Fallback-Position - Anyone Who Can Be Fired Needs a Fallback Position
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Globalization and Technology Lead to Uncertainty in the Job Market

Things have changed in the job market. Things continue to change. And the rate of change is quickening. Unless you’re aware and prepare, these changes can catch you by surprise and be devastating to you.

That’s why I wrote Fallback Position. I’d seen too many people laid off or fired unexpectedly and being unprepared were devastated emotionally and financially. Does that sound familiar?

I thought there was a market for a book that provided tools to get prepared. Fallback Position provides both career and personal tools to help people get a job, do the job, and exit the job. All with some comfort and security.

Do you think comfort and security is needed?

3 million people were laid off the past two years. 600,000 just in 2003. 2400 mass layoffs (more than 50 people) just in January 2004, a total of 15,000 mass layoffs for the year. 9 million total are officially unemployed, but it’s estimated that 4 million have quit looking and don’t figure in the statistics. There’s a shadow economy out there with 8 million folks doing odd jobs as independent contractors--doing one-time jobs for free-lance, per-job contract pay--making candles in their kitchen, selling things on Ebay, and doing contract work part-time for their former employees. Another 550,000 new businesses were started as people realize that unless you own the company you can be fired. So they want to own the company.

We have 140 million people employed. 14.5 million in manufacturing, down from 20 million 20 years ago. 2 million Temporary Workers are included in the employed in manufacturing numbers. What happened to those jobs? Replaced by technology or shipped overseas. Levi Strauss announced the closure of its last two plants in the U.S. just last week. They once had 63 plants here. Now none. Is there anything more American than Levis? Now they’re all going to be made in China, India, Mexico. They used to have 36,000 workers in the U.S.

Kodak announced the layoff of 15,000 people. IBM announced sending 10,000 jobs to China, India, and Brazil. Accenture is sending 10,000 jobs offshore. J.P. Morgan last year bought Chase Manhattan Bank. Last year J.P. Morgan bought Chase, saying they’re laying off 10,000 people. Even “the family” of Hewlett Packard is not immune. HP is laying off 14,500. Consolidation and application of technology, with some offshoring of back office staff makes it work.

The 5 industries that employ 75% of those with jobs are undergoing what the economists call “creative deconstruction.”

  • Downsizing, right-sizing, by whatever name reducing headcounts, replacing workers with technology.
  • Outsourcing and moving jobs Offshore--to India, China, Mexico.
  • Mexico recently complained of China paying lower wages and stealing their jobs.

Those 5 industries undergoing ‘creative reconstruction’? Airlines and Aircraft, Communications, Finance, Manufacturing of Electronics, and Technology. That’s a lot of the economy.

You need to be prepared, to have a contingency plan for being laid off. Having one will make you feel good that you’ve protected yourself and your family. The increased security will actually make you a better employee in your present job. Jim Hobbs was one who read the book, did the exercises in the book, and came back and said he appreciated what the book made him think about and he’s pleased with his current boss and job. But he felt much more comfortable knowing what he’d do if the company crashed and he was laid off.

Those trends tell us that there is no longer the concept of Lifetime Employment. 40 years to a Gold Watch and Retirement is a dead concept. Students of the subject say you are no longer going to stay in one career, but you will have four careers. Not four jobs, but four careers, with different skill sets for each in your lifetime. That means continuous learning.

I’ve been on 70 Talk Radio shows about the Fallback Position and some have call-ins with questions. People ask, “What should I do?” I say you should learn a new skill every year, learn something to add to your value to the employer, and to add to your intrinsic value as an employee to anyone. For example, have a goal of learning a new computer program every year, learning a new technique of dealing with people. Update your negotiation skills, as an example. Learn how to lead a meeting efficiently. Learn how to mediate conflict. Do something that makes you more valuable to your employer, so you enhance your chances of being the last tossed off the lifeboat.

And update your resume.

I also advise that the people who hire you are your friends, but that’s not who lets you go. So negotiate severance with your friends. Get your Out package on the way In.

Changes Occurring

Globalization of the economy and application of technology are making the changes occur. And the changes are accelerating.

China, Russia, and India have over 300 million highly educated people in their workforce. That’s twice as large as our total workforce.

Companies can save 58 cents on the dollar by outsourcing jobs there. IBM figures to spend $12.50 an hour on computer programmers compared to $56 an hour here.

Companies also want to sell their product to this population, totally 3 billion people. So they are taking plants there, hiring people, and building markets for their products. Not just manufacturing, but that’s a large part.

It includes computer programming, back office support, and customer service call centers.

Does globalization sound like a trend that will reverse? Or should? I don’t think so.

Computer and other tech jobs lead the move offshore. Some researchers say that 1 in 10 jobs in computer service jobs and 1 in 20 in other technology jobs will move offshore. IDC figures that by 2007 23% of all tech jobs will move offshore, compared to 5% currently.

Loyalty to the company is eroding as evidence mounts that the company is not loyal to the employee, that the employee is treated more and more like a commodity. As a result, 50% of the people employed would like to move to another job. Only 3% of the people employed are satisfied with their jobs. The uncertainty of the job market is holding them in place.

Growing job opportunities exist in the fields of health care services, leisure services, biotechnology, teaching, food services, business and professional services, and administration and support for those fields. The next decade will see 1.5 million jobs in biotech, 1 million jobs in health care, and hundreds of thousands of jobs in the other fields.

  • The Wellness industry will grow from $200 billion to $1 Trillion by 2010.
  • 40 million people run home-based businesses, growing to 95 million in next 2 years.
  • For the self-employed, getting health insurance is a big deal, very difficult, very expensive.

Demographics and Unemployment

We need 200,000 to 250,000 jobs a month for the next year to get to full employment.

There are 70 million baby boomers and the youngest just turned 40. The work force is getting older. 76 million boomers will retire by 2010. That should spur openings. Yet people are working longer.

  • In 2000, workers over 55 totalled 18 million.
  • In 2015, workers over 55 will number 32 million.

Those in the 40’s to 50’s age group are the most likely to be laid off. They’ve been working for the company longer, and are paid more.

34% of the public live paycheck to paycheck, for those with earnings above $75,000. If there’s a kid under 18 the number grows to 57%.

Manufacturing

We have 140 million workers in the U.S. 14.5 million are in manufacturing, down from 20 million 25 years ago. For 37 months manufacturing jobs have eroded each month.

Yet our Productivity (output per worker) is up—8-9% growth the last quarter of 2003. That’s the highest Productivity Index in 20 years. Growth in Productivity is caused by Replacement of headcount with technology. For 2004 the growth totaled about 4%.

2 million workers in Manufacturing are Temporary workers, doubled in the past decade.

Some people ask should they take a Temp job, because “there’s no quarantee of continued employment.” I argue there is no guarantee of continued employment in ANY job—that’s the world of work we’re in today.

When a manufacturing worker loses their job, it takes about six months to find another, and then the pay is less—average 13 % less.

Those who are not laid off see their benefits reduced, or see they have to pay more of a share.

Wilbur Ross, who brought Bethlehem out of one stage of bankruptcy, did it by changing pensions and health insurance, said, “There is more health insurance cost in an automobile than there is steel costs.”

Hardest hit states for loss of manufacturing jobs are Michigan, Ohio, Massachusetts, and South Carolina.

Service Sector

The service sector has traditionally been immune from international competition but many economists are now saying it is ripe for outsourcing on a global scale, McKinsey and company agrees.

Outsourcing has transformed manufacturing from”vertically integrated production structures to highly fragmented ones,” according to Douglas Irwin writing in the WSJ. “50 years ago Detroit’s River Rouge plant sucked in iron and coal at one end and spat out an automobile at the other. Now, auto firms source component parts from a vast array of domestic and foreign suppliers.”

Educated Work Force in Competition

India churns out 2.3 million college grads each year. 92% more than the U.S.’s 1.2 million. Computer programmers there make $2,500 and in the U.S. $75,000. So 200 of the 500 Fortune outsource some jobs there.

The U.S. economy is worth $11 trillion, while China’s is $1.1 trillion and India is $500 billion. Yet according to the Economist, China is the world’s largest producer of cereals, meat, fruit, vegetables, rice, zinc, tin, and cotton. China is #2 in wheat, coarse grains, tea, lead, wool, and coal. China is the largest manufacturer of textiles, garments, footwear, steel, refrigerators, TVs, radios, toys, office products, and motor cycles. India is right behind, being #1 in sugar and tea and in the top 3 of cereals, fruits, vegetables, wheat, cotton, and rice.

The difference? Prices are so low in China and India that if we equalized them, then the size of the economies of China and India to the U.S. would be $14 trillion to $9.6 trillion.

In looking at stocks, the Asian 3.6 billion people garner a 3.4% share of market capitalization. Look into the imbalance and invest more than 3.4% of your investments in Asian companies.

The dollar is at risk with the U.S. debt totaling $32 trillion, including $6.8 trillion of the U.S. government, which is adding $1.6 billion a day.

 

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All of this suggests that the book FALLBACK POSITION is right on for today’s world. Anyone Who Can Be Fired Needs a FALLBACK POSITION, Preparing a Contingency Plan for the Worst Case Scenario. Unless you own the company you need a FALLBACK POSITION.