Tuesday, July 1, 2014

A Growing Lack of Skills Liquidity

Time use and skills sets could be considered as wealth potential in their own right. In other words, they have the capacity to become directly applicable in the marketplace, so that human capital might actually become the designation which investment implies. Ongoing commitments to direct service formations would also make skills use markets a central component of human capital. In the process, many skills sets would become highly liquid and accessible.

Why hasn't this been possible, already? In part, external definitions of labor are responsible. Where external definitions rule, the idea of human capital as investment is only partially true. Also, where external definitions are in effect, aggregate skills potential no longer affects the bottom line for wage and income designations. Over time, government has reinforced the labor concept as externally driven and defined, through labor's association with corporate structure.

Hence, what skills liquidity exists, has mostly been categorized and measured as labor. However, labor remains a partial concept: income needs time integration with diverse resources, to order to maintain economic access and balanced equilibrium. If time integration is not already present through one's investments, it needs to be an option for one's skills set portfolio. Economically, time use has especially been associated with the creation of product separate from time: first in individual (local) terms, then in corporate (state) terms.

However, future wealth potential has already shifted to time use on individual (income) terms rather than those which are corporate (wage) defined. If this resource capacity were pursued, it would allow greater definition for services productivity than is possible through corporate structures. In the meantime, this growth capacity has yet to be considered. As a result, the Fed is capping growth, which serves to disallow greater access to present day service sectors as currently defined.

Part of the problem for statistical measurement: it's not easy to tease apart economic relationships between entrepreneurs and self employed, versus the resources at their disposal. What's more, the challenges that aspiring entrepreneurs face in the marketplace have grown more substantial because of access limitations. As a result, arbitrage gain tends to be mostly possible through disruption. And disruption may not be welcome, even in the cities where it is possible. Even as entrepreneur driven dialogue seeks to disassociate corporations from their previous "provider" roles, labor continues to trend in a direction that looks oddly traditional. According to Ryan Decker:
Around 55 percent of U.S. firms are small, but only 5 percent of U.S. workers are employed at small firms. Over 70 percent of workers are employed by firms with at least 50 employees. Furthermore the share of employment accounted for by large (and old) firms has been steadily growing.
How to account for this cultural disconnect? For one thing, not every person who is attempting to be self employed is counted among these numbers. But central to these statistics is the regional character of job generation. In spite of many a rural area and town which need local employment options -  the 5 percent employed at small firms is quite telling. Small firms would be found in small towns, and there are many more small towns than thriving city regions. In other words, not near enough business formation exists in many areas. In such areas, a lack of skills liquidity is particularly acute.

A growing lack of skills liquidity (particularly in the U.S.), is also behind the uncertainty people have about present day economic conditions and immigration issues. Tomorrow the Boston Consulting Group will release a report (above link) which will probably get a lot of attention. and the WSJ notes:
The U.S. is one of the world's few economies that could struggle with high unemployment through 2030.
Why the U.S.? I have been concerned for years that the U.S. is in a uniquely bad spot when it comes to employment potential. However, that also makes the U.S. the best candidate possible for skills use markets in services, which would turn this negative scenario around. One only hopes that it will not take 15 years, just to implement them.

No comments:

Post a Comment