Thursday, January 1, 2015

Preparing for a Labor Surplus

The other day at work, one of my co-workers had a good question.  She wanted to know what a person could do to prepare for a labor surplus.  Her question was based on the assumption that maturing globalization and practical robotics would lead to a greater labor surplus than exists already.  A labor surplus is what happens when many people are available to work any particular job and employers can easily find a person with exactly the correct skills and experience for the position.  We have this situation in the US right now, even though the unemployment rate is decreasing.  In the long run, everything will work out fine, but the short term adjustment to changes in the labor market brought about by external shocks or disruptive technological innovation can be difficult for individuals.

Her question brought on further thought.  I took a look in the Internet and found an article on called How to Employ and Cope with Surplus Humans.  The article was interesting, although far fetched.  Some of the thoughts, like send colonists to Mars, are not possible today.  Perhaps Michael Moffa thought he was talking about a theoretical situation, but labor surpluses are starting to effect even China as economic growth there slows.   China is off shoring steel production in an atmosphere of slowing domestic consumption.  In 2009, I went to Shanghai where my MBA cohort talked to a factory manager who had just returned from scouting potential future locations in Viet Nam.  He said Chinese labor was becoming too expensive.  If an emerging economy is becoming exposed to labor surpluses brought about by slowing consumption and off shoring production, then the age of labor surpluses is here now and becoming a critical problem.

Americans tend to have an earnings life cycle similar to a product life cycle.  At the beginning workers don't make very much.  Later in life, they make the most they will in their career, and then as retirement age looms, earnings reduce.


As life unfolds, every worker needs to seriously consider what to do when their earnings go down.  Age brings on symptoms of labor surplus.  Due to this fact, I am writing my list designed on a pragmatic approach to ensure a decent lifestyle in every age and phase. 

Have a Plan B

Everyone who has a career needs to keep an eye on trends and developments in their work.  Life happens, and sometimes situations don't work out as planned.  When a favorite job is lost, or when something happens that is health-based, have a plan B.  For me plan B was continue my education so I could have certified skills no one else in my career field possesses.  I am ABD (All But Dissertation) for my PhD, and once I get the PhD many possibilities will open to me.  I still work as a career manager because I love my job, but I wanted to ensure other doors were open.  During my education, I became handicapped, so a PhD makes sense because I can teach sitting down.

Examine your skills and desires to discover what your plan B could be.  Hobbies can grow into businesses.  Cake decorating, bee keeping, E-Bay sales, whatever you do that you enjoy.  My wife decorates cakes, and her plan B is to operate a home-based bakery.  A friend runs a coffee kiosk in a mall, and his plan B is selling on E-Bay.  Others write e-books , consult in their profession, fix computers and operate theme-specific stores.  Teaching from home is possible too.  There is no one path to success.  Make sure your Plan B is something you love so if your career derails, you never go to work again.  And if your Plan B is good enough, why wait?  Especially if your Plan B is not dependent on one customer, employer, or source of income.  Diversification works in stocks and in employment too.

Artistic Skills

Arts and Crafts are not likely to go out of fashion.  Everyone can 3D print small plastic items, but can they make a scarf and mittens?   Or paint a picture?  Not likely, and robots haven't caught on to this yet.  Hand knotted Persian Rugs are still an important cottage business in Iran.  No factory can make such a high quality item.  In Portland, Oregon we have the Saturday Market, but other cities and towns have their own craft fairs.  On the Internet, Etsy comes to mind.  Cottage industries will be popular in the future, as manufacturing fades and people buy in the long tail market made possible by the Internet.  Develop your skills and you will always have something to depend on. 


I like to watch TV reality shows about Alaska.  Many people in Alaska like to live off the grid.  This is a difficult life, and probably not something everyone would want.  There is still a romanticly appealing notion about being independent of most of our advanced civilization.  Still, even for people in cities, there are many skills people can use to increase their self-sufficiency.  The quick ones that come to mind are gardening, chicken raising, canning, jam making, sewing, carpentry, auto mechanics, bee keeping, and many others.  Anyone can become more self-sufficient which will help if something goes sideways.

This is a long post,  Part 2 is here.

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