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Do We Matter Anymore?

A jarring recent post in The Atlantic raises that very question. Charles Davi, a New York-based capital- and derivatives-markets lawyer, crunches sets of numbers and comes to this conclusion: “People are becoming less valuable to companies.”

Part of his analysis examines the wage-growth differential in various income brackets (the rich are getting richer scenario) but it also looks at Moore's Law and the growth of containerized shipping.

You're familiar with the effects of Moore's Law, but perhaps not so much with the containers. The combination of the two, according to Davi, has been profound over the last three decades:

The freedom of capital to move throughout the world in search for labor has fundamentally changed the balance of power between labor and capital… This dynamic is already exerting sizable, downward pressure on the value of labor relative to capital in developed nations.

We know wages — even in high-skilled professions such as engineering — have stagnated for a decade, much of that due to the Great Recession. My sense is that this will improve once the economy improves and that the intellectual rigor required to design chips and boards — even helped along by productivity-enhancing tools — will remain highly prized and well rewarded.

But I could be being Pollyana about this.

What's your sense? Is it instead a matter of not if but when we will automate ourselves out of even highly skilled occupations in the electronics sector?

24 comments on “Do We Matter Anymore?

  1. FreeBird
    February 21, 2013

    There's a lot to be said for automation, particularly in regard to labor costs. But no matter how well you program your system, something will come up that the system can't handle. That takes judgment. In earlier blogs, contributors talked about the sixth sense and the supply chain. There are some things only experience can tell you–like when a custoemr is double-ordering in anticipation of a shortage. There are a lot of ways to beat programs that are supposed to flag such things (order once through a distributor and once through the supplier). A savvy PM will catch that before the orders get too far down the line–and then become excess.

  2. Brian Fuller
    February 21, 2013

    @FreeBird: spot on points. Years ago (I want to say 15 years ago), I was speaking to the guy who was running LSI Logic's WW manufacturing. We talked about Japan's “lights out” manufacturing push. He said the problem was with no human oversight, there was no optimization. 

    Not to say we won't be able to innovate that into our machines soon, but we're not quite there yet. 

     

  3. SemiMike
    February 21, 2013

    Do we matter?  Joy's article on wired comes to mind.

    http://www.wired.com/wired/archive/8.04/joy.html

    The interesting class warfare issue, is that your comment phrases this a “capital search for labor” wherever it is cheaper perhaps.   But as automation levels increase, that search is less necessary. Then it becomes “capital in search of design innovation” or “capital in search of application expertise” which favors experienced workers in all countries.   So what worries me is “will my grandkids matter” and the answer to that lies in education, perhaps of the co-op work-school type.

  4. FLYINGSCOT
    February 22, 2013

    I see in high tech less reliance on many local technical people.  In the old days a company might have has 100 engineers on site say and now they seem to have 10 key engineers on site and 150 splattered all over the world where they are more available.  So I see a stratification of resource to fewer very highly technical gurus and many less specialized implementers wherever they can be found.  So some people matter even more and many others matter less than before.

  5. jlawton
    February 22, 2013

    MClayton, I disagree strenuously. At least at the engineering level in this economy unemployment is still amazingly high because innovation is simply not valued. Your comment seems to imply that at some mid-skill level there will still be a demand but if there's nothing substantially “new” being developed where would that come from? I used to think that robotic forms would “take over” in factories because they were reprogrammable and therefore not easily obsoleted. What I failed to take into account is the clever way factory techs will take “any old 1800 RPM FHP motor” without even speed control and fashion plain old rotary motion into the thousands of individual motions needed to fill and cap jars or bottles or assemble parts etc., then you just have to support a simple mechanism not train someone to program a computer. No I believe our politicians and other “social engineers” will have to work out the intricate details of our “post-labor” globalized economy, which they seem eminently incapable of understanding or even admitting that the problem exists. If you still wonder whether this is a “trend” here in the West then consider the rate at which housing construction and prices for the middle class are accelerating in developing countries versus how they're contracting here. Sad to watch and frankly frightening.

  6. Nemos
    February 22, 2013

    Totally disagree with your point of view, maybe the skilled workers and engineering jobs having a better life or a better future but the direction where the “whole situation” is moving is very clear…

  7. SemiMike
    February 22, 2013

    jeffl_2, you have right to disagree. 

    Engineers are out of work in large numbers, as a professor once told me in the 1960's (Herb Simon, who made old IBM computers play chess) that most engineering and financial tasks, especially electronics industry and banking, would be automated by end of 20th century, and toughest job to automate would be bulldozer and other tasks that require great hand-eye coordination rather than logical thinking, advanced math solutions. (Of course we now have laser and GPS guided earth movers that seem to do just fine with less hand-eye coordination part of the operator). 

    But you get the point, anything that is easy to automate or computerize will become a lost job in some scenarios.  And guessing that “innovation” will never be so robotized could be dangerous.  What humans do best is to pick and choose which innovation is worth investing our time and money in helping to deploy, and how to guide it to its best application, while creating new roles for ourselves. We all see innovation every day around us, but few of us really create the new things that will survive.  And yet we all need to have some income.  So if we can't inherit it, we have to earn it.  And we have to keep looking for those innovations that are worth learning how to use.  Slide rules, graphical calculators, mainframes, PC's, tablets, smart phones, voice interfaces, thought interfaces, whatever comes along.

    But I studied engineering any way…and as 21st century shows, the lawyers, stock traders, bond traders and engineers that did not keep learning new skills are out of work in droves.  Luckily I am 77 years old.  So I simply worry about what skills will be needed by my grand-children who are now going into college (one already has law degree, no job, going back for CPA as that certification has monetary value it seems right now.)  Another wants to design games, of course. And another wants to entertain for a living.  I don't have any quarterbacks in the queue yet, although they all hike.

    Intel and others only hire PhD's now, and many BS engineers are doing technician-level jobs now as temps at Intel (at least in Arizona where the newest fab is about to start up).   And having outsourced back end operations to Asia, they are trying to “innovate” in West Coast labs, then “copy exact” in new 8 billion dollar fab, that will have only 500-to-1000 employees.  PM's on equipment are done by Kelley Services people trained by the equipment vendors (this is where some former equipment and process engineers end up.) Many other high tech companies have distain for engineers that are not PhD's or proven design talent in specific arenas.

    So my point is that with that much automation, there is less motivation to move to Asia (Ireland perhaps to avoid taxes…another story).   Tax policy may be one thing that politicians will get right over next decade, higher for billionaires, none for corporations that provide jobs??  Or just race to the bottom state by state with incentives to move companies to that state???  We will see.

    But Qualcomm and other fabless design centers are doing very well, avoiding the big capital investments that fabs require…so far.  They may at some point buy a used fab in US, or build one, just to do as Intel has done, keep the IP secret for at least a year or so head start on competition, and be able to customize the process to give them an edge over foundry products.  Who know. 

    My point is that kids who take engineering will need much more future-proofing in the form of a continuous education beyond even the PhD level (or as replacement for PhD, a second degree in patent law perhaps, or Warton School of Finance).  Who knows.  My Asian friends from Berkeley got their PhD's and then went to Wharton, to try to become tech advisors on Wall Street.   Some succeeded in New York, some are in China getting rich, some joined startups.

    What kind of education, training and experience is needed to prepare the millions of grandkids out there for the 2015 to 2025 “next wave of baby boomers globally” as one bull market forecast predicted.  Or the next three  decades to 2055?   You mention “”politicians and other “social engineers” will have to work out the intricate details of our “post-labor” globalized economy.”

    We certainly cannot count on those folks to get it right. So what can you and I do to get our grandkids and their grandkids ready for what comes?  I remain opimistic about teaching adapability, or even creativity, after a foundation in how to use the new robotic, analytical, and design tools, to add value as the world evolves.  The innovation I am looking for is in new learning systems that are exploding around the world, as hinted in U Tube, and Khan Academy, and MITx, and the death of the large lecture halls, moving to small workshops after the video lecture is digested.   But in pre-K and K-12, the foundations have to be laid, hopefully dragging the parents along by making it easy for them to see the results of daily work and learn along with their kids, or support these new whizzes with positive attitude toward truth and skepticism without harming others. 

    So let's all take a few web courses, and help them get better, by adding content such as case studies from our own experience. Maybe become workshop guests in the schools?  Maybe help the kids learn to hike our wilderness areas to round out their thinking about the nature of nature?  But do something to help their support systems, rather than wait for a government solution that is merely a framework of funding and metrics will all the important details left to learning system design people…like us, maybe, acting as sanity checks and content providers.   And get to know our grand-kids really well.   Keep our tribe adaptive, and tolerant, and based in empiricism rather than dogma, and we can survive the jobless view of the future.  In my opinion.

  8. _hm
    February 22, 2013

    There are some universal truths. Human resource, the most valuable reosurce is one of them. Some person's whimzical thought cannot change it.

  9. dalexander
    February 22, 2013

    @Flyingscot, I am seeing the same thing here in the Silicon Valley. As outsourcing has taken much of the factory labor and support component out of the picture, companies tend to spend their working capital on additional R&D, Marketing and and Communications efforts, basicly becoming a marketing entity a captive inventory supply chain. It is much like fabless semiconductor companies who design ASICs and employ foundries overseas to make the wafers adn package the final products. Cutting out a bunch of factory labor is in effect creating a fabless factory. Seems like a misnomer, but when a manufacturer does not actually do their own manufacturing, then they are operating on the same principles as a fabless semiconductor company.

  10. Nemos
    February 23, 2013

    “even in high-skilled professions such as engineering — have stagnated for a decade” The recession is used as an excuse, I strongly believe that the main reason for this situation is the quantity of the skilled people a company can find very easy. As more is the demand for a working place as less will be the salary. Before 20 years if you were a well-educated person you could find a nice and well paid job so easy, what about today? ……..

  11. Brian Fuller
    February 23, 2013

    Couple of thoughts here… 

    @mclayton200, you win comment of the week! You response below is just amazingly thoughtful. Thank you for that.

    @nemos: your comment brings to mind something I've heard for many, many years in the semiconductor industry. Every CEO and HR manager complaints each decade it's hard to find “qualified” people. But they make it happen or, when they expand into a new business, they explain part of their success as “we were able to hire the right people.”

    How can it be that every year it seems harder to “find qualified people” and yet the business keeps growing? Everytime I hear that, there's invariably well-qualified, experienced engineers (to @mclayton200's point) looking for gainful employment. (Oh, wait! They're too expensive!!)

    Also, I suspect that some of it is used as an excuse to move design and operations to lower labor regions (not always a bad thing, especially for regions that are trying to lure high-tech business). 

     

  12. itguyphil
    February 23, 2013

    No matter how good technology becomes, the human element can truly never be replaced!

  13. Brian Fuller
    February 23, 2013

    @pocharle, with all due respect, we used to say the same thing about the village cobbler, and blacksmith, and tanner etc. No machine would work better than the hands of an artisan! 

    That's what concerns me: There's precedent. 

     

  14. jlawton
    February 24, 2013

    MClayton, your wisdom is certainly not lost on me.

    The one outstanding ability of this country's engineering megacorporations is that of wasting immense amounts of human capital. Let's say you were running a tech company in a smaller but fully developed country, say somewhere kind of like Japan but without the massive debt but also lacking the venture capital infrastructure. You'd then understand intuitively that the people who wallk through the front door in the morning and out it at night are your most valuable “capital”, and you'd naturally understand the value of having company-assisted continuing education. And you'd find yourself acting in most ways ezactly the OPPOSITE of your counterparts in this country.

    I find that many people (including a lot of engineers) believe for example that Intel is a company that does outstanding engineering. I'm not trying to “burst any bubbles” (or demean anyone's talents) but Intel is primarily a marketing enterprise, has been since the 90's, Otellini is a fine man but he's totally a marketeer. His company fusses and fumes about ARM processors but they also fervently hope everyone forgets they HAD a plattform on that ISA (XScale) they poured immense resources into then basically gave it away to Marvell. The situation is much like that at IBM from way back in the 60's. The same corporate “arteriosclerosis” is easily visible at places like HP, where many of the operations they “discarded” (Agilent, Avago etc.) are doing better than the former “parent” company that's still stuck in the ICU on life support, the victim of a semi-endless succession of CEOs who were as “valuable” to HP as Gil Amelio was to Apple (sorry about having to make the reference). No, the companies that know how to get value from their human capital today are outfits like Google (with a powerhouse built largely on Python) and the Broadcoms and Qualcomms (designing SoCs in Verilog). Of course most of the schools aren't even TEACHING about these tools to their students (often because their tenured professors have been out of industry for awhile and either don't know or don't value them) so they decide that hiring “educable” people becomes the requirement (hence hire only PhDs) and employee education becomes the order of the day (of course they also get the highly-degreed folks cheap because of labor market conditions).

    So why has this lamentable situation developed? I believe it stems in part from the easy availability to manahement of debt financing (issuing stock or bonds, going to VCs or other private capital). Successive generations of managers is taught “your investment banker is your best friend” then they borrow heavily and their stock gets whacked with monthly analyst downgrades when results don't appear within literally days. It also arises from the boardroom arrogance that reassures them that a new MBA is orders of magnitude more valuable than ANY engineering degree. I'm reminded of the lowly tech at Litton Industries back in the day who knew that a working 22-bit integrating A/D converter would need to be practical in order for a working inertial guidance system to be built. He didn't “have enough education” like the company engineers did to realize that such a contraption was totally impractical, so he went into the lab and actually BUILT one – and a billion-dollar industry was born! I don't see how using BSEEs as process line techs serves the purpose of advancing the state of technology at Intel or anywhere else.

    No I don't see the boardrooms at US tech corps changing for the better anytime soon. Unfortunately the leadership in management at the corporations in many emerging economies has their own flavor of NIH, and learning fluent technical Mandarin isn't exactly a “piece of cake” either (maybe a reliable translator will be the next hit smartphone app?). It just bothers me that the waste of technical human capital in the current economy is so vast and senseless. Until technical training programs emerge that companies understand they can trust enough that they can hire their graduates (even us “retreads”) and make money on the deal, and the corporations TRUST that they work, the current situation will continue to deteriorate.

  15. itguyphil
    February 24, 2013

    There is precedent for many things but there still needs to be someone to control these machines, whether it's the live intelligence factor or map out the processes.

  16. syedzunair
    February 25, 2013

    pocharle:

    You are absolutely correct. The human factor cannot be neglected and neither replaced. Someone will still be required to run the devices and interpret results. 

  17. Houngbo_Hospice
    February 25, 2013

    @syedzunair,

    Somebody will still have to operate the devices and interpret results but machines are already being prepared for that as well. There are some jobs that may not be taken over by “intellingent agents” for sure, but most of the decision making processes in the enterprise and in the market will likely be handled by computer systems in a very near future.

  18. Houngbo_Hospice
    February 25, 2013

    @nemos,

    The job market is also governed by the law of supply and demand. Do you think that there are more engineers available than what is actually needed? 

  19. Nemos
    February 25, 2013

    Yes, there are more well educated than people without education, unemployment crisis is in every cornet in this planet. Companies cannot handle anymore this situation, even governments cannot help. I don't know how we can surpass this and when …..

  20. itguyphil
    February 25, 2013

    I hope it stays that way.

  21. Brian Fuller
    February 26, 2013

    Agreed, but for how long? The optimist in me believes that humans, somehow, will always remain one intellectual step ahead of the technologies they create. But then sometimes I'm not sure sure. We've tied the world together with the Internet. Now we're tying in sensors to that massive infrastracture and we don't have a sense for all the consequences. 

     

  22. itguyphil
    February 26, 2013

    I look at it this way. The same way that hackers are always a step ahead of the security pros, this way the security pros always have a task to handle one way or another. I feel like the cat & mouse game of technology will identically always require humans.

  23. Mr. Roques
    February 26, 2013

    I agree with you, there will be highly-paid jobs, but less per company. We should aim for more companies.

  24. Brian Fuller
    February 27, 2013

    And @Mr. Roques, I think there will be… highly specialized companies leveraging ubiquitous hardware and software for very fast, almost reactive product development. 

    The company of old–that lasted decades or a century or more–is a thing of the past. Companies will come and go much more rapidly, but they will come much more rapidly, like spring flowers. 

     

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