Old school – What is limiting job growth?

Frederick Winslow Taylor lived from 1856 to 1915

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Jobs.  The latest 4 letter word being thrown across the aisle in Washington … before Congress took a 1 month vacation.  There is a battle for your hearts, minds, and votes.

There is a problem with the jobs debate.  The debate is based on the pre-1992 economy.   We are arguing about an economy that died when new technologies took on life.  We are arguing about a service economy that required people to deliver service.  The post 1992 economy is different.

Frederick Winslow Taylor created a new paradigm in the late 1800s.  He fathered the theory of Scientific Management.  Scientific Management focused on creating repeatable processes to standardize how things were made.  The goal was to produce things as efficiently as possible.  Taylor’s process was evidence based.  Measure and analyze the work that’s done.  Question all assumptions of what works.  Take what works best, standardize it (Best practices).  Make everyone do it.

The 90’s saw the birth of connected technologies (the Internet).  We were told that it was a new paradigm.  The Internet boom was unstoppable.  “Everything is different”, they said.  The threat of a bubble burst was no more.  Then we saw the Internet bubble burst.  Next came the energy bubble pop and the housing bubble implosion.  Everything was not different.  There was no new paradigm.

An old paradigm matured.  It met someone new, the internet and computing technology.  And it liked it.

Technology allowed business to take Scientific Management to the next level.  Do things faster, more efficiently and more consistently at lower cost.   The result?  Companies use technology to increase profitability with less dependency on people to produce profits.

Corporations are making profits.  Record breaking profits.  They are making these profits with the efficiencies born from the old paradigm meeting new technology.  And they are sitting on the piles of cash produced by their profits.  Company’s are experiencing profit growth with fewer employees.  Technology replaced workers.

Technology changed business. The world was flattened. The corporation thinned.  A kiosk can handle an airline passenger.   Someone in Brazil or India can support software running in a U.S. data center.  Someone in Korea can produce guitars that were once built in the U.S.   In-house sales and support were replaced (or seriously augmented) by websites and call centers.

Jobs went elsewhere or disappeared.  At the same time, more business opportunities emerged overseas.  U.S. corporations could grow profits in a growing, more diversified global marketplace.

Corporations are obligated to their shareholders to make as much money for as little cost as they can.   Their job is not to hire people.  It is to make profits.  Based on their profits, they are doing their job.

It’s time to stop squabbling about how to fix the 1992 economy.  It’s time to start adapting to the economy of 2011.

The longer we squabble the longer will be left behind.  And that will really limit job growth.

 

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