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The Great Recession? Or The Great Realignment?
The "highly paid consultant" is not necessarily going to receive health or retirement benefits, and may have to withhold his or her own taxes, too. So while it may appear that the consultant is overpaid it may not be the case. Benefits are worth thousands of dollars to an employer and that is what they stand to save by outsourcing work either here in the US or offshore. The presence of recruiting firms also poses an advantage because in some cases those agencies will also handle payroll for the term of the contract or consultancy. With less paperwork and a recruiting agency to handle the details, corporations may save even more time and money.
Until somebody calls for an act of Congress, the darker side of the IT industry is likely to become a reality for just about every corporate professional: Specifically, a small core of company employees at any given corporation will be outnumbered by consultants, contractors and temp workers (onshore and off).
This, in turn, explains why so many job descriptions read like unrealistic catchalls. Major corporations are asking their employees to do the work of 3 or more people because they are trying to get by on too many consultants, temp workers and part-timers to boost their profit margins by cutting their payroll expenses. These companies need full-time employees but they also need happy shareholders. As a result, they walk a fine line at the risk of all concerned.
Freelancing once was the bane of artists and writers. In this economy, however, short-term gigs are the new norm. I feel for those who are entering the labor market with ridiculous student loan debts to pay off and/or those who wish to raise a family. Even in a traditional two-parent household --- and studies now show the average American household is no longer a "nuclear family" but a mix dominated by single parents and childless singles and couples --- how does one build any type of "employment security" on a string of mostly low pay, no-benefit consulting, temp or contract jobs in a downwardly mobile economy?
The real question everybody ought to ask at this late stage of the recession is WHY. If you think it began with a subprime mortgage crisis, dig deeper. In order to compete with cheaper labor markets abroad the American middle class standard of living must diminish. During the expansion phase of American history GDP benefited from slaves, child laborers and slave-like wages --- until the union movement, among other civil rights efforts, spawned what we call the "living wage". That worked to raise the average person's standard of living, educational options and even life expectancies through better nutrition --- until, that is, we began in the early 1970s to expand our trade to countries that benefited from a labor market that more resembles the America of some 200+ years ago.
So what is the solution?
Dong Tao, a Credit Suisse economist, said on CNN last year that Americans must prepare to make do on 80 percent less wages and the Chinese must start consuming more to level the playing field and end this undeclared trade war.
For most of us, that's going to hurt. And hurt bad. (With the exception of those Americans who can still eat and pay the rent after taking an 80 percent salary hit.) For all the talk of a housing crisis at the root of this protracted downturn, the foreclosure crisis is really just another symptom of a post middle class transition.
If we wish to ask where this lopsided game began, look to trades, tariffs and economics. When NAFTA, GATT and other so-called Free Trade Agreements were passed the idea seemed reasonable enough. Why not share the wealth? The catch was this: Unless those trade agreements were balanced with human rights, labor and environmental protections that bore some semblance to one another, there would be no "free trade" --- only the sound of the First World slip, sliding away. Not only did we create an incentive to offshore our economic growth, Congress' lost much of its ability to collect corporate taxes: 2/3 of US corporations, according to a Congressional study released two or three years ago, pay no federal taxes whatsoever!
In order for free trade to function the way the global idealists promised, every nation must play by the same set of rules. If not, all you have is a chaotic game of musical chairs wherein the Third World and First World can trade places faster than anyone cared to admit. That's a recipe for uncertainty, at best, and uncertainty does not spur hiring and growth.
In the end, even Wall St. could not avoid the pinch of a less profitable domestic economy. Less of a real economy on which to sustain productivity-generated profits led to creative, if not foolish gambling --- casino practices that remain despite the warning shot the subprime lending crisis launched worldwide. Financial instruments --- like faulty mortgage backed securities and credit default swaps --- have come to represent an increasing chunk of every First World trade exchange in direct proportion to the loss of manufacturing and tangible growth.
It is no accident that we have become the debt-ridden government and society we are today. Wall St. investment firms are now taking US dollars and converting them into foreign-denominated investments because not only has our labor market offshored but so too has much of the investment trade! (Even the NYSE is in the process of relocating!)
As Americans, the impetus for our stagnating wages and unpredictable career trajectories links to how we have repeatedly ignored the influence of trade practices. Government leaders, in their infinite wisdom, continue to craft new and equally lopsided free trade agreements with South Korea, among others. This isn't to say that those nations shouldn't be permitted to enter a trade agreement --- only that it should be negotiated more equitably (and the US is by far the worst trade negotiator at the table).
All of this comes to one conclusion: What we are witnessing isn't merely the beginnings of a "double-dip recession". The so-called Great Recession is, in fact, the Great Realignment.
We may experience these changes in our personal lives as increasing competition for jobs, wages that seem unjustly low for the amount of time and money we put into our degrees and/or our professional development, longer spates of unemployment and more stress associated with taking on ever-increasing levels of responsibility on the job. Until we educate ourselves, demand a more intelligent American media and spend more time voting with these issues in mind, we can expect more of the same.
None of this is to say we should endorse a resurgence of protectionism or aggressive unionism. What should be the case, rather, is a healthy sense of respect for a counterbalance to unsustainable trade deficits. The future is entirely dependent upon how wisely we elect our representatives and how closely we scrutinize the trade laws to ensure that the American Dream is not yanked from beneath our feet.
Until somebody calls for an act of Congress, the darker side of the IT industry is likely to become a reality for just about every corporate professional: Specifically, a small core of company employees at any given corporation will be outnumbered by consultants, contractors and temp workers (onshore and off).
This, in turn, explains why so many job descriptions read like unrealistic catchalls. Major corporations are asking their employees to do the work of 3 or more people because they are trying to get by on too many consultants, temp workers and part-timers to boost their profit margins by cutting their payroll expenses. These companies need full-time employees but they also need happy shareholders. As a result, they walk a fine line at the risk of all concerned.
Freelancing once was the bane of artists and writers. In this economy, however, short-term gigs are the new norm. I feel for those who are entering the labor market with ridiculous student loan debts to pay off and/or those who wish to raise a family. Even in a traditional two-parent household --- and studies now show the average American household is no longer a "nuclear family" but a mix dominated by single parents and childless singles and couples --- how does one build any type of "employment security" on a string of mostly low pay, no-benefit consulting, temp or contract jobs in a downwardly mobile economy?
The real question everybody ought to ask at this late stage of the recession is WHY. If you think it began with a subprime mortgage crisis, dig deeper. In order to compete with cheaper labor markets abroad the American middle class standard of living must diminish. During the expansion phase of American history GDP benefited from slaves, child laborers and slave-like wages --- until the union movement, among other civil rights efforts, spawned what we call the "living wage". That worked to raise the average person's standard of living, educational options and even life expectancies through better nutrition --- until, that is, we began in the early 1970s to expand our trade to countries that benefited from a labor market that more resembles the America of some 200+ years ago.
So what is the solution?
Dong Tao, a Credit Suisse economist, said on CNN last year that Americans must prepare to make do on 80 percent less wages and the Chinese must start consuming more to level the playing field and end this undeclared trade war.
For most of us, that's going to hurt. And hurt bad. (With the exception of those Americans who can still eat and pay the rent after taking an 80 percent salary hit.) For all the talk of a housing crisis at the root of this protracted downturn, the foreclosure crisis is really just another symptom of a post middle class transition.
If we wish to ask where this lopsided game began, look to trades, tariffs and economics. When NAFTA, GATT and other so-called Free Trade Agreements were passed the idea seemed reasonable enough. Why not share the wealth? The catch was this: Unless those trade agreements were balanced with human rights, labor and environmental protections that bore some semblance to one another, there would be no "free trade" --- only the sound of the First World slip, sliding away. Not only did we create an incentive to offshore our economic growth, Congress' lost much of its ability to collect corporate taxes: 2/3 of US corporations, according to a Congressional study released two or three years ago, pay no federal taxes whatsoever!
In order for free trade to function the way the global idealists promised, every nation must play by the same set of rules. If not, all you have is a chaotic game of musical chairs wherein the Third World and First World can trade places faster than anyone cared to admit. That's a recipe for uncertainty, at best, and uncertainty does not spur hiring and growth.
In the end, even Wall St. could not avoid the pinch of a less profitable domestic economy. Less of a real economy on which to sustain productivity-generated profits led to creative, if not foolish gambling --- casino practices that remain despite the warning shot the subprime lending crisis launched worldwide. Financial instruments --- like faulty mortgage backed securities and credit default swaps --- have come to represent an increasing chunk of every First World trade exchange in direct proportion to the loss of manufacturing and tangible growth.
It is no accident that we have become the debt-ridden government and society we are today. Wall St. investment firms are now taking US dollars and converting them into foreign-denominated investments because not only has our labor market offshored but so too has much of the investment trade! (Even the NYSE is in the process of relocating!)
As Americans, the impetus for our stagnating wages and unpredictable career trajectories links to how we have repeatedly ignored the influence of trade practices. Government leaders, in their infinite wisdom, continue to craft new and equally lopsided free trade agreements with South Korea, among others. This isn't to say that those nations shouldn't be permitted to enter a trade agreement --- only that it should be negotiated more equitably (and the US is by far the worst trade negotiator at the table).
All of this comes to one conclusion: What we are witnessing isn't merely the beginnings of a "double-dip recession". The so-called Great Recession is, in fact, the Great Realignment.
We may experience these changes in our personal lives as increasing competition for jobs, wages that seem unjustly low for the amount of time and money we put into our degrees and/or our professional development, longer spates of unemployment and more stress associated with taking on ever-increasing levels of responsibility on the job. Until we educate ourselves, demand a more intelligent American media and spend more time voting with these issues in mind, we can expect more of the same.
None of this is to say we should endorse a resurgence of protectionism or aggressive unionism. What should be the case, rather, is a healthy sense of respect for a counterbalance to unsustainable trade deficits. The future is entirely dependent upon how wisely we elect our representatives and how closely we scrutinize the trade laws to ensure that the American Dream is not yanked from beneath our feet.
Posted by NewsView
Updated - 24th Jun 2011
