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Cheap labor from other countries is not killing your jobs. Lack of skills, is.

Time changes everything. With the help of the great equalizer (technology) what was once the rule, is now the exception.

As business activities expanded during the last decades (let’s say the 90’s and 2000’s to have a point of reference), most of the decisions about where to build production units were based on labor cost. Especially in industries which required labor-intensive production for their goods and services.

But, technology advanced. Today, 82% of global goods trade is not materialized from a low-wage country to a high wage country. [1]

To put it in another way, only 18% of goods that are traded between countries are based on labor-cost arbitrage. What is that? It’s a fancy way to explain exports from a country whose GDP (per capita) is 5 times or more smaller than the GDP of the country receiving those goods.

That’s because consumer demands from manufacturers and service providers have changed. People demand better quality and service. Technology also requires skills to apply it. So, cheap labor is not the answer to most of those requirements. Access to skilled labor, access to natural resources, the quality of infrastructure, and proximity to consumers are among the main considerations of management today.

As the years pass, this effect will become even more profound. The rising wages in developing countries, automation, AI, will present even more challenges both to the employers and the employees. The employers will have to shift from a labor-intensive mindset, to a capital (investment) one. And the millions of employees will need skills to remain employed. Skills they don’t currently posess. It’s easy to blame cheap labor for all of our problems. But, this argument is not relevant anymore. We need to stop demonizing and begin training our current and future workers, employees, professionals, service providers.

The clock is ticking. The next decade will bring big changes to the way we work. We need to be prepared.

[1] McKinsey Global Institute: The future of trade and value chains, Jan. 2019

Who wants to live Forever? Apparently enough to fund a $200bn. Industry.

Freddie wasn’t the first one to wander, when he sung “Who wants to live Forever”. The topic fascinated us for thousands of years.

Our efforts to develop anti-aging compounds increased during the last decades. All of them failed. Recent #medical breakthroughs though, have helped us explain better why we age, and increase our average life expectancy. As a result, we experience a massive influx of capital and research into the #anti-aging market (now worth 200 billion dollars according to a Citi Report).

Today, research teams concentrate on hereditary and other cell factors. One of the most promising routes is a group of drugs that attack “senescent cells.” These are the cells to blame for a series of aging, as well as degenerating conditions like #Alzheimer’s. Studies suggest that by eliminating these cells, we can increase our lifespan by up to 35%!

The first company to offer a treatment is Unity (NASDAQ: UBX). They are testing a compound called #senolytics with patients suffering from osteoarthritis. If this #drug gets approved, it will disrupt both big and small brands promoting products for this condition. Add to this the knee-replacement surgery market (3million surgeries/year by 2030) and you can see how big the impact of new technologies will be in the next decade.

#Technology is also a major disruptor of jobs and their future. Hundreds of millions of jobs will be lost in the next decade because of technology and #automation. At the same time, millions of new jobs will be created. #Healthcare related jobs will be at the top of that list. McKinsey predicts that by 2030, “there will be at least 300 million more people aged 65 years and older than there were in 2014″. As lifespan increases, people change their spending habits, and this will lead to a whole new demand for medical and healthcare related professionals. Doctors, nurses, personal care aides, the list is big and it will continue to grow as new demands are created. McKinsey estimates that healthcare related jobs will increase up to 85 million new jobs by 2030.

Technology will make a lot of professions obsolete in the next decade. It’s a good idea to start thinking about alternatives in order to survive this shift. Especially for young people planning their studies, this process is even more important. As more traditional professions (like lawyers, accountants, real estate agents) will start to suffer the consequences of the new AI world, it’s good to have options. Healthcare and medical research is one of those. Especially when institutions like the NYU make their Medical schools tuition free!

Off to listen to some Queen now.. Have a great day, everybody.

Half Truths, Half Politics: Amazon’s Wages ,Welfare, And What’s Coming Next.

Machines and automation create jobs.

At the same time, they take away jobs.

Both statements are true.

And all our policy-makers and elected officials have to do, is find the sweet spot between introducing automation, and steering capital and human resources to the right direction.

But efficiency and common sense are not always top priorities in our society.

And sometimes, tech and automation are used to hide the real problems under the rug.

Problems like laziness and shallow politics.

O.K, but where does Amazon fit into this?

Keep reading to find out..

10% of Amazon employees in Ohio, are on food stamps.

In case you missed it, the story made the headlines a few weeks ago.

Apparently, according to a study from nonprofit group Policy Matters Ohio, 700 Amazon employees in Ohio (about 10% of the company’s entire workforce in the state) receive assistance from the Supplemental Nutrition Assistance Program.

At the root of this: temporary workers

2 years ago, Ohio won a bid for 2 Amazon fulfillment centers — and since then, the e-commerce company has gotten $125m in tax breaks and cash grants. In exchange, the state figured it would get thousands of decent-paying jobs.

Though Amazon pays full-time workers in these centers around $15-per-hour, they also rely heavily on a large force of “temporary workers” who are not assigned enough hours to support themselves without government assistance.

What’s the story here?

If we go a few years back, we’ll remember the effects of the recession that hit the US as well as many other countries in the West.

Tech bubbles, Stock exchange crises, the big House market collapse..

They all made lives for millions of people hard in the last 20 years.

And each one of them, was more difficult to overcome than the previous.

So, when Amazon stepped in and started buying property and building warehouses, who would complain?

What could the people of San Bernardino say when 1000 new jobs were created into their struggling community back in 2012?

And today, 15,000 workers in the Inland Empire alone..

Eight fulfillment centers, and one sortation center.

Jobs, prosperity, low unemployment retes (from 15% in 2012, to 5% today in San Bernardino).

So, where’s Amazon’s fault in this?

There’s no fault here.

Well, there are complaints about working conditions.

“High-stress” and “grueling” are some of the words used around the web from sites and people to describe the working conditions in these warehouses.

“People don’t stay long enough to enjoy the benefits the company offers”.

People in seasonal and part-time positions, complained they “didn’t know how many hours or when” will they work.

But these are just symptoms.

Symptoms of a much bigger problem that is coming our way faster than we anticipated.

It’s called “Automation”.

These “temp” jobs (along with millions of similar ones) like grocery store cashiers, clerical and secretarial positions, will most probably vanish, in the next 15-20 years.

In fact, one third of the working force in countries like the US and Germany, is expected to lose their jobs, or forced to “migrate” to new positions to survive this shift.

Even today, 50% of current work activities are technically automatable by using already available technology. This percentage will go higher in the next few years.

So, year after year, it will become more difficult for people to find this type of jobs.

And they will need more government aid.

That’s why the talk about universal income has come into play.

But, if the jobs lost in the following years are so many (as many as 400 million positions by 2030, according to a McKinsey study), these solutions (like free healthcare, Universal income) will be as useful as a band aid on a gunshot wound.

There’s simply not enough money to cover such a cataclysmic shift in our working force.

These options don’t look so viable under the prism of a reality that is catching us faster than we expected.

So, what happened to the techno-utopian dream?

One of the core beliefs of most prominent technologists is that technological advancements should ultimately work toward “solving” societal ills and inequalities. Bezos himself has spoken of the coming “golden era” of tech.

And it’s true. technology is the biggest driving force of innovation and prosperity.

Globally, and historically.

But we need a plan.

Technology will replace jobs.

But it will also create new ones.

Like when the PC was created back in the 80’s.

Think of how many jobs were created, outside the technology-producing sector itself.

Call center representatives, Financial analysts, inventory managers..

Millions of jobs.

So we need to steer people to the righ direction.

To be educated, trained, and seek employment in industries with a future.

Like health care. For aging poplulations.

People live longer than they used to even 30 years ago.

Life expectancy will continue to increase.

Because technology in the medical field is advancing rapidly.

By 2030, there will be at lest 300 million more people over the age of 65.

So, more people will need more care.

Also, infrastructure and energy.

Investments in these two sectors are steadily rising evey year.

Technology does create more jobs than it destroys, in the end.

We just have to use our common sense. To adapt and make rational choices.

It’s the only way to help ourselves and the people we care about.

And give a fighting chance to all those temp workers who live with the aid of the government, and see their living standards diminish.

Be safe everybody.

Leo.