It's Still About Jobs
Wed, 10/01/2003 - 6:11am
Ern Worthman, Technology and Editorial Director
Most of this year I've been racking my brain to try to rationalize the definition of the present economic recovery.
As I understand it, the traditional definition of an economic recovery includes such traditional observables as a reduction in unemployment, increased job creation, and an upturn in manufacturing, as major factors. Yet, as I write this column, I hear a lot of noise, but see little substance. As far as I have been able to find out, this is the first time there we have seen increases in profits and revenue without a corresponding increase in jobs. An interesting anomaly, which, I believe, is mostly created by the years-long downsizing and cost-containment.
One of my favorite childhood stories is the one about the king riding naked though the kingdom and no one dares to voice the observation for fear of loosing their head. Until, of course, a young, innocent child makes the observation, at which time reality sinks in.
I often feel that this is the case with today's economy, especially the telecom and high-tech sectors. I think our present government expects us all to just see a fully clothed king, but in reality, he's buck-naked. There is constant sidestepping of facts like no real job growth, continued high unemployment numbers, little growth in the GNP and weak consumer confidence. To me, that doesn't signal a recovery. I'm tired of our present governmental regime glomming onto every tiny perturbation or anomaly that pops up from time to time saying "see, we are in the recovery." It doesn't do anyone any real good. I tend to agree that most of the carnage is over, but stagnancy has set in and until we get off of the dime, in terms of productivity increases across the board, nothing much is going to change.
The government likes to use the stock market as its barometer of the recovery in action. Yet, in reality, the stock market is only doing what it is expected to do. It took such a tank, that the only way to go was up. But today, I don't think the stock market is a very reliable indicator of the state of the economy. It's a poor star to hook your predictions on. IMHO, I think watching the job market is much better.
Why, because the working person is really the source of growth. It's the consumer, stupid, as the saying goes. The consumer drove the proliferation of radiophones, computers, digital cameras, wide screen TV's and the like. When the consumer likes it and they have money, look out, the glory days are back. But the key here is if the consumer likes it AND if they have disposable income. Without both of these elements, it's a challenge.
But, I'm not really telling most of you something you don't already know. The ravages of the dot.coms, the reality check of stock values, the "right-sizing" of businesses, and the present governments head-in-the-sand mentality make it difficult to generate jobs. And, until many of those that are either unemployed, or underemployed regain confidence in the economy, it's going to be a rough road.
The 2.7 million-plus jobs that were lost in the dot.com crash and ensuing recession are permanent job losses. Not lateral people shifts to other industries. Couple this with the increasing trend to offshore manufacturing and one begins to see the math play out. There is no predicted worker shortage for the next 10 to 15 years, meaning it will take a while to absorb these losses.
So, is it years of starvation for high-tech? Not really...but the smart high-tech player will look for products that tight-fisted consumers are willing to spend on. That translates to value. For example, one shining illustration of a not-ready-for-prime-time application is picture phones. I know of few individuals (outside of the DoCoMo crowd) that have a lot of use for it. Mostly because it's clunky, slow and there are some legal issues with it. But on the other hand I see a significant growth in Wi-Fi. So, redundantly speaking, which one offers more value to the consumer? It is a lot more practical to go to a coffee shop and work on a resume, or do some work over a thick cup of Tarbucks coffee. And, it doesn't cost the end user! Furthermore, Wi-Fi is expanding it's presence into other area such as wireless interconnect among phones, organizers, digital cameras, MP3 players and the like (check out what Broadcom Corp. is doing).
I think this is evidence that, for the present time, wireless connectivity needs to be viewed for its convenience value, especially by a tight-fisted consumer. Bluetooth-enabled refrigerators will happen, but again, not yet as a priority to the same cautious consumer.
Furthermore and of late, news from the high-tech sector shows people are buying items such as computers (something one really cannot be without, anymore) again. RF Micro Devices is cautiously raising its revenue and sales forecasts for mobile phone chips and Research in Motion, Ltd is optimistic about it Blackberry device forecasts. This is where the rubber meets the road and it should be a wake-up call for those with their ear to the rail.
So if the mood of the un- or underemployed consumer is caution, then robust economic recovery is a long way off. When everyone has the job of his or her dreams (as I do :)), then none of us will have to worry. But that isn't reality now or likely to ever be. So the lesson I've learned from all of this is that for the foreseeable future it's time to produce wireless technology that enables, not impresses.