Book Review: Gurus, Hired Guns and Warm Bodies

Gurus, Hired Guns and Warm Bodies
by Stephen R. Barley and Gideon Kunda
Princeton University Press, 2004

This is a book that describes what I do for a living. Therefore, should I be surprised that I found the book to be of great interest?

Consultants play a major role in the economic development industry. Their role has grown steadily over the past decade as ED organization tackle increasingly complex tasks and as the role of specialized knowledge and skill in the field has grown. My forecast is that the role of economic development consultants will become even more important in the future.

Some years ago, during the height of the technology stock bubble, a book entitled Free Agent Nation made quite a splash by glorifying the phenomenon of independent contracting. I liked the book at the time, but wondered if it was really talking about "what I do." The book was a little overdone in retrospect.

Less famously and far less optimistically, a number of economists and anthropologists pointed to this trend as a grave sign of the decay of workers’ position in American society. With a background in organizational behavior, I always thought this assessment was wrong-headed.

Stephen R. Barley and Gideon Kunda, the authors of Gurus, Hired Guns and Warm Bodies, steer a careful, meticulously documented middle course. I liked it. They examined the observable fact of independent contracting in the high technology industry from three viewpoints: the contractors, the headhunters and the client firms. They say that the contractor is a new, different kind of knowledge worker with a unique set of opportunities and constraints. The book is clearly written, based on apparently sound evidence and illustrated with carefully chosen anecdotes.

Here are some of the salient points you might take away from the book:

• Contractors, who are defined as professionals who take temporary assignments, constitute a new kind of employee with a new kind of relationship with employers.

• Viewing contractors as members of a “Free Agent Nation” is simple-minded.

• Contracting has emerged as a new kind of labor organization, enabled by the eclipse of bureaucratic fi rms and the ascendance of the free market.

• Contractors speak of freedom and flexibility, but their reality may not match their rhetoric.

• A contractor’s relationship with a contracting fi rm is ambiguous and often tense.

• Contractors rely on their skills to survive since they lack traditional career paths and buffers against unemployment.

• Contractors spend a great deal of time investing in and sharpening their skills.

• The contractor’s three main forms of capital are: social relationships, time and knowledge.

• When the tech bubble burst, contractors fared about the same as full-time employees.

• Contracting is likely to be a long-term factor in the labor market.

Buy the book at Amazon.com.

Book Review: China, Inc.

Everybody has China on the brain. Scarcely a day goes by that I do not hear China's name uttered as a dire threat to American prosperity, and in many instances we should beware of China's mighty surge into the world of modern economics.

I have spent very little time in China. My sole adventure to the country was back nearly 20 years ago. Things have changed greatly according to the more recent accounts I have received from friends and business colleagues.

A friend (Dean Whittaker, another ED consultant) that I met up with at the International Economic Development Council annual conference in Chicago last week suggested that I read China, Inc. I gave the book a try and here is what I learned:

· The book gives you a good "feel" for what the place is like.

· China touches everything and everyone in the world, but many folks still do not know it. Or they have a limited appreciation for the nation's widespread impact.

· Official figures understate both China's population and its economic power. I have always sensed this to be the case. People are hungry for numbers when they are scarce. So they are prone to believe just about any numbers they are given. There lies an impotrtant lesson for all of us.

· Farmers launched China's free market revolution by braving death to do business. Rural people now risk their lives and health in China's factories. This really stuck with me. I thought I knew, but I really didn't.

· Maoist egalitarianism has yielded to the world's widest gap between rich and poor.

· With cheap labor, excellent engineers and stern determination, China threatens every industry in the developed world. This is the point of most news articles and books on the subject of "China."

· As U.S. manufacturing withers, U.S. farmers welcome China's appetite for soybeans, a harbinger of its coming need to import more food as China's farmers flee to factories. Interesting shift, huh? That could be good news for Midwestern growers, if they can grow enough beans to export them.

· Wal-Mart buys cheap products in China and sells them to Americans who've lost their jobs to Chinese competition. We've heard these accounts, and yes they trouble me as well.

· Almost two-thirds of China's cities have dangerous levels of air pollution. This is another point that has been brought out by recent media accounts.

· China's population policy has resulted in a risky surplus of young males that may threaten global security. China could stand to learn a lesson or two about balance and sustainability.

· Chairman Mao's picture is now a commercial icon decorating watches and clothing. It's amazing how we manage to market everything we run across.

The book is aimed at people with limited knowledge of China, or let's say those who have only read about it. I must confess that's s me, save my trip there a long time ago.

I felt the book was a bit dilettantish in places. I know...how dilettanish of me to say so. It's hard not to get that impression of a book that sweeps across vast topics in limited pages. Those who know China will learn only illustrative tales here, but those who do not know China will learn what even the most scrupulously accurate journalists cannot always convey: the feel of the place. That is no small matter really.

I appreciated the author Ted Fishman taking me to some meaty places that give you a sense of what China is really like. For example, China's prosperity has a dark underside, which the Chinese and their defenders (Wal-Mart, and other multinationals) like to sweep under the carpet.

Many rural Chinese migrants to urban areas enter a world of discrimination and exploitation. I think my grandfather, Vito Iannone, might have experienced the same thing when he left Italy in 1904 and landed at Ellis Island. To finance their journeys to the city, Chinese migrants must visit loan sharks. When they board the trains they face the possibility of theft by organized criminal gangs, sometimes working in cooperation with railroad personnel. They arrive in the cities and, if they are lucky, they find jobs in factories where standard operating procedure calls for overwork and neglect of employees' safety and health.

I thank Dean for suggesting the book. My wife tells me I should start a library with all the books I buy. Maybe she's right.

China, Inc.
By Ted C. Fishman
Scribner, an Imprint of Simon & Schuster, Inc.,
N.Y., 2005

Bio Industry Growth Clips

If you are targeting biotech and life science industries for future growth, you should know how they are expected to grow worldwide in the future. Here are three very promising industries you should be watching.

Bioinformatics: The worldwide value of bioinformatics is expected to increase from $1.02 billion in 2002 to $3.0 billion in 2010, at an average annual growth rate of 15.8%.

DNA Sequencing and Proteomics: Projected sales for the worldwide DNA sequencing and proteomics markets are expected to rise at an AAGR average annual growth rate of 17.6% from $7.8 billion in 2004 to $17.5 billion in 2009.

Biosensors and other Bioelectronics: The global market for biosensors and other bioelectronics is projected to grow from $6.1 billion in 2004 to $8.2 billion in 2009, at an average annual growth rate of about 6.3%

Most Common Industries Map

Though the manufacturing sector has declined in the past fifty years, manufacturing is still the most common industry throughout the Eastern half of the United States. Agriculture, forestry, fishing, and hunting are prevalent throughout the Great Plains region. The western states are composed of a tapestry of most common industries.

Source: Censusscope

Cuyahoga County, OH: Employment Trends

This is not a pretty picture. If you were the economic development leaders in Cuyahoga County, Ohio, what steps would you take to strengthen job performance in the county, especially quality job growth?

Still a Long Ways to Go

In 1969, Mississippi's per capita income amounted to 62.28% of the national average; in 2003, it comprised 74.56%. Similarly, in 1969, Louisiana's per capita income totaled 75.29% of the national average; in 2003 it consisted of 83.60%.

What Do You Think?

More Responsibility? Think Again

American workers of most age groups are not wanting jobs with greater responsibilities, according to the Families and Work Institute. The table above shows how this attitude about work has changed.

Average Earnings Growth: Ohio Versus Michigan

Ohio's real average earnings per job climbed 24.0% over 1969-2003, trailed the gain of Michigan (28.3%), and fell below the increase nationally (43.0%).

Productivity Growth and Job Growth

Here is an interesting piece of research on jobs and productivity growth from the Federal Reserve Bank of San Francisco.

Have the extraordinary gains in productivity in recent years been temporary or more permanent? SF Federal Reserve Bank researchers Mary Daly and Fred Furlong argue that the gains have been lasting and are unlikely to be unwound as the economy adds jobs.

The performance of productivity in the U.S. economy has delivered some big surprises over the last several years. One surprise was in the latter half of the 1990s, when productivity growth surged to average an annual rate of over 3%, more than twice as fast as the rate in the previous two decades. A bigger surprise has been the further ratcheting up of productivity growth since the most recent recession. Even with a slowing to below a 1-3/4% annual pace in the second half of last year, productivity growth averaged around 3.8% for the 2001 through 2004 period. That is an extraordinarily high number by historical standards. It also is well above the consensus view among economists, which is that trend growth of productivity is on the order of 2-1/2%.

The state-level data tell us that the U.S. productivity surge and coincident sluggish job growth in the recent recovery were not necessarily parts of the same phenomenon. The enormous gains in efficiency in the U.S. were pervasive among the states and not correlated with job growth. This is consistent with the view that the gains in the level of productivity we have observed are lasting and unlikely to be unwound substantially once employment growth picks up.

That does not mean that the growth rate of productivity will move back up to the elevated average pace seen in recent years. Even if the gains in the level of productivity realized over the past several years are retained, progress toward still higher levels of efficiency could come more slowly. Indeed, sustaining productivity growth at an average pace of close to 4% per year would be remarkable by historical standards. For example, if some of the very rapid pace of productivity growth during the recent recovery were the result of lagged effects from past investments in technology and changes in workplace practices, a diminution of those effects could mean slower productivity growth going forward. That said, evidence from the state data raises doubts that take-backs from earlier productivity gains will constitute a significant factor pushing productivity growth below its long-run trend.

Employment Quality Index

The Economic Policy Institute's (EPI's) Employment Quality Index (EQI) is a summary measure of aggregate employment quality designed to be both easily understandable and based upon economic theory.

The goal of the EQI is to "make sense" of a number of regularly released economic indicators that, individually, do not always give a complete picture of employment conditions. Indexed to 100 in January 1989, the EQI stood near 111 throughout 2003. EPF keeps an archive of all EQI releases. It recovered from a low of 94 during the recession of the early 1990s, and has risen strongly during the last two years. The EQI is calculated using data from publicly available series on employment, wages and public/employee opinion, which are categorized into four major sub-components:

Compensation: The EQI uses the BLS Employment Cost Index (ECI) private industry compensation series, adjusted for inflation. For 1990 forward we use the CPI-U-XG as our inflation measure and for years prior to 1990 we use the CPI-U (minus .8 percentage points to account for errors in the CPI-U). The ECI's quarterly observations are transformed into monthly figures by using a 3 month moving average.

Job Quality: The job quality series of the EQI is based on a ratio of employment in "higher-paying" and "lower-paying" jobs, defined by analyzing median wages for 90 industry and occupation categories. The categories that employed the higher paid 50 percent of the workforce in 1988 (based on median weekly earnings) were identified as higher-paying, while the categories in which the lower paid 50 percent were employed were classified as lower-paying.

Job Availability: The job availability component is based upon the Bureau of Labor Statistics series for the seasonally adjusted civilian unemployment rate. To maintain comparability with the other components, the job availability series is constructed so that an increase in the unemployment rate makes the series fall – higher unemployment means lower job availability.

Employee Attitudes and Preferences: This component of the EQI measures how employees feel about their employment prospects. It is comprised of three series:

-Unemployed workers who left their last job voluntarily
-Part-time workers who are voluntary
-Conference Board's series on the share of individuals who think that jobs are plentiful.

This month's EQI can be found here.

Ford Steps Up Hybrid Engine Effort

Ford Motor Co. is doubling its hybrid vehicle team to support its ambitious growth plan even as the No. 2 U.S. automaker is laying off employees from other departments. The expansion comes as the automaker is moving to develop the hybrid battery and transmission technology in-house to overcome a supply bottleneck for the key parts.

Hybrid vehicles twin a gasoline engine to an electric motor and batteries to boost fuel economy. The automaker is trailing Toyota Motor Corp. and Honda Motor Co. Ltd. with the fuel-efficient hybrid technology.

Source: Reuters

Classic Druckerism

"Most of what we call management consists of making it difficult for people to get their jobs done."

- Peter Drucker

The New Leader's Job

"A new leader has to be able to change an organization that is dreamless, soulless and visionless ... someone's got to make a wake up call."

- Warren Bennis

May We All Be Reminded

"The first responsibility of a leader is to define reality. The last is to say thank you."

- Max DePree

Leadership Quote

"Life is change. Growth is optional. Choose wisely."

- Karen Kaiser Clark

Dealing With People

"Throughout life people will make you mad, disrespect you and treat you bad. Let God deal with the things they do, cause hate in your heart will consume you too."

--Will Smith, Actor