This doesn't surprise me at all. One thing I've come to learn in life is the importance of social proof.
Social proof takes many form. It's why MIT and Stanford CS grads have tech companies come to their campuses and throw money at them (these institutions don't have a monopoly on good engineers). It's why if you have Google/Facebook/Twitter on your CV you are pretty much guaranteed a job. It's why academic staff who have a Harvard degree have a much easier time than those that don't.
How long you've been out of work is more social proof. Were I in this situation I would absolutely without a second's doubt invent fictitious employment and get a friend to back up any reference check and I wouldn't feel the least bit bad about it. I know employers are filtering on superficial things and those that have had difficulty finding work is a pretty quick and easy filter.
There is another side of this that the article doesn't touch on: home ownership.
10+ years ago I remember reading a study in Europe that showed the rate of unemployment was directly proportional to the rate of home ownership across the entire EU with a very high correlation. Spain had the highest rate of home ownership and unemployment. Britain (then) had the lowest for both.
We push home ownership as a political agenda. While it has benefits for creating stable communities it also creates an inflexible labour market as people won't move to where the jobs are.
>>There is another side of this that the article doesn't touch on: home ownership.
Oh boy. There's so much I can say about this topic, and none of it is positive.
Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane!
Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the shoulders and shake them violently. It's like the housing market crash did not teach anyone anything!
It comes down to this: a house is a terrible, terrible means of investment. It's a fixed asset that, contrary to popular belief, is not guaranteed to always go up in value. In addition, people don't really take into account the negatives. Primarily, a house ties you down. You have zero mobility as a labor market participant if you own a house, and this significantly reduces your leveraging power when it comes to negotiating salary. Besides that though, houses have a ton of expenses, and as fixed assets they are subject to a lot of uncontrollable risk (fire, floods, earthquakes, the neighborhood depreciating, etc.).
Instead of having that money tied down on a house, people are much better investing in the stock market, which has, over the past 100 years, gone up by 7% annually.
The only time a house makes sense is when raising kids. The stability of the environment has a lot of positive benefits for their growth. It also makes social integration easier.
* Leverage. (The most you can leverage a stock investment is 2x. For homes people can leverage their money up to an insane 20x, for example: by buying a 500k home with 25k down. The proper comparison is not to compare buying a 500k home vs 500k worth of stocks; it's buying 25k or 50k worth of stocks vs a 500k home.)
* Mortgage deduction. (Imagine if you could invest 500k in the stock market with only 25k, and then the government let you deduct your interest payments!)
* Inflation. (I've heard of people living in Manhattan in apartments they bought in the 1980s that pay a mortgage of $500. Inflation has reduced their mortgage debt to negligible levels. Time has in a very real way erased much of their debt.)
Excellent summary. Home ownership will probably never in our lifetimes look like a better investment than it does now. Mortgages rates are extremely low, and because of all the quantitative easing, it's possible that we will see higher than average inflation over the next 10 years.
As a result you can basically borrow hundreds of thousands of dollars, long-term for free. Inflation offsets a fixed interest rate--and the spread is probably only about a point right now, with low inflation.
The housing market is recovering, and immigration reform could create millions of new legal customers for real estate. The only downside is that the mortgage deduction will likely be capped, reduced, or taken away as part of tax reform in the next decade.
What leverages up can (and will) leverage down. The problem with the housing collapse was that people with low or zero down-payment mortgages found that the property value fell, wiping out their entire stake (if they had any at all). More skin in the game should (though there's some research suggesting otherwise) make the market more stable by reducing the ability to speculate. This is a lesson that goes back to the crash of 1929 and the Dutch tulip bubble.
The mortgage deduction is priced into your home (as are low interest rates). Absent the deduction, real estate prices will fall. As interest rates rise, housing prices will also tend to soften.
What inflation giveth, it also taketh away: your mortgage costs are reduced, but so is the appreciation of your house.
Each of those is an contribution to risk and and potential reward, I guess it still comes down to whether people think their house will appreciate or not faster than inflation.
There is also:
* Closing costs. 5k to 10k can easily go to that only. So just buying and selling constantly could end wasted eaten "transaction costs"
* Chance of moving. Are you likely to move? If so think twice about a house. This is offset in the software world by working from home.
* You effectively get a 4% loan and pay it off in 30 years. That could be hundreds of thousands of dollars over the cost of your house you end up paying to the bank in 30 years. That completely escapes many people. Now there is inflation and the opportunity cost to do something else with the money but:
* You have to figure is your salary going to keep up with the inflation? You hope so right...right?
* Opportunity cost. Could you make more by buying some stock, and sell it after 30 years?
* Do you think housing is going to go up again or is the stock market going to go up faster. Same compounding for interest rate goes for reinvesting stock dividends.
Add to the "chance of moving" cost: your opportunity cost in lost income (or additional expenses) by being unable to sell your house in the course of a move. Either you lose out on the income opportunity (which is what this subthread started with), or you're left with the higher costs of renting out your home (likely not covering mortgage) while renting at the new location.
We saw this last situation for a new hire who last year was unable to sell his underwater midwest home while finding rents in a markedly hotter housing market much higher, especially when proximity to good schools and low crime rates were factored in.
> More skin in the game should (though there's some research suggesting otherwise) make the market more stable by reducing the ability to speculate. This is a lesson that goes back to the crash of 1929 and the Dutch tulip bubble.
True, but that's not what we have in the market today. You are confusing "should" with "is".
Are you saying that today we have more skin in the game and it's not helping, or that today we don't have more skin in the game (with market stability left AFAICT uncommented on)?
+i for the inflation comment. This is a big driver for my current investment approach. The opportunity to pick up a large, real asset at rates below the inflation I personally experience (US gov't published inflation rate is lower than mine), in market with significant appreciation due to positive population metrics (Austin TX)
Note that you should always spread risk in your portfolio, but housing at nominally negative rates should have youngers investing if they can. Buy something small and close to the city core.
You can effectively leverage 100x with stock options. You can by deep in the money LEAPs (long-term options, expiring 18 months-2 years out) and effectively have the risk profile of the stock itself. You can then sell and roll those over to longer-term expiring options every 6 months or so.
Also not accounting for a house being a place to live, raise a family, and store your stuff. Talking about it like it's just another investment is strange.
Not to derail the thread, but on the eve of my 30th birthday, if I've learned anything it's that "stuff" is a fucking liability, and spending a lot of resources on a place to house it is just one of the manifold reasons to perpetually avoid accumulating it if at all possible.
One additional negative to home ownership is transaction costs. Real Estate agents, laywers, lenders, title companies all get you comin' and goin'. They love churn!
I like redfin.com as a market changer in this space. Check them out!
Of course. The real estate lobby is behind all these programs, and the propaganda about home ownership.
Many people would be better served renting. All of the incentives are actually causing us to spend a lot more on housing than we otherwise would have, capital that is being diverted away from building productive industries.
Which is fine, since we are letting China have all that stuff anyway. We have all the empty houses and the debt to brag about.
* Leverage. (The most you can leverage a stock investment is 2x. For homes people can leverage their money up to an insane 20x, for example: by buying a 500k home with 25k down. The proper comparison is not to compare buying a 500k home vs 500k worth of stocks; it's buying 25k or 50k worth of stocks vs a 500k home.)*
I guess you are confusing investment and mortgage?
One thing that puzzles me is that rising house prices are treated as inherently good, and falling house prices are seen as inherently bad. But for most things, it's the exact opposite - rising prices are bad.
Is this just because newspaper articles are biased towards the perspective of real estate agents and homeowners? Or are high house prices good because houses are investments? Would cheap 3-d printed houses (hypothetically) make the country better off or worse off economically?
It's because 2/3 of Americans are homeowners, so for a majority of Americans, falling house prices are bad.
It's the same thing for most goods - the price mechanism is inherently value-neutral, and then whether it's better if prices go up or down depends upon how many people are potentially on each side of the transaction. Falling wages are seen as a bad thing, because most Americans identify with labor and not capital. The social security crisis is seen as a bad thing, because senior citizens (who get the payouts) vote in much larger numbers than young adults (who pay the taxes). Falling stock prices are seen as a bad thing because most Americans own stocks, even if indirectly. Falling CDO prices are seen as a good thing because most Americans do not own CDOs.
>It's because 2/3 of Americans are homeowners, so for a majority of Americans, falling house prices are bad.
Why? Those homeowners shouldn't care what the price of their house is. While they're living in it, it doesn't matter, and when they sell, presumably their next house will be cheaper too.
The only time home prices should matter is in comparison to the overall market. If your house got cheaper while other homes got more expensive, that's a problem for you. Otherwise, the price of your home is mostly irrelevant.
Houses are an asset in people's minds. This means that you can sell your house if you need to get extra money and you're in a bind, or to downsize from your current house to a cheaper-to-maintain one.
Let's say you bought a house for $400k with 100k down and have so far paid 50k towards the remaining 300k (plus interest, since it's a loan). The housing market has gone down, and your house is now worth $200k. (These sort of drops happen). Okay, so your house is worth $200k. You need to get out of there, but you've only paid 150k towards your 400k loan. You sold the house for 200k, so now you still owe 50k to the bank for a house you just sold for less. This does not help you out of your current situation, which was to sell an asset to pay for things, or to survive easier.
Edit: Note. This is a VERY simple and slightly inaccurate review of how paying for a house works. The intent of it was to explain why lowering prices are bad for people that already own homes.
Let's say I take out an $80,000 mortgage to buy a $100,000 house--which then appreciates to $120,000.
If I sell the house, I walk away with $40,000 in cash, which I can keep tax-free (a special privilege accorded the capital gains on your primary residence).
Now let's say I want to buy a home the same size--it's $120,000 too. But I only need a down payment of 20% to secure the mortgage--that's $24,000. So now I'm back in a house the same size as I had, but I have $16,000 tax-free in my pocket.
Yup; I also could have just refinanced the first house at the higher appraisal. All three are good reasons for a homeowner to be happy their home value is going up.
If you're stuck in your home like in sukuriant's example, you can't move if you find a job somewhere else. You're stuck in the town you are in and you'll need to find something locally.
This is part of the problem with the American labor market at the moment.
* Most bought and expect it to appreciate. Very important. That is the most important retirement asset they have. If their house loses half the money it could mean eating ramen for 20 years after retirement or eating steak.
* Property taxes. Some would actually not like it to appreciate too fast if they are not selling yet because they have to shell our many thousands of dollars a year. Ideally they would like the price to stay low then right before they sell, to spike through the roof.
Property values for tax purposes are reassessed less than once per decade in many jurisdictions in the US. This is true on the downside also. In some cases, houses sell for multiples of their tax assessment, yet even a transaction will not trigger a reassessment.
Excuse me, but I'm a twenty-something who pays Social Security and National Insurance taxes (separately, due to dual citizenship) because I actually want these programs to be there for me and my whole generation when I/we get old. You think a generation who graduated school into huge debts and busted wages are going to have fat 401k accounts to retire on?
If you see the mania and avoid getting involved, patiently waiting until sanity returns, you can buy more cheaply. But you are still stuck paying for these insane policies, which cost hundreds of billions.
But we are avoiding that too, borrowing a trillion plus bucks a year. We will ultimately face the music and it will be when all the wiggle room is gone, because they wiggle as much as possible without regard to long term consequences.
It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity.
If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.
It comes down to compounding interest. Same as with credit cards or really any similar debt (or investment).
People are: shown the total amount they have to pay to the bank over the life of the loan. It is hundreds of thousands of dollars over 30 years. And most can see in their statement what gets applied to principle and what gets applied to interest.
If they didn't screw themselves and get a loan with early payment penalties they are always free to pay extra anytime they see fit to reduce principle (and if it is early enough it could end up dramatically reducing the total interest paid).
That's an excellent point, but a mortgage is not the only route to true home ownership. You could work and rent in a city with high salaries and low rent vs. purchase prices, then retire in a very cheap area where you can just buy a house with cash saved up, thereby paying no interest whatsoever on the house and keeping maximum mobility during your career.
This is an excellent point I think people often forget about. How does property tax in a house (whose valuation you often have no control over) compare to rent?
That's not even it; in most towns with a 20% down traditional 30 year mortgage, you do very well versus renting if all you count are taxes+interest as expenses, particularly as interest is tax-deductible but rent isn't.
However, you also have to pay maintenance. And had you not put all that equity in your home, then it could be earning above inflation, whereas real-estate in aggregate earns approximately at inflation (if you do better or worse, then you were a winner or a loser versus the average).
Precisely. If its more expensive to rent the money than rent the house, there is no gain.
Of course, the tax deduction is worth something, inducing people to do things they would not otherwise do. And no capital gains tax on profits. And first time assistance. And whatever else there is running up government deficits.
Its a big ponzi scheme. It blew up once and I guess they know how to profit on the way up and on the way down. Its Mr. and Mrs. Joe Average who get skewered.
At the beginning of a mortgage, the overwhelming majority of your payment will be interest; a very small slice is applied to the principal. Over the term of the loan, those small cuts whittle away the principal owed, which in turn lowers the amount of interested charged each payment (a percentage of the principal owed), until at the end of the mortgage your payment is mostly principal.
If you do the math, a typical 30-year mortgage will cost you twice the actual cost of paying cash for a home, so roughly 50% of your payment actually gets converted into equity, assuming your home value was static over the term. This is why people often advise new homeowners to make an extra principal-only payment as often as possible at the beginning of the loan: to cut down the eventual amount of interest you'll end up paying.
That's what I've done with my mortgage. I've been lucky to be in a position to make frequent principal-only payments and should be able to cut a 30-year mortgage to 15-ish or so, saving a metric grundle of cash in the process. Given the nature of the conversation happening around this thread, I suppose I should state my reasons for trading away job-seeking flexibility: I LOVE that eventually, I'll have a roof and four walls independent of my employment situation.
As someone who just bought a home -- I can also assure others in this thread, there is a lot of emotional value in owning your own place (reality check -- yes I know the bank owns it for a while) -- but for me and my wife, the value comes from being able to do whatever we want with the house.
Expand the basement? Sure! Get a bunch of dogs? Why not! Commit to getting to know the neighbors? Sounds great. All while not having to worry about a landlord doing whatever they want at the end of a lease.
It's a very rewarding thing. Is it for everyone? Absolutely not, much in the same way having kids or getting married isn't for everyone either. But for me, there is a lot of value in the actual ownership.
>>Expand the basement? Sure! Get a bunch of dogs? Why not! Commit to getting to know the neighbors? Sounds great. All while not having to worry about a landlord doing whatever they want at the end of a lease.
It's funny that two out of the three things you said are additional expenses that the house enables.
Of course, we aren't disputing the emotional value of owning a home. We're just saying that it's a poor financial decision most of the time.
>>It's funny that two out of the three things you said are additional expenses that the house enables.
Those same two things may also be valuable to the owner, regardless of expense. Expand my basement so I have room to continue working on the hobby I love? Sounds good.
You obviously don't live where I do; nearly all changes to the house require a permit which takes 6-12 months to get and is quite expensive, and for anything that changes the # square feet (like expanding the basement) will be denied.
It depends. The interest portion is very high in the beginning of the mortgage and very low at the end.
In a typical 30yr mortgage, you will make 360 monthly (roughly equal) payments. If your mortgage payment is $1000/mo, payment #1 will be approximately $950 interest and $50 principal. Payment #360 will be ~ $50 interest and $950 principal.
Most people move every five or six years (historical, might not be true with current RE market), so they complete about 20% of their total mortgage schedule. However, because of this ramped apportionment, most people still owe the lender much more than 80% of their initial purchase price.
The first time I did the math on this, I thought I had discovered a huge consumer-hostile scam. But actually it's quite reasonable -- mortgages are designed to keep payments equal over the term of the loan, so there's really no other way to do it.
I just bought a home and 40% of my payments are principal from day 1. That's at 3.5% interest. If you get a conventional loan instead of a jumbo, you can do even better than that. Mortgage interest deductions make the calculus even better. Plus tax-free capital gains.
It was quite the slam-dunk easy decision to make where I live (San Francisco), considering how hot the rental market is. My house rents for $1k more than the monthly mortgage!
Interesting. If I understand the math correctly, that means that you have an effectively variable interest rate over the life of the loan (though presumably it will average out to the 3.5%). Is there a special name for that kind of loan?
The reason mortgages front load the interest is not to victimize borrowers (that's just a pleasant side effect) but because in the early days of the loan, you are using more of the lender's money. You pay it back slowly, but you pay interest in each payment on the amount that you're using at that point in the term.
So payment #1, you pay interest on ~100% of the loan. Plus a little extra to reduce your principal. Next payment is interest on ~99.8% (100% minus 1/360th), plus a little extra (more than last time) for principal reduction so that the payments total the same amount. On and on til payment #360.
If you're paying 40% principal on payment #1, by my math, either your effective interest rate is variable over the term, or you're choosing to overpay the invoice (applying the excess to principal -- which makes a huge difference in the early years).
I'm surprised the economics of buying work out so well in SF these days. When I left, it was the other way around. Interest rates help a lot. Congrats on the house!
It's not variable, it's fixed at 3.5% for 30 years. A "jumbo" loan has a higher interest rate than a conventional simply because of its high initial principal, making it a riskier proposition for the bank. What calculator are you using to calculate principal vs interest for a fixed rate loan? Remember, the lower the fixed interest rate, the higher % of principal you are paying at day 0.
The economics of buying vs renting has changed a great deal since I moved here. 5 years ago, buying was rather questionable. I took advantage of "cheap" rents to save up for buying a house when it finally became a buyer's market. Now rents have nearly doubled, but housing prices haven't gone up proportionately.
However, blindly following advice on renter-ship is as bad as blindly following advices on homeownership. Every situation is different, and you should do your math per your specific situation.
True. However, in the majority of cases the math is overwhelmingly on the side of renters. Whereas conventional wisdom goes the other way. This is one of the reasons we had the housing crash. The house of cards can only stand for so long.
There are lots of calculators that will show you, but for a $100,000 loan at 5% you only get about $1450 in equity the first year and only another 1550 the second year, but you pay about $4950 in interest the first year and $4900 in interest the second.
Unless you make lots of extra payments you gather equity very slowly. The break even interest vs equity per year point is at the half way point.
People often pay double the cost of the house, so on average (for the life of the loan), half of your mortgage payment is equity. In the beginning the vast majority (90%+) is interest.
Here's a calculator I whipped up: http://instacalc.com/1737 (adjust the numbers as you need; this is a side project of mine).
> Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane!
It's really the older generation that promote this. If you're 35 years old, chances are your dad walked out of high school into the same large company that he retired from. Why would they need mobility when they had jobs for life?
The only younger people I know that share that view are close-minded and never see the point of leaving Smalltown, USA.
> The only younger people I know that share that view are close-minded and never see the point of leaving Smalltown, USA.
To be fair, if you can find a way to make good money in a small town, you'll be living a more comfortable life than most people in big cities. If the attractions of a big city don't actually attract you, then sometimes moving to one is, economically, a bad decision.
My parents have a big house in a small town and for over a decade they owned and operated a local gas station. They were "rich," even though they didn't make a lot of money by NYC or SV standards. Do you know how much the house cost them? A little over $100k. Just let that sink in.
>The only time a house makes sense is when raising kids.
It really depends where you live. Here in Pittsburgh you can buy a decent house for $150k. Meanwhile, rent in that same area is $1000 for something similar. In this case, even if there was zero appreciation, the amount you pay on interest, repairs, etc... is less then the amount you would have spent on rent, but everyone should take the time to make these calculations for themselves. There was no amount of math that made a 1,500 sqft house in Calfornia at $1 mil (during the boom) better then renting.
I should also mention the area I'm thinking of has high demand for rent, so your mobility isn't really limited as you'd be able to rent out at a profit almost immediately.
Speaking as a homeowner, we didn't buy the house as an investment asset (though naturally we hope it doesn't depreciate too much). We bought it to live in, and are not paying huge amounts or over very long periods. Of course there are risks. That's why we carry insurance.
>>Of course there are risks. That's why we carry insurance.
Which also has a cost... You are not negating risk by buying insurance. You are simply offloading it to another party and paying them money on a regular basis. At the end of the day, it's still an expense.
That's right. It's economically more efficient for me to pay someone $1000 a year in order to be covered for most eventualities, because I estimate my annual risk at a bit higher than 0.3%.
The piece that I see ALWAYS neglected is maintenance. I rent and pay nothing additional to maintain the place. Washing machine breaks - landlord fixes it. Carpets wearing out (minus things that are obviously my fault) - landlord replaces it.
Everyone I talk to who owns is constantly upgrading or replacing or fixing something in their house. It seems, on average, home maintenance is about 66-75% of my rent check; and that isn't money they get back. It just prevents their home price from falling.
Just write the deposit off and if you get any back, consider it a blessing. It's odd that you give it so much weight when it's usually less than a single month's rent.
In Britain these days, the deposit is held by an independent agency, not the landlord or letting agent. They have to give a good reason to have money deducted - and you can then dispute this if it is spurious.
I recently moved, and the landlord (who was broke) was trying to keep money for all sorts of non-existent faults, most of which were due to his shoddy DIY work before I moved in. I raised a dispute and eventually got the vast majority of the money back. Just make sure you keep pictures of the state of the house before you move your stuff in.
It varies a lot; in California the legal maximum is two months' rent, and it's fairly common for landlords to demand the maximum. That can be a significant hit unless you stay in the same place for years.
The only time a house makes sense is when raising kids.
I don't have kids but one benefit I get from owning a house is I can do pretty much what I want to it without having to get permission for it from a landlord and it affords more space for entertaining friends and allowing me to build things so I think that statement is a bit short-sighted.
You are right though about the mindless promotion and the dubious investment potential. Unless you specialize in real estate investment, houses are primarily a place to live and you have to determine the value that you would get out of it from that standpoint.
Really some houses are built to last :-) I was looking to buy a place (before I got made redundant) built in the 1790's (Listed building mentioned in peveinser no less) and the farmhouse next to my parents house is 1500's/1600's John Bunyan preached there back in the day
Given your last point re: kids, how is it "insane" that people want to buy houses? Most people have/want to have kids.
Btw, I don't agree with your last point. It's pretty much possible to stay in a rented apartment for 5 years at a time quite easily. And kids go through wrenching changes every five years on average (home->kindergarten->middle->high school).
You make good points about the drawbacks of buying a house. However, the ability to lock in your housing expenses for the next 30 years (i.e., no impact of inflation) shouldn't be underestimated. IMHO.
Every place is different but in some places there are huge advantages to buying that most people don't probably realize.
In the state of Maryland for example It's my understanding that property taxes on the first $300k of assessed value for primary residences are adjusted based on your income[0] for households making less than $60k per year. (for reference 300k will get you a pretty nice place in a trendy part of the city) The end result is you could be living in a $300k house and pay zero or near zero property tax. So you could for example buy a place straight out of college rent out the spare rooms to pay off the mortgage at a very accelerated pace and then if you wanted to you could live in that house basically property tax free once the mortgage is paid off so long as you didn't make too much money. I'm not sure if you've looked at your living cost structure but once you knock out mortgage and property tax you have an extreme amount of flexibility in terms of how much money you need to make to live comfortably and the types of career risks you could take w/o having to worry about ending up on the street. You have to be smart about what you buy and at what price of course which is where most people fail at smart decisions when home buying but if you do it right it really can be a no brainier.
> Instead of having that money tied down on a house, people are much better investing in the stock market, which has, over the past 100 years, gone up by 7% annually.
Just to be clear, that 7% is after inflation. The historical performance of the stock market is closer to 10-11% pre-inflation.
> The only time a house makes sense is when raising kids.
Retirement is of course another scenario where it makes sense. Mobility won't be nearly as important (indeed it may be totally irrelevant), and you won't have any rent or mortgage payments if you own your house.
The thing is that I don't plan to retire in San Francisco or NYC. I plan on retiring in the south or midwest. Housing is so "cheap" there compared to salaries in tech hubs that as long as you're saving a reasonable amount of cash (say $1k minimum) every month (on top of retirement accounts and investments in stocks and bonds), you'll easily be able to just go buy a decent house in a cheap area for cash when you're ready to settle down in retirement.
Is it absolutely the most efficient path, financially? I don't know, but it sure does make everything simple, as you'll have maximum mobility during your career. I can't tell you how many people I know who have basically stunted their careers due to buying homes. Money is certainly not the end goal in life, not even close, but lots of people I know could double their earnings if they weren't locked down to one location.
Indeed, if I could find a very stable, long-term remote development job paying $80k-100k (which is quite a bit lower than the going rates in NYC and SV), I'd seriously consider moving to a small town and just buying a home for $100k. Pay it off completely in a few years and live a really, really comfortable life afterwards.
I'm just starting my career, but one of my big goals is to achieve the above either through a traditional remote development role or through independent consulting. The problem is stability--the most stable tech companies don't tend to hire remote devs, and consulting is inherently unstable, although I suppose if you work hard at the top of your game it wouldn't be much of an issue.
The going rates in NYC/SF also have going rates for living expenses. A single person might not mind having a small apartment or sharing with someone - people with families or other priorities can't live like that.
It doesn't have to be telecommute - mid-senior developers can get jobs making $70-$80k in many major areas around the US (Minneapolis, Raleigh, Atlanta, Nashville, are just some I know of off the top of my head). Junior devs with no experience would probably be hard pressed to start off much over $50-60k in those areas, although there may be exceptions.
Consulting may be 'unstable' in that you'll have periods where you're not billing - at first that'll be because you have nothing else lined up. Later, it'll be by choice - you'll scheduled out breaks between engagements, and have a bit of a life in between. And you'll have charged enough, and budgeted your earnings enough such that it won't matter to your day to day living.
I would suggest that if you do the consulting/contracting route, that you be willing to travel. I know people can't always sell a house and move, but most people can get a car or plane to visit clients on a regular basis - it helps a lot to solidify relationships. And I'm surprised at how many people who want to do independent consulting remotely focus way too much on the remote part and not enough on the independent and consulting parts, then wonder why they can't find clients.
Keep your eyes and ears open for opportunities - they sometimes come up in places you wouldn't expect (both geographic and industry).
> A single person might not mind having a small apartment or sharing with someone - people with families or other priorities can't live like that.
Actually, people can. Immigrants are notorious for doing that in the US. If you're willing to rearrange your perceptions of what can be done... you could definitely have 3-5 people in a 800-900 sq. ft apartment. :-)
I thought that might be brought up when I was writing it, and you're right. Yes people can, but not everyone wants to, of course, and it's a pretty big sell to tell someone "pay $2500/month to live in this small apt to be close to company X" when there's far different options out there: bigger space, less pollution, better schools, cheaper food, perhaps closer to other relatives, etc. So yes, it can be done, but I think many companies are doing themselves a disservice by requiring people to be onsite and live nearby or commute long distances.
I second your post here-- I am currently idled through the end of summer by choice (we're moving and then traveling), but it's not a big deal-- I live in the sticks, but I do drive into Austin, TX pretty frequently. There are indeed a lot of opportunities, but you do have to focus on business development as part of what you're doing; while I don't have a lot of specific offers on my plate for the fall, I'm not worried about finding fun, interesting development projects.
I'm in TX too (not Austin, but another big city). I'm curious how you're liking consulting here and how it's going. Do you find most of your clients in Austin or are they remote? And do you feel like you would be better off just getting a salaried full-time job with benefits given the going rates here for salaries vs. consulting? If you don't mind spilling the beans (I understand if not), how much are you generally able to make (and how much work does making it involve)?
I ask because I'm seriously looking into transitioning into consulting over the next few years. I'm a little dissatisfied with the developer wages in Texas in comparison to the cost of living inside the city (Houston, probably similar to Austin). The wages are great in comparison to the suburbs or further out, but I don't want to commute 1.5-2 hours every day if I can help it.
I can't give you any insight into developer wages. But as far as commuting in the Houston area goes, I used to commute from Fort Bend County to Bush Airport (which really was an absurd commute) and it took me about an hour each way. So if you're trying to keep your commute under 45 minutes each way, you may have a wider area of acceptable areas to live in. Especially if you are thinking of companies inside the loop.
I'll be making about $83k/year this coming June (haven't graduated yet...) working in the Greenway area in the loop. I have an apartment lined up which will actually be in walking distance, so life will be easy. But I'm the sort of person who tends to think too far forward in the future, and I don't want to be renting an apartment my whole life. To me, the sooner one owns a home (and by own I mean own, not a mortgage) the better, as that's one major step towards true financial independence, as it means no rent or mortgage payment at all. And short of striking it rich, the only way to outright own a home early on in life is to make a lot of money with a permanent residence in a very cheap area.
At the same time, I really don't want to commute and don't feel comfortable spending more than double my salary on a house (I don't want to be "house poor").
In striving to satisfy all these desires simultaneously, I'm led to the consideration of consulting in the next few years. A few posters (patio11 and a few others I don't remember) here on HN have convinced me that, if done right, consulting can be a path to financial independence without the unpredictability of the startup "lottery". The idea, I hope, is that through partially remote consulting work one can make a wage which is disproportionately high compared to the cheap area in which one lives. It remains to be seen if any of this speculation is actually true.
> The idea, I hope, is that through partially remote consulting work one can make a wage which is disproportionately high compared to the cheap area in which one lives. It remains to be seen if any of this speculation is actually true.
This is precisely what I've done with my life for the last five years. It works, on one condition: you must find, connect with, and sell the Right Kind Of Customers for it to work.
If you're just a programmer (which, of course, Patrick famously recommends against identifying as), you are competing against every other "programmer" with your list of bullet-point skills, many in places a lot cheaper than even your "cheap area in which one lives"— e.g. eastern Europe, former Soviet states, etc.
The trick is to position, market, and brand yourself as a specialized, boutique consultancy that incorporates various highly-sought-after technical skills in a complete "special sauce" package for businesses to achieve business-ey goals. People LOVE good abstractions, and are willing to pay for them. Be a problem solver/revenue increaser, not a "programmer". If you try to compete on a specific, easily-defined technical skillset, you'll lose to vast hordes of internet-connected Romanians, Latvians, and Ukranians every time - they can maintain a very comfortable standard of living at prices way below what you could offer your services for.
Because of my wife's business (she's a violin teacher with a large, productive studio) and because commuting is not something that I am willing to do, I feel compelled to find clients for remote work.
While it'd be fun to move to Austin and I feel like I could find a stable "good" job there pretty quickly, I like working for myself and ironically (as a musician- It's as profitable side business for me) there are probably more paying music gigs out here in the sticks.
About three years ago, I started out doing brochure marketing sites for a shyster local "social media" salesman who knew very little about web marketing but who loved to sell. At the time, my skills were basically photoshop, the (relatively extensive) programming classes I had as a child in high school, and some knowledge of markup.
I did about 80 sites for the guy over 8 months plus countless odd jobs like domain name transfers, troubleshooting email problems, writing annoying forms (the first routine I wrote that really solved a problem for me was a short bit to take a keyed array of field names and labels to generate/validate/process a form based off those values)... I spent almost all my free time on educating myself about whatever I though would be useful, and built sites for myself and some "on the side" clients in Joomla, Drupal, and WordPress.
I also had to hire and help manage a three-person technical team and deal with all the over promising that the sales guy would do. This was a good education in and of itself.
At the end of that period, I reasoned that the sales guy/owner could sell websites not knowing how they worked, I could probably sell 1/10th the number of websites and double my income. So I sold two local web sites and quit... it didn't hurt that my income was already only around $16/hr with no benefits, so replacing that was not a big deal.
For the next six months, I sold more sites and did a whole lot of cold calling and contacting folks via craigslist, and found an agency client who would pay 20/hr and give me plenty of work, and then using the same process I found an agency who would pay 30/hr, and for the last year I've been at around 65/hr and as busy as I'd like to be.
Mostly, after the first few craigslist clients, my new business comes from personal referrals. It doesn't hurt that I make myself very available, I'm quite friendly, and I do a whole lot of free consultation that I consider to be business development-- people are really happy to direct work to folks who are helpful.
I don't usually sell work directly; mostly I work with agencies in Austin who are marking up what I am doing by around 50%.
I brought in around 65K last year, which is not great, but I also worked a lot of 4-day weeks (if I don't count checking in and doing a half hour of work on a late Friday, or occasionally spending a Sunday reworking something that had to be done ASAP) and I usually am able to do my work in two 3-hour sessions... still no benefits, but I am young and paid off a substantial chunk of the student loans accrued pursuing an unfortunate PhD in English.
By studying consistently, playing with new technologies, and being willing to take on a lot of work on odd jobs troubleshooting stuff, I've gotten to where I can build modules for Magento or aMember, themes and plugins for WordPress, and generally working in clean, patterns that seem elegant and satisfying.
I've learned how to deploy AWS EC2s, how to work on the *nix command lines, git, ssh, enough SQL to understand joins and how to root through a database and make changes to an entire managed site at once... nothing awesome or special, but stuff I find interesting and fun.
My feeling is that I have just started getting a "good" grasp on programming, but if I can keep this going for another couple of years then I might actually get good at programming... I'm getting a little tired of doing marketing oriented work, but to be honest my skills up to the last year really weren't all that unique (other than the fact that people like working with me for whatever various reasons).
I hope that is helpful for you... as I said, I am currently idled for personal reasons and am both cleaning out my development machine, the last couple of projects on my plate... and reevaluating what I'm doing, so it was helpful for me to write all that out.
Addition to the other factors to consider put forth by nostromo:
-Mobility. When you need to exit a house and relocate, you can do so without waiting for a lease to expire. If you are in the right market, you can rent the first home out while you migrate, then sell it once the dust has settled.
>>Mobility. When you need to exit a house and relocate, you can do so without waiting for a lease to expire.
Yeah, instead you need to find a buyer, which in most places is not an easy task, especially in a housing market flooded with cheap foreclosed homes. In addition, you have to hope that the house has not depreciated in value during your ownership - which can happen due to factors totally outside your control (such as foreclosures in your neighborhood).
In other words: if you need to move, don't count on having the ability to sell your house quickly and without loss.
Compounding this problem are the facts that in many, and I would argue, most, US cities, renting is expensive, the there is a social stigma against renters, and the rental properties available are very undesirable.
I'm in the process of buying a house. My monthly payment will be ~$300 less than what I'm paying for rent now for a similar house, and I could probably break even (taking into account maintenance) if I had to pay a property management company to rent it out in the even that I needed to move.
And in 10 years, who knows what rent will be? I know what my house payment will be, modulo possible changes in tax and insurance rates.
Not all markets are like that, but in some cases it does make sense to buy a house.
I agree that home ownership is not a good investment. Between mortgage interest, property taxes, home owners insurance, and maintenance, the ROI will be negative. Not to mention most homes barely appreciate beyond inflation. People say that with rent, all your money is going out the window. The same can be said for owning a home.
I so agree with this argument that I think it should absolute, ie no provisos for "The only time a house makes sense is when raising kids." Long term, stable rental income is the dream of any landlord. Families provide that. So capitalism work just fine here too.
I guess it depends on the rental vs purchase market where you are.
Here in outer London, rental prices are pretty much in line with the interest payments on a mortgage. So you're "throwing away" the same amount whether you're renting or not. I'd have thought this would become a natural equilibrium in most places. If rental prices are significantly more than the interest payments on a mortgage then owning will seem more attractive.
Mortgage still has value in that it gives you the opportunity to invest that in a house if that's something you want to do.
Early in a mortgage you're paying what, 25% principal? Probably less? And that's not even taking into consideration property taxes, mortgage insurance, etc, etc. So no, you're not getting $1k back from every month.
You wouldn't get $1k a month in equity. First of all, you can't ignore interest as its a huge part of what you pay on a mortgage. Depending on your down payment and rates, you could end up being over half the cost of the actual property in interest and property tax. Then there's maintenance, insurance (much more costly than renter's insurance), and so on.
Here in Poland, you can't rent a flat even if you want. There are extremely few offers, partially because there's a culture of owning. Renting is frowned upon.
The social-proof side not only means you need to have jobs, but they have to be a certain "class" of jobs. Though you can invent them pretty well.
Here's a story from an acquaintance (don't know him that well, so may or may not be apocryphal, but it seems plausible). For a period of 2 years he worked at Home Depot to pay the bills, and did a bit of puttering around on tech side projects on the side. Not really any kind of business, just for fun mostly. So he listed that honestly: Home Depot was in the employment section, and a few side projects that had become releasable were listed under projects.
Later, he changed his resume. He removed Home Depot from the resume entirely, because he had gotten the impression that working a retail job while post-college-age carried a stigma, at least if you were looking for "professional" jobs rather than other retail jobs. To explain what he was doing in those two years, he grouped together those side projects as an "unsuccessful startup". Big improvement in responses.
A friend of mine worked on a consulting project that tracked how hiring managers looked at resumes for high-volume positions (defined, at that time, as 100+ resumes per opening -- probably a very conservative figure today). In interviews, they claimed they looked at everything. In eye-tracking studies, they basically spent about 30 seconds per resume, and they looked at education, companies, job titles, and dates. Almost nothing else on the page mattered.
I'm almost positive you could have inserted complete gibberish into every other line of the accomplishments/bullet points, and still have passed muster if you'd had enough big names on the page.
Of course, that was 5-6 years ago. These days, we also have computer filters to deal with. To some extent, these filters can be "SEO'ed" with the right combination of keywords, and the right percentage of linguistic overlap between job listing and resume. But on the flip side, they're almost certain to be very harsh and uncaring to employment gaps, unknown companies or brand names, and non-standard job titles.
There is another side of this that the article doesn't touch on: home ownership.
10+ years ago I remember reading a study in Europe that showed the rate of unemployment was directly proportional to the rate of home ownership across the entire EU with a very high correlation. Spain had the highest rate of home ownership and unemployment. Britain (then) had the lowest for both.
We push home ownership as a political agenda. While it has benefits for creating stable communities it also creates an inflexible labour market as people won't move to where the jobs are.
Beyond just the correlation with unemployment, it also results in the FIRE sector wielding far too much power over your economy and politics. When political effort goes into bolstering the stability of real-estate to keep all the homeowners afloat, that's the real-estate brokers, the landlords, the banks, and the insurance companies getting the boost.
Notice a difference? Spain, and a lot of European countries, have some archaic debt laws. Where even if you could move to where the jobs are, the mortgage on the house you no longer own is still on your back. So you could take another job but half your income is going to service that old debt. This contrasts pretty well with the way the US and UK handle debt; you invested, the investment failed, liquidate everything, and then move on.
Someone takes on a debt using property as security, if they forfeit the security why should they be excused from the difference between the value of the security and the value of the debt?
The aren't excused from the value of the debt. They are returning the collateral, which closes out the debt.
The whole price of the loan (interest rate, points, etc...) was based upon the home being the only recoverable asset in the case of default.
This is why most loans with less than 20% equity have to pay primary mortgage insurance. If your house declines in value, you probably have an agreement that PMI kicks it. The lender being the beneficiary if the PMI has to pay off.
Theoretically this both protects the borrower from predatory practices and encourages the lender to make quality loans.
A counter argument is that someone agrees to loan you some money in exchange for some collateral. If the value of the collateral isn't enough to cover the value of the loan in case of forfeit then surely that is the lenders problem since he was the one who set the level of collateral too low.
Because you are penalized for not being a fortune teller. They are archaic because it doesn't work well in a modern market. Oh, it worked, alright. Right up until the housing market stopped going up. Then when it went down all that capital was tied up in personal debt. The bank got the house and their pound of flesh, for perpetuity. And I mean that in some people will never be able to pay off that loan and see suicide as a viable option.
This is a dangerous game. Some HR managers and hiring managers won't have the time or the know-how to fact check that sort of thing. Others will. The expected value of the dice roll isn't worth the risk.
I'm not saying to do it, but the EV is almost certainly positive if the prospects for long-term unemployed are significantly negative. Suppose you get "caught" the first time? Just do it again, and you'll likely find a job sooner than if you played it straight.
Dangerous how? The only down-side appears to be that you don't get that job. TFA is suggesting that with an employment gap instead of a fake job, you wouldn't have, anyway.
Dangerous because HR people and recruiters tend to switch companies and even industries constantly, and because any given company is obligated to keep your resume on file for a certain number of years -- inclusive of any remarks made by HR or the hiring manager about it. If you want to risk being essentially blacklisted for lying on your resume, I guess your risk tolerance is higher than mine.
I get the argument about the risk's being mitigated over time by the downside of being unemployed for 6+n months. Mathematically, sure, this starts making sense after awhile. But it seems much less risky just to invent (or hey, attempt to start) a fictitious company than to lie about having been employed by a real one, defunct or otherwise.
"While it has benefits for creating stable communities it also creates an inflexible labour market as people won't move to where the jobs are."
Over the last few years it's more like they can't move to where the jobs are, at least not without taking a huge loss on a house or declaring bankruptcy.
But yeah, you're right - we've got a rather immobile labor market, for a variety of reasons, and there don't seem to be any quick fixes. telecommuting you'd think would help, but it's not applicable to every single job, and even places that do allow for it don't necessarily orient their culture to take full advantage of it.
Also, could it be that salaries offered are not worth the risk as well?
For example, I've had recruiters contact me about the same/similar positions in the DC and NYC suburbs, where I'd only make $7k-10k (if I was lucky) more than my current position (in a middle market city). Why would my fiance (who would have to quit her job as well and find new work) and I leave for peanuts? I'd also lose any time base perks at my current employer as well.
If companies/recruiters are expecting people to move for "same job, same pay" then there's your reason for an immobile work force. Add to that what you mention - many would have to take a loss on their home when they wouldn't have too.
> I would absolutely without a second's doubt invent fictitious employment and get a friend to back up any reference check and I wouldn't feel the least bit bad about it.
There's many managers who'll employ you if they suspect it's a lie so they'll have something against you if they want to get rid of you quickly later on. So the trick is to make up a lie that'll fool the HR filters but not the sociopath managers who'll employ you to be their bitch.
"It's time for the government to start hiring the long-term unemployed."
What the fuck? If you measure something you do not like, the immediate response should not be to grab a hammer and try to kill it. It probably exists for a reason. Understand the reason. Then take action. It may be that there is nothing you can do -- directly. Only a small few percentage points of the problems in the world go away through direct action.
Prima facie, this argument seems to be that if employers don't like an attribute in a job applicant's resume, we should either make it illegal for them to discriminate based on that attribute or "fake out" that attribute in some other way.
It seems like anything I'm going to say is blindingly obvious, but I'l say it anyway: we cannot provide "recent experience" in X simply by hiring somebody and giving them a nametag that says "I do X!". It doesn't work that way. Employers want experience, not simply words on a resume. You can't create lots of experience for a job position in a market that simply might not have that many job positions of that type available. In addition, sometimes (not always by any means) companies let go the people who are deadweight first.
I could go on. There's a plethora of various speculations I can make about why this measured observation is true. More research, most likely by job seekers themselves, is required to fix this. Politics by correlation, just like management by correlation, is a terrible way of running a ship.
Eh, there is something to what he's saying. The idea that the labor market behaves rationally is a childish fantasy. Employers are not rational. They do all sorts of irrational things, and discriminating against the long-term unemployed (and also women returning to the work force from motherhood) is one of those irrational things.
It's almost a dating mentality. They jump to the conclusion: "well if nobody else wants him, why should I?" In reality, people can be long-term unemployed for all sorts of reasons that have nothing to do with them being a bad potential employee. Maybe they have really specialized skills or want a really specific kind of job--the nature of such situations is that there is going to be gaps in how long it takes to find the next employer looking for those very specific skills.
So you think I'm arguing for a rational market. I am not. Another commenter thinks that I'm ignoring the benefits of getting up and working any kind of job. I am not.
Why would you guys have such diverse opinions on what I'm advocating? Because the problem is not sufficiently stated. That's my entire point. You make one measurement and say "let's work on this directly" and you haven't said much of anything. All you have is correlation. Lots of correlation in the world. It's like the doctor taking your temperature and then applying ice packs because you have a fever. Maybe you have a cold! Maybe you just exercised! Maybe cool water would be better! And so forth. Hell, I don't know what you have, all you've given me is one data point.
If you don't define a problem well, you can't define an experiment to prove that some intervention works or doesn't work. You just have a measurement you want to be different. That may be a huge social problem, but in terms of being useful, it's not a lot of anything. I don't particularly like the fact that high schools graduate so many kids who fail a reading test, but I doubt changing the test is going to alleviate my concern.
Sure, the market is probably irrational to one degree or another. That doesn't mean that we should approach it with an equal degree of irrationality. This very well could be a multi-faceted problem only solved at the level of the individual, like most problems are. Or not. From this article, we don't know one way or another.
Well if they act irrationally they will be sufficiently punished by the market (no childish fantasy required). There aren't enough jobs? Then create more jobs. Starting a company, at my last check, is incredibly simple to do. Of course, turning a profit is hard, which is why people turn to the government to provide them with work rather than take the risk of starting a company. The government doesn't need to turn a profit, it collects taxes. Therefore it's a very attractive alternative to the cold, hard realities of the market. Of course, there's only so much tax money to go around..
Companies will eventually be punished for acting irrationally, but, in the short term, they can be rewarded quite handsomely.
This reminds me of an old trick I've heard used on multiple occasions. We've all read the Hack News posts about how no amount of programming can compensate for a poor personality. Image that you're looking at an applicant and their former employer tells you:
"He was a good coder, but he had a serious anger management problem. You should do code reviews over the phone if you don't want books thrown at your head."
You're probably not going to hire this candidate.
Now, imagine that you're a manager who has a great, professional programmer who is leaving your organization. When other companies call for a reference, you could tell the truth, causing your competitors to hire her and their business to improve. On the other hand, you can make up a story about poor inter-personal skills and keep this talented worker out of the workforce. If you can't have her, no one can. On the reverse side, you give glowing recommendations to your worst coders so that their terrible practices fill your opponents sites with massive security holes and performance bottlenecks. As an added bonus, when your current employees figure out that they'll have a hard time finding a new job after working for you, you can keep their salaries below market rate.
Now, this won't work in the long term, since you'll eventually gain a reputation as a liar and your recommendations will be ignored. However, as long as you remain small, it will take you quite a long time to get this reputation. Is the CEO of FerriDyne systems honest or a liar? Meanwhile, you can keep a promising employee out of the job market for six months until they come crawling back for their old job at a fraction of their old pay.
This technique also makes recruiting difficult, since your employees won't recommend their competent friends for new positions. On the other hand, you can just get in the habit of hiring other people with large gaps in their record. If they're incompetent, then you let them go and recommend them to your competitors. If they're good, you hire them on at a discount since they haven't been able to find a job in six months.
Granted, I'd never do this and I'm sure you wouldn't either. It's underhanded and, ultimately, irrational. Lying leads to a breakdown of trust that weakens the whole financial system. However, if you're leading the charge towards that collapse, you can make a lot of money on the way.
I think not common, at least not in the US. The risk of liability is too great. My company has a strict no-comment policy, and won't affirm anything beyond dates of employment and job title. This seems to be the norm for corporations.
Smaller business who don't have their own HR and legal departments protecting them may be a bit more forthcoming, but probably not much.
Big companies find other ways to do it though. Don't believe for a second that nut job managers won't do everything they can to screw your career if they feel slighted.
There are people who have done precisely that in places like South Korea where there is very overt discrimination against educated women returning to the work force after their children are a little older. If I were starting my own firm that's exactly what I'd do (and some day, I might).
There are some places in New York that at least have the right idea (I don't know about the implementation): http://www.cravath.com/benefits ("We have an associate re-entry program that is designed to foster a connection between the Firm and those associates who leave the Firm for primarily family-related reasons... we hope that these former associates will consider returning to the Firm if they decide to practice law again.").
I know what this quote refers to (and it's not particularly kind of you to suggest I don't, if I may say). I meant to point out that engaging in "rational" behaviour when it comes to hiring in a market you perceive as behaving irrationally is no guarantee of becoming rich any more than engaging in "rational" behaviour when it comes to speculation.
Well if they act irrationally they will be sufficiently punished by the market (no childish fantasy required).
The market does punish shitty corporations, but it happens over years to decades, and most people can't wait that long. How much comfort is it to someone who's unemployed if Microsoft breaks off and falls into the ocean in 2025? These people want jobs now and, as far as I can tell, don't really care what the market does to the companies that won't hire them.
Also, companies are mediocre (refusing to hire unemployed people is moral mediocrity, since no effort is spent finding out why he was long-term unemployed) because most people are morally mediocre. So, while good companies eventually come up and replace bad companies, they're also getting worse as time goes on.
Most of the people these articles are written about don't live in SF or NYC where there are a large number of good companies, so the option of not working for mediocre companies reliant on social-proof bullshit might not be one they have.
My personal thought: long-term unemployed should lie. Yes, I'm under my real name, and I'm still saying that. I don't care. I feel like anyone (even an employer) who relies that much on social proof deserves to be deceived. I've never lied on a resume, but I have no issues with people who lie as pertains to this particular matter. If you've been out for 10 months, make something up.
People, especially young recent graduates who make up a big part of the unemployed, really need job search and interview coaching. Their parents and schools have left them completely unprepared for that task.
Devil's advocate: or is it employers that need interview coaching? If a candidate otherwise suited for the job (with necessary training, skills, aptitude, etc) is rejected on the basis of an interview, I would suggest it's a problem with the interview.
Unless, of course, there aren't enough jobs for qualified candidates, which is a different problem altogether and interview-training some candidates will only result in an arms-escalation without any benefit on the macro scale.
Problem is, who's going to pay?
Unemployed, especially long term unemployed don't have any money since they can't blow their monthly food budget on a 15 minute consultation.
My plan, if I ever am unemployed with no chances immediately available, is to work up a consortium with the other people in my position and do some kind of coop business on the internet. We can all get together in a cheap coffeeshop or one of our places and start hacking. I feel very ruthless in this metter: I refuse to just "lay down and take it". I can fix computers, perform small business IT, create websites, software, etc. My time immediately becomes "free" to burn a great deal of it on this sort of thing. Job hunting does not take THAT much time if you're looking in the right place.
If you are long-term unemployed, IMO, you are your business, and you need to hustle very aggressively on that.
I actually have an idea for how to solve that problem but I don't want to blow the idea. There's a startup concept that could work, but I need to pass it by a few key players.
There's also a market opportunity for "career incubators" that train people relevant skills, like that one organization in S.F. that was training Rails developers from the ground up.
Recruiters work for the company, because that's who pays them, and because companies tend to be more selective but also more stable as clients (i.e. you'll lose a worker after 2 bad placements, but usually not a client).
For what little it's worth: I can think of 6 colleagues who have been, or are currently, long-term unemployed. I personally wouldn't have hire any of them, had it been my decision. I'm glad it wasn't. Two of them were among our best hires ever. The other four didn't work out so well.
Honestly, some real skills do disappear with long-term unemployment, like getting up on time every day. Even working a made-up job is probably better.
But real job skills do disappear, too. If one person has been working with machine tools 40 hours a week while the other hasn't used machine tools for six months, hiring the first is the rational thing to do.
Personally, as a software engineer, I've enjoyed my bouts of unemployment, because I've had the chance to deep dive into new things I never had the chance while working full time, and I've come out of them more employable. (Although I'm in the job hunt now while still employed, and recruiters and employers seem to be giant flakes, maybe because I'm not calling them twice a day, or maybe because they just suck.) But this isn't the norm.
> If one person has been working with machine tools 40 hours a week while the other hasn't used machine tools for six months, hiring the first is the rational thing to do
yes, but the point is that companies would even prefer hiring people that have been doing work in a different industry recently than someone who is 6 months unemployed but with experience in the same industry.
I think it simply comes down to employers automatically assuming that you have some sort of major flaw if you've been unemployed for so long.
* I've enjoyed my bouts of unemployment, because I've had the chance to deep dive into new things I never had the chance while working full time, and I've come out of them more employable.*
It follows that staying in one job for a long period would tend to make you less employable... And indeed I've witnessed this very thing.
During the Great Depression, the government did exactly this, and it worked out extremely well. A lot of parks still use the infrastructure created by CCC employees, and the employees learned valuable work skills, earned a living, and were more productive in the economy and military once the spending boom of WWII began.
The reason here is that the interests of employers are misaligned with society's interests at large.
Individual employers are clearly demonstrating that they have a disincentive, rational or otherwise, from hiring potential employees with large gaps in their resumes. This obviously will tend to feed back on itself, making long gaps longer and unemployable applicants even more unemployable as time passes.
Society, on the other hand, has both economic and humanitarian interests in minimizing the number of unemployable individuals. Since the market has inadvertently began creating a large pool of these unemployable people, and it shows no sign of changing in the short to mid term, then society can and should apply non-market forces to advancing its interests.
Honestly, I'm not sure if direct employment is the best solution; I'd probably prefer some variation on tax incentives for employers. But reaching for the hammer, as you put it, is not always a knee-jerk reaction and seems like a pretty rational instinct in this situation.
Long term unemployment is intrinsically destructive, both to the individuals losing careers and money and to the economy as a whole. While understanding why it's happening is important, it's also important to compensate for it, for the good of society (and the economy) as a whole. Government is one of the few agencies that at least theoretically has the care of society as one of its goals; private corporations aren't going to give a sh*t, they're not going to "take one for the team" and hire less experienced people, even if the long term effect is increased consumer spending.
It is after all why things like welfare exist. So peoples' lives aren't ruined, and the secondary effects of that happening on a wide scale.
I absolutely do think that employers should only be able to ask how long you worked somewhere and not how long you worked there. Sites like linked in should give you the ability to only publicize tenure and not approximate dates of employment.
I'm employed but but an issue like this is worrying for other reasons like the decision to take a break from the labor market and travel. What if I want to dip in my savings and travel for a year. I'm unemployed for greater than 6 months in such a situation but voluntarily so.
Here's a solution that doesn't require the government to hire long-term unemployed: lying on a resume or in an interview to conceal unemployment is now legal. (Well, technically, it was never illegal; just considered unethical.) You may:
* Expand dates of any job by up to two months or 10% on each side, whichever is larger.
* Bump an educational degree forward by up to 5 years if under 40, and 10 years if older.
* Move any employment engagement translationally by up to three years.
* Inflate title as long as it does not involve falsification of a professional credential (e.g. "Senior VP" is OK, "Physician" for a non-doctor is not).
Anyone who is fired for such now-legal falsification must be given six months' severance or there is a wrongful termination claim.
How does that sound to you?
(I don't think it's a good idea, but it is an improvement over the system that exists now.)
I think it sounds like a terrible idea. As an applicant, I would never take advantage of it. As an employer I would never WANT to hire anyone who took advantage of it. A side effect would be that I would begin to distrust resumes and would therefore hire more by word-of-mouth instead, which would reduce opportunities for minorities and those less well-connected.
I've been on both sides of this divide. I've interviewed people who have been unemployed for more than 6 months, and I've been without formal employment for longer than 6 months.
If all you've done is watch TV and send out resumes, nobody's going to hire you. You have to be able to say that you've done something. The easy answer is to go back to school. That costs money -- hopefully there's a government program you can take advantage of. But it gives you something you can put in that hole on your resume, and hopefully gives you relevant skills.
The other good answer is "I worked on X", where X could have been pretty much anything: a failed business, an open source project, volunteer work, or just making stuff to sell on Etsy. I didn't even care if it was remotely related to the position. I just wanted to see some initiative and passion. There's nothing wrong with a forced sabbatical as long as you do something with it.
The question is whether or not you should put your "forced sabbatical" projects on your resume or not. They'll plug the hole, but I imagine that it will also cause you to be filtered out by HR departments in big corporations if the work isn't "relevant".
>>The other good answer is "I worked on X", where X could have been pretty much anything: a failed business, an open source project, volunteer work, or just making stuff to sell on Etsy. I didn't even care if it was remotely related to the position. I just wanted to see some initiative and passion. There's nothing wrong with a forced sabbatical as long as you do something with it.
Ideally, yes. In reality, it's easier said than done.
1. Most unemployed people need a way to pay their bills. This is not possible if you're dicking around with open source projects or volunteer work. Starting a business requires a certain amount of capital. And "making stuff to sell on Etsy" works only for a tiny minority of people who have the creative skills to make cool stuff.
2. When you're unemployed, finding work should become your full-time job. You should get up at 8am and look for jobs, make a list, take a lunch break, then spend the afternoon tailoring your resume for those jobs. Then you can get off at 5pm or whatever and do other things. What most people do however is that they do other things during the day, and then in the evenings they sit in front of their computers with Monster.com open and browse job openings, and maybe send out a few resumes. Which doesn't work of course.
Basically, the only people who can afford to work on something meaningful while unemployed are those who have a significant amount of money saved up. In today's economy, most people who are at risk of unemployment don't.
Finding work should be your primary focus, yes. But employment counsellors will tell you that you cannot and should spend 8 hours a day doing it. That's just a recipe for burn out. After you've applied for a few thousand jobs and been rejected a few thousand times, applying for more jobs is an exercise in futility and a recipe for depression. You're obviously doing something wrong. Figure out what you're doing wrong, fix it, and then try again.
"When you're unemployed, finding work should become your full-time job."
This assumes there's enough of a job market "out there" that after more than 6 months you can still burn 40 hours per week on it.
"This is not possible if you're dicking around with ... volunteer work."
This doesn't even make sense. Most volunteer work doesn't require much money. You may be confusing setting up a charity or donating to a charity with volunteer work at a charity. Even something "time consuming" like serving soup at the church soup kitchen can't burn more than a couple hours.
I did volunteer work at a soup kitchen and through the connections I made there I worked with someone who kicked my butt and fixed my resume. If that hadn't happened i wouldn't be making the salary I am now.
The ancient wisdom: give and it will be given you is mysteriously powerful. Humans want to help those who help others, it's in our genetics.
It is the first step of forming an alliance and symbiotic relationship between adversarial systems.
When two humans want to acquire all the assets of the other and make the other one the slave, the first step in starting an alliance is doing a cost benefit analysis of how things would be easier for both if cooperation was done. Often times the one persuaded is reluctant until one human takes a leap of faith and gives, in expectation of receiving. It's all highly mathematical and I could create an algorithm to describe it. But you wouldn't recommend that either.
If you've been looking for work full time for 6 months and not a single employer has wanted to hire you, being unemployed for 6 months is the least of your problems.
Absolutely correct. The proposed scenario suggesting that the long term unemployed consists of competent, skilled and psychologically capable people who have spent 8 hrs a day working hard preparing and customizing resumes and going on interviews, but have not had a single offer after more than six months of doing this on a daily basis is complete fiction. Perhaps there is a single person who falls into this category, a minute fraction of a single percent of the long term unemployed. Even that assumption that out there is one single competent person who did all this and had no offers is highly questionable. Portraying something that ranges from non-existent to exceptionally rare as the normal condition is just promoting nonsense. The reality is that the long term unemployed population is not comprised of competent and skilled people diligently working 8 hrs each day seriously seeking a job by contacting companies, sending out resumes, and going on interviews.
I'm sorry, but you don't know what you're talking about.
Usually, what happens is, they spend the time looking for jobs they are qualified for and want, and don't get. Then they spend some of their time looking for jobs they are overqualified for as well, and usually don't get.
That's 6 months.
I've done it. I was unemployed for about a year; during that time I went on about a dozen interviews, did volunteer work, took courses etc. so as to have something to explain what I did during this blank period on my resume.
I learned much better multi-tasking skills during this period, and how to organize dozens of contacts, because if job x calls you and you've applied to 28 jobs in the last 10 days, you have to know immediately who they are and what they do as well as what you said to them in your customized application.
Personally, I'd like to see better integration between linkedin and my smartphone to facilitate this. Anyone working on that?
Applying to jobs is hard, not getting them is hard, and there's about 10% unemployment in the US for a reason. It's not just because 10% of people are lazy or incompetent and 90% are hardworking and good.
> Nonfarm payroll employment edged up in March, and the unemployment rate was little changed at 7.6 percent, the U.S. Bureau of Labor Statistics reported today.
> In March, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.6 million. These individuals accounted for 39.6 percent of the unemployed.
One must wonder if 39.6 percent of 7.6 percent is 10 percent, or is it 3 percent.
A three percent incompetence rate is lower than ten percent. It's also almost identical to the 3.1% of the population who are under correctional supervision: either in prison or on parole. (http://usgovinfo.about.com/cs/censusstatistic/a/aainjail.htm)
With a full 3% of the population actually in the correctional system, it is not hard to imagine that there is also 3% of the population incapable of contributing meaningfully to a job. Half of Detroit residents are functionally illiterate. (http://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-...) 36% of Washington DC residents are functionally illiterate. (http://voices.yahoo.com/more-than-one-third-washington-dc-re...) Nationally, 21% of adults are functionally illiterate. To think that the vast numbers of illiterate adults who are also unemployed are ready and capable of holding down a job in a meaningful sense is a complete fantasy.
Yeah, you're focused on unemployment numbers after the redefinition of unemployment. That's not as accurate. Technically there were a lot of unemployed left out of the earlier evaluations as well, but this problem is worse now. It's to the point where the data isn't nearly as useful, or perhaps is useful in different ways. Either way it's a very poor tool for measuring long-term unemployed.
Your illiteracy studies? Not particularly rigorous science behind them. Not usually a good sign when what you cite sources no peer-reviewed studies at all. It's interesting that you chose those two places along with the correctional system to focus on, though.
But go ahead, blame my math, logic, and research skills.
The National Institute for Literacy is a federal agency that was established by the National Literacy Act in 1991 and reauthorized in 1998 by the Workforce Investment Act. There's nothing wrong with their methodology. Their measurements are consistent with other studies, but theirs are the most recent and are done nationally so are likely the most reliable. Feel free to cite other studies if you prefer, I notice that your post contained no references, just smug dismissals of data with citations.
Now you've moved from saying I'm bad at math to calling me smug, and saying that I'm dismissing your data. I'm not dismissing your data; you have cited NO DATA.
Your first link referenced what amounts to a policy paper by the Detroit Regional Literacy Fund. Which is actually interesting because it implies the link goes to a study by the National Institute for Literacy.
As an aside, I'm not doubting the reputation of the National Institute for Literacy. I just don't trust any study I can't see the data from. This is a personal thing, but it comes from working and being friends with people that routinely manipulate data for Federal Policy Think-Tanks.
So first you have the Huffington Post with two sources, one that doesn't have any references in it and makes statements without visible justification and another that is The Wall Street Journal. Second, you've got a Yahoo Voices article: Your second link listed these sources: www.proliteracy.org, The Washington Post, Wikipedia, BBC News and the Associated Press. So you've got publications sourcing other publications.
The reason I don't immediately trust everything on the Huffinton Post and periodicals that don't actually source any studies AT ALL, is because they often draw inaccurate conclusions from bad data, or use sources that have no scientific grounding.
This happens a lot with medical studies.
The other problem is you seem to be assuming that the unemployed population is the same as the illiterate population. I don't know why you assume this, as your sources don't have any causative inferences.
Detroit has high illiteracy. Detroit also has high unemployment. Without a study, though, there is no implied causation.
If all you want is a citation from a periodical, I can do that: how about this that says 53% of recent college graduates are un- or underemployed?
This is obviously industry-specific but assuming you have the skills, doing contract programming requires only trivial up-front cost (a domain name and server, but most who work with the web would have that already) and it's certainly not a $15/hr job.
As one of my siblings comments says, it's your responsibility to have a safety net of your own (6 months of all your expenses is a pretty standard number). Not doing so is simply irresponsible unless you're struggling to keep food on the table as it is.
Yes, it is industry-specific. Not only do software engineers have the necessary skills to do contract programming or start something up by default, they also make enough money such that building up a nice amount of savings is a trivial issue.
Outside software however, things are quite bleak. Many people are stuck in that awful income range where they make too much to qualify for government aid, but too little actually save any meaningful amount of money[1]. And, unlike with a lot of software companies, their jobs don't really allow them to work remotely. So when they become long-term unemployed, they get hit hard.
[1]You know, software is kind of a unique field, in the sense that you have both ends of the income spectrum. On the one hand, you have homeless wanna-be founders who eat nothing but ramen all day. On the other hand, you have people who get paid six figure salaries in comfortable office environments. What you don't have however is people who are in the 20k-40k range. As a result, most software engineers cannot sympathize with those people.
Well, you not saving money is nobody's fault but your own. And if you can't pay your bills, you can either take advantage of any of the many safety nets provided by the government, or you can use any of the natural safety nets that are available to everybody but the most antisocial people; friends and family. Jobs are not a right, they are a privilege.
There's an interesting amount of money you can make as a person living in the United States where you're not making enough money to both survive and save on your own; and, you're making too much money for the government to go out of its way to help you. I've had friends in those situations over the course of my life. I believe I've even heard of situations where people would turn down raises or even turn down jobs because making money at the new level earned them less money than the government help they were getting, and the government would stop giving them any help if they passed a certain threshold.
Maybe in your situations you've been lucky; but I've seen people on really hard times that cannot readily save. I'm grateful to know they're living stably now (as far as I know, little-to-know savings).
Yeah, we talk about "means testing" social security payments in this country, but little talk of "means testing" welfare recipients.
I worked with people 20 years ago (at a burger king) who would turn down shifts because that extra $15 for a 5 hour shift would put them over a limit and they'd lose all their food stamp money. We're very keen on progressive taxation, but apparently progressive welfare is too far out of our realm of possibilities.
Would like to point out that many years ago with respect to collecting unemployment that it was clear to me (after speaking to the former employees) that the ss office in the state that we were in was purposely coaching employees on how to stay on unemployment as a way of regulating the labor supply which could only absorb so many people otherwise wages would be depressed. My point is simply that there could be multiple masters being served here by these policies. Not saying that is why it is happening in your example but on the surface some things that don't make sense sometimes fulfill another purpose.
Another example might be looking the other way while employees cheat on expense reports. They get the money and everyone avoids additional payroll taxes.
Oh, I really do believe you're correct - there's too much of a system in place which needs to justify itself and the people who put it in to place. I think you're very right with the 'many masters', I just wish we didn't have to be so cynical to be able to spot these sorts of things.
How on earth then are so many illegal immigrants making enough money to both survive and also send money back to their families in their native countries?
Also, anecdotally, and since you brought it up, I was in a situation where I lived for many years at or below the poverty line, but I made due by living in inexpensive apartments I split with other people in the same situation. I think most young adults who aren't given a trust fund or financial help from their parents go through a period like this in their lives, usually while developing more marketable skills or working their way up a company's hierarchy.
The point is, you learn to make do, and you learn to survive, just like everyone else on this planet does. And if you want to increase your standard of living beyond sharing a dingy apartment with other people then you make yourself more valuable to employers somehow or accept your lot in life.
> How on earth then are so many illegal immigrants making enough money to both survive and also send money back to their families in their native countries?
>If all you've done is watch TV and send out resumes, nobody's going to hire you. You have to be able to say that you've done something.
WHY??!?!? Seriously, WHY?!?!
So, I'm thinking that maybe there's some skew in these findings, and then you come in and say "Yea, I wouldn't hire you unless you show me you did more than just look for work".
Looking for work is time consuming. Furthermore, as the spouse who's currently jobless you may be pulling double duty taking care of the kids, or fixing up the house, or helping out the household in some other way (maybe working at McDonald's), things that you don't put on your resume. Little does such a person realize, that there are people like you, who look at his or her resume and dismiss them as lazy.
I didn't do the resume filtering, I was doing interviewing. As I said, I didn't really mind what the answer was, just that you had an answer. I would have accepted looking after pre-school kids or major house renovations or working at McDonald's. Basically anything that shows you are the sort of person that makes lemon-aid when life gives you lemons.
>As I said, I didn't really mind what the answer was, just that you had an answer.
Let's take that. A person with a good employment history, leaves (or loses) their job and takes a few months off to do nothing. What exactly makes them unhireable when they rejoin the workforce?
Furthermore, how do you know the person you're interviewing will tell you that they were looking after kids, or working at McDonald's. Maybe they don't consider it relevant work experience, or maybe they were embarrassed, or better yet maybe it was something personal that's none of your business (e.g. a health issue, a messy divorce etc.), whatever it is, they decide to not go into details. Why punish them?
>I'm sure to other people perhaps taking time off is seen as some sort of weakness, but you don't want to work for those people anyways.
Ideally. But for anyone outside of tech and possibly financial, it's a buyers market. If you have bills to pay, and a family to support, you may not afford to be so picky.
The reality is that you are competing against people who have been increasing their skill at relevant tasks and you have not. It's no more complicated than that. Fairness has nothing to do with it.
That makes no sense, for so many reasons. Here's one: 10 years of experience with a 6 month break is worse than 5 years of experience and a 2 month break? Here's another: skill increase is not linear. Here's another: People are different.
Unfortunately, HR departments do not have the time or resources to take into account differences in individuals. When looking at two resumes, they have to evaluate them based on certain criteria, and they have to assume that all other things are equal. (They rarely are, but life is unfair like that.)
Looking for work isn't an idle task, it is sales and marketing. If you do not record that fact for potential employers, questions are going to be raised. No money exchanging hands is not relevant, you were still working in a legitimate profession doing legitimate work. It is a job and should go on your resume. Likewise for home care, if that was your primary profession during that period of time.
So you're saying this person or anyone should put on their resume, rather than
[last position] [last company] [long time ago - 8 months ago]
they should put
Personal Marketing Assistant Me, Myself and I 8 months ago - Present
* Analyzed potential job contracts with future employers
* Bid for relevant contracts using specialized letters of qualifications
* Proselytized Mr. John Do to applicable markets using word of mouth and print
techniques
[last position] [last company] [long time ago - 8 months ago]
>If you do not record that fact for potential employers, questions are going to be raised.
Clearly, CLEARLY, employers in the US are finicky and capricious, I'm not disputing that. The study in the article proves this. I'm arguing they are irrationally so. Let's take the worst case scenario. What's really wrong with me leaving work, living off my savings while watching TV, and then rejoining the workforce 7 months later? Obviously, if I do that with every job it raises (legitimate) questions, but what if I just did it once, and I had a good employment history prior. What possible reason is there to punish such a person? He took a few months off (on his dime) one time in his life and now he's unhirable?
The insanity comes in that this scenario is not what happens. Generally, people lose their jobs, and it takes awhile to find another, and apparently if you cross the magic threshold of six months, you're now a lazy slob.
" What's really wrong with me leaving work, living off my savings while watching TV, and then rejoining the workforce 7 months later?"
Nothing. The big question is what you do in month 8 when you decide to re-enter the work force. You've made it harder to find a job, but if you had enough savings to voluntarily take 7 months off, then presumably you have sufficient savings to plug the hole.
If you want to spend seven months watching TV, then document it. Explain your motivation, what you gained from the experience, etc. My earlier point was that the "we shall not speak of this time" gap in the resume is the problem, not that you were not making money during a period of time.
Everything in life is a job, including watching TV. You just need to account for that time if you want people to not think you are sketchy and trying to hide something. At least that is how I take the whole thing.
>You just need to account for that time if you want people to not think you are sketchy and trying to hide something.
In context of this article, most people aren't even given a chance to account for that time. Their application gets filtered out and they are never called in for an interview. That's one problem. Another problem is that it may not be relevant at all. Worse, it can be something that is highly personal. What if you had health problems and you had to take time off, should you really need to disclose something like this?
I am referring to accounting on the resume, not in an interview setting. Even getting sick and caring for yourself is a job, which could easily be accounted for, without going into too much detail.
Whether you should have to is another matter, but it seems clear that you do have to if you want equal chances with others. That doesn't make it right, but you have to work with the constraints you are given.
After a 6 month contract gig, the employer told me they were going to bring me on full-time. I stopped interviewing thinking I had a full-time spot. They told me two weeks before the end of the contract they didn't have anything else for me and I was cut at the beginning of January after our project ended.
I did find a job with a small company, but after three days, realized they were looking for a Javascript developer, not a front-end developer. From then on, I was out of work for almost four months. Luckily, I picked up a freelance project which filled the gap during the time I wasn't technically "working".
On my resume, I put it was a private freelance project that lasted the time I was unemployed (four months). Since it was relevant to my work history, nobody asks about it, or just wants me to go over what we did and the technologies we used.
The interesting thing is when recruiters see "freelance" projects they instantly equate it with being unemployed. While the actual HR people at the companies I interviewed with never made the same connection. To them, work is work as long as its relevant to your career.
What if you simply got a business name for yourself? A DBA license isn't too hard to get, and would probably look a little more professional (even if unjust) than freelance.
You don't put "freelance" on your resume. Being "freelance" means you're operating your own company, with its own presence, branding, etc. The least you can do is to name your consulting company and declare yourself as the owner. Even with something as simple as <last name> Consulting. Because, at least according to the IRS, you are. Take advantage of it.
I think you will find is that a lot companies don't like hiring small business owners either. Even successful ones. Companies might expect them to be 'arrogant' or "want do things their own way".
Then perhaps that isn't the company you want to work for.
Realistically, I have not met any hiring managers who had a problem with my consulting. I have not met any recruiters that had a problem with this. I focused on describing the project/product in all of employment history rather than who employed me, or what my job description.
To be fair, software developers are generally in much greater demand. If you're a software dev looking for work, the best way is a combination of:
(1) Going to technical meetups that have a strong cross section of "developeneurs". There are generally recruiters there in addition to startup founders looking for technical founders. They usually flock to places rich with developer contacts. The recruiters at this kind of meeting are voraciously hungry for leads, with the regular members trying not to roll their eyes and ignoring the recruiters. Anyone new gets pounced upon. Just by showing up, you're pre-qualified, pre-screened. And you get free food.
(2) Participate in open source projects. Yes. You want to eat. Set aside some time while waiting for people to call back. Even things as simple as maintaining the docs. You can hear about the most active open-source projects by going to the meetups in (1).
Both of these methods builds up your network, something far more valuable than a mere job. Jobs come and go, but your contacts tend to persist over the lifetime of your career. If you're only sending out resumes, then you're not using everything that is available to you.
I've been out of work for more than six months and got back into the thick of things. I chose the area of specialization I got back into. I did it by focusing on the project, rather than the company. I think, your chances of employment is actually lower, if you do not focus your search. If you're going to make an effort to focus on your search, you might as well choose, not just simply sending things out and seeing what sticks on the wall.
That you have focus, a drive, a goal, all bleeds through your body language. People want to go where you're going. If you're lost and desperate, people avoid you; it's sad, but people in general avoid needy people like the plague. This "knowing where you are going" is what people are really looking for when they screen out someone who has been unemployed for six months.
I have a friend whose favorite mantra is, "adapt, improvise, overcome." Ok, so recruiters have software that screens out anyone who has been unemployed for more than six months. Adapt. Improvise. Overcome. Don't send out resumes to recruiters; go to where the employers are. Or better yet, stop looking for a "job" (and all the things that go with it, such as social status, peer acceptance, etc.) and look for a project.
Definitely agree on the "do something in the gap" aspect. In a lot of technical fields, 6 non-practicing months can be very close to "no experience".
My job responsibilities tend to come in waves of 3 different functions, where I'll focus almost exclusively on one aspect for 4 months, then move to another for 8 months, then hop again. Each time I switch it can take a lot of time to "shake off the cobwebs" - either the software changes, there is new functionality, or just rediscovering some best practices.
I can completely understand reluctance to hire someone in that situation.
First, I wouldn't want to naysay the idea that unemployment is a vicious cycle, because it intuitively is. But: this analysis is based on resume callbacks. Something that I think is as true as the "damaged goods" stigma is that most Americans do not know how to market themselves during job searches. If your only access to the job market is through a mechanism that is designed to extract basic facts from a resume and screen based on that, and there's high unemployment and so increased demand for every position, it stands to reason that unemployed people are structurally disadvantaged when competing for jobs via resume blasts.
Second: Six months, you say? Can any of us think of a cohort of job seekers that routinely needs to contend with 6+ month employment gaps? I wonder, maybe, just maybe, do you think that has a powerful "objective" stigma attached to it disproportionately often might find it difficult to compete equitably in the job market? I wonder which 50% of the population I might ask to find out more about this.
"is that most Americans do not know how to market themselves during job searches"
Along the same lines I had an office a few years ago in an office park about 1 mile from a Walmart.
In all the years I was there nobody ever knocked on our door looking for work or dropping off a resume. At the Walmart though I'm almost certain that they had a steady stream of job seekers showing up and filling out employment forms.
I've helped two doctors get better jobs just with the simple suggestion that they proactively contact all the relevant departments within a radius of where they could work and not wait until called by a recruiter or by responding to an ad. They got multiple offers and essentially had no competition (jobs hadn't been posted yet).
One time I got a job that I was unqualified for by simply flying out to a tradeshow after doing some research and cold calling various sales managers in person (had setup some interviews in advance as well). Got hired two times (short 3 year period when I didn't work at my own thing). Worked great. No doubt in my mind that if I had responded to an ad with a resume, that since I wasn't really qualified, I wouldn't have been picked or even come close to getting an interview.
Your anecdote doesn't really seem feasible for most people. Do you think it's reasonable that someone who has been out of work for 6 months would take on the risk and cost of flying to a tradeshow?
Come on, now. He's not saying "just fly to a trade show and you'll get job offers," he's saying that you need to be proactive. Go into a business unsolicited and ask if they're hiring (obviously you should know what they do and know that you're a fit).
Are you a web developer? I live in a rural area and there are a half dozen shops within a 30 minute drive. Show up during business hours, ask for the GM or owner and tell them why you're there. Sure, you'll have the people who are put off by you just showing up, but it's just as likely you'll hit someone with a need just a few days (or hours) before they were about to place a listing.
So no, he's not saying to "take on the risk and cost of flying to a trade show," he's saying to be proactive and act like you actually want to have that job, not just a job.
By the way this is one of the things I tell people about dating as well.
You have more chance going to a bar to find a date (where some could be put off by your approach - I mean who cares you only need one person!) then you have sitting at your house expecting someone will knock on your door or come falling through the roof!
Also as is true with any situation where you are only looking for one taker (dating, jobs) as opposed to multiple takers (making sales every day of the same product (encyclopedias?)) you can afford to put much more effort in because it's not something you are going to have to repeat every day. So if it takes 4 weeks of cold calling and you get a job it's a solution to a problem.
First, people who read hacker news are not "most people".
But more importantly "most people" live hand to mouth or have living arrangements that are on the fringe of what they can afford or are only a short time period away from hot having enough money to pay the mortgage.
The idea is to live your life in a way that you have the money to do something like this if you need to do it.
Almost impossible to say of course without knowing the specific person or not whether they should gamble the $1000 (arbitrary) that it might take to take this chance.
Note I also said that I had pre arranged a few interviews and contacts before making the trip.
It is easy in the tech world (and HN is mostly tech) to confidently say 6 months is a long time for unemployment. At the moment, I'm fairly certain I could have interviews in a single digit number of hours, but that isn't true for people who have to compete for "general skills" jobs (i.e. those that require a resume, but no particular special skills, such as receptionists, admin and the like). Also there are a lot of perfectly valid reasons to have a 6 mo gap (the biggest is maternity leave).
Resume blasts are often the only realistic option some people have for getting their candidacy out there. If they had a friend at a firm that was hiring they'd probably have used that before 6 months of unemployment. Unemployment generally means that hanging out with employed friends has to be cut back (because going out for drinks gets expensive). If you network fails you for a few months you might not have much of a network to lean on after that.
Discrimination against 6 Months+ of unemployment certainly has some objective basis. Discrimination isn't always a bad thing. Still there are undoubtedly people swept up into this bias who should not be.
If it's true that 6+ month resume gaps have a deleterious effect on job searches, my point would be that this observation is another arrow in the quiver of people (like myself) who believe that women face not just bias but also specific objective structural disadvantages in the workplace, beyond just the career development time they lose directly to child care.
Women are more likely to work in sectors not as hard-hit by the recession. They don't tend to work construction. They do tend to work in the public sector sharply more often than men. You have to take those statistics in context.
As for lower unemployment, you might have noticed that women also have lower employment. As a percentage of people who actually want jobs (employed+unemployed) rather than of the total population, the unemployment rate is basically the same between men and women.
> Second: Six months, you say? Can any of us think of a cohort of job seekers that routinely needs to contend with 6+ month employment gaps? I wonder, maybe, just maybe, do you think that has a powerful "objective" stigma attached to it disproportionately often might find it difficult to compete equitably in the job market? I wonder which 50% of the population I might ask to find out more about this.
Oh, wait, you mean women? For a most of that rant I thought you meant ex-convicts, because there is definitely an objective stigma against them (and they're certainly out of the job market). Now that I think about it, it's possible that the amount of ex-cons in the 6-month+ unemployment bracket, plus maybe ex-mental-institution or ex-rehab individuals, is significant enough to skew the results. The original paper doesn't address this, at least not that I can see.
I think you'll find, if you talk to a lot of women who have looked for jobs after taking 6+ months off to deal with having a kid, that this is not true.
I'm in the UK so maybe things are somewhat different here with regards maternity but all women I have worked with who have taken time off for this have been given their job straight back once they are ready to return and are usually paid some % of their salary while they were off (I think the law mandates this).
I think that's a positive attribute of the UK system. But consider this: childbirth is a reason many women everywhere temporarily leave the workforce --- not for maternity leave, but literally surrendering their job, perhaps for a couple years. The research we're talking about today shows that after leaving the workforce for a couple years, they face an obstacle that makes it harder to find a new job, and thus more likely that they'll accept an inferior job.
That's certainly true, it took my mother ~5 years to get back into her industry after having kids and even then it was lower in the org chart than she left at.
I would still posit that reasonable people would be more sympathetic to a mother spending 2 years looking after children than a single guy playing a 2 year xbox marathon though.
1. Resume blasts are infamously ineffective. Not only that, but gap since last job is a screening criteria so basic that even HR can filter from it; if you're bad on that metric you're unlikely even to hit a hiring manager. So it may be less true that 6 months of unemployment is intractable than that 6 months of unemployment forecloses on the tactic of just blasting resumes.
2. Women routinely incur 6-12 month gaps of unemployment because they have kids. When Erin went back to the workforce, the resume gap was by far the biggest obstacle she faced; it was raised specifically in (I think? She'll comment and correct me.) every job interview she had. Point being: if you're disadvantaged as a cohort that early in the process, the impact to your career long term is likely to be far-reaching even after you find employment.
Ironically, having a child is likely the best possible response to have for why you have a year gap in employment. For the all-male resumes used in this experiment, hr and hiring managers would be more likely to assume the gap was due to work-related reasons (lazy, unskilled, unintelligent, etc) as opposed to the socially accepted and positive reason of childbirth.
About 13 years ago, I was unemployed for about four months.
I've had a few people positively grill me about that blank despite the length of time that has passed and evidence that I didn't spend the time idle (Obtained a certification, did freelance work and eventually pivoted my career).
In each case, it was an older person who upon my asking explained that they saw any extended period of unemployment as blatant laziness.
I ended up getting those jobs, but came to learn a bit about how some people can come to think of life as so straightforward and easy.
In each case the people judging me hadn't had to look for work for at least 20 years. In one, the person judging was the son of a prior VP who was widely despised by his peers for having made a nepotistic ascent through the ranks. In another I ended up seated at a desk next to the son of the judging CTO.
What bothers me most about the long term unemployed is the lack of visibility into what they have been doing during the down time. I recently got to look at two resumes, both people who had been unemployed for > 6 months, one guy has this big blank spot, the other has a narrative about what he's been doing. The active guy got in shape, he rebuilt is basement drainage system, he did odd jobs helping people with "handy" work (he was a highly paid system administrator at a New York bank before he was laid off) and he's been reading.
I am much less likely to call back the blank spot guy and much more likely to call back the active guy. What I'd like to know is, there any correlation between callbacks and intra-employment activity?
Whenever I read a resume, I wonder about blank spots over about 2-3 months. I don't really get excited that they exist, but I do want to get a grasp of the rationale and what they did.
I suppose I am ok with it if someone just wanted to spend 3 months in his PJs recovering from burnout. But I'd rather hear about him spending 3 months doing gardening. Better yet, I'd rather hear about the technical things he did in that time frame. What I try to distinguish is apathy/laziness vs. relaxation/recovery.
3 years ago I ended 18 months of unemployment by listing every friend, person I spoke with, or acquaintance as one of my clients for my 'very successful' consulting business.
I regularly do help out on side projects or test out ideas with friends so they were more than happy to provide a reference for this period. In the 3 years since i've been able to climb from no income, to medium US income, to top 5% income bracket. Its hard, but not impossible to recover.
With the unemployment rate so high, employers are now getting absolutely flooded with resumes for every and any job posting. There is a high volume of completely unqualified people applying to positions they have no relevant experience for. There is also a much higher volume of qualified people, and HR departments need some way of prioritizing these applicants. Fair or not, filtering out people by whether or not they have been recently employed is a relatively effective way to find the most promising candidates.
If you are out of work and looking for a job, your best chance is to try to bypass HR altogether by either reaching out to hiring managers directly or by networking your way in. Most jobs are filled long before they are ever even posted online. It's never too soon to reach out to companies you want to work for - they may not be hiring immediately, but you want to be top of mind when a new position does open up.
This article hits home for me. I graduated from a Top 20 university here in the UK in 2009 with a First Class in Computer Science. I have always been the type that never really knew what they wanted to do with their life and made the mistake of not forcing myself to pick a career path.
The first year after leaving uni I worked in a job unrelated to my degree. I left and decided to take the grad scheme slog that is so common. I applied to 10-15 big companies' grad schemes in their Tech departments (IBM, MS, investment banks etc) and reached at least the first in-person interview for around half of them. I had a few offers but turned them down since I realised I was not passionate about the role (big mistake).
Since then I have spent the following 18 months unemployed. I work voluntarily at my parents' business, again, in a field unrelated to my degree, while doing some freelancing and hacking on some personal projects.
I am scared to apply for programming jobs now because of the gaps in my employment and lack of 'formal' experience. I have a massive fear of the rejection, mixed with a good amount of Impostor Syndrome.
It's a vicious cycle. I am scared to apply and be rejected, which is in turn adding to my unemployed period and making the situation worse.
I have had some savings which meant I could survive unemployed comfortably (probably worked against me in hindsight), but it is quite a depressing realisation and I feel as though I have wasted my degree and am starting from scratch.
The negative stigma that is placed on long-term unemployment is an issue that needs to be addressed; measuring how long someone has been unemployed is not really indicative of anything.
The rationalization that "If no one has hired them in X months, there must be a reason not to" is just flat out dumb. And while it may be a red flag when purchasing physical goods or real estate, it's a baseless stat when it comes to measuring how well an individual's expertise & qualities may be suited for a particular position.
In my opinion, there are much better stats an employer can take off a job application, and wouldn't mind the federal/state government passing legislation against this type of discrimination if it gets out of control.
Same thing happens with real estate (well known) as only one example or even dating as another. (Price with real estate and market conditions are also a factor but a house on the market to long gets stale).
Generally the fact that others have passed on something is taken as a marker to less attractiveness all else held equal.
The question could be raised "if this person or house is so good why hasn't someone else taken advantage of it to date?" With respect to both employment or dating the reasonableness of the person in question could also be a factor.
Lastly, there is the theory of getting a "find" before someone else has discovered something that works in favor of less time on the market.
As someone with zero debt, minimal financial needs and enough savings to take voluntarily more than a few months off work, this is downright scary. I guess if it comes down to this, I'll just have to fudge the hell out of it in my resume.
Why would you advertise the fact that you were unemployed for 6 months to a prospective employer?
"Unemployed" suggests that you spent 6 months sitting in your pyjamas watching TV. Why not simply say you were freelancing, even if all you actually ended up doing was a few data entry tasks from mechanical turk.
Startuplandia myopia is myopic. Even for software developers, if you apply for a bunch of BigCo jobs, you're going to find that a long stretch without formal employment is an obstacle.
The "I've been freelancing for the past year" trick probably does not work as well for med techs or paralegals.
Probably not. Something like "I've been volunteering down at the hospital" would be much better in those professions. Regardless of your profession, surely you can find something productive to do for 6 months, even if its part-time or without pay. Taking that sort of initiative will probably also get you the connections and referrals you need to get a job. Doing nothing but submitting applications for months on end is about the worst thing you can do. If you aren't getting hired, do something to make yourself more hirable.
I agree that networking, volunteering, and pursuing unconventional short-term employment opportunities in your field is likely to result in you outperforming people who rely on resume blitzes to find jobs.
I do not agree that any of those things will help you get past a resume screener.
Why would you advertise the fact that you were unemployed for 6 months to a prospective employer?
This. No one is unemployed any more. They are just "freelancing" or "self-employed" or "working on personal projects". Anybody can make up (and preferably actually do) some resume items that makes your non-working time look incredibly productive.
Probably a variation of "better to be thought a fool than to open up your mouth and remove all doubt". In this case you say something which is better than nothing.
In the case of a guy laid off from a factory job better to say you have been spending the time helping a friend doing handyman work then that you are at home watching TV, doing nothing, or just sending out resumes getting rejected. Even better if you imply that you liked the work and were making money. It's all in the story.
Even the BS shows at least you are attempting and know the downside of not having anything. You get a few points for that in my book.
And do you think the screeners won't start screening out "personal projects" if enough people start doing that? "Freelancing" for eight months after a career of working for other people, and suspiciously little to show for the freelancing... I wonder what that's about?
Last time I applied for a job was after just shy of two years of contract work full-time. They asked for a portfolio which I sent over. I was confused when they asked for more as I had already picked my best work. After supplying some more samples I asked the hiring manager why they had requested more and was essentially told they were looking at not only quality, but also quantity. They wanted to make sure I had been doing this for two years.
Personally, I think this is good. Saying you're freelancing when you're actually unemployed is no less dishonest than saying you have a degree you don't have or you worked at [X] BigCo for six months longer than you actually did.
I worked my ass off when I was a consultant and I'd be pretty upset if John Q. off the street has been resume blasting everyone for six months while drawing unemployment and saying he's been "consulting."
To be clear, I'm not suggesting somebody flat out lies and claims they were consulting when they were really playing xbox.
I'm suggesting making some actual effort, saying "part time freelancing whilst seeking other opportunities" sounds better than "collected unemployment"
Why are you so worried about what other people are doing? If John Q. has been unemployed for the last six months he deserves to starve because "SEO"ing his resume would make you upset? Get over yourself.
Why would they? Do companies have some kind of feel for how many people are long-term unemployed and how many of those apply for jobs with their companies?
Leaving aside data like macroeconomic statistics which do indeed tell companies how many people are long-term unemployed, companies have a pretty good "feel" about people that send them resumes if they read any of them. If three months ago 10% of resumes you were getting indicated long-term unemployment, and next month 2% of received resumes indicate long-term unemployment and 8% list freelancing for the first time in their careers with little details provided and a sample of candidates are unable to provide details in an interview, do you suspect a sudden explosion of entrepreneurial spirit?
It seems that from a hiring manager point of view the logic is this:
-Good people are hard to find
-If I find a good person, I snap them up right away
-Other hiring managers in my industry probably do the same
-If someone hasn't been working for 6 months they've probably been on a bunch of interviews
-In those interviews, no one thought the candidate was good enough to hire
-Odds are the candidate probably isn't worth hiring
Real world example, one of my co-workers was hired less than a week after his large corporate investment bank employer collapsed. Main reason was that it was obvious that he was smart, hard working and organized.
Here's an idea. Think outside of the box: If being employed in the past six months is really such a big deal, just start your own LLC and do contracting work of some sort. Hey, look at that. Now your resume shows that you were employed during that period. Sure, you might not have made all that much money while you were employed at your own business, but at least you were employed.
So, being unemployed is being taken as a proxy for being incompetent/unemployable. I'd think getting fired after 6 months or less would be a much better indicator (even if you just look for once, rather than repeatedly to control for having gotten a crap boss)... is this just a case of HR departments being overconfident of their own collective skills?
Part of the theory is that the first people to be fired at a company are among the least productive or least competent. Therefore, the longer someone has been unemployed, the less competent they are.
"When you fill an opening, think about what happens to the 99 people you turn away. They don't give up and go into plumbing. They apply for another job. There's a floating population of applicants in your industry that apply for nearly every opening posted online, even though many of them are qualified for virtually none of these positions. "
The article's author is assuming that the people in the under 6 months and over 6 months are identical candidates just based on resumes. They are ignoring all of the "soft skills" that can get picked up in actual interviews.
Do you have some tips for someone like me ? Unemployed for 3 years, graduated from IT but worked in another industry (nautical charts). I have little to show. I got an interview quite often, but that's where it ended. 80% companies just have HR department and don't ask any technical questions.
Should I focus on building my portfolio ? (recently focused on Django)
Is it easier to find a job in some "common" field, like software testing or PHP, or rarer like Django where there are much fewer offers but also less competition ?
This seems to also affect software engineers. I used to split my time between 18-24 month consulting projects and then would take 3-6 months off to travel. I've been lucky to see all of the US and parts of Africa, Europe, Japan, Australia and Mexico. This was pretty easy to do in the late 1990s and early 2000s. However, after the last time I traveled, it took quite some time to find another contract. It seems much riskier in the current economic climate.
The worst thing about the interventions into the labor market is that they prevent people from being hired.
It would be far better to hand aid to the working poor directly than to have a minimum wage or impose regulations that make hiring the working poor more expensive.
Many people seem to think making the employers pay somehow reduces their profits with no other ill effects. But in reality, it is also likely make prices go up. OR the take home pay of workers go down or rise more slowly.
Just because these effects don't happen immediately doesn't mean they don't eventually happen or that they don't accumulate. And just because you don't understand how artificial prices interfere with supply and demand doesn't mean the effects aren't real.
If you are one of the least productive laborers, your labor may not be worth the minimum wage to anybody. You're completely shut out. Good luck finding a place to live under the nearest bridge.
In tech itself, open source organizations should make a push to hire long-term unemployed developers. Promise to give them recommendations and references if they do a good job during the interim.
The downside is the long-term unemployment problem is probably not as significant in software, compared to other industries.
At some point the pendulum may swing the other way, and employers may not hire anyone who even has a current job, using "loyalty" as a filter. "If they're so bold as to take time off work to go interview here with me, why would I ever trust that they won't just lie for a day off and leave me high and dry in the future?"
If we want to affect quick change for 'long term unemployed', start offering tax breaks to employers (hasn't this been done/tried already?). Reduce payroll tax by 2% for every year a person has been unemployed (2 years = 4% reduction, etc). That would, I'd think, get employers' attention.
"why would I ever trust that they won't just lie for a day off"
That's just bizarre. I've been around a couple decades and I've always taken a personal or vacation day for interviews. I guess there are people who call in sick although thats not my style. I've never even heard of an employer so controlling that they get to decide if my day off activities are "worthy enough". Salaried jobs I just took off for an odd lunch hour.
People will rationalize anything. Who might have predicted years ago that we'd be in a position like this:
Employer: "I just can't find any qualified people to work! I'll have to import people from overseas who've never done this work before!"
Person: "But... there's load of people right in this city who have these skills who'd like to come work for you."
Employer: "WTF? They've not had a job in 9 months!"
Person: "That's because your competition closed down and you're one of the few places in town that needs their skills but you didn't want to hire them, even though you need workers to keep up with demand."
Employer: "BUT THEY HAVE NOT HAD A JOB IN 9 MONTHS! NEXT MONTH IT WILL BE 10 MONTHS!"
Yes, I understand that long-term unemployment can bring about changes in people wrt skills and perhaps socialization (keeping 'normal' hours, etc). That's not what's in play all the time. We had a HUGE increase in job seekers - employers had their pick of whoever they wanted for most positions, and some will continue to make the criteria harder to fill if it means they'll get something out of it (tax breaks for hiring long-term unemployed, relaxed immigration bills for cheaper foreign workers, ability to keep wages down in their region, etc).
"In other words, the first thing employers look at is how long you've been out of work, and that's the only thing they look at if it's been six months or longer."
This seems intuitive to me. With the large number of people applying to jobs, there has to be a way to quickly filter resumes down.
It's unfortunate, but HR probably decided that six months or longer is probably a signal that there is something wrong with the applicant. Because of the vast amount of resumes being sent in, they can afford to miss out on the diamond in the rough that is hidden among the mass of resumes of people out of work for 6 months or longer.
If you can't land a job in your desired field, get another job that pays a wage you can live on. Then in every single free moment you have, do work in the field you're interested in. Even if you have to do it for free (assuming the free work looks really good on a resume). It lets you keep something current on your resume and develop skills in the field. Doesn't work for every field and situation, but I've found it useful.
Then did extending unemployment insurance to 99 weeks actually screw the people it was intended to help?
I have not read the details of the original study but this article seems to indicate that a recently employed person in a different industry has an easier time getting a job than a long-term unemployed person with industry experience.
Long term unemployment is unfortunately a signal of low productivity. While being long term unemployed doesn't necessarily unproductive, it is highly correlated with low productivity.
any engineer would recognize the symptoms of what may be a systematic failure in a system. There was no mention in the article of studies fo studying the hr system from a sysatem perspective.
My thinking is that the drastic increase in applicants for any job posted acts as a feed back loop adjusting the system into chaos as hr personnel choose to reduce workload via reducing quality.
Is thee any studies somewhere where a team took on the task to study the problems as a system?
even my assumptions could be wrong..it would be nice to attack with some actual facts based on some science.
>> It's time for the government to start hiring the long-term unemployed.
Hiring them to do what? The government not only has to hire people it doesn't need, but it has to hire from the 'unwanted' pile that private employers have already selected the best from?
>> Or, at the least, start giving employers tax incentives to hire the long-term unemployed.
What happens after a year, when the tax credit expires for that newly hired person, and another unemployed person comes along and applies for that job? Fire the first guy and hire the new guy so you can get that tax credit for another year?
Long answer, I happened to teach at undergraduate level during my days ad grad school (not really a T.A. but a sort of associate professor position that in the US is normally filled by PosDocs). At the time it seemed like a great idea and I was proud to "not having a single day of unemployment in my record".
The problem was when I decided to go back to work in industry instead of pursuing an academic career. Most employers would see me not as a fresh graduate from a prestigious graduate program, but as "just a teacher" trying to "switch careers".
It took 4 and a half months of eroded expectations, biter exchanges with H.R. folks and learning the ropes of the hiring game to find someone to actually give me a chance to prove myself in a support position that required no advanced degree and minimal technical skills (basically: speaks English, knows ksh and SQL). Then came the appalling realization that after 9 years of post K12 education I was apparently not qualified to answer the phone properly.
Of course, your mileage may vary. Much of my experience not necessarily comes from being in grad school, but from lack of soft skills and the ability to manage perception of potential employers.
The Corporate System is actually collapsing. That doesn't mean that corporations themselves are going to go out (that won't happen for another 100+ years) but they're no longer an efficient way of turning human efforts into salable work.
The value of managed human work is going to zero (anything that a manager can tell a person to do, a person can program a machine to do) and independent creative work's value is going up exponentially-- but there is a massive unsolved problem of how we pay people for the latter, given the high skill requirements and intermittency of payment. What kind of insurance system must we build?
Unfortunately, we have a regime in which the Satanic Trinity (housing, healthcare, and tuition fees) have not only eaten the middle class, but have left people utterly dependent on a monthly income. Also, we have generational creative poverty. There is generational poverty, which is cultural as much as it is physical. Then there is the American middle class, which lives not in material poverty, but in a de-culturized zone that annihilates human creativity. That is generational and hard to reverse (parental and peer expectations). We have millions of people bred to be middle managers and junior executives that the world no longer needs, because the grunt work is increasingly being done by machines.
The generational cultural poverty, coupled with actual material scarcity since 2008, has left a generation unable to survive as the Corporate System ceases expanding and begins its decline.
My organization is hiring for ops and java engineers right now. We pay well. We're having a hard time finding anyone who wants to work full time. Most people we're talking with would rather work on project basis or work part time.
After working in IT for 12 years, I can't blame them. If you can, why sit at a desk for at least 5 days a week, at least 8-10 hours a day each day.
It's going to be hard in this thread to shake off all the biases high-end software people bring to the table. We are, as a collection of people engaging with any topic, particularly bad at seeing things through anything other than the lense of our own experiences; maybe that's because we spend so much time in a heavily-amplified online echo chamber.
It'd be interesting to note whether the rise is accelerating or decelerating, whether it's growing in sufficient proportion to the number of Americans entering the workforce, etc.
Just because the share is rising doesn't mean those enterprises aren't becoming less viable or accommodating.
I'm not saying they are or aren't, only that that data is pertinent.
No, corporations are actually getting more powerful.
they're no longer an efficient way of turning human efforts into salable work.
They're as efficient as they've ever been.
The value of managed human work is going to zero (anything that a manager can tell a person to do, a person can program a machine to do)
No, we don't have human-level AI yet.
Convexity will end the Corporate System for good.
There are always diminishing returns, if you go far enough. Sufficiently rapid innovation may push everyone leftwards on the logistic skill-level curve for a while, but it's only ever temporary.
I agree that there exists a hypothetical future where corporations collapse and all creative work is done by brilliant unpaid individuals who have their work broadly pirated. But that's not what I expect to happen.
Large corporations have the majority of the wealth and capital, and are frighteningly efficient at weilding their economic power to lobby government for corporate-friendly business environments, and will continue to act as rent-seeking cartels in any industry where a barriers to entry can be constructed.
Sure, coroporations are a terrible way of turning human labor into product work, but they are an optimal way of moving wealth from "consumers" to owners of capital.
"large businesses only employ about 38 percent of the private sector workforce while small businesses employ 53 percent of the workforce. In fact, over 99 percent of employing organizations are small businesses and more than 95 percent of these businesses have fewer than 10 employees"
Affordable health care is pretty much the last major benefit that puts a large corporate employer at an advantage to a small business or self-employed status. With health exchanges and affordable (?) health care kicking in next year the parent assertion might be correct.
I think this is likely to be a sleight of hand analysis on the HuffPo columnist's part. Firms with fewer than ten employees, which the column alludes to when talking about small businesses, make up just 5% of employer firms. Census doesn't define "small business", and SBA defines it in the context of specific verticals, so that a small manufacturer might have 500 employees while a small law firm might have far fewer. Whatever the case, firms with 500+ employees represent by far the largest segment of all employer firms, by just about 3x the number of employees of any other bracket.
Looks like the original stats (38% of US workforce employed by large businesses, 53% by small) were pulled from Wikipedia, which then refers to SBA.gov
I disagree with this assertion that corporations are a "terrible way of turning human labor into work product." In industries like software? Sure. In industries like coal mining? Explain to me how a decentralized structure would be a more efficient way of marshaling the capital resources and labor necessary to blow the top off a mountain and extract a bunch of rocks from the carcass.
Well, I'm not a fan of mountaintop removal. Still, I get your point, and you're right. I shouldn't say "corporations" are terrible at that, because there are a lot of processes that require (if nothing else) the legal structure of one, but that a certain management style associated with the 20th-century large corporation is counterproductive.
We can't know, because we can't go back in time, but I feel like those coal miners would have been just as productive (if not moreso) if they were better compensated for their work.
As a point of interest, miners in Australia are astoundingly well compensated and taken care of compared to resource extraction workers in other countries.
I agree that there exists a hypothetical future where corporations collapse and all creative work is done by brilliant unpaid individuals who have their work broadly pirated. But that's not what I expect to happen.
Nor mine, not in the short term.
Corporations != Corporate System. A corporation is a private-sector enterprise that performs some set of business processes to make a return on capital. Not all of those are bad. Anyway, those will be around for a long time. The Corporate System is the current economic totalitarianism in which it's pretty much impossible to stay afloat without corporate blessing. That's dying off, but not immediately and not without a fight.
Large corporations have the majority of the wealth and capital, and are frighteningly efficient at weilding that to lobby government for corporate-friendly business environment, and continue to be rent-seeking cartels in any industry where a barrier to entry can be constructed.
The shift is gradual but real. From 1945 to 2008, people believed in corporations. Even the more liberal people of the time, like Bill Clinton, were pro-corporate, insofar as "pro-business" meant pro-corporate and the idea that one can support capitalism but despise corporations (mainstream high-IQ libertarianism, now) was at the extreme fringe.
Now, even our right-wing (Tea Party) is anti-corporate. (They hate government more, and they're deeply wrongheaded, but many of them are anti-corporate; I'll give them that.) It took a while, but people have started to lose faith in their corporate masters. That is the first step (the first of many).
Sure, there's still a lot of regulatory corruption and rent-seeking and extreme inefficiency, and it won't die off tomorrow, but I have no doubt that it's on its way down, and probably in the next couple of decades.
In 1999, if you said that the world was run by evil people or idiots and that Corporate America was a travesty, you'd be seen as a bitter loser and laughed off the table-- even in liberal circles. Post-2008, no one argues against that viewpoint.
So the Corporate System has lost the people's faith, and it has also lost its ability to provide full employment. Those are two major changes. It won't be overthrown next month, and its demise will be painful (because its owners will externalize much of the pain to the middle and lower classes) but it will happen.
This is an artfully written comment, the way it peppers paragraphs of opinion with factoids that make it look authoritative but don't in fact back any of the points up. "From 1945 to 2008..." perks up "people believed in corporations" groan.
It's a hall of mirrors. You look closely and suddenly "the right wing" is "The Tea Party", and "The Tea Party" is "anti-corporate", or "In 1999, if you said the world was run by evil people [...] you'd be seen as a bitter loser". But worse than the occasional verifiably false premise is the fact that the whole comment is slippery, written deliberately to avoid being pinned down and interrogated.
I'll respond as I myself hate when people leave me hanging after I respond to their snark... "factoid" (arguably used incorrectly), "authoritative", "verifiably false premise".
It could be written more simply. You're not wrong, of course, but I've seen you take-down posts like that a couple of times now, so a comment seemed fair. (I realize it's not far off from how you normally write, but the effect is different in a take-down post.) IMHO of course.
No, thank you. This is where I do all of my writing, and I appreciate the feedback. One of my coworkers once made a word cloud of all my HN comments, and it was embarrassing (a small galaxy of words relating to argumentativeness) and ever since, I've worried that my lazier writing is easy to spot for how puffy and prolix it is.
Though, for what it's worth: I used "factoid" in the sense of "concept related as a fact that probably isn't a fact".
It was really nice of you to take the time to write that. Thanks again.
37.4% of employees are at firms of 1000+, 6.8% are 500-999, 7.2% are 250-499.
So either the numbers I remembered were a bit outdated, or were using a higher cutoff than 250 (probably 500, since I remember it being not that much less than 50% working at "large" corporations).
I'm looking at "Statistics about Business Size", and considering as "large businesses" those firms with 500+ employees, as that's the largest top-level bracket they track. Within the 500+ bracket, firms with 5000+ employees are (for whatever it's worth) the largest component by far.
It's not a terrible metric. There is an actual correlation between long term unemployment and being unemployable because of lack of skills and incompetence, or serious personality defects, such as drug addiction, mental disorders, criminality, violent behavior and laziness.
Few long term unemployed are long term unemployed for no reason at all. It's hard to take the claims seriously of those such as the article author who are unable or unwilling to acknowledge this.
If authors and social workers are concerned with advocating on behalf of the small minority of long term unemployed who are actually employable, it would be more helpful to have articles that address the issue of how to find the small number of long term unemployed who would make good team additions, without having to spend far more time interviewing bad candidates than one does when hiring currently employed and short term unemployed persons.
Advocating for the government to hire unemployable people for positions in government is one of the worst suggestions I have ever heard. Things are already bad enough with endemic incompetence and corruption in government bureaus without seeking out even more of the incompetent and dangerous and giving them the power and influence that comes with government positions.
> There is an actual correlation between long term unemployment and being unemployable because of lack of skills and incompetence, or serious personality defects, such as drug addiction, mental disorders, criminality, violent behavior and laziness.
There is an actual correlation between being black and drug addiction, criminality &c.
If you read two resumes that were identical in every way, except that one had experience listed and the other had none, wouldn't you go for the first one? If not, what's the point of listing experience at all?
Hire half unemployed to dig holes with a shovel all day, and the other half to fill them and pay them 30% below minimum wage. Or do something useful - there is always infrastructure in need of repairs. If won't cost much compared to wars and will do wonders for the self worth of the people.
You've just invented the Public Works Administration! A huge proportion of America's infrastructure was built in the 30's by the PWA - including the vast majority of infrastructure in federal and state parks.
They had to stop because that's socialism - and as we all know, socialism is unAmerican and bad.
Social proof takes many form. It's why MIT and Stanford CS grads have tech companies come to their campuses and throw money at them (these institutions don't have a monopoly on good engineers). It's why if you have Google/Facebook/Twitter on your CV you are pretty much guaranteed a job. It's why academic staff who have a Harvard degree have a much easier time than those that don't.
How long you've been out of work is more social proof. Were I in this situation I would absolutely without a second's doubt invent fictitious employment and get a friend to back up any reference check and I wouldn't feel the least bit bad about it. I know employers are filtering on superficial things and those that have had difficulty finding work is a pretty quick and easy filter.
There is another side of this that the article doesn't touch on: home ownership.
10+ years ago I remember reading a study in Europe that showed the rate of unemployment was directly proportional to the rate of home ownership across the entire EU with a very high correlation. Spain had the highest rate of home ownership and unemployment. Britain (then) had the lowest for both.
We push home ownership as a political agenda. While it has benefits for creating stable communities it also creates an inflexible labour market as people won't move to where the jobs are.