Why the Dot Com boom-bust is still messing up our job markets – and what to do about it.

       If you were in the work force in the late 1990s, (meaning you are 30 or older now) you should easily recall the remarkable salary spike in tech jobs, and particularly in software and Internet related positions.   For a brief instant – maybe eighteen to thirty months - , salaries were propelled from what I would call "very decent" to "unrealistically and unsustainably high".

     How high did they go? As the owner of a software company at that time, I was paying eighteen and twenty year olds with only high school degrees, and no exceptional technical smarts, about $40,000 a year (including incentives) to staff my tech support desks.  In my mind, a fair salary would have been about $24,000, maybe less.  (It was sadly amusing that these kids, all of whom were living at home with nothing more than a car insurance payment to make, were literally running out of money before the semi-monthly pay day.)
Based on this niche alone, I'd suggest salaries were 67% too high. 

     Other niches were also momentarily out of whack.  Acquaintances of mine, with maybe a couple decades in the work force, but no unique skill set, suddenly found their $45,000 a year job now worth $82,000 a year in the booming "desktop publishing/computer graphics" category. These jobs and their outsized salaries didn't last very long. By 2001-2002, as the dot com bust hit, and as millions suddenly entered the labor force with those same skills (they too were in search of oversized compensation), the salaries shrank back to levels of reality.    Temporary imbalances were corrected - but only in the market. Not in the minds of the workers.  One fellow I know who had been earning in the 60K range bragged to me that he had switched jobs and had crossed the century mark - meaning he was now making over 100k.  That job lasted all of eight months until the crash, and then he did not work regularly for years - unable to go back to earning what the job market felt he was truly worth.

      Sadly, ten years later, many of those same workers who enjoyed a brief, temporary surge in earnings, are still valuing their own skills at those artificially high levels. Let me gently suggest now, you were never worth that 40k as a untrained tech support person. NEVER. It was a temporary market imperfection brought on by a wildly surging economy and the "market" solved the problem. I paid those salaries because I had to.  I was over a barrel.   Today,  workers who are holding on to that temporary valuation need to face the fact that their skills were not so unique and incredible and, that the barriers to entry were low. Yes – you may have had the skills before others, but it turns out those skills were not so hard to acquire.

     Our Congress, in its infinite wisdom, exacerbated the problem by refusing to increase the cap on visas for technical workers.   Millions of technical workers who wanted to come to America and pay taxes, were shut out.   While pandering to political forces and hoping to protect American jobs and workers, all Congress did was motivate those foreign workers to set up companies overseas and supply their skills to US companies through other means - all the while creating jobs for people in their home country.   American workers lost even more jobs as a result of Congress' foolishness.  And the salary scale slid further.  This foolishness continues today.  It'd be nice to admit to ourselves that Americans don't have a patent on entrepreneurship. 

     " Excess profits invite excess competition" - I heard this a lot in grad school, and its true. While it was often said in reference to new companies rushing to enter a market that had oversized returns, it absolutely pertains to the labor market. It doesn't take a Wharton MBA to appreciate the veracity of the statement. Need a recent example?   How many of us ran into real estate when profits were temporarily outsized? Judging from the size of the bust, it was almost all of us – with and without college degrees, or MBAs, for that matter.

      There is an element of human nature involved here: everyone of us wants to be paid more. Really! You, me, my friends, my neighbors – we all want a higher salary. And so do the other 6.6 billion people in the world. This is not new.  The new problem (only 10 to 15 years old), is that the Internet allows many jobs to be handled by people from anywhere – even Mars. (If you think we have a problem with job outsourcing now, wait until aliens show up and start outsourcing technology work to another planet.)   So, the average worker has competition from not just his high school peers, but from workers in the rest of the planet. It's really pretty daunting.

     It gets uglier: Want to know what your job skills are worth? Take a quick look on elance.com and Freelancer.com - see what rates people are willing to do your job for.   Does it make you shudder? It should. Perhaps it turns into a source of motivation for digging in a little harder at your desk, while praying your boss hasn't figured this out as well. It's not just tech support– its sales, design, assembly, research, manufacturing, even medical analysis can and is being done remotely.    Shortly – a surgeon in India will, through the use of robotics and remote cameras, inject botox, clean your teeth, perform a hernia operation, do liposuction or a vasectomy at a convenient location in the mall in your town.

     But, coming back to my main point - the Internet and the outsourcing of jobs to people who can do yours, is NOT the big problem. The big problem is that many of us became fixated on a certain salary level and since it has not returned, and is unlikely to return, we think there is something wrong with the job market.   Don't feel overly bad – it's not about you personally. It's about our human ego and what it does to us.    

What are your skills REALLY worth? I would suggest forgetting those few years of the salary boom entirely, and then looking at what you were making in the early to mid-1990s as a guide, and adjusting up or down for any supplemental learning/courses/training/degrees/experience that you have added since, and then tweaking for inflation.     Then look at those job websites and inspire yourself to deliver something more to your employer. Something that makes you fun to have around or especially valuable.    Are you socially pleasant – or do you spread gossip at the water cooler? Are you prepared for your meetings – or do you walk in like you're doing everyone else at the table a favor?   Do you contribute to the conversation, or are you in love with the sound of your own voice?   Would the customers you serve, be they internal to the company you work for, or external clients, rate you highly or not?   We define our value to employer in these ways and more.

 
     If you're unemployed, or "under-employed" , and dreaming of the good old days of 1999 and 2000, maybe its time to adjust your perspective, humble yourself, and start bidding on some of those jobs on elance.com, and work on your skill set.  Adjust your spending habits downward, perhaps.  Change is a constant, and none of us are immune. From what I see, it looks like competition for the job you want is still increasing.

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