by Jon Roberts, TIP Strategies

No topic is of more immediate, more urgent concern than America’s job situation. The unemployment rate remains stubbornly high, the op ed pages overflow with prescriptions, warnings, and admonitions, entire communities are at financial and social risk. Among all these issues, there is a deeper discussion to be had. It goes something like this: what is a job – really – and how does it fit into the larger historical framework?

Before we tackle this question, there are a few related problems worth exploring. Whose job is it to create jobs? Well, not the public sector. At least we know that from the current giddy assault on government employment. Yes, cities, states, and federal agencies hire people but we are right to be suspicious of their contribution to the economy. They are doing work that we are paying ourselves to do. Or so the argument goes. They are like paying your own kids to mow the neighbor’s lawn. Your neighbor may like it (let’s assume he does), but your family is earning no additional income. It’s not a sustainable business model.

There’s more to be said on that topic, but let’s leave it at that. Then if not the public sector, who else? The private sector? Really? In what sense is it a reasonable expectation that the “private sector” should add employees? No private business exists in order to create jobs. It really is that simple. Businesses add employees when they have to add employees. Not before, and for no longer than they are needed. Any other attitude would result in . . . (you guessed it) an unsustainable business model.

But certainly there’s more to it than that. In a healthy economy jobs are created. It is in the interest of businesses to add employees. But this “interest” is self-interest, it is not for the good of economy as such. That can’t be a business concern. Which leads us to an interesting question: Can we have a healthy economy that isn’t producing jobs? Those who want jobs to be created, for whom it is a bit of crusade (the public sector) are powerless to do so directly. Those who could create jobs (the private sector) put themselves at substantial risk by adding workers when it compromises their competitiveness – thus making their model unsustainable. We are looking at a huge disconnect.

All these thorny questions and we haven’t even come to the really difficult one yet (what, after all, is a job?). Suffice it to say that if we ask whose job it is to create jobs, there is no easy answer – or perhaps no answer at all. We need to be asking a different question. Something like this: what are the conditions under which jobs will be created (by the private sector, of course). Are the answers easier to come by? Let’s try. Jobs get created when two things happen: there is a steady demand for product and services, and new workers are required to fulfill that demand. So what are the conditions under which this occurs? Consumers are confident and have the income (or credit) to act on their desires. And workers are able to increase the productivity of the company. Not just one of these things needs to happen. Both do. If I can increase my productivity (i.e., satisfy the demand for goods efficiently) without adding workers, I have no economic motivation to do so.

Before we leave this topic, we need to see the paradox this represents. If the only way I can sell my goods and services is to have customers able to do so, but the only way I can stay competitive is to reduce my labor costs, then who will there be to buy what I have to sell? As paradoxes go, this one is a doozy. Against this background we’re ready to ask our question:
What is a job?

Some historical context is relevant here. The concept of a job is not something we should take for granted. By that I mean people working directly for a company (an employer) who provides wages for specific activities. In fact, it’s a relatively recent development. Industry as we know it – and the structures that support industry – are a recent historical phenomenon. Prior to the 17th century, a merchant class was something of a novelty. There were farmers, to be sure, and craftsmen. Farmers typically worked for themselves, or they were indentured, but no one gave them a paycheck. Craftsmen did not go to a job in a factory and punch a clock. People did jobs, but they didn’t have a job. Even the rise of the merchant class did not immediately usher in an employer-employee structure, at least not in the corporate sense.
So you know what comes next (what always comes next in economic history). You guessed it. The Industrial Age. The 19th century changed everything. The idea of a workforce preceded the idea of a job. To put this somewhat differently, we were creating an economy that required specialized skills. Highly specialized skills – the ability to do one thing very, very well. This economy resulted in corporations, something that also had never existed before. The idea of a workforce had an almost transformative effect. If you weren’t “working for” a company, you weren’t working at all. Freelancers, housewives, apprentices – these all existed largely outside of the idea of the workforce.

Now all this is grossly over-simplified, but not entirely without basis, and certainly not without a point.
The point is that the notion of a job is not a fixed idea. It can change, it has changed, and it will (we think) change again. To explore this idea is to engage in a thought experiment. It is to imagine a growing cadre of highly talented individuals who fit their skills to the specific needs of corporations. They see that corporations have less and less need for things that machines can do. To put this more provocatively, the industrial age is over, and the machines have won (“I, for one, welcome our robot overlords,” to paraphrase from the Simpsons.). An economic model that seeks to create jobs by ignoring this reality is a failed model.

If we begin from that premise, entirely different models open up to the imagination. A flexible talent pool that moves to solve problems. A new cooperative corporate model in which consumers are themselves marketers, testers, and shareholders. Social innovators who build networks of services and products that operate first in a closed, then an open system. – Can we imagine any of this? Yes, because it is already happening. Social networking is redefining traditional sales models. “Professional services” are reconsidering where their value lies as search functions redefine legal analysis and insurance claims.

Simply put, there is no sector of the U.S. economy that is not fundamentally altering its business models. In this series of radical changes, why would we expect to solve the jobs question (i.e., to reduce unemployment) by expecting companies to hire people into permanent full-time jobs? This conception of “jobs” fits a model that simply doesn’t conform to business realities. And, for that matter, it doesn’t conform to the needs of the would-be worker.

None of this is simple. None of this will happen in a predictable way. None of this will be painless. But the changes have already begun. It works as a thought experiment not only because we can imagine it, but because we sense its inevitability.

The future of jobs is that they have no future. Passive job seekers desperately hoping to find job postings that fit their skills is the sad and painful dead end of an economic system that has run its course.

To say that the transition will be hard is more than an understatement. In fact, it will be as wrenching as the shift away from an agrarian economy was. Entire industries will cease to exist, communities will be in turmoil, families will suffer terrible indignities.

We could, perhaps, have eased the blow of this transition, but that opportunity has passed (if it ever was an option). Just as in the private sector, more efficient government is more efficient because it can do more with less. And in these times, that means fewer people. And fewer people employed (regardless of which sector) means higher unemployment.

This is not an economic forecast. Employment in the traditional sense will continue to go up and down. But the pattern, the move away from a 20th century employment model, is inevitable. Anything else is… unsustainable.



Jon will be presenting on this theme as an IGNITE presentation at IEDC’s 2012 Leadership Summit, January 29-31 in San Antonio, TX.

An interactive graphic developed by the American Human Development Project and the United Way allow you to see, by county, a dashboard of indicators of health, educational attainment, income, and civic participation. What makes this visualization particularly informative is that the user can manipulate educational attainment levels and see how changing that variable affects the other metrics.

For example, here is the first screen when Bastrop County, Texas, is selected.

Then, a pre-set scenario from the menu in the bottom left corner to “All up one educational category” was selected. Note the changes in median personal earnings, poverty rate, and unemployment rate. Users can also manipulate the orange bars under each educational attainment level on the left manually rather than selecting a pre-set scenario.

By Mark Fidelman, Seek Omega
via BusinessInsider.com

H.R. 2930 or the “Entrepreneur Access to Capital Act,” would provide companies the ability to raise up to $1 million (US) to fund projects and companies. The bill will ease fund raising restrictions and regulations on both companies and investors.

So if you are a start up in need of an early round of financing, you no longer need to ask friends and family, you can ask friend of friends or their extended network for seed capital. And that’s where companies like Kickstarter will have an advantage over Angel Investors.

Let’s face it, the Professional Angel community is insular. They invest in each others deals, they invest in similar types of deals, and they invest in who they know. Why? Because it’s safe and they have a legitimate need to protect their client’s capital. But that has led to a lack of investment diversity and has created an investment “group think” that is limiting the potential of the community.

Conversely, sites like Kickstarter and IndieGoGo enable people with a diversity of knowledge, skills and experience to fund projects and receive rewards for helping entrepreneurs. It’s called crowdfunding and it allows almost anyone to give money to an entrepreneur to complete a project.

In some aspects it’s like American Idol. Because it enables anyone to vote (by making a prescribed monetary pledge) and become a fan of a project (by following it). At the end of 30 days if the pledges don’t meet the minimum requirement as set by the entrepreneur, then the money is refunded to the investors. If the project funding goals are met, then the project moves forward, but with an important added fan base.

Today on crowdsourcing sites, project funding ranges between $100 – $8000 and pledges a fraction of that amount. But if H.R. 2930 passes, you can bet crowdfunding sites like Kickstarter will quickly move into the business of helping entrepreneurs raise Angel levels of capital ($100,000 to $1 million) .

So why will the Professional Angel Investment community die? Because, if entrepreneurs are given a choice between raising funds through an opaque, arduous and slow Professional Angel route versus a much more efficient, diverse and knowledgeable path, the latter will win ever time.

Case Study: KickStarter
Rather than speculate, I decided to invest in a Kickstarter project myself to understand how it all works. I chose an iPhone/iPad game called Stop Those Fish by Eye Interactive for three reasons.
First, I know the founder of Eye Interactive and he sent me an invite email to participate. Second, I could tell that Eye Interactive’s new game was creating buzz from my personal network which provided me with social proof (due diligence). Third, his first game Zombi Samurai reached #3 on the charts making it one of the most successful games in the last few months.

I asked Jason Seldon, Eye Interactive’s founder why he decided to raise funds from Kickstarter versus taking a more traditional route through Angel’s or friends and family. Seldon responded, “I believe Kickstarter’s value goes way beyond their stated value proposition of being a new way to fund creative projects. In addition to helping individuals and small businesses fund these creative endeavors, I believe it is also a way to generate tremendous pre-release buzz for a new product and to build a fan base prior to launch.”

Seldon continues, “It gives early adopters a unique sense of ownership over a new product. In our case, project backers actually get their names in the game credits. So it really encourages a deep connection with consumers. In a sense, you are building a street team comprised of all of your project backers prior to product launch. These individuals can then serve as brand ambassadors to help make your newly launched product a success.”

What the Crowdfunding Critics Have to Say
If the bill passes, the first objection you’ll hear from critics in regards to crowdfunding sites is the opportunity for scam artists to commit fraud and place unsophisticated investors at risk of losing their capital.
My reply to objection # 1 is twofold. First as we’ve seen with Wall Street, even sophisticated systems that are heavily regulated are subject to fraud. In this case, several hundred billion. Second, because sites like Kickstarter do their own background checks, make the process transparent, and allow potential investors to see who has invested (social proof), the risk is mitigated by a number of check points. I’m not saying it’s fool-proof, in fact I am positive we’ll see fraud at some point, but the benefits of crowdfunding far outweigh the potential for fraud.

The second objection I hear is that new start-ups will lose the coaching and networking opportunities from a professional Angel investor. In the short run, I agree with this objection. But in the near future, crowdfunding sites will overtake those basic functions and eventually crowd source the networking, intelligence and strategy aspect the Angels provide today. More, crowdfunding sites like Kickstarter will enable virtual teams to sign on (think eLance meets Kickstarter) to help start-ups fill talent quality gaps.

Who else will H.R. 2930 benefit?
Besides start-ups, crowdfunding sites, and mom and pop investors, companies like Angel List, and Bolstr will offer nearly anyone the opportunity to participate in an investment round.

For example, if the Social Customer Relationship Management (SCRM) start-up Nimble wanted to quickly raise a round of capital, Angel’s List could convert Nimble’s followers to investors by offering them a chance to participate in their next round of funding. If the new bill passes, I suspect Angel List will provide a swipe your credit card platform to participate.

As a quick aside, I’d like to touch on is the rich analytics and statistical information these crowdfunding sites can potentially track. Imagine giving start-ups the ability to see how many page visits, clicks, and conversions they’ve had to their page. More, who is referring potential investors to the page? Which segments of social networks seem to be supporting the idea the most? What is the sentiment of start-ups product?

That information could be used for a variety of purposes from improving the business idea to increased transparency.

The Professional Angel community will quickly lose its wings if H.R. 2930 passes. You can bet on it.
Sites, like Kickstarter, IndieGoGo, Angel List, and Bolstr will offer superior services through the crowd sourcing of funding, talent and the ability to organically build a fan base. These crowdfunding sites will eventually offer superior access to intelligence and strategy than professional Angels provide today. The crowdfunding process is much more transparent but potentially more dangerous than traditional Angel financing.

Read more: http://www.seekomega.com/2011/11/if-this-bill-passes-the-angel-investment-community-is-dead-and-companies-like-kickstarter-take-over/#ixzz1f8vBiwwN

via The Wall Street Journal

By Conor Dougherty

AUSTIN, Texas—As the nation grapples with stubbornly high unemployment, Texas’s political and high-tech capital shows one way to create good jobs for people who didn’t go to college: Attract highly skilled entrepreneurs, and watch the companies they start hire lower-skilled workers.

Praxis Strategy Group, an economic-development consultancy, estimates Austin added 50,000 “middle-skill” positions in the past decade. These are jobs that require a two-year associate’s degree or the equivalent work experience, and pay a median wage of $17.30 an hour, or $38,000 a year. That pace of growth is roughly four times faster than the nation’s as a whole, three times that of New York and Portland, Ore., and twice that of Phoenix.

Austin’s success in creating middle-class jobs runs against the grain of national trends. As America’s shift from manufacturing to the service sector has accelerated, economists have noted a hollowing out of such jobs.

In recent decades, a select number of brain hubs like Austin have attracted a higher percentage of well-educated workers and a lopsided share of new investment and young companies. In 1970, the top 10 most-educated metropolitan areas among the nation’s 100 largest had an average of 23% of workers holding a bachelor’s degree or higher, compared with 10% in the bottom 10, according to an analysis of Census data by Harvard University economist Edward Glaeser. The 13-percentage-point gap has widened every decade since, and had doubled by 2010.



Click on the interactive graphic to see the growth in middle-skill jobs from 2001 in Austin and other regions.

Beyond creating new middle-skill jobs, such brain hubs have generally higher incomes and for the most part have performed better through the recession. In Austin, the 7.1% average unemployment rate in 2010 was well below the nation’s during the same period.

Of course, Austin also has a fast-growing population, which helps create jobs in any economic environment. And it’s not as if other cities can create a more-educated populace overnight.

Still, Austin’s success in creating middle-level jobs shows how a well-educated work force can raise the fortunes of lesser-educated workers as well. Raleigh, N.C., has benefited from the same dynamic.

One consequence of the economy’s shift away from production toward brain work is that companies are constantly seeking new ways to break down high-value intellectual tasks into smaller, cheaper bits. Much the same way that assembly lines created millions of new jobs by reducing mass production to a sum of tasks, employers in Austin and elsewhere are constantly breaking down higher-skill jobs to “create new middle-skill, middle-income specialties,” according to a recent report by the McKinsey Global Institute.

Take Homeaway Inc., a vacation-rental service founded here in 2005 that went public this year. Its rapid growth allows entry-level employees to substantially raise their income, said Brent Bellm, the company’s chief operating officer.

Mr. Bellm points to customer-service representatives, who earn from $25,000 to the low-$30,000s range and field phone calls and e-mails from people using the company’s website. About one-third of them are promoted annually to areas such as a security team that monitors the site for fraudulent listings and removes shoddy properties. “In a few years, you can go from the high 20s to the 50s,” he said.

Simply put, rapid growth boosts the value even of workers who have a limited education but possess knowledge of a company’s systems.

Enrico Moretti, an economist at the University of California, Berkeley, notes that highly educated cities see faster wage growth for less-educated citizens as well as the high fliers. One reason is that that many lower-level employees use the most productive technologies and act as complements to more-expensive and highly-educated workers, making it much easier for companies to raise their wages faster than overall inflation.

Another force, Mr. Moretti notes, is called “human capital spillovers,” a fancy way of saying that many “middle skill” workers begin to acquire skills that are much more valuable than their overall education level might suggest.

That’s how Douglas Kanneman went from a bored retail clerk feeling grim about his prospects to a computer-equipment technician with a four-bedroom house and the chance to let his wife work part-time while looking after their two children.

Mr. Kanneman, 37 years old, began his working life like a lot of people who didn’t go to college—at a retail store with low pay. Looking to better his prospects at 25, he went to community college for computer training and eventually landed a customer-service job at SolarWinds in Tulsa, Okla., which makes software that controls companies’ information infrastructure like computers and phone systems.

Later, when SolarWinds moved to the tech hub of Austin, Mr. Kanneman went with it. As the company grew, he worked his way into the better-paying information-technology department. A year ago, he did something that he said validated the worth of his new skills: He quit for a higher-paying job elsewhere in Austin, and with overtime can now earn more than $90,000 a year.

“It proved that I was worth as much as I thought I was,” Mr. Kanneman said.

Write to Conor Dougherty at conor.dougherty@wsj.com

Harvard has released an interesting new index of “economic complexity” which is the productive knowledge of the economy, based on analysis of its output composition.

… the Economic Complexity Index (ECI) is based on the number and the complexity of the products that a country exports with comparative advantage. Empirically, countries that do well in this index, given their income level, tend to achieve higher levels of economic growth. The ability to successfully export new products is a reflection of the fact that the country has acquired new productive knowledge that will then open up further opportunities for progress.

The index is then used to make detailed growth projections, and identify export opportunities on a country-by-country basis. There are also interactive versions of most of these visualizations that you can explore and filter.

Download PDFs:
Full version

Part 1: Why, What & How & Rankings

Part 2: Country Pages

Interactive Visualizations



via

via the Google Green Blog

Imagine a renewable energy resource capable of producing more than 10 times the energy of the installed capacity of coal in the US. That’s the potential for Geothermal Energy in the United States, according to a recently completed 3-year project supported by Google.org to update the Geothermal Map of North America.

The study conducted by SMU Geothermal Laboratory, led by Principal Investigator Dr. David Blackwell, incorporated tens of thousands of new thermal data points to create the most data rich perspective on US geothermal resources to date. The full results can be seen in the updated Google Earth layer on U.S. Geothermal Resources and in SMU’s paper to be presented at the Geothermal Resources Council Annual Meeting.

The project estimates that Technical Potential for the continental US exceeds 2,980,295 megawatts using Enhanced Geothermal Systems (EGS) and other advanced geothermal technologies such as Low Temperature Hydrothermal.


2011 Geothermal Heat Flow Map of the US

The new estimates are compliant with the new global geothermal mapping protocol developed by SMU, Hot Dry Rocks PTY, GeoWatt Ag, and Google.org which is now recognized by the International Energy Agency and the International Geothermal Association. Under the protocol, Technical Potential is limited to depths of 3.5 to 6.5 km (6.5 to 10 km is considered “Theoretical Potential” under the protocol) and inaccessible zones such as national parks and protected lands are eliminated.

How’d they do it?

The SMU team has been developing entirely new pictures of the earth’s geothermal resources. They started by aggregating thousands of new Bottom Hole Temperature (BHT) readings from oil, gas, and water wells in previously under-sampled regions of the U.S. For example, The 2004 Geothermal Map of North America used only 5 heat flow points informing geothermal estimates for West Virginia, compared to the additional 1,455 BHT points in the updated version. In addition, the team has improved estimates of heat flow through the earth’s crust with better regional lithologic data.

The updated map is a testament to the incredible SMU team: Dr. David Blackwell, Maria Richards, Zachary Frone, Joseph Batir, Ryan Dingwall, Andrés Ruzo, and Mitchell Williams.

We’re excited that with improvements in EGS technology, all of these resources could one day be harnessed to provide clean, reliable, baseload power — energy that’s available every hour of every day.