STEM, Advanced Industries, and The Future of Employment. – Part 1

The marketing SVP I was sitting next to leaned close and whispered “what’s stem?”

He seemed a little hesitant to admit that he didn’t know what the term meant to the rest of the table, but as everyone was busy arguing about AI and robots replacing all of our jobs someday soon, he saw an opening and took a chance. The term had bounced back and forth across the table a few times: Stem this and stem that. Was it a biotech thing? Genetic-engineering jobs? (Because stem cells, I expect.) Some kind of government tech education program?

“S.T.E.M.,” I said. “Science, Technology, Engineering and Maths.”

“Ohhhhh,” he replied with a grin. “Tech jobs.”

Right. Tech jobs. Sort of. Not just tech jobs, but definitely the kinds of jobs most prized by companies right now, at least at scale.

A little background: I had just spent a chunk of my time on my flight to DFW reading up on global macroeconomic trends, and particularly how they relate to shifts in job creation around the world. (I have real hobbies, I promise, but I’m also kind of curious about a lot of tech-related topics. It kind of comes with the job.) So anyway, there I was, wondering if my newly STEM-enlightened neighbor would feel super psyched about scoring an impromptu mini-course in how STEM jobs impacted employment trends, and what we might infer about the US job market between now and 2025 given the shift to post industrialized… um… Yeah, no. He seemed like a nice enough guy, so we segued to HBO’s Westworld instead, and specifically how much of the hosts’ processes would have to be handled in the cloud, because that seemed less nerdy somehow.

Know your audience, they say.

Still though, this whole national job creation thing (which was a major piece of the presidential election discussion), and STEM, and IoT, and AI, and manufacturing vs tech… The convergence of these interconnected topics is filled with really interesting insights and catalysts for big ideas; so while my single-serving Marketing exec friend might not have been all that interested in employment data, or how STEM fields might play a part in creating a lot of new jobs in our increasingly digital economy, I find the topic particularly relevant to the world of digital transformation that we dig into here a little deeper every day.

Let me frame it in a way that will make the most sense. A lot of what we talk about here touches on the future of work: the impact of the cloud, big data, cognitive computing, the digital workforce, AI, VR, the IoT (and the IIoT), advanced analytics, 3D Printing, mobility, etc. – the tools and processes and methodologies – and how they are already shaping how companies will operate as our world transitions from yesterday’s operational models to new business models run party on ubiquitous, ambient, intelligent technologies. In other words, we usually focus on outlining and explaining various key aspects of the operational building blocks of Digital Transformation.

The topic that we are introducing today is a macro version of that. Instead of the future of work, its focus is the future of employment. Specifically: what type of impact will advanced industries and STEM jobs ultimately have on the job market? Will they help create more jobs than they eliminate? Will they help drive more economic value than other industries and job categories? Will they trigger an upheaval of the job market, and consequently force a reboot of how we approach education, both K-12 and job training? What will be the impact of these changes on the business world? How might companies, large and small, not only protect themselves from this wave of disruption, but take advantage of it to gain a strategic advantage in their respective markets?

These are the types of questions that we will try to answer in this series. For now though, let’s establish a set of baselines we will come back to in future discussions.

A Quick Introduction to Advanced Industries

The best place to start, as always, is at the beginning, and the beginning, in this instance, isn’t actually Digital Transformation, it’s Advanced Industries. The term refers to roughly fifty industries heavily centered around STEM and R&D. Among these industries are familiar ones like wireless telecommunications, computer systems design, automotive, healthcare, aerospace, biotech, household appliances, and so on.

  • 35 of these industries fall into the manufacturing sector. (This is important, so make a mental note of it.)
  • 12 qualify as Service industries (software publishers, wireless carriers, medical and diagnostic labs, etc.).
  • 3 fall into the Energy sector. They are: electric power generation, mining, and oil and gas extraction.

That’s right: 35 out of the 50 Advanced Industries are in the manufacturing sector. That’s more than two thirds. As we note the impact that the erosion of manufacturing jobs has had on the American middle class and the economic stress it has wreaked on blue collar workers, that’s an insight that caught my attention. So here it is: Insight number one – Over two thirds of Advanced Industries are in the Manufacturing sector.

Next, I wanted to find out how that translated into net jobs. The most recent numbers I had on hand were from 2013, but they broke down like this (rounded up or down for simplicity):

  • Advanced Industries – Services (12/50): 6.2 million jobs.
  • Advanced Industries – Manufacturing (35/50): 5.5 million jobs.
  • Advanced Industries – Energy (3/50): 700,000 jobs.

Two quick observations. The first: That’s all? (It didn’t seem like a lot.) The second: The ratio of jobs per industry category (Services vs. Manufacturing) looks pretty uneven. How can 12 industries produce more jobs than 35?

I know why. It’s a reaction, not an actual question. Rather than go off into a windy tangent on the ratio of manufacturing to services jobs, let me paint a quick picture about the evolution of the manufacturing space in recent years with two eye-opening factoids:

  1. Back in 1980, it took 25 jobs to generate $1M in manufacturing output. Today, it only takes 5 jobs to do that.
  2. A spot-welder costs an average of $25 per hour. A spot-welding robot only costs an average of $8 per hour.

It doesn’t take an economist to figure out where this is going. This leads us to insight number two: If you currently work in advanced industry manufacturing, and you already know that a robot can do your job at least as well as you can (if not better or faster), you may want to consider engineering a transition to a related advanced industry services field.

Naturally, my next question hovered around job growth and trends in advanced industries: Overall, are those jobs growing, shrinking, or staying flat? Is there an opportunity here for job growth on a mass scale that the general public may not be aware of? Let’s look at the numbers:

  • Advanced Industry Jobs (US) in 1980: 11.3 million
  • Advanced Industry Jobs (US) in 2000: 11.3 million
  • Advanced Industry Jobs (US) in 2013: 12.3 million
  • Advanced Industry Jobs (US) in 2015: 12.9 million

That’s a significant uptick since 2000, but unfortunately it isn’t exactly keeping up with overall employment numbers, or driving significant job growth:

  • Total employment (US) in 1980: 97.5 million
  • Total employment (US) in 2000: 135.6 million
  • Total employment (US) in 2013: 141.8 million
  • Total employment (US) in 2015: 143.1 million

To put this in perspective, advanced industry’s share of US jobs has shrunk, not grown, since 1980:

  • Advanced Industries’ share of employment (US) in 1980: 11.6%
  • Advanced Industries’ share of employment (US) in 2000: 8.3%
  • Advanced Industries’ share of employment (US) in 2013: 8.7%
  • Advanced Industries’ share of employment (US) in 2015: 9.0%

What’s interesting though, is that for the same time period, advanced industries’ share of output has been steadily growing:

  • Advanced Industries’ share of economic output (US) in 1980: 14.3%
  • Advanced Industries’ share of economic output (US) in 2000: 16.8%
  • Advanced Industries’ share of economic output (US) in 2013: 17.7%
  • Advanced Industries’ share of economic output (US) in 2015: 17.2%

Industry chart

According to The Brookings Institution, advanced industries have increased their productivity by roughly 2.7%/year since 1980, while the rest of the economy has increased its average productivity by an average of 1.4%/year. Following a similar trend line, advanced industries jobs now average $214,000 per worker worth of output compared with $108,000 for the average worker outside of advanced industries. And finally, while earnings for an advanced industries worker averaged $95K in 2015, workers in other sectors only averaged $53K/year. When we graph that data, we get this:

year on year growth chart

Also worthy of note: while advanced industries only account for less than 10% of US jobs, they are responsible for generating a whopping 60% of US exports, and their combined output accounted for a massive 17.2% of US GDP in 2015.

job share

Now let’s break things down to a more granular level: Advanced industries are made up of 50 different industry subsets. Are some of these subsets performing better than others in terms of job creation and overall growth? Have some been struggling? Let’s take a look:

50 different industry subsets

Insight number three: Nearly 80% of new advanced industries jobs between 2013 and 2015  – roughly 480,000 new jobs – were created in services industries, not manufacturing.

Insight number four: Nearly two thirds of that growth – roughly 307,000 new jobs – were created in four specific industry categories:

  • Computer systems design
  • Web search and internet publishing
  • Software products
  • Data processing and hosting

Do those four industry categories sound familiar? If you spend any time at all browsing through our insights and reports, they should. They are the sectors driving Digital Transformation.

Shifting back to blue collar jobs for a moment, advanced manufacturing industries didn’t do nearly as well between 2013 and 2015, but they still managed to contribute roughly 132,200 new jobs (about 20% of the overall advanced industry job growth). It could be better, but it could also be a lot worse. Here is the most interesting part: If you have been following the auto industry’s shift to electric vehicles and advanced navigation/self-driving systems in the last couple of years, you may not be surprised to learn that nearly 70% of those new manufacturing jobs (roughly 95,000) came from that sector.

Here’s a breakdown of how the entire ecosystem looks like:

ecosystem breakdown chart

Some Parting Observations

That’s probably enough data for one sitting. Now, let’s spend a few minutes thinking about all of this. What can we infer from the data we just looked at?

  1. On the whole, Advanced Industries appear to generate roughly twice as much economic value per worker as non-advanced industries.
  2. The highest proportion of new jobs in advanced industries can be found in digital services (what people generally refer to as “tech” jobs).
  3. Automobile manufacturing is showing the highest job growth of all advanced manufacturing sectors.
  4. While digital transformation and technological disruption are driving the growth of advanced industries, advanced industries, in turn, are both shaping the Digital Transformation landscape and controlling the speed of technological disruption.
  5. Speaking of technological disruption, advanced industries don’t operate in a vacuum. They impact millions of businesses by creating products and services that boost down-channel capacity, productivity, and profitability. (The impact of Digital Transformation.) There is an economic multiplier effect at work here that we will return to in a moment.
  6. On the opposite side of that business ecosystem is a complex supply chain that allows advanced industries to operate. Another multiplier effect can be observed there.

The first of these multiplier effects is far more difficult to measure than the second, so let’s start with the second: the supply chain. It is estimated that 2.2 jobs are created in support off every advanced industry job. (0.8 locally, and 1.4 outside of the region.) That means that we can add an additional 28.4 million support jobs to the 12.9 million advanced industry jobs in the US – for a total of 41.3 million jobs. Based on the 143.1 million figure we used earlier, that accounts for 29% of all jobs.

The second of these multiplier effects will require its own article, but until then, consider this: The application of new information and communication technologies (or ICT for short) has been demonstrably responsible for more than 1/3 of all labor productivity growth between 2002 and 2012 in non-advanced industries (like retail, business services, hospitality, etc.). As ICT become increasingly vital to every vertical and business discipline through the diffusion of Digital Transformation, the the compounded impact of the advanced industry sector’s innovation on the overall capacity, productivity, and profitability of US businesses will continue to increase.

Translation: A handful of key advanced industries are currently at the center of a tectonic shift of new job creation in the US – a first wave, if you will, whose ripples could feed industries around it if those industries are prepared to take advantage of them.

We’ll pick up where we left off in Part 2. For now, take this all in, let these numbers settle, and perhaps even take a moment to marvel at the dynamic connective tissue between the macroeconomic forces shaping the future of employment and the technological ones shaping the future of work.



A version of this was first posted on


3 Trends Defining Hiring Success In The Digital Economy

An organization’s ability to identify, attract, and plug in the most creative minds precisely when and where they are needed is the foundation for innovation. Therefore, designing and executing a strategy that does this well has become the competitive edge in a digital economy where the speed of innovation trumps all.

According to a recent global study by McKinsey, as digitization accelerates, the U.S. has a huge opportunity to boost productivity growth. Exploring three big areas of potential — online talent platforms, big data analytics, and the Internet of Things — the firm estimates that digitization could add up to $2.2 trillion to annual GDP by 2025. That’s an enormous boon for the economy, but one that won’t be enjoyed equally across industries or organizations because digital frontrunners who can apply innovation to hiring strategy will leapfrog their known (and yet to be identified) competitors and command the lion share of the growth.

Organizations that have embraced digitization as a part of their culture, structure, and strategy are already pulling away from the pack. Amazon has surpassed big box stores. Uber is disrupting transportation. AirBnB is changing the hospitality and travel industry.

Disruption isn’t just for “startups in the tech space” either. From now on, every organization’s ability to compete is directly proportionate to its ability to embrace digitization. But here’s a big distinction: Embracing digitization must not be confused with simply embedding technology — tech is just one piece.

Embracing digitization is about adapting digital strategies in creative ways inside the business to stay responsive and constantly innovate. That creativity could manifest itself anywhere from “leapfrog worthy” R&D to predictive advertising to proactive recruitment marketing. No matter where you find it, that creativity will always start with the same thing — people — which is exactly why talent acquisition leaders need to get focused, right now.

Here are three areas I see forward-thinking hiring organizations focusing on.

Over-invest in Strategy for Critical Roles

Here’s the hard truth: not all roles drive the same value to the business. The lead engineer designing your next product is more critical to the future of the business than the accountant who is tracking the production budget. Both are important, but they do not yield the same value long term. Not coincidentally, the supply of talent to fill that engineering role presents a greater challenge to your talent acquisition team. Why, then, would you design a talent strategy that consumes equal resources?

Competition to attract and hire that engineer is greater than it is for the accountant role. Therefore, an over-investment in the talent acquisition strategy and resources required to fill high-value roles makes good business sense.

If you haven’t already read it, I highly recommend Talent Valuation by Tom McGuire and Linda Brenner, which introduces the concept of over-investing in critical roles. It’s a smarter way to approach the talent acquisition strategy and an instant credibility builder when it comes to speaking “C-suite” (think CFO).

Facilitate the “Liquid Workforce”

Right now, entrepreneurs are standing up businesses with three people (Uber started with two). At a deep level, these digital natives understand the strategic alternatives of build vs. buy (vs. rent), and they know how to leverage a fluid org structure to speed innovation and time to market.

43 percent of the workforce is expected to freelance by 2020, and a recent Accenture trend report predicts that there will be a Global 2000 company within 10 years that has no full-time employees, save the C-suite. The appeal of the skills economy strengthens — just as the value prop for longer term, full-time employment weakens — every day. Accenture calls this more fluid movement of talent “the liquid workforce.”

As traditional organization structures wane in the face of project-based work, HR leaders must embed process and technology to identify both internal and external skills needed at the project level. Building fluid talent pools to get work done and embedding collaboration and training tools every step of the way will be key to facilitating this new way of work.

Embrace Hyper Automation

Organizations exceeding and pulling away from the competition aren’t just plugging in tech. They are reinventing their processes by combining insight, tools, and technology in new ways to drive huge efficiencies they couldn’t even imagine two years ago.

I love this periodic table of HR Tech from CB Insights. It’s visual proof that there is an opportunity to embed automation into nearly every area of the talent acquisition and talent management process. Through smart applications of digital technology, recruiting leaders can automate repetitive tasks, strengthen decision making, and get some valuable time back to concentrate on the work that requires more human interaction; for example, building relationships with their hiring managers who desperately need talent advisors.

There is no denying that the acceleration of digital is only going to get faster. From the McKinsey report, “Digitization is advancing in a series of accelerating waves that touch more and more participants. As each one builds on and amplifies what has come before, the waves are hitting in faster succession and with greater impact.” For instance, industries such as media, finance and insurance are light years ahead of hospitality and healthcare. Organizations that don’t keep up risk upheaval from innovations in outlier industries that aren’t even on their radar. Consider the impact of driverless cars on fast food. 70 percent of McDonald’s business comes from the drive thru; cue the end of impulse eating — riders will binge on entertainment instead.

By over-investing in critical roles, empowering a liquid workforce and continuously looking to automate and reinvent processes by using technology, the digital frontrunners will be those who put people first and expand the gap between winning and losing.

This post is sponsored by SmashFly and was previously published on It is published here with permission. For more content like this, follow SmashFly on Twitter, LinkedInYouTube and SlideShare.


photo credit: 3 via photopin (license)