Sunday, October 14, 2007

The sagging middle

Wall Street Journal featured a story 10/11/07 titled 'Why Job Market is sagging in the middle' Subscription required):

"As Harvard economists Lawrence Katz and Claudia Goldin put it recently, "U.S. employment has been polarizing into high-wage and low-wage jobs at the expense of traditional middle-class jobs."

Here's the hypothesis evolving among these and other academics. Technology and globalization are boosting demand for the most-educated workers, those prized for abstract or conceptual skills. Top hedge-fund managers aren't being replaced by computers; they're harnessing them, to their great profit.

By contrast, technology and globalization are eroding demand for workers who do routine tasks in factories and offices, many of whom are high-school or even college grads. The voice-mail system does away with switchboard operators; back-office software eliminates bookkeepers; robots replace assembly-line workers. Or the work is shipped overseas to a foreign factory or an office linked to the U.S. by fiber-optic cables.

But technology and globalization are not eroding demand for personal-service workers. Those tasks can't be done by computer or shipped offshore. The services have to be delivered here in the U.S. -- and in person -- either by natives or by immigrants.

Indeed, as the folks at the top make more money, more of them want nannies, gardeners, personal trainers and gourmet chefs. These workers are indirect beneficiaries of the upward flow of wealth.Their wages have been rising while those of midlevel factory and office workers, though still higher than those of many service employees, are stagnating."

We see this trend everywhere in society and even more pronounced in advertising, media and consumer demands.

The sagging middle is the nowhere land. Is the place you never want to be.
Some advertising agencies will succeed if they serve the low-end of the marketing spectrum, the advertising optimization industry: SEM, SEO, algorithm-based marketing, auction-based buying etc. Others will succeed because they create remarkable experiences, conversational opportunities for people to tell stories about their beloved brands, create innovative and deep connection with people.
Everything in between will fade away.

The market for mediocrity is disappearing. Quickly.


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