Bogus Comparison Between Detroit In 1990 And Silicon Valley In 2012
from the apples-and-tomatoes dept
I’ve seen a few folks discussing a slide that was apparently part of a SXSW presentation, comparing Detroit in 1990 vs. Silicon Valley in 2012, with the crux of the argument being that while Silicon Valley has created plenty of value, it hasn’t created jobs like Detroit did. Here’s one version I saw from WSJ columnist Geoffrey Fowler:
Silicon Valley has created a lot of value, but not very many jobs. Compare the "big 3" in Detroit vs SV #SXSW pic.twitter.com/XMNx9zX3yU
— Geoffrey Fowler (@geoffreyfowler) March 8, 2014
Not only that, but the type and quality of the jobs created by Silicon Valley today are likely to be much better than the grunt factory work that dominated Detroit. The internet has given more people control over their own jobs and careers, as opposed to becoming just a cog in the automaking machine, that left few options for employees in that industry. Furthermore, by 1990, Detroit was already in decline, its heyday having come decades earlier. By 1990, Detroit had been seriously eroded by competition from abroad (largely Japanese, but also from Germany and elsewhere), and we were talking about giant companies that were slow to react and change, and whose large employee bases were actually a lot more of a liability in innovating and keeping up with the times.
We’ve discussed in the past the paradox of job creation, highlighting that innovative companies often look like they’re “destroying” jobs, because they take down lumbering, slow, legacy industries that have failed to innovate, but that employ tons of people in inefficient and often unnecessary jobs. Upfront, that looks like a job loss, but the innovation often creates new opportunities, new efficiencies and different (and frequently) better job options. There are some very real concerns for those who are not able or qualified to make the shift from one to the other — and that’s something that needs to be addressed. But to simply compare these two cases as if they were apples and oranges is horribly misguided.
Filed Under: detroit, innovation, jobs, silicon valley
Comments on “Bogus Comparison Between Detroit In 1990 And Silicon Valley In 2012”
I don’t think there can be any serious doubt that in terms of total numbers in the US, the number of jobs today are lower than the number of jobs in the past.
I also believe that the number of jobs in the future will be a fraction of what it is today.
I am not one to support big government, but I see a time when the government will either pay people not to work or we shall see a revolution.
Re: Re:
“I don’t think there can be any serious doubt that in terms of total numbers in the US, the number of jobs today are lower than the number of jobs in the past”
I think there not only can be serious doubt about that, but it’s not, in fact, true. At least, it’s not true according to the BLS statistics. Perhaps what you meant is the number of jobs adjusted for population.
“I also believe that the number of jobs in the future will be a fraction of what it is today.”
Well, this is of course pure speculation by anybody, but I don’t see any reason to think this would be so.
Re: Re: Re:
Well there is this…
http://www.businessinsider.com/bill-gates-bots-are-taking-away-jobs-2014-3
Honestly, can you imagine a future that still has manual labor jobs? I just hope the government does not step in to try and keep these inefficiencies in place… But they will.
Re: Re: Re: Re:
“Honestly, can you imagine a future that still has manual labor jobs?”
Of course. Do you really think robots will be doing all the gardening? Coming to your house to repair the wiring or fix the plumbing? Will robots be doing all the road work?
Manual labor isn’t going anywhere, and no one (except you) thinks that it is.
Manufacturing jobs, OTOH, will disappear.
Re: Re: Re: Re:
Some people actually prefer jobs that keep them on their feet. A car factory is a bad example, but some manual labor jobs can be more satisfying than sitting at a desk pushing buttons; healthier too.
Also, as processes become more automated, better paid artisans get replaced with low paid unskilled laborers. Instead of many people making decent money, you have most people making very little, and a few people at the top getting rich. Sure, you produce the product for lower cost, but your potential customers now have less money to buy it, and the jobs you have now are more boring and tedious.
Re: Re: Re:
Also, consider that nearly double the percentage of the population is competing for these jobs, compared to just a few decades ago.
Re: Re:
“I don’t think there can be any serious doubt that in terms of total numbers in the US, the number of jobs today are lower than the number of jobs in the past.”
You know there are a lot more people today than in the past, right? So there are actually A LOT more jobs today, but also more people to fill them.
Speaking of Detroit...
Look at Detroit today, when the car companies left for China after their bailout, and tell me how a population of 2 million in the 70s went to 700K today, then talk to me about “job creation…”
Aren't you forgetting the normal distribution of skills
Performing Internet-related jobs or any jobs related to pretty much any technology coming out of Silicon Valley requires people with above average IQs. Indeed, you probably need to be 1SD above average at a minimum.
I think you are forgetting that Detroit created a large number of jobs for people who were of average IQ or even below.
This means that anyone working on technologies coming out of Silicon Valley can only be drawn from the top 16% (approximately) of the population, while those working in Detroit could be drawn from the top 50% of the population, or maybe more.
That is a big difference.
Re: Aren't you forgetting the normal distribution of skills
I think you overestimate how smart people need to be to work in jobs coming out of Silicon Valley technologies.
I’ve worked in IT for 20 years.
I’ve done various jobs, developer, UNIX sysadmin, middleware support etc.
I think I’ve done them all competently.
And I’d probably scrape into the top 40%, let alone top 16%…
Re: Re: Aren't you forgetting the normal distribution of skills
A million times this. In my experience, IT people, software engineers, and so forth are not generally smarter or dumber than the general population.
What they often are is passionate about what they do, and when you’re passionate about something, you put a lot more time and effort into mastering it. It has nothing to do with intelligence.
Re: Re: Re: Aren't you forgetting the normal distribution of skills
I was about to say that these tech jobs are more interesting than working in a car factory, but they I remembered the movie Office Space.
Re: Aren't you forgetting the normal distribution of skills
You forget the axiom of The People:
We’re a bunch of insane morons.
Re: Aren't you forgetting the normal distribution of skills
Performing Internet-related jobs or any jobs related to pretty much any technology coming out of Silicon Valley requires people with above average IQs. Indeed, you probably need to be 1SD above average at a minimum.
What are you basing that on?
I see plenty of stories of new tech companies creating job opportunities for people who don’t need “above average IQs.” Think Uber and Airbnb.
Re: Aren't you forgetting the normal distribution of skills
“Performing Internet-related jobs or any jobs related to pretty much any technology coming out of Silicon Valley requires people with above average IQs. Indeed, you probably need to be 1SD above average at a minimum.”
I’m wondering what kind of jobs you think are being created, because you’re totally wrong. Unless you actually think that the people stacking boxes for online retailers or answering customer service calls have to be at genius level to work in jobs that exist purely because of the internet. In which case I have to wonder which companies you’ve worked at to see those people, because I’ve seen a lot of below average people working at online companies in my time.
A litle too techno utopian here Masnick
I’m not buying it. The direct employment is obviously lower from tech companies. Facebook and GM had (last I looked) similar market caps. Facebook employs how many people?
And the ‘quality of jobs’ argument is pernicious. The dumb factory work jobs that powered the big 3 auto makers provided a decent middle class standard of living. The few jobs Silicon Valley provides are for highly skilled technical employees.
This isn’t Silicon VAlley’s fault. The issue is that we need an economy that works for everyone — not everyone will be, can be, or should be a software architect.
Re: A litle too techno utopian here Masnick
Hear, hear…..
Not only that, but the type and quality of the jobs created by Silicon Valley today are likely to be much better than the grunt factory work that dominated Detroit.
Those factory jobs paid a good middle class wage with overtime and outstanding benefits. The tech industry is famous for avoiding overtime while piling on the hours and opposing unions which are the reason for the higher wages, better benefits and working conditions of the factory.
The president’s executive order regarding overtime will hopefully reign the current abuses in many of the digital sweatshops that currently exist.
Re: A litle too techno utopian here Masnick
“The dumb factory work jobs that powered the big 3 auto makers provided a decent middle class standard of living.”
Indeed. Thank you, unions!
Re: A litle too techno utopian here Masnick
I’m not buying it. The direct employment is obviously lower from tech companies. Facebook and GM had (last I looked) similar market caps. Facebook employs how many people?
Yeah, but direct employment vs. market cap is a meaningless ratio.
And the ‘quality of jobs’ argument is pernicious. The dumb factory work jobs that powered the big 3 auto makers provided a decent middle class standard of living. The few jobs Silicon Valley provides are for highly skilled technical employees.
Again you’re looking at the wrong jobs. I’m not talking about Silicon Valley jobs, but jobs that wouldn’t exist but for the internet. As mentioned earlier, things like Uber, AirBnb or LiveOps.
Re: Re: A litle too techno utopian here Masnick
“things like Uber, AirBnb or LiveOps.”
LOL
Yes of course, because these things have created SO many jobs… lol
Re: Re: Re: A litle too techno utopian here Masnick
Add up all of the tech sector jobs and you might find that they are as numerous as the ones generated by the big 3 automakers. (Not saying you will, as I’ve not done this myself so I don’t know).
I do know this much — that you won’t find a single employer that matches any of the big 3 in their heyday. But that’s not the meaningful way to look at it because of the differences in the nature of the industries.
Automaking is a business where a small number of companies contribute the majority of the jobs the industry provides. The tech industry is the opposite — it consists of thousands and thousands of companies (of which the likes of Uber, AirBnB, etc., are simply examples), each of which provide fewer jobs individually.
Comparing the number of people hired by specific companies isn’t a valid thing to do. You need to compare the total number of jobs in the industry.
Re: A litle too techno utopian here Masnick
“The issue is that we need an economy that works for everyone — not everyone will be, can be, or should be a software architect.”
The issue is also that the vast majority of jobs created due to technology have nothing to do with software development. I don’t live in the US, but I do work in an industry that only exists due to the internet – and there’s almost certainly more call centre agents employed here than developers.
Jobs jobs jobs ... it is not jobs that we need
The focus on jobs is just wrong.
It is not “jobs” that people want; it is income. Most people would rather be doing something else other than their job – if they had enough money.
These Silicon Valley companies are creating the infrastructure that will allow all of us to live without needing to work – the machines will do the work, we’ll live like landed aristocrats.
Stop worrying about jobs.
Re: Jobs jobs jobs ... it is not jobs that we need
That still leaves a problem of redistribution.
By default a tiny fraction of the population will live as you say (because they own the machines, the “intellectual property” or the land).
A substantial chunk will be employed in law enforcement to protect them from the remainder, who will be at the mercy of whatever benefits regime is politcally fashionable.
Re: Re: Jobs jobs jobs ... it is not jobs that we need
This.
Why would anyone expect a fully automated society to benefit everyone equally? The wealth will clearly reside with those who invented and financed the robots.
Re: Re: Re: Jobs jobs jobs ... it is not jobs that we need
So what if it’s not equal? We can have equal rights, but we’ve never had equal wealth, and never will.
If a “fully automated society” makes everyone better off, that’s good enough for me.
Perfect equality is not needed.
Re: Jobs jobs jobs ... it is not jobs that we need
This is an excellent point, and I make a variant of this when talking about raising the minimum wage.
The primary argument people use against raising the minimum wage is “it would reduce the number of jobs”. Even assuming this is true — so what? People who live on the minimum wage right now often have two or three such jobs because otherwise they can’t make enough money to live. If they suddenly are able to live on one job, that’s a net gain in available employment even if the absolute number of jobs do go down.
Re: Re: Jobs jobs jobs ... it is not jobs that we need
No, the argument against the minimum wage is that “it will make the poorest even worse off”.
And that is a real problem. If you want to help the poor, by far the simplest way is to simply give them money.
Rigging the market doesn’t help anyone in the long run.
the simple fact is, that most of these low qualification manual labor jobs are gone and won’t come back. The people who used to do this jobs have become redundant and there are no jobs created for them.
Even in china the companies start to use automation because the manual labor starts to get too expensive. That is what will make most manual labor redundant, everywhere.
The question is not any longer how to create jobs for people nobody needs anymore, the question should be how to adapt to that fact and ensure at least a modest existence for those who have been made redundant.
Pathetic rebuttal, Masnick, even for you.
SiilyCON Valley takes all the money and has few jobs to offer.
The only bogus-ness here is your vapid water-carrying for greedy fat-cat corporations like Google.
Re: Re:
Pathetic rebuttal, Masnick, even for you.
SiilyCON Valley takes all the money and has few jobs to offer.
The only bogus-ness here is your vapid water-carrying for greedy fat-cat corporations like Google.
It’s called licking the hand that feeds you.
Re: Re:
Reading comprehension failure on your part. No one said that Silicon Valley, itself, employs more people. It was said that Silicon Valley, and the Internet as a whole, created more jobs as an industry. Just because you can’t read doesn’t mean he’s wrong.
1. Are the 1990 numbers inflation adjusted? I should not need to look this up to find out.
2. Comparing the market caps is stupid. Could it maybe, possibly be that a company like Facebook is overvalued?
3. More revenue with fewer people basically means increased productivity. That is not a bad thing.
I think there are serious economic problems associated with the lack of decent jobs for people, but this chart is basically worthless.
The revenue drives demand for goods and services across the board, which in turn leads to more available jobs even if they don’t create as many directly.
Hm... so how many jobs are outsourced or done by H1-Bs?
That is a question that gets more than a few mumbled answers from more than a few job sectors here in the United States.
Re: Hm... so how many jobs are outsourced or done by H1-Bs?
‘The tech industry is destroying jobs with automation processes!’
‘Sorry, but could you remind me, just how many jobs has your industry outsourced in the last few years in an attempt to cut costs and boost profits?’
‘Stop trying to change the subject! Like I was saying, any decrease in employment is solely the result of the tech industry!’
dissapointing
Oh, and what happened to Detroit again?
I must admit that when the City of Detroit filed for bankruptcy, I was most disappointed that it meant they were unlikely to have the funds to build RoboCop any time soon.
Re: dissapointing
Isn’t that how RoboCop started? Detroit ran out of money so they had to get OCP to pay for the cops?
Re: Re: dissapointing
Hey, maybe that means that the future has arrived!
Just that Detroit has not noticed yet.
Google alone has 45,000 employees; Apple, 50,000. Somehow the total number of “Silicon Valley” employees (population: 3+ million) is 130,000?
More Than Three
It’s probably also worthwhile to point out that Silicon Valley is also not just three big companies.
I mean, why stop there. There’s some other big daddies and up-and-comers here, which also employ people and create wealth — on a scale NEVER seen in Detroit.
Yahoo, Intel, AMD, Oracle, HP, Cisco, eBay, Uber, Gilead, VMWare, oh, just read this:
http://www.mercurynews.com/sv150/ci_23063782/sv-150-2013-silicon-valley-150-listings-nos-1-75
It’s pretty asinine to include just three, cuz that’s what Detroit has, then compare the regions.
Why?
What I’d like to know is why this topic was brought up at SXSW at all. What does that have to do with a music festival? Is SXSW turning into a macroeconomics seminar or something?
Whose presentation was this part of? What was the context?
I can hazard a guess, but I’d like to know for sure. (My guess is that it is some sort of anti-tech presentation by the usual copyright-maximalism-as-artists-rights crew.)
Re: Why?
I can hazard a guess…
Yeah, me too.
As an aside, I stumbled across this in the Urban Dictionary and it made me chuckle (even with all the typos):
http://www.urbandictionary.com/define.php?term=Trichordist
examples or it didn’t happen
Detroit is a rathole
I was born and raised in Detroit, and still live within 50 miles of it. It’s a deep, meaningful rathole. How anybody could compare it to silicon valley is beyond me. You’d be better off living in Baghdad. Crime and murder rates are lower, and job opportunities are higher.
Mike, do keep up:
http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm
For how scummy the tech folks are:
http://www.bloomberg.com/slideshow/2012-03-30/inside-apple-s-foxconn-factory.html#slide9
So great is the new regime that now the factory has anti-suicide nets. Kudos to the late great Steve Jobs. And may the fires in hell be burning white hot…
Re: Re:
While I agree that Apple (and other well-known titans) has and continues to engage in incredibly scummy behavior, to paint them as representative of the entire tech industry is to lie.
It would be like saying that retailers are all scumbags just because Wal-Mart is. It detracts from the real problem: major corporations in every industry tend to be scummy. The tech industry is no exception.
Re: Re:
Mike, do keep up:
Hilarious of you to say that when pointing to a 2010 article bemoaning high unemployment. Let’s take a look at unemployment since that article was written:
http://data.bls.gov/timeseries/LNS14000000
Oh look, Grove wrote that at basically the peak, and unemployment has steadily decreased since then.
How about California in particular:
http://data.bls.gov/timeseries/LASST060000000000003
Yup. Same story.
So, yes, Slappy, please do, keep up.
Re: Re:
Mike, do keep up:
Aside from what Mike said, that article focuses on startup companies, which the tech companies in the slide are not.
For how scummy the tech folks are:
I agree wholeheartedly that the Foxconn situation is terrible. But this isn’t limited to tech companies, nor even to Foxconn specifically.
Since we’re talking about auto manufacturers: Most U.S. cars now have embedded systems in them to control breaking, steering, etc. Who, exactly, do you think makes those chips?
Re: Re:
Yep, the suicide story’s a great way to demonise Apple. You hear about the high number of suicides at Foxconn, but the massive number of employees tends to get left out of that discussion. In fact Foxconn’s staff suicide rate is far less than China’s average. Im sure their working conditions are shocking compared to what we’re used to, but they do actually seem to be less suicidal than the rest of the country.
Here is my view of the future and where we could end up, could be right, could be wrong.
Jobs available are very few and far between, why?
All driver jobs (bus,taxi, train, plane, truck) gone due to self driving vehicles. Military gone due to drones, drones guided by programs (which could activate Skynet.)
Police forces drastically limited (Robocop)
Road construction, automated. Farming, already going down, but becoming more and more so through automation.
Even today, McDonalds is considering a burger cooking machine, ROI payback is 2 years, reduces staff by 4 per store.
Retail? Lowest level in years, some due to store closure due to Internet competition, some due to automation (self checkout, in case of Walmart, Home Depot and others no customer service)
Manufacturing? The US isn’t losing its manufacturing to other countries workers, the US is losing its manufacturing to other countries robots. India is losing to China in terms of outsourcing now, after China it will be another country, but in the end, we will all be in the same boat.
In the end, only those inventing these robots or programs will have “jobs” and very few others. Government could tax the few that have money and support the rest through welfare, but it won’t be a grand life.
Will we make it there? Who knows, maybe China runs out of water and starts WWIII and things start all over. Personally, I am not worried about my generation, but my kids, and their kids? I don’t believe that the world will be a better place for them.
Of course, a lot of Occupy Wall Street folks think the same thing.
Automation and the Future
the greatest rewards for automation come when high skill, high paid jobs are automated. Many so called high skill high tech jobs will be automated out of existence. In the recent past IBM has made public statements to this effect. Manufacturing jobs were high paid jobs because they were physically demanding and also difficult to adapt to emotionally. Try lifting 50 pounds 4 times a minute for 8 hours. I read so many comments that have no idea what the assembly line was like. To all the future high tech automation victims you won’t get much sympathy. There does not seem to be any apparent possible set of employment options which will make this situation better.