Tuesday, April 11, 2017

The 21st Century Disruption Way-of-Life
  The California tradition of discontinuity
  and displacement needs to be mitigated

By the mid-20th Century Californians had become pretty much responsible for The 21st Century Disruption Way-of-Life.

In this context, "disruption" means a series of events that result in
  1. "discontinuity" meaning an interruption resulting in a permanent break in the expected flow of events and
  2. "displacement" meaning moving, shifting, or forcing people from the usual place or position, especially from a job and/or a place of residence and/or a homeland.
Economist Joseph Schumpeter's corollary to this is the new does not come from the old, it appears next to the old and competes with it up until it replaces it. Of course he observed that in 1911 when the agrarian society was being displaced by an industrial society over a period of 200 years from the mid-1700's to the mid-1900's.

By the mid-20th Century, unlike the folks in The Rust Belt, far more of Californians regularly migrated from employer to employer or entrepreneurial opportunity to entrepreneurial opportunity and, because of that, from community to community. In 1950 California's divorce rate was double that of Pennsylvania. Being a resident who was born in California was a rarity - meaning that most adults lived a "far distance" from their birth families.

In the five years after 1940 beginning with WWII, California's population grew by 2.5 million or 30%. Some of that was due to military movement of personnel, but many people came for the jobs, tens of thousands of jobs, which even then were "high tech."

In Southern California, some of the key employers (with peak WWII numbers of employees where available) were Douglas Aircraft (40,000) in Long Beach, Santa Monica, and El Segundo; Hughes Aircraft in Culver City; Lockheed Corporation (94,000) in Burbank; Northrup Aircraft in Hawthorne; North American Aviation in Inglewood; Consolidated Aircraft (45,000) in San Diego and Vultee Aircraft in Downey in 1943 merged to become Convair.

There was Aerojet, an American rocket and missile propulsion manufacturer based primarily in Rancho Cordova, California. Aerojet developed from a 1936 meeting hosted by director of Guggenheim Aeronautical Laboratory at the California Institute of Technology Theodore von Kármán, including rocket scientist and astrophysicist Fritz Zwicky and explosives expert Jack Parsons, all of whom were interested in the topic of spaceflight. Their first design was tested on August 16, 1941, consisting of a small cylindrical solid-fuel motor attached to the bottom of a plane. Takeoff distance was shortened by half, and the USAAF placed an order for experimental production versions. Aerojet employment in California peaked at around 10,000 in the early 1960's.

Perhaps most the important happening was when IBM opened its San Jose Research Laboratory in 1952. One of its first developments was the IBM 350 launched in 1956 with the first commercial moving head hard disk drive. As noted in this article:
    IBM is often overlooked in the valley. It’s seen as an East Coast outfit, despite the fact that for years it’s been among the valley’s largest private employers. (Today those employees work primarily at the Almaden center and IBM’s Silicon Valley Lab, a software development operation.) IBM is seen as stodgy — a suit-and-tie company in shorts-and-sandals Silicon Valley.
    But in fact, IBM brought an innovative fury to the valley long before the founders of Facebook and Google were even born. In 1952, the company sent senior engineer Rey Johnson west to open a lab in San Jose. Years before Steve Jobs launched nimble and independent skunk works to kick-start innovation at Apple and decades before Google launched its “20 percent time,” hours set aside for engineers to think big thoughts, IBM was experimenting with open-ended invention.
    “When I came out here you either worked at Lockheed or IBM,” says [Howard} Bell, 75, who started with IBM in 1958 and eventually managed the utility plant at Almaden. His father had already worked at IBM for 13 years when Bell started at the company. Eventually, his son, two daughters and his daughter-in-law also went to work for IBM in San Jose. Collectively, the Bells put in 127 years at the 100-year-old company.
As a child who was born in California during WWII, I was aware of the growth, but not really of the "dynamic" of life. But by 1970 I first worked with a "room sized" IBM 360 and by 1980, with my wife, started a computer services business. Yet, I wasn't fully aware of the socioeconomic impacts of the digital revolution. It just seemed like we had some better tools.

In reality, of course, disruption was occurring around me. Previous to 1970 I had worked has a reporter for a newspaper, the paper kind. This disruption was happening in the typesetting process:

Still it wasn't until 1999 in the Sacramento Valley when a supervisory employee in his late 20's who had young children observed that he thought his kids might not be able to have the life he had - for instance, they wouldn't be able to buy a home or stay with an employer to gain promotions and seniority.

He could see the economic and social disruption surrounding the beginning of the 21st Century.

I responded noting that the one mandatory skill for his kids' generation will be to adapt readily to change which will require a quality education creating a solid foundation in the basics - reading, math, science, and history.

And then, I noted, they will have to lower their expectations to a life comparable to that of the middle-class in Mexico in 1999 not the middle-class in the United States in 1969.

After I said that, I realized my ongoing awareness of the impending 21st Century Disruption Way-of-Life had heightened.

In 2005 the New York Times published an article headlined In Silicon Valley, Job Hopping Contributes to Innovation examining studies about the relationship between frequent job changing and technology exploring the reality of the change in the work culture, but most of the data was over the prior decade. By 2015 in the Harvard Business Review article Setting the Record Straight on Switching Jobs this is offered:
    Stay in a job for at least two years.” “Never leave a job until you have your next one lined up.” Everyone from your mother to your mentor has advice about the best way to switch jobs. But how can you know whom to trust? Especially since what was true in the job market 20 years ago — even two years ago — is not necessarily gospel now. And the market is constantly changing.
    Consider the power dynamic between candidates and employers, for example. Though it differs across industries and regions, and is dependent on the health of the economy, in the past few years, experts have described the current labor market as “candidate-driven.” Job seekers hold more power than employers, a trend that seems to be deepening.
    ...Fernández-Aráoz points to the advice in The Alliance by Reid Hoffman (the cofounder and chairman of LinkedIn) and his coauthors that life-long employment is no longer realistic but being a completely free agent isn’t perfect either. “The alternative is what they call a ‘transformational alliance,’” explains Fernández-Aráoz, “where through honest conversations you explicitly agree on a temporary alliance, clarifying expectations regarding your contribution to the organization and what the organization will provide you in return, which may well be the support to continue your career elsewhere.” This is popular in Silicon Valley now, and “is probably showing the way to talent and career management over the next decades.”
While the concept of a "transformational alliance" with your employer appears not unreasonable, what is actually meant is a focused employment period where you are drained of your creative skills and ideas. It is not unlike the insurance agencies that hire someone to be a sales person to drain them of possible leads from their friends and family.

In fact in 2015 Business Insider offered this article Some tech workers over 50 are literally working themselves to death — and other things we discovered about their careers. And then this year there is this You Should Plan On Switching Jobs Every Three Years For The Rest Of Your Life which explains:
    Patty McCord, former chief talent officer for Netflix (and responsible for the company’s current innovative work culture), says job hopping is a good thing, and young people should plan to do so every three to four years.
    “I think that the most important, critical change in people’s mental outlook is to view employees as smart contributors from the beginning,” advises McCord, who now coaches and advises companies and entrepreneurs on culture and leadership. ...She adds. “You build skills faster when changing companies because of the learning curve.”
    Why the high learning curve? Because job hoppers are constantly placed outside of their comfort zones. They join companies, know they have to learn fast, make great impressions, and improve the bottom line—all within a couple of years before moving on to their next conquest. As a result, they’re usually overachievers and learn a lot in a short span of time.
    According to Penelope Trunk, serial entrepreneur and author, life is actually “more stable” with frequent job changes. ...She adds: "... I read a lot of research about what makes a good employee . . . and people used to think that the longer you kept an employee, the more worth they are to you, because you train them and they get used to their job and then they do it. But, in fact, an employee who stays on the job and isn’t learning at a really high rate is not as engaged, so they’re not doing as good work. So it turns out, the employee who stays longest, you get the least work out of, and the employees that job hunt are the most receptive of becoming extremely useful, very fast."
    But what about companies? We all know how costly it is to train employees. If companies have to keep training new employees, how does this affect their business objectives?
    This is a concern McCord is asked about regularly by the companies she consults. Employee retention is a big issue, and “it scares the hell out of” employers, says McCord. They’ve invested a lot in hiring big talent. To that, McCord has some advice: In 15 years, when your company is growing rapidly because of all the high, job-hopping achievers that have come and gone, unless you’re an institution, don’t worry that no one has any institutional knowledge of your company.
Then there is this Forbes story Employees Who Stay In Companies Longer Than Two Years Get Paid 50% Less. Economic opportunities pretty much drive the way we live, at a minimum because we need food, clothing, shelter, health care, and Netflix subscription. It would appear that the best economic opportunities come with biennial discontinuity and displacement.

So far, the 21st Century Disruption Way-of-Life is pretty much as expected.

This is not the discussion of "disruption" seen in 2017 media evaluation of technology business innovation, a positive view of the role of destruction and creation of businesses and even whole industries within a decade. That discussion too often ignores the fact that the process destroys communities and regions, and the people therein.

By the year 2000 the inevitable future seemed obvious. But even for someone who had lived in the Salinas Valley and was aware of this...

 ...these pictures of technology affecting California's agricultural economy in the 21st Century still boggle my mind even as the jobs on that graph that existed in 2012 are disappearing:

The pictures provide a more directly informative image than graphs by economists. But most Americans understand the meaning of this graph:

But that doesn't mean that we understand the 21st Century employment picture. This graph from economists provides some further understanding with the explanation below it:

    The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry, fishing and mining. The manufacturing industries that aggregate, pack, package, purify or process the raw materials close to the primary producers are normally considered part of this sector, especially if the raw material is unsuitable for sale or difficult to transport long distances.
    The secondary sector includes industries that produce a finished, usable product or are involved in construction.
    The tertiary sector of industry involves the provision of services to final consumers and other businesses. T
he focus is on people interacting with people and serving the customer rather than transforming physical goods. Services also may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry.
But somewhere around 2000 people became aware of a change which led to consideration of a fourth "sector":

    The quaternary sector of the economy is a way to describe a knowledge-based part of the economy - which typically includes services such as information technology, information-generation and information-sharing, media, and research and development, as well as knowledge-based services like consultation, education, financial planning, blogging, and designing.
The problem is not everyone is in agreement on what are quaternary activities and some are now breaking things down into five activities. An then we don't have adequate statistics that have been graphed but one source has offered this for the United Kingdom which offers some hints about the future:

Looking at the curve on the tertiary line it appears that it peaked around the year 2000 much as secondary activity employment peaked in the 1930's. As we know self-driving vehicles are going to be disruptive for those who drive trucks for a living and retail sales employees are already being displaced by auto-checkout systems and internet sales.

The disruption in the primary and secondary activity employment is still being felt in areas of the United States such as the Rust Belt. Contrary to political rhetoric, those trends will not reverse. Americans who worked in agriculture (consider the pictures above), plus mining, and industry are delusional if they expect a change.

One of the realities is that a Tesla auto assembly plant looks like this:

Perhaps "Trump The Deplorable" would assure you that Tesla is a special case and that workers in auto plants in Mexico stole all the jobs. That is both stupid and a lie, because in that Tesla plant you can actually see some humans doing things because some things are experimental or custom, while in this Kia plant in Mexico there are no workers pictured:

 I''m sure they must employ people there, but my guess is most would be involved in quaternary sector activities keeping those robots working properly. If you're skill is operating a wrench, to work in one of these plants in the future you will have to get additional education and training requiring that calculus you fortunately took in high school because, as I said in 1999, you got a quality education creating a solid foundation in the basics - reading, math, science, and history.

The reality is that much of the technology creating the disruption came from California's aerospace industry and California's Silicon Valley. It cannot be undone nor can those businesses that created the technology employ those who have lost their jobs. There just aren't enough jobs in Silicon Valley. But even if there were, there aren't enough qualified workers - let me emphasize the important word qualified - to fill the millions of vacant jobs. As recent stories noted Cyber security jobs in high demand, currently 1 million job openings and Businesses say they just can't find the right tech workers.

Oh, and if you want to work in retail consider this March 2017 story Walmart.com hiring hundreds of tech workers in San Bruno, Sunnyvale to challenge Amazon Prime:
    The hiring is expected to more than offset recent job cuts of about 175 Walmart.com workers on the Peninsula.
    The retailing giant also has bought e-commerce firms Jet.com, Shoebuy and Moosejaw in a series of transactions in September 2016 and January and February of 2017.
    “We are shifting our investments and building up teams that can launch two-day shipping and other customer-facing initiatives that further enhance the digital shopping experience,” [said Ravi Jariwala, a spokesman for Walmart.com, the digital arm of the Arkansas-based retailing titan].
    “Every traditional retailer is trying to come up with a winning formula for its online channel,” said Mark Vitner, a senior economist with Wells Fargo.
What possibly would make someone write that the hiring of tech workers would offset retail jobs lost by these folks in nearby Walmart stores?

How many of those WalMart workers will be able to slide right into the tech jobs remains to be seen. But certainly most likely will face stressful displacement and discontinuity in their lives. And for many it will not be the first or last time they will experience The 21st Century Disruption Way-of-Life.

The 21st Century Disruption Way-of-Life is not going to be limited to economic disruption. There is what Obama Administration White House science adviser John Holdren called "global climate disruption" which admittedly is a slower process, though by the middle of the century many places Americans live will not be very "desirable" or even "livable". Unfortunately, the term climate "disruption" was not picked up by the media. Nonetheless combined with economic disruption, it will help form the 21st Century Disruption Way-of-Life.

Scenes like this will become more frequent and, in many cases, will cause displacement and discontinuity, sometimes extreme displacement and sometimes inconvenient permanent discontinuity:

As noted previously in these posts, Californians have their own environmental program working with people in other Pacific Rim, European, African, and Asian nations and states they hope will make the next 100 years of climate disruption less disruptive for their children and grandchildren. We Californians should be doing that because the 20th Century California addiction to the automobile is at least partly responsible for climate disruption.

Now Californians have begun an effort to make the economic disruption less disruptive. We will explore that in the next post.

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