State Street CIO Defends IT Job Cuts from Bank Technology News is a really interesting interview with State Street's CIO.
The article covers State Street announcing the elimination of 850 IT jobs on the same day it reported strong earnings. I was struck that this article nicely illustrates several employment trends we're watching:
1. Corporate earnings are much less linked to U.S. employment than in the past: In the good old days, if a company was doing well it hired more people and didn't lay people off. While it's still true that strong performing companies are more likely to hire and retain their employees, the linkage is not as strong. Today's successful companies - like State Street - are looking to cut costs and heads while they churn out strong profits.
Even if a successful U.S. company is adding employees, it no longer means it's adding employees in the U.S. According to the Commerce Department via the WSJ, over the last decade large U.S. companies cut their U.S. work forces by 2.9 million. During the same time period, they expanded their overseas employment by 2.3 million.
2. Lower value jobs, even if they are knowledge jobs, are going away: Great quote from the CIO:
"At the end of the day, we want a larger percentage of our dollars and State Street personnel working on things that differentiate us with our customers."
In other words, we want our people working on high value assignments. Lower value work is going to be automated or outsourced.
Another great quote is on what happens to State Street IT employees who don't have the skills to do higher value work:
"That individual may not have the right skill sets to apply on the development side. There's dislocation and it's unfortunate."
"Dislocation" has always been one of my favorite buzzwords, and it's being used a lot these days.