Factories were long the engine of American growth, and also the engine of middle-class prosperity for many. Since the 1970s, that engine has stalled. But it’s been replaced by another: the software engine.
For 100 years, people moved to big cities for jobs in factories of one sort or another, escaping a rural subsistence existence for a shot at serious money, enough to move them into the bona fide middle class. If you had a good work ethic, followed directions, and were loyal to your company and union, you could start work at 16, buy a home, raise a family, put your kids through college, and retire on a factory worker’s salary. Not a luxury life, but one with at least modest creature comforts.
That dream is dead.
STEM are the top-paying college majors
Instead, the way to middle-class prosperity is through STEM (science, technology, engineering, math) education and vocations. In 2012, Forbes once again placed STEM majors at the top of their best-paying college majors list.
Note that while some professions may earn more over their lifetimes, they also dig a deeper hole for graduates. MBAs typically only earn more when graduating from top schools like Harvard, Stanford, Yale, Wharton, etc. Such programs typically put their students $200k in debt, leaving them a deeper hole to climb out of before they net dollar one.
Software, on the other hand, is remarkably democratic and egalitarian. Some of the best software developers I’ve ever worked with did not even graduate with degrees in computer science; they simply picked it up as they went along, or made conscious career switch at some point in their lives. I’ve hired 20 year-old developers with 10 years of web and mobile experience, because they’ve been coding at home, just for the fun of it!
For those who do matriculate with a degree in computers, though, employment is almost assured. And lucrative employment, at that. Are jobs being outsourced abroad? Yes. But in most cases, that’s a mistake, and companies are once again co-locating development teams for maximum effectiveness. And regardless of the economy, an accomplished developer with a solid track record and references will always find work, and usually in the $90-150k range, at that. Without the extra debt, without the delayed start of an MBA program or medical school.
Nice work if you can get it– and they can
Companies make fewer and fewer physical goods in the U.S.; we outsource those low-skill labor jobs. Those jobs, unlike software, are not coming back. But the logistics, control and compliance, ERPs, order-to-cash, distribution, human resource, and accounting systems that manage such distributed resources are still most often done in the home country. There is an incredible amount of customization necessary on most big software installations, which is why enterprise software companies can afford to give away the software and charge millions in professional services (read: installation) fees. Except that they don’t give away the software; they charge millions for that, too! And for maintenance, support, and multi-seat licensing.
Software developers are different from you and me
A few years ago, I was hired as a turnaround COO for a startup mobile development company with 70 client projects in the pipeline. Although there were a few “silver backs” in our development pit, most of the engineers and user interface designers were under 29 years old. We also outsourced to several vendors around the world. The young developers were remarkably talented and smart. Many (not all) were also remarkably disdainful of basic business truths, like accountability and profit maximization. To be fair, part of that was the fault of leadership that had enabled a “dot com” laissez-faire attitude, and created an us vs. them schism between UX and code-behind teams. Even knowing this going in, it was still extremely painful to excise those behaviors.
It’s even more difficult at Fortune 500 companies, where attitudes can be more deeply entrenched, for longer periods of time, and are bound up with politics. For example, in large organizations, productive employees are not rewarded for efficiency. Middle managers get no respect, no bonus, and no promotion or recognition for delivering the goods with fewer team members. Rather, they are promoted like military generals, based on the number of troops they command, and the size of their P&L responsibility.
F. Scott Fitzgerald wrote in The Rich Boy (1926):
“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them […] in a way that, unless you were born rich, it is very difficult to understand.”
Substitute “tech-savvy” for “rich,” and you may understand some of the challenge of managing Gen X & Y, particularly in the field of knowledge work. I’m a “tweener,” born in 1967, and having learned some basic programming skills (on Vax mini-computers!) starting at age 16. I’ve kept with it a bit since then, mainly Web development, and my penchant for applied technology in music, film, and personal tech. Without this passion for technology, I’d be totally lost when managing knowledge workers and projects. As my father, a radio D.J. for several years, said, “You have to keep up with the music, or the music will pass you by.”
Can you manage?
Such business model changes mean that a huge portion of most companies’ P&L is the salaries of these New Blue Collar workers: software developers. It also means that, as a COO, CIO, or CEO, you’d best learn how to manage them effectively, or you are flushing away millions of dollars in lost productivity. Companies who don’t recognize this fundamental change in the nature and demands of their workforce are doomed to go the way of the Edsel. They don’t make those anymore, either.