Because of my work experience and formal training, I consider myself to be a Information Technology and Telecom guy. It’s why I’m so passionate about broadband in the US. Lately I’ve been thinking about how some of the history of telecommunications can teach us a bunch about the job market today. In both instances it’s the last mile that is the problem.
First a bit of a primer. In the earliest days of telecommunications we created twisted pair cable. This cable, what most people think of as phone cable, provided telegraph service and then later telephone service. It worked really well because it was designed to facilitate this type of communication. Once it was determined that voice service was something everybody should have for safety and security reasons, the government got involved. Subsidies and rules were put in place to make sure that every person had access to a telephone. These actions resulted in laying telephone cable across the nation and from every Telco company building to every house in their neighborhoods. The second major cable that came along was a coaxial cable. This video cable helped create the cable TV market. The access problem here was that this wasn’t really a lifeline service. Nobody would die if you didn’t see The Price is Right. People could get fuzzy, but mostly watchable television by sticking up antennas. Because of this universal access was not determined to be necessary. This is mostly why you only see cable TV in cities and dense urban areas. If you live in the country, you were SOL until the satellite providers showed up on the scene. Television and phone service were based on analog technologies but then digital happened and the internet eventually happened. We needed a new type of cable.
Nearly half a century ago we came up with a great new cable type called fiber optics. Fiber is made up of thin little strands of glass that sends signals via guiding laser light vs. the electrical pulses of the older analog system. A signal based on light can carry virtually limitless information of all types including voice, video, and data. The big cable and phone companies crisscrossed the nation and globe with fiber optics. These big trunk lines are what we refer to today as the ‘backbone’ because they are the core of the network. The companies needed the backbone for their own networks and they needed it for providing high dollar data services to their biggest customers. From a business perspective this was low-hanging fruit for the communication provider’s bottom line. Relatively low investment equaled huge returns. It was a lot harder to provide fiber optic access to every non business consumer. The legislative hoops you had to jump through to dig up all those roads and lay all that fiber optic cable to people’s houses was difficult enough. A return on investment measured in decades without a universal access subsidy was the nail in the coffin. Since there was money that could be had for providing data service to consumers, the old analog networks were repurposed for a job they were never designed for: internet. In general, unless you are in a very dense and higher dollar neighborhood with fiber, these repurposed networks do a horrible job of handling data. Hence we have the last mile problem: We have a tech industry creating amazing internet based products in every category imaginable. Yes there is the fluff like Netflix, Facebook and other entertainment services but there is also stuff that will truly enhance people’s lives like telemedicine and distance education. We have amazing backbone networks that can move unbelievable amounts of data around the world instantaneously. Then we hit the choke point of the last mile of the old repurposed voice and video networks. In some cases the last mile may deliver something usable, but in many cases end users should learn to be happy with Facebook and email because that’s all the repurposed networks will support. Sadly, at the end of the last mile are millions of consumers who want, but are unable to, take advantage of all these awesome digital services created by some of the greatest and most creative entrepreneurs in the world.
History is great to know but I always like to include a real world scenario to underscore my point. To this end I have a personal story about how I tried to bring fiber to my community. When I first purchased the land from my house I checked with the internet service provider who served the area. They promised me 3 megabytes down which is horrid but I thought I could survive. Unfortunately I made a massive error by not getting that in writing which would probably have forced an engineer, not the customer service rep, to give me the real number. In the end I bought four acres of land and built a house, in part, because I thought I would get good internet but in fact I get 512kbps down. That’s one half of a megabyte and only on a good day. Naturally I became a champion of trying to get an alternative high-speed provider to the area. After months of research, calls and nagging to multiple vendors, one of which actually told me it wasn’t even worth their time to look into it, I finally got the incumbent provider to give me a quote. For the low low fee of one hundred and fifty seven thousand dollars the local telephone company would plow fiber so that I and my neighbors would have the privilege of giving them a couple of hundred dollars a month for halfway decent internet service. I did the math just based on my community. Even without calculating potential business they would get from other houses the new fiber line would pass, the ROI on my community would happen in 5-10 yrs. yet the company wouldn’t put the money up. They insisted we pay over six figures for the privilege of access to a fiber network that they would still own.
That’s the last mile problem. It’s a bottleneck which can be easily overcome with investment and commitment. The companies in question won’t commit without being forced to by law even if history has shown that connecting every household to the network creates some of the most profitable business in the country and massive economic growth in ways undreamed before the connection existed. As an example, before the telephone could anyone even comprehend pizza delivery? This short term thinking keeps companies from making long term investments.
What the Last Mile Looks Like in Employment
Our current workforce includes a massive population of workers who are not anywhere near their potential. Some only have elementary education and some have a little high school or maybe a diploma. Some have been displaced from an industry shutdown of some sort or other. We also have tremendous investment in an antiquated education system that produces armies of graduates with nearly useless Bachelor’s in the Arts degrees. No matter if you’re a 7th grade dropout or a kid with a newly minted BA in psychology or communications, you are looking at 8 bucks an hour. Many of these folks have the capacity to be professionals, or advanced tradespeople. The challenge is that they don’t have the bandwidth to go back to school and take out another thirty to sixty grand in student loans so they can live and support their family while they get the needed degree and experience for the good job.
It’s not all bad. There is a safety net when it comes to these folks. There are many government based programs that train people in skills with the goal of getting someone started in a wage that’s more than minimum. Think entry level trades and basic professional jobs. The program options are fairly comprehensive and include everything from Community College Certificates in different disciplines to specialized work-based learning. These programs work pretty well. They don’t take much time and get the average to $10 or $12 an hour or a little more. It’s ideal for someone who’s got kids or a short window of unemployment benefits and needs to get beyond minimum wage jobs.
On the other side of the coin is a huge need for professionals. The Information Technology industry is doing all they can to get more visas approved so they can import the talent they desire. It’s not just Silicon Valley, it’s in my backyard as well. I have met countless employers in healthcare, trades, advanced manufacturing, and other sectors that need highly skilled staff. The employers all want the medical credential like RN, they want the seasoned plant lead, the construction supervisor, etc… These are all great jobs that pay in excess of the national average, typically $20-$25 an hour. They wring their hands and lament that they cannot find the right talent. Therein lies the gap. It’s the difference between around $10/hour and $50K or more per year. It’s also the difference between a certificate and a real in demand skill that comes from education and experience.
Why Does the Gap Exist?
I see the gap in telecom and in the workforce as having exactly the same root cause. The players simply do not want to make a long term investment. In another personal experience I had, I was discussing the needs of the workforce in an industry that was experiencing a critical shortage with the head of their statewide association. I was fortunate in that the person whom I had the conversation with was close to retiring and frustrated with his industry. Consequently he had no filter and without any prodding went on to vent to me for about an hour about how his industry talks a big talk about investing in people but never follows through. He said that when it actually comes to paying a great potential candidate enough to motivate them to move from another industry or to support a family for the year or two it takes to get them up to speed in his industry, they, the business owners and employers, simply refuse to make the commitment. He went on to say that all of the leaders in his industry refuse to provide enough of a total benefits package to keep people from moving around. This means people jump, and they jump often. Consequently the attitude of the owners is to refuse to invest in a human asset that disappears the second the training is over and somebody else offers them an extra $3K year. It’s a chicken and egg scenario. There is no culture of training everyone, so everyone is trying to steal the other guy’s person. It’s just cheaper to pay more when you land the big contract than build your own loyal team unless everyone is doing it.
The net result in that industry and many others is that if you were lucky enough to have fallen into the high demand career when you were younger, you’re in a permanent upwardly mobile spiral of income. This is why we see plumbers and industrial maintenance folks who make $90,000 a year and information technology professionals who make $150,000 a year and on the other end of the spectrum is the $10 an hour job. Is it any wonder why we constantly see stories about the gap between the wealthiest Americans and everyone else?
Should Government Step In?
It stands to reason that if the government is providing the services to bridge the gap from minimum wage to $12 an hour jobs that it could also introduce programs to bridge the gap between $12 and $25 an hour. Ultimately it can’t, it’s not set up for it. The government programs are generally limited to a few thousand dollars in investment per participant. There’s no government program designed to give someone two years of middle-class quality of life. I take that back, I can think of one that does just that. They take people with potential, hire them with great pay and benefits and invest in their development for years. It’s called the Military. This makes sense as it’s kind of hard to find a $25/hour level missile technician on the open market.
For everyone else, it’s a lot more politically expedient to say “we’re going to take somebody from minimum wage and give them the skills to make enough to get out of poverty”. What is needed to bridge the gap is this massive investment for a couple of years that includes both training and enough money for a reasonable quality of life. College does good job of the training piece, especially for the professional, but college risk is on shoulders of individual’s vis-à-vis student loan debt. This makes it nearly impossible for mid-career professionals to transition to the industry or job with the growing need and maintain their quality of life during the transition.
I’ve often argued that paid apprenticeship is a solution, but employers don’t want to pay professional wages for the new apprentice and for the education component. Another shot against apprenticeship is that it is still locked to its origin with the trades. There is no traditional structure for things like paid human resource apprenticeship, paid registered nurse apprentice, or paid software coder apprentice. These knowledge jobs can be learned at work, but there must be a large classroom component for it to work out.
Fixing the Last Mile
I have a solution for the telecom last mile. Sometimes in my writing I feel like I’ve nailed the problem but I don’t know the answer, and that’s how I feel about the employment last mile. Employers want fluidity in their workforce for on demand business needs. They especially need higher order skills in our more complex world. I get that and I want to give it to them. Employers don’t want to heavily invest in the unproven because so many wash out and it’s a huge investment to get a few that stick, hence they are only willing to pay $10/hour but promise the world. The telecom equivalent of this is only being willing to repurpose the old copper lines rather than running fiber proactively by customers who may or may not subscribe to the service.
Professionals have those higher order skills like problem solving and work ethic. They also don’t mind moving around but the investment needed for them to switch is even higher than the unproven and new to the industry employee. Professionals have families and still operate in a world that demands consistency for things like home and car payments. If your transitioning then nobody wants to be 40 years old and have to go from 60K / year to 25K / year while they train for a new career for two years. Between school expenses, lifestyle expenses, and ramp up time industry usually demands before they pay well for a proven human asset, the transition cost is measured in the hundreds of thousands of dollars. This is the workforce equivalent of my telecom company wanting me to foot the hundred and fifty seven thousand dollar bill to run the fiber to my neighborhood. Most people I know will almost never will put that job transition burden and risk on themselves so they tend to stick with where they at unless forced to make a change. I stuck with 512kbps. The company lost customers and I lost out on decent internet.
Maybe in 100 years we’ll have something like apprenticeship for professional and knowledge jobs. Maybe we’ll be in a place where there are systems in place for shared risk, shared cost, and resources in place to help with rapid workforce fluidity. No matter what form, the base similarity in the last mile in both employment and telecom is that massive investment is needed to put the new system in place. I’d love do more research to try and find a solution for the transitioning workers and employers in my area, but I can’t. Most research today is online and unfortunately my internet is only allows for Facebook and email.
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-Mike.
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