the margins so it could insert itself and killed their business model. For a long time, demand for TVs was greater than the number of stores supplying, profits were high. Once Walmart and Target realized there was money there, supply increased, profits decreased.
It happened in the U.S. with the dotcom bubble and it's happened more recently with housing. For a while, a given market is massively exploitable. Over time, everyone thinks it's exploitable, everyone moves in to doing it, the margins decrease, it loses its exploitability.
So, your statement is only partially true...
Over time, yes, you get what you pay for (you may even get less if you're on the wrong side of the wave).
BUT, if you're smart enough to identify the trends and get there ahead of others, you really can get far more than you pay for.
For those that bitch about high executive salaries, that's what they're often really getting paid for: They're people who've established they're good at staying ahead of the wave, surfing its leading edge and keeping their companies hugely profitable. If your ability can keep your company on the leading edge of the equilibrium wave, making $500m more a year than a company that rode the top of the wave, isn't it worth paying you $50m for that edge?
My thoughts exactly. There are plenty of jobs available for workers, and plenty of US workers available for jobs. This article is yet another round in the ongoing saga of corporate interests applying downward pressure on wages.