Wednesday, December 05, 2012

Innovation Economy Converging

The world is getting less spiky. If there is a war for talent, then "why are IT wages flat?" Even in the Innovation Economy, labor costs matter:

"IT salaries have not really kept pace with inflation," said Victor Janulaitis, the CEO of Janco Associates, which reports on IT wage compensation.

In 2000, the average hourly wage was $37.27 in computer and math occupations for workers with at least a bachelor's degree. In 2011, it was $39.24, adjusted for inflation, according to a new report by the Economic Policy Institute.

That translates to an average wage increase of less than a half percent a year. In real terms, IT wages overall have gone up by $1.97 an hour in just over 10 years, according to the EPI. It gathered data from the Current Population Survey, a monthly survey of households conducted by the Census Bureau for the Bureau of Labor Statistics.

Fair to say that the jury is still out on whether or not the Innovation Economy is still diverging. The journalist of the above article balances the story with expert claims that business as usual isn't too far off into the future. That's healthy skepticism. The shape and scope of the recovery is still a mystery.

With the "fiscal cliff" looming, BRICs struggling, and the European Union looking more like Japan's lost decades; uncertainty is acute. Why is Microsoft so sure there is a talent shortage? Apply another dose of healthy skepticism. More supply can help keep costs down. Current measures for austere times may not go away. Demand might not come back. On top of all those unknowns, add our ignorance about return migration:

“We hope this research helps reveal the bonds between the United States and other countries – specifically India – given the contributions of foreign-born academics to the scientific innovation of this country,” said Sabharwal, who studies workforce policy as it relates to job satisfaction, productivity, and diversity. “National borders are becoming thinner, and we want to expand research on human capital.”

Sabharwal said that little is known about the way skilled migrants formulate their re-migration decisions. Existing data have shed light light on why these workers have been highly productive but dissatisfied enough to leave. Cultural and social experiences may indicate whether they choose to stay in the United States, she said.

Such patterns could lead to gaps in the workforce, an issue that academic leaders and policymakers may want to consider as they try to maintain a stable workforce.

At best, Microsoft is fumbling around in the dark. More likely, the company is proposing a brain drain boondoggle. For a few years running, the alarm bells have been ringing. Foreign born talent is leaving the United States. While I'm sympathetic to liberalizing policies and allowing immigrants to stay in the United States, the flow reversal is good for all countries involved: The more geographic mobility, the better the global economy.

Microsoft is leveraging the anxiety about brain drain, seeking a more captive labor pool. The company is watching its bottom line in terms of talent costs. That doesn't look like economic divergence. The zenith of the Innovation Economy is behind us.

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