Trump, forget about Coal and Nuclear, software exports is where the jobs are at
For a long time software has been the new manufacturing. A software company is where a kid from a middle to low income family can aspire to social mobility and job security. Software is where the new +$100K jobs are at. These are the jobs that open the door to a middle class income in urban hubs, where rents are crazy and having dependents is hard. Times are tough, and software is where young people can expect to escape the other side of the “service” economy (restaurants, cafes, bars, hotels, and the TSA).
In 2015 the US employed 1.2 million software developers with an average income of USD 99k and 148k web developers with an average income of USD 58k. That doesn’t sound like much, but employment among software developers is growing fast. Between 2014 and 2015 the number of people employed as software developers grew from 1.075 million to 1.167 million, a 92 thousand job gain or an 8.5% increase. These 92,000 new jobs are more than all of the jobs of the Coal Mining industry (which are 65k according to the BLS and 87k according to the ACS https://datausa.io/profile/naics/2121/).
But software is not only a major employer, but also, an industry where wages have been increasing. In 2015 the industry paid USD 116 billion in salaries, compared to 107 billion in 2014. That’s a small increase in average salaries, but an addition of USD 9 billion to the US economy. Unfortunately, these high wages, and employment, are mostly in the coastal areas. Software development is a knowledge intensive industry, and since knowledge is hard to move, it is an industry that flourishes in tight geographic clusters.
In 2017, San Francisco is the new Detroit, and Boston the new Chicago. The new secure jobs are now at Facebook or Google, not GM or Ford. And these are not just software jobs. They are also human resource jobs, accounting jobs, finance jobs, administration jobs, design jobs, etc. Software companies require a large diversity of skills. They cannot survive hiring only math whizzes, since good software products need also the work of designers, artists, and people with marketing and narrative skills. These secure jobs, however, are what the worrisome parents of erratic 24 year olds want. A place where their children can set a foundation for their life.
But will the administration realize that the way forward for the economy is to push more people into the sectors that are growing? Will they help the software industry develop a million new jobs, or will they try to save a few tens of thousands jobs in nineteenth century sectors? Will they help equip the children that grew up far from software hubs with the skills they need to be join the industry? The skills in math, design, arts, and storytelling that are required by software firms?
Unfortunately, supporting the software sector is a tough choice for the Trump administration. Software is where the new jobs are at. But it is also, a sector that is extremely critical of the Trump administration. One obvious reason for this antagonism is that software is one of the most immigration intensive sectors. What the software industry has been asking for years are simpler procedures to hire talent globally. More H1-B visas, or even better, easier to obtain work permits. To create local jobs, you need globally competitive firms that can hire globally. But not even Obama could give the software industry what they were asking for. Could Trump do it?
Understanding why the software and tech industry is so pro-immigration is easy. It is because software firms are likely to come from immigrants. Immigrants are 13% of the US population, but they were founders or co-founders of 52% of all Silicon Valley companies created between 1995 and 2005.² That’s more than four times the prevalence of immigrants in the U.S. population. The tech hubs of the U.S. are also approaching parity between U.S. born and foreign born people. Sunnyvalle California is 47% foreign born, San Jose and Mountain View 39%, New York 37%, Brooklyn 37%, Boston 28.4%. You may say that the population of foreign born is still less than that of locals in these areas, but if you add to these stats children born to foreign parents (who count as locals), you may well be facing a situation where the job generating hubs of the economy are places where immigrants are the majority.
Will Trump let immigrant continue to generate the jobs he promised?
I am willing to give the new administration the benefit of the doubt and invite them to MIT. Maybe, seeing the future we are building here will help them better understand the future of the economy. A future that requires supporting science and entrepreneurship as a mean to deliver jobs. At MIT, we have thousands of things for future generations to do, from robotic legs, to implantable medical devices, self-assembling buildings, maps of the brain, and maps of the global economy. All of these projects will create jobs in the future, and many of these jobs will take place in organizations with a core of software developers.
Now, you may say that these jobs are only for the elites, but you would be surprised to learn about the backgrounds of many of my best students. They are the sons and daughters of electricians, car mechanics, banner printers, and shuttle drivers. They are also from a wide variety of backgrounds. From white conservative boys, to hijab wearing Arab women. And you know what, they all get along when they are working on an interesting problem.
So let’s embrace the fact that jobs are not created by places, but they are created by people. And since creating jobs is hard, we need to embrace an economic reality where research teams and firms are like sports teams: they require global talent to be globally competitive. This is a reality where Indian, Russian, Latin American, and Asian engineers, artists, and scientists are working together with U.S. locals to create the middle income jobs that are si much needed in the U.S. economy.
¹ Negroponte, Nicholas. Being digital. Vintage, 1996.