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9.2% Unemployment? Blame Microsoft.

Posted by Gene Marks


I was in a Rite Aid pharmacy the other day and about to pay for my stuff at their new bank of automated self-check out kiosks. I heard one woman behind me say to her friend, “Oh, I would NEVER use those things. They take jobs away from people.”

Um…duh?

What’s that? You’d like to work for my small business? I appreciate your interest. And I, like so many others, feel terrible about how long you’ve been unemployed. We would like to do something about the situation. We’d like to help you. But there’s something you (and the woman from the Rite Aid) need to know. I’m not sure how to say this kindly so it’s best I just say it: many of us don’t really need more employees.

Of course the fact that you’re out of a job has a lot to do with the state of the economy. Growth is anemic. The uncertainty in the current business environment is holding a lot of us back from making the investments that we’d like to make. And regulations and the prospect of more regulations, let alone higher taxes to pay for our country’s deficits, are giving many of us pause for concern. For that we can certainly blame many: our politicians, the government, the banking system, the media…even ourselves.

But it’s not just that. In fact, one of the biggest reasons why you don’t have a job (and the prospects of finding a job are not encouraging) can also be blamed on someone else: Microsoft. And other technology companies like them.

Because there’s something else going on in this economy. Just look at the below chart. It shows that our country’s Gross Domestic Product, while growing at a painfully slow pace, is now higher than it was before the 2008 recession. And yet it’s common knowledge among those who track these things that there are more than seven million people without jobs than there were at the start of the recession. Which means that businesses are producing more products and services than ever before…but with seven million less people. And by the way…corporate profits are at an all-time high too.

Manufacturers are leading the charge. Just look at how manufacturing productivity has risen over the past thirty years in this country while the number of people employed to make stuff has decreased.

I know you need a job and I know this is a very difficult situation. And I don’t want to sound cruel because I’m trying to help you. And to get help with a problem the first thing we have to do is diagnose the problem. So here’s the cold, hard truth about why you’re unemployed: most businesses don’t need you any more. We can do just as much, if not more, without you.

Over the past twenty years, the technology industry, led by companies like Microsoft, have given us powerful databases, operating systems, networks and software applications that have made it easier for us to accomplish more tasks than we did before with less people. And it’s not just Microsoft who you can blame.

Blame Sage, who makes Enterprise Resource Planning and Customer Relationship Management software that has enabled businesses to automate their marketing campaigns, build workflows for alerting managers when inventory needs to be replenished and generate workorders and invoices that are immediately emailed without employing teams of people.

Blame Rackspace and Amazon and other cloud based infrastructure providers, who allow us to host all of our business applications on their servers, thereby eliminating many in our information technology departments and cutting back on wasted time from downed computers and security flaws.

It’s true that the costs of healthcare and other regulations have discouraged many of us from hiring full time employees. But at the same time we’ve come to realize that maybe we don’t need as many full time employees as we used to. And because technology has advanced so much, even over the past few years, we’ve seen an explosion of outsourcing among businesses, both small and large.

For little cost, companies like mine can easily setup systems for external access and collaboration. We use remote desktop services (again from Microsoft) , but also from companies like Citrix Online and LogMeIn so that our contractors can access our networks to do their work. We use cloud based applications like Box.net, Basecamp, Salesforce.com and NetSuite to manage projects, share data and schedule tasks with both employees and approved outsiders wherever they are. Thanks to Microsoft, Google and companies like Zoho and Dropbox we can now easily put out entire office in the cloud – documents, spreadsheets, presentations, databases, projects.

And we can communicate with our outsourced help, wherever they are, more quicker and easier than before. We make free phone calls using Skype and inexpensive mass calls (or texts) using products like VoiceShot. We hold free conference call sessions using Freeconferencecall.com. We share our desktops using Glance and Join.me. We hold training sessions using Webex. We use video tools like Oovoo to virtually meet face to face.

And finding outsourced help is easier than it’s ever been. That’s because we can search sites like Craigslist, Elance and Guru. And when we find qualified people to accomplish specific tasks for us we can use these sites to set our relationships, manage our payments and communicate our needs.

Which is why so many of the tasks once done by companies are now being outsourced to individuals and other companies who can, using their own internal technology, perform these same tasks with so many less people. Most of the clients I work with outsource their payroll to companies like ADP and Paychex. Many outsource their bookkeeping needs to firms that do nothing else, but do it more efficiently. Most companies now have internet based phone systems where an automated attendant re-directs calls to people’s cell phones and voice mail messages are sent to them via text with no humans in the middle.

No humans.

Are you starting to see the picture? I know you want to be hired full time by me. And I want to be doing my part. But please understand: I’m running a business. I want to make profits. And these tools are letting me make more profits by employing people only when I need them rather than carrying them on my payroll.

It’s not all Microsoft’s fault. What they’re doing is nothing compared to what’s happening on the shop floor. Because, quietly and without fanfare, companies like the Oystar Group are making machines that fill tubes faster than before, requiring less shifts of people to complete an order. And equipment from Keller Technology enables cosmetics and pharmaceutical manufacturers to produce more product with less people. And software and consulting firms like Intuitive ERP and Epicor are helping manufacturers change their internal processes to create more products from less space and using less resources, particularly people.

We know this is true in our own lives. Things are lasting longer and working better. We’re keeping our cars well beyond 100,000 miles. We’re letting our fridges and toasters and kettles do their jobs well beyond the lifespan that our parents did. New developments in flooring, painting and construction are resulting in longer use of our homes. Because technology is better. Have you ever had a TV repairman to your house? How many times has your washing machine broken down over the past twelve years and thousands upon thousands of cycles? Because of technology, there are less people needed to manufacture and service the durable equipment that we use because this stuff is working better and for a much longer period of time.

And with all that, we still need you. Don’t believe me? Look at last month’s Monster Employment Index or read Gallup’s recent Job Creation data. Both surveys find that job availabilities are at their highest level than before 2008. But these are not same the jobs that existed before 2008. That’s because we don’t need as many receptionists, clerks, cashiers, bookkeepers, inventory stockers and maintenance people as we used to. Technology has helped us cut back on all of that. Go to your local supermarket (or Rite Aid) and you’ll see what I mean.

But we do need programmers. And experienced customer service people. We need engineers, scientists, high end equipment operators, nurses, lab technicians and (very soon) capable construction workers too. In other words: people with skills. As a business owner it’s a no-brainer to me that if I can profit from your skills I may very well be persuaded to hire you. What expertise can you bring to me that a machine can’t do for much less? I have to meet that challenge with my own customers. That’s the challenge that we all face.

Of course, all economies are cyclical. And more jobs will be created once the economy again begins to grow. No one knows when this will happen and right now, in our current political environment, many aren’t feeling too confident that this will happen anytime soon. But even in a growing economy will we ever see 5-6% natural unemployment again? This may never happen. And if it doesn’t, please don’t just blame the politicians. Blame Microsoft. And other tech companies like them. It’s because of them that I’m not hiring you.



Besides Forbes, Gene Marks writes weekly for The New York Times and frequently for The Huffington Post and American City Business Journals. He runs a ten person consulting firm outside of Philadelphia and can be followed on Twitter.