While many will debate Apple's recent claim that its gadget ecosystem has created over 500k US jobs, its actual base (47k) is less than a tenth of General Motors at its peak in the 1970s. Although the markets are up and companies are sitting on piles of money, we have seen very little meaningful improvement in the unemployment situation. Significant employment bubbles such as finance and real estate have come and gone. Given the US's knack for marrying innovation with commerce, where should we look to find the next great employment vehicle?
It's great to see the bubble back, but it is not making a big impact on the situation. Michael Dell recently claimed that tech startups will plug the hole (ironic given its mass layoffs over the years), but it hasn't moved the needle that much. The big 4 2011 IPOs (P, LNKD, Z, GRPN) have a current combined market cap of $32B but only employ 11,000 collectively. The $100B juggernaut Facebook? Just 3,000. To add to the trend, the increased usage of crowdsourcing and contract help has created an on-demand labor pool without the steady paychecks to go with it. Simply put, tech companies do more with less.
We can't really look to the government for help. The post office is on the verge of collapse. Every agency from local counties to the Federal government can't cut fast enough to stave off budget shortfalls (political angles aside). Even if the administration's plans to build employee pools around infrastructure and energy were sound, the government is the last place to find market-based, sustainable industry growth. I don't think another interstate system will solve our woes in the long-term.
So perhaps we should follow the money trail to find an answer? Last year, VC's poured $28B into new companies. Roughly half of the investments were in software and "internet" companies which we know are employee-lite concerns. Industries such as manufacturing or retail which traditionally could employ large quantities were nowhere to be found. Some large investment areas such as energy, bio-tech and medical devices might be fruitful depending on their level of success.
What about the mass benefit of US corporations' export efforts? They are flushed with cash generated abroad as economies around the world have opened up their markets. While a boon for bottom lines, a WSJ article suggests that these companies have actually reduced their staff in the US while increasing bases overseas. Worldwide offices in Asia and South America are growing at a torrid pace. The now infamous Foxconn sweatshop employs over 1.3M and climbing. While there is no question the US has benefited the most from globalization, it doesn't seem US-based employment has seen a similar level of benefit.
There are many factors which explain unemployment figures (participation rates, skills gap between jobs and employee base,etc..), but there doesn't seem to be a simple answer for the next engine of job growth. We will definitely need small businesses to start hiring again. Hopefully, we'll see growth as emerging companies start to scale and spark new support industries. Health care, technology and energy continue to look like strong prospects for the future. Given past history, it will more than likely it will come from someplace that we are not currently contemplating.