Where I mix career information and career decision making in a test tube and see what happens

Wednesday, January 21, 2015

Young People and Urban Careers

Yesterday’s Wall Street Journal ran an article titled “More Young Stay Put in the Biggest Cities.” Drawing on an analysis of census figures, it noted that between 2004 and 2007, “before the recession, an average of about 50,000 adults aged 25 to 34 left both the New York and Los Angeles metro areas annually, after accounting for new arrivals.” But this turnover of young people diminished after the recession. “Fewer than 23,000 young adults left New York annually between 2010 and 2013. Only about 12,000 left Los Angeles—a drop of nearly 80% from before the recession. Chicago’s departures dropped about 60%.”

The article cites a demographer at the Brookings Institution who believes that young people may now be stuck in the cities for economic reasons: They are having more trouble getting their careers (and families) started, establishing a credit rating good enough to snag a mortgage on a suburban house, and paying off student debt. I agree that these factors are true for a lot of young people, but I also wonder why the demographer and the writer of the article did not consider another possible factor: that urban life may simply have become more attractive to young people.

The article does acknowledge one reason why young people flock to the cities: “In tough times, finding well-paying jobs may be easier in big cities, offsetting their relatively high costs of living.” Actually, there is a longstanding trend of college graduates concentrating in cities. One economist traced this trend from 1980 to 2000, so it is not just the result of temporary economic stress. As the percentage of young people with bachelor’s degrees keeps increasing, we should expect a greater percentage of young urban arrivals to make their permanent homes there.

And cities have other attractions besides job opportunities that might make young people less eager to leave. The crime rate in most large cities has plunged in recent years. Young people are showing diminishing interest in owning automobiles, a necessity of suburban life. And popular culture has changed the image of cities from the gritty and drab environment of “The Honeymooners” to the glamorous setting of “Sex and the City.”

You may be interested in which particular occupations are concentrated in cities. As it happens, in my recent book Your Guide to High-Paying Careers, I include a relevant list. Here’s how I created it: First, I identified the 38 largest metropolitan areas out of all 380 metro areas for which the BLS reports workforce size. For each of the high-paying occupations in the book (those with a median income greater than the 75th percentile for all salaried workers), I summed the number of workers employed in these 38 metro areas and then divided it by the total number of workers in that same occupation throughout the United States. This yielded a figure I call the “urban percentage.”

I thought it would be interesting to see how much better the wages for these occupations are in large cities than in the country as a whole. To do this, I computed the weighted average of the median earnings in the 38 largest metropolitan areas. (In a weighted average, the pay in each city is given a weight proportionate to the number of workers in that city.)

Understand that this single figure for the urban wage conceals the variation that may often be found among different regions. For example, look at the first occupation on the list: Agents and Business Managers of Artists, Performers, and Athletes. You’ll note that for this occupation (as for all the others on this list), the figure for average urban earnings is higher than the figure for the national average. No surprise here: Pay tends to be higher in big cities, partly to offset the higher costs of living there. But for the best pay, you may want to look for work in a particular city where your targeted industry has a large presence. This occupation earns an average of $103,380 in Los Angeles-Long Beach-Santa Ana, CA, the urban area that includes Hollywood, whereas it averages only $28,460 in Tampa-St. Petersburg-Clearwater, FL.

Here are the 20 high-paying occupations with the highest concentration in cities:


Title
Urban Percentage
Urban Earnings
Nationwide Earnings
1.
Agents and Business Managers of Artists, Performers, and Athletes
82%
$75,594
$63,370
2.
Art Directors
78%
$89,900
$80,880
3.
Multimedia Artists and Animators
74%
$66,461
$61,370
4.
Producers and Directors
74%
$86,836
$71,350
5.
Software Developers, Applications
74%
$94,920
$90,060
6.
Economists
73%
$100,180
$91,860
7.
Financial Analysts
72%
$81,811
$76,950
8.
Medical Scientists, Except Epidemiologists
72%
$82,022
$76,980
9.
Sales Engineers
72%
$96,456
$91,830
10.
Securities, Commodities, and Financial Services Sales Agents
72%
$84,581
$71,720
11.
Marketing Managers
71%
$127,157
$119,480
12.
Software Developers, Systems Software
71%
$103,343
$99,000
13.
Computer and Information Systems Managers
70%
$129,958
$120,950
14.
Market Research Analysts and Marketing Specialists
70%
$65,052
$60,300
15.
Architects, Except Landscape and Naval
69%
$74,934
$73,090
16.
Computer Systems Analysts
69%
$83,513
$79,680
17.
Lawyers
69%
$127,110
$113,530
18.
Advertising and Promotions Managers
68%
$102,357
$88,590
19.
Financial Examiners
68%
$81,367
$75,800
20.
Operations Research Analysts
67%
$78,870
$72,100

Thursday, January 15, 2015

Careers in the Era of Cheap Oil, Part 2

In last week’s blog, I discussed some of the career-related effects of the current rapid declines in the price of petroleum. I mentioned that low-skilled workers in the oil patch will see job losses, and that the advantages that manufacturing will enjoy from low energy costs will be offset in some sectors by diminishing demand from the petroleum-extraction industry and from overseas buyers whose currency is losing ground to the dollar. This week I’m starting to wonder whether I was over-optimistic about the continuing outlook for green energy careers.

In the transportation industry, the large purchasers of energy (such as many airlines) are committed to hedging arrangements that prevent them of them from rapidly taking advantage of downward swings in price. But other airlines have reduced their hedging or have used the strategy of call options that don’t have to be exercised. This is also true for large truck fleets. And, of course, the current low prices will allow these transportation companies to lock in rates that will be advantageous when the price rebounds (although that may take some time). So the low price of oil has improved the long-term outlook for work in these industries.

Small trucking operations, those least likely to use hedging, can immediately profit from cheap diesel fuel, which will create opportunities for drivers and other workers at businesses that use these trucks. In fact, even before the price of oil plummeted, the long-distance trucking industry was expecting to face a shortage of drivers. A year ago, the Bureau of Labor Statistics was already saying (after now-obsolete comments on the rising price of diesel fuel), “Job prospects for heavy and tractor-trailer truck drivers with the proper training are projected to be favorable. Because of truck drivers’ difficult lifestyle and time spent away from home, many companies have trouble finding and retaining qualified long-haul drivers.”

The outlook is not good for state workers in the oil patch. As extraction slows down, states that depend on severance taxes (that is, taxes on the extraction of nonrenewable resources) will have less revenue to spend on road repair, aid to education, and other state budget items. In 2003, Alaska obtained 78 percent of its tax revenues from severance taxes; North Dakota, 46 percent; Texas, 9 percent. Other states, however, will have more tax revenue to spend as consumers increase their purchases in response to their low gas-pump expenditures and the general uptick in employment. Moody’s Analytics estimates about 5 percent growth in state tax receipts for the fiscal year ending June 30.

As I mentioned last week, the biggest concern now is a macroeconomic issue: How much of the declining price of oil is caused not by increased production but rather by decreased demand resulting from an economic slowdown in most of the world (with the United States a noteworthy exception)? One indicator pointing toward the latter explanation is the decline in prices of many commodities other than petroleum. The price of copper, for example, dipped sharply this week. A global recession would hurt job prospects even in the United States because of diminished demand for American products and services. The European Central Bank just got the go-ahead to take measures to stimulate the Eurozone economy in much the same way that our Federal Reserve did in response to the Great Recession. It remains to be seen exactly what the bank’s strategy will be, so it’s unclear whether it will be aggressive enough to provide sufficient stimulus.

Thursday, January 8, 2015

Careers in the Era of Cheap Oil

One of the biggest trends in the American economy right now is the low price of oil. As the price per barrel approaches and sometimes dips below $50, you can expect some changes in the job outlook for various occupations. But these are not necessarily easy to predict, and it is important to remember that the price of oil has a long history of ups and downs. The boom in domestic production was triggered by the development of fracking technology, but the continuing plunge in prices owes a large share to the decisions of Saudi Arabia, which often are based on political rather than market considerations.

The obvious first place to look for career consequences is the oil industry itself. The total number of operating rigs in the United States stands at 1,811, down 6 percent from its peak in the autumn of 2014. According to The New York Times, “Each rig represents about 100 jobs, from roughneck field hands to maintenance workers.” The Times article quotes one analyst as saying, “Exploration and production budgets are down anywhere from 30 to 40 percent and the cuts are happening faster than we thought.” He also predicts that the big three drilling companies are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ.”

The author of the article notes that “large-scale layoffs across the industry are not expected, at least not immediately. Producers contract their rigs for as long as three to four years, and many companies have hedges that lock in higher prices than the going market rates. In addition, producers often need to drill simply to retain their leases or keep their revenue up.” The more highly skilled workers have the most security, because drilling companies anticipate that prices will rebound as global demand increases in coming years. For that reason, I expect the long-term job outlook to remain excellent for petroleum engineers, who commanded the highest salaries among college graduates in last year’s survey by the National Association of Colleges and Employers. The short-term prospects for newly minted petroleum engineers may not be quite as rosy, however.

Industries that are heavy consumers of energy can be expected to be the next place where career effects are felt. However, understand that bulk energy purchasers also use a hedging strategy to lock in stable prices over several years, so they do not benefit from oil price dips as quickly as you and I do at our local filling station. For example, this is true for the highly competitive airline industry. Manufacturing is feeling mixed impacts. Low prices at the gas pumps are helping automobile manufacturers to sell more of their highly profitable SUVs. The steel industry, on the other hand, is experiencing cutbacks in pipe and tube sales as demand from oil drillers slackens. Domestic steel is also being crowded out by imports, lured here by the current strength of the dollar. Manufacturers who depend on exports are finding that the strong dollar makes their products less attractive overseas.

The shift to green energy does not seem likely to be slowed much by cheap energy, so prospects are still good for job openings for engineers and technicians specializing in solar and wind energy production. The main drivers for this shift are improving technologies and continuing tax credits. An analysis by Deutsche Bank predicts that solar electricity will be competitive with grid-based prices in 47 states in 2016, assuming that the 30 percent tax credit continues. Even if the tax credit drops to 10 percent when the current law expires that year, solar electricity will be competitive in 36 states.

The darkest cloud on the horizon is the question of the economies of Europe and China. The low price of oil is partly the result of lack of increasing demand from these quarters. If Europe goes into a third round of recession and Chinese growth continues to cool, diminished world trade is likely to have an adverse effect across our economy. We can be proud of our strong dollar when we shop on the Champs Élysées, but eventually a stagnant world economy will hurt us, too.

Friday, December 12, 2014

Two Very Hot Careers

At Ivy League colleges, the most popular on-campus interviews have been for two careers: consulting and finance. By consulting, I mean specifically work for management analysts hired by consulting companies such as Ernst & Young and Accenture. Finance covers a large and diverse industry, but the focus of the on-campus interviewing has been mainly on Wall Street jobs.

Why are these jobs so popular? Probably the main draw is that they pay very, very well. ManagementConsulted.com estimates that recent bachelor’s graduates average a base salary of $50,000 to $65,000 in their first year on the job, with signing bonuses of $5,000 to $10,000 and a similar level of extra compensation in the form of relocation reimbursements and year-end bonuses. As for finance, a 2012 survey by the National Association of Colleges and Employers found bachelor’s grads earning an average of $52,800 as their base salary; the middle 50 percent had salaries ranging from $40,800 to $62,000.

The outlook for both of these careers is good, although both are sensitive to ups and downs in the economy. Right now, the economy is on an upswing, so hiring is brisk.

However, competition for jobs is intense, partly because the pay is so good and partly because both jobs take on smart college graduates who don’t necessarily have a background in business coursework. They don’t hire just any smart graduate, however. They want people who have a high level of energy, who can think quickly in numbers, who can express a reasoned conclusion confidently, who are personable, and who fit into the corporate culture—which can vary greatly among employers.

I am particularly aware of these entry requirements because I recently finished updating two guides to interviewing for these careers: Vault Guide to Finance Interviews and Vault Guide to the Case Interview. I was not the original author of either of these books, but I revised them to reflect current hiring practices and the current state of the industries.

For both careers, the on-campus interviews serve as a first cut to eliminate candidates who obviously are a bad fit. With a few quick questions, interviewers can identify candidates who are not good at thinking in quantitative terms. Some behavioral questions, on topics such as summer jobs, can eliminate candidates who have never worked in a business setting. Still other candidates fall by the wayside by responding poorly to timeworn interview questions; for example, when asked “Tell me your greatest weakness,” they may make the mistake of saying they have no weaknesses.

The candidates who make it past these hurdles are the ones who are invited to corporate headquarters (or a large office), where they often experience a “superday” of back-to-back interviews, perhaps capped by dinner. Would-be consultants, in particular, are grilled in this way. Over the course of the day, the interviews typically progress from conversations with low-level workers, where the focus is on technical issues, to meetings with the higher-ups, where the emphasis is on how the job candidate fits in with the corporate culture. Candidates for finance jobs are less likely to get such a thorough vetting.

For both kinds of jobs, it’s common for job candidates to be asked to make “guesstimates.” For example, they may be asked to estimate how many ping pong balls would fit inside a 747 jetliner, how many diapers are sold each year in the United States, or how many windows there are in Manhattan. Questions of this nature help determine whether job candidates have a rough awareness of the business environment (such as the population of the United States), an aptitude for mental calculations, and the ability to think on their feet.

In addition, interviewees are often asked brain-teaser questions, such as “Why are manholes round?” (a question that originated at Microsoft) or “If you pulled in the anchor of rowboat floating on a lake, would the water level in the lake rise, lower, or stay the same?” These questions get at the jobseeker’s creativity and logical thinking.

Wednesday, November 19, 2014

Conspiracy Theories About Jobs Numbers

Every month, the Labor Department releases figures on the current state of the economy, and every month, without fail, malcontents take to the media to say that the numbers are phony. For example, Paul Singer, a hedge fund billionaire and prominent donor to Republican candidates, recently wrote to his investors, “Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth.”

If you have read my books, you know that I rely heavily on data from the U.S. Department of Labor, so it’s obvious that I don’t share Singer’s skepticism. The data analysts at DOL are career civil servants without a stake in enhancing the reputation of whoever happens to be in power. More important, if there were a vast conspiracy to conceal the true state of the economy, surely someone would play the Edward Snowden role and blow the whistle.

It’s true that the unemployment figure does not indicate the actual percentage of people out of work, because it covers only those who are looking for work and ignores those who have given up. But how many times does the public need to be told this? The Labor Department never pretended otherwise. The numbers are what they are.

Last week, a friend of mine whom I have known since seventh grade pointed out an example of the absurdity of the conspiracy theorists. He wrote on Facebook,

You may have heard about the jobs report that came out last week. The mainstream media generally received it as good but not super—248,000 jobs added (200,000 is order-of-magnitude break-even). Now, this is seasonally adjusted, and October is a strong month for jobs, so it was adjusted down, by a lot, in fact—800,000 or so. If the adjustment formula from last year had been used, growth would have been around 100,000 more. So sure enough, the daily stock market letter I look at has rumblings about government fraud to report the low number. The logic is that acknowledging the true extent of expanding employment would have undercut the case for low interest rates.

He goes on to note another competing conspiracy theory, regarding the other number that was reported—the unemployment percentage:

On the other hand, following links from the newsletter, I find another deep thinker saying that the reported unemployment rate is too low because of fraudulent underestimation of the potential work force. The reason for that fraud would be to minimize the appearance of troubles. So is the current employment picture better or worse than the government is telling us?

As my friend observes in conclusion, these market-watchers accuse the government of “two separate conspiracies working at cross-purposes.” Surely the government can’t be lying to make the economy look both better and worse than it really is.

Writing in The New York Times, Floyd Norris acknowledges that sometimes the reported economic indicators are inaccurate, but this is not because of a conspiracy to make the administration in power look better. Rather, it’s because when Labor’s economic analysts adjust figures, they tend to extrapolate from current trends. If the economy reverses direction, this tendency can cause economists to get the numbers wrong. When the economy goes into free-fall, they may overstate performance, but when it bottoms out and starts to improve, they may understate the situation. He gives the example of a 2012 Twitter comment by Jack Welch, the former chief executive of General Electric, who said that the reported decline in unemployment at that time was “unbelievable.” (This was in October of a presidential election year.) In fact, the figures later had to be readjusted to reflect the fact that the emerging economic recovery was actually more rapid than the initial figures indicated. (Incidentally, following Welch’s comment on Twitter, several other messages pointed out Welch’s reputation for manipulating the numbers reported for GE Capital.)

Norris recommends skepticism in situations where there are “rapid changes in any indicator, particularly if other indicators do not show similar changes.” But he cautions that we should “separate reality from ideology.”

Wednesday, November 12, 2014

When Robots Create a Need for Human Workers

Yesterday a Facebook friend of mine wrote about an “eerie and creepy” experience. An advertisement had just appeared in the margin of the Facebook page she was reading, showing a tee-shirt with the lettering, “Just a California Girl in a New Jersey World.” It is no coincidence that my friend is a native of California and now lives in Flemington, New Jersey. Facebook obviously sold this user-profile information to advertisers, one of whom found a way to develop a highly personalized product.

But my friend did not buy the tee-shirt, and if enough other targets of this pitch find their personalized tee-shirt unappealing, the manufacturer will lose money on the ad campaign (plus the costs of tooling up to produce the tee-shirts; the manufacturer surely doesn’t have an inventory of shirts for every possible two-state match-up). What this tells me is that although Facebook’s data-gathering (a robotic function) makes it possible to create highly personalized products, the actual creation of products that people will buy remains a human function. In the brave new world of Big Data, human creativity is still needed to make a sale.

Something very similar became clear in this month’s congressional elections. As The New York Times pointed out,

Modern political campaigns home in on their key voters with drone-like precision, down to the smallest niche — like Prius-driving single women in Northern Virginia who care about energy issues. They compile hundreds of pieces of data on individuals, from party registration to pet ownership to favorite TV shows. And they can reach people through Facebook, Pandora, Twitter, YouTube or cable television.

The only problem: They do not have enough messages for them all.

The Big Data era of politics has left some campaigns drowning in their own sophisticated advances. They simply cannot produce enough new, effective messages to keep up with the surgical targeting that the data and analytics now allow.

…Or, as Joe Rospars, the founder of the Democratic digital agency and technology firm Blue State Digital, put it, “The science is ahead of the art.” An analytics team can help a campaign make “a much more targeted buy,” he explained, but that alone will not offer a particularly efficient return on investment if the ad is still “just a white guy in a suit.”

As a result, the people who design the advertisements for electoral campaigns end up trying to tease out certain large slices of voters with something in common, such as “soccer moms” or “angry white males.” The campaigns do not have enough creative people to craft the highly personalized ads that should be possible given data-analysis tools.

On a recent broadcast of NPR’s “On the Media” (sorry, I can’t remember which date), I found another example of the limitations of technology. You may remember that YouTube moved quickly to take down the videos of the recent beheadings in Syria. You may not know that YouTube takes down many other videos because of pornographic or sadistic content, and so do most photo-posting sites, such as Flickr and Photobucket. Computer technology makes it easy to post photos and videos, and to make them searchable by keywords, but the explosion of content that has appeared on the Web requires human eyes to decide which photos and videos violate site policies.

One indication of how subtle the human decision-making must be is the fact that photo sites prefer to offshore this work to the Philippines rather than to India, where the workers are lower-paid. The reason is that Filipino workers have a better understanding of American culture and therefore can decide whether (for example) a shot of someone in a bikini is too revealing, whereas an Indian worker might reject every bikini shot.

The takeaway is that technology sometimes creates a need for more human workers, and not just those employed in creating, manufacturing, or repairing the technology. It sometimes creates opportunities for work that requires great creativity or subtle judgments. Robots may be driving cars, but they are not yet metaphorically in the driver’s seat.

Wednesday, November 5, 2014

High-Paying Occupations with a Few Superstars

My most recent book, Your Guide to High-Paying Careers, is my first for my new publisher, Meyer & Meyer. Here is a brief excerpt, giving you a peek at some occupations where the sky is the earnings limit--for a few outstanding workers.

Have you ever fantasized about winning the lottery jackpot? Some occupations have a few jackpot positions that pay extremely well. You’re certainly familiar with movie stars who earn the millions that most struggling actors can only dream about. The radio plays songs by musical superstars who bring home more than the combined earnings of 100 bar bands.
 
Among the occupations included in this book, some offer extremely high earning opportunities for a relatively small subset of workers. You can’t tell which occupations these are by looking at the median wage figure or even at the range of the middle 50 percent of earners. But I have a way of identifying these occupations for you.

Imagine this situation: Five friends are sitting around a restaurant table having lunch. They all earn roughly the same amount:

Person
Earnings

Joe
$50,000

Lydia
$51,000

Mateo
$52,000
median
Isabella
$53,000

Mike
$54,000


For the group, the median earnings figure is $52,000 (half earn more, half earn less). If you calculate the mean earnings (add them all up and divide by 5), you’ll get the same figure, $52,000. But let’s say Mike gets a phone call telling him that he was just promoted to vice president and is now earning $150,000. Note that the median for the group has not changed, but the mean has jumped to $71,200. Because there is now one superstar earner in the group, the mean is now 37 percent higher than the median.

For the 173 occupations in this book, I calculated the difference between the median earnings and the mean earnings. (The BLS reports both figures.) The following list includes those occupations in which the mean is at least 15 percent higher than the median. They are ordered by how much the mean exceeds the median. For each occupation, I list both earnings figures.

What might cause you to be among the highest of the high-paid workers? Here are some possible reasons:
  • You have an outstanding talent. Maybe you were born with some ability that few other people have.
  • Through hard work or study, you have developed outstanding skills. Whether these are physical or mental skills, they can put you ahead of the pack.
  • You use mass media to reach a very large paying audience. Think about how much more a TV chef can earn compared to a one-restaurant chef.
  • You find a specialization or a geographic location that causes you to be in high demand but have no competition. This advantage may be only temporary, but you may be able to command high earnings as long as you are the go-to person for your narrow field or community.
  • You go into management.
Whether you look at the following list as a collection of nice fantasies or as possible roadmaps to your future, the list makes for interesting reading.

High-Paying Occupations with a Few Superstars

Title
Median Earnings
Mean Earnings
1.
Securities, Commodities, and Financial Services Sales Agents
$71,720
$100,910
2.
Agents and Business Managers of Artists, Performers, and Athletes
$63,370
$88,620
3.
Real Estate Brokers
$58,350
$80,220
4.
Personal Financial Advisors
$67,520
$90,820
5.
Producers and Directors
$71,350
$92,390
6.
Health Specialties Teachers, Postsecondary
$81,140
$100,370
7.
Advertising and Promotions Managers
$88,590
$107,060
8.
General and Operations Managers
$95,440
$114,850
9.
Chiropractors
$66,160
$79,550
10.
Art, Drama, and Music Teachers, Postsecondary
$62,160
$73,340
11.
Health Diagnosing and Treating Practitioners, All Other
$72,710
$85,740
12.
Loan Officers
$59,820
$70,350
13.
First-Line Supervisors of Non-Retail Sales Workers
$70,060
$82,320
14.
Geoscientists, Except Hydrologists and Geographers
$90,890
$106,780
15.
Biological Science Teachers, Postsecondary
$74,180
$87,060
16.
Art Directors
$80,880
$94,260
17.
Business Teachers, Postsecondary
$73,660
$85,730
18.
Financial Analysts
$76,950
$89,410
19.
Law Teachers, Postsecondary
$99,950
$115,550
20.
Area, Ethnic, and Cultural Studies Teachers, Postsecondary
$67,360
$77,690
21.
Lawyers
$113,530
$130,880