Not your father’s job market II

The second recommended New York Times article that portrays the changing way work is being organized is entitled: As boom lures app creators, tough part is making a living. The article chronicles how applications are being developed for devices like the iphone and ipad.

The good news as the article reports is the:  “… field is so new it did not even exist a few years ago: writing software applications for mobile devices like the iPhone or iPad. Even as unemployment remained stubbornly high and the economy struggled to emerge from the recession’s shadow, the ranks of computer software engineers, including app writers, increased nearly 8 percent in 2010 to more than a million, according to the latest available government data for that category. These software engineers now outnumber farmers and have almost caught up with lawyers.

(To get off subject a bit: think about more computer software engineers than farmers. So much for farming being one of our leading industries. And then think about who gets government subsidies. Our politics are dominated by supporting what used to be important, not what is today or tomorrow. Not smart!)

Now the not so good news. As the article reports: “Despite the rumors of hordes of hip programmers starting million-dollar businesses from their kitchen tables, only a small minority of developers actually make a living by creating their own apps, according to surveys and experts. … For many of the developers not working at traditional companies, moreover, “job” is a misnomer. Streaming Color Studios, a game developer, did a survey of game makers late last year. The 252 respondents, while not a scientifically valid sample and restricted to one segment of the app market, indicated what many people had suspected: the app world is an ecology weighted heavily toward a few winners. A quarter of the respondents said they had made less than $200 in lifetime revenue from Apple. A quarter had made more than $30,000, and 4 percent had made over $1 million.”

The Times article I wrote about in my last blog largely involved work being done by web based software instead of workers or contractors. The contractors did paid work, without benefits. In this article the Times is writing about workers who don’t have a job at all, but rather are entrepreneurs who only get paid if the product they produce is sold. Ending up with a few big winners and a lot of folks that make little or no money.

This is the new reality. In many ways it is how markets are suppose to operate. For profit employers seeking to maximize profits secure work in the cheapest way possible. (For profit employers are not job providers or job creators, they are profit maximizers.) Globalization, and even more so, constantly evolving technology is opening up more and more ways of producing products with fewer and fewer workers, fewer full time employees and maybe more and more folks who are only paid if and when the product they create/produce creates economic value.

As we have written previously it is easy to see how American employers thrive in this new reality. We already are seeing record corporate profits. But it is far harder to see how American workers thrive. At all skill levels there is downward pressure on employment earnings (wages and benefits). If we want a broad middle class focusing on workers succeeding in this new reality (not trying to go back to the old work) needs to be the priority.

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