Trying to find efficiencies and synergies to save $1.7 billion.
The ink was barely dry on Dell’s acquisition of EMC, the largest technology deal ever, valued at $67 billion when it was announced in October last year – and already the layoff rumors are oozing from the woodwork.
“People familiar with the company’s plans” told Bloomberg that Dell will cut 2,000 to 3,000 jobs.
Dell spokesman Dave Farmer refused to comment specifically on the report on Thursday but said instead, as sort of a confirmation: “As is common with deals of this size, there will be some overlaps we will need to manage and where some employee reduction will occur.”
On Wednesday, the day the deal closed, CEO Michael Dell gave some clues in an interview: “There are some overlapping functions and that sort of thing – that’s not the primary feature of this, but there is some of that.”
These “overlaps” or “overlapping functions” are terms in corporate speak for real people, and these real people are mostly working in the US, according to the report: supply chain, marketing, and general and administrative positions.
Dell is trying to find some efficiencies and synergies to save about $1.7 billion in the first 18 months after the deal closes, so starting from Wednesday. They’re not dilly-dallying around cutting costs and laying off people.
Combined they have about 140,000 employees. So the trimming might have a long ways to go, especially if the cloud and the Internet of Things are not as fun as imagined. But that doesn’t mean that the headcount will come down – they’re bringing in foreign workers, mostly from India.
Between 2014 and 2016, Dell applied for 2,039 H-1B visas and 256 Green Cards. EMC applied for 2,347 H-1B visas and 453 Green Cards, for a total of 5,095 applications.
These are just applications. Not all of them will be certified, and of those that are certified, not all beneficiaries will be hired. But the data for 2016 isn’t complete yet either.
It’s the hot thing to do for tech companies: laying off existing workers in the US, and bringing it foreign workers on H-1B visas. The Senate has been looking into some of the abuses. In February, Senator Richard Blumenthal (D-Conn.) sent US Attorney General Loretta Lynch a letter requesting a Justice Department investigation. But the tech lobby will likely get the Senate back on track soon.
But Dell needs to save some money, one way or the other. Dell’s corporate credit rating is at the upper end of junk. It’s loaded to the gills with debt, stemming from when it was taken private. Now the EMC deal has piled new debt on the company, including $20 billion of bonds it sold in May, followed by a $5-billion leveraged loan.
It needed this pile of cash to pay EMC shareholders $24.05 per share. They also got a “tracking stock” linked notionally to EMC’s interest in VMware, but in reality they get no real ownership of anything. Tracking stocks were hot during the dotcom bubble, with disastrous results for investors.
The combined company is also trying to boost sales, which they’ve been trying to do individually for years. All old tech companies, including IBM and Microsoft are trying to boost sales, and particularly those in the withering PC ecosystem are having the hardest time. They need to find a new niche for growth, and so they’re all piling into the “cloud” and the adjacent “Internet of Things” that links even the fridge to the cloud. But this is precisely where Amazon, Microsoft, Facebook, Apple, and Google dominate.
This is the situation Dell and EMC are in. Both have a large part of their products scattered around the PC ecosystem, Dell with servers and PCs, and EMC with storage devices. A match made in heaven. And so they’re going to innovate their way out of it! As Michael Dell said in the interview:
“We’ve got the ability to innovate at scale and invest – not for next quarter, but we have the agility and speed of a startup, but the scale and reach of the largest company in the industry.”
Alas, Dell became successful by building the same boxes everyone else was building, but it was building them on order, marketing and selling them directly, and getting customers to pay before their computers were even assembled, which was a new approach to supply chain management and working-capital financing in the 1980s: For the first time in history, accounts receivable were a negative amount, and working capital was funded entirely by customers, free of charge. Credit cards made that possible.
That was Dell’s big invention. It gave it a huge cost advantage, until everyone started doing it. But it wasn’t technological innovation. EMC is a different animal. But now it’s under Dell’s control, and they’re carrying a lot of debt, and cost cutting is going to be the big strategy going forward.
Mergers & Acquisitions often just lead to more shut-downs, write-offs, and layoffs. But somebody is making a killing. Read… “Tech” Paid $5 Billion in Fees to Wall Street in 2016, and Look What it Got for it
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I work in this industry and it has been overrun with H1-B abuses. I am no Michelle Malkin fan but she wrote a book that went into great detail about this. I see it every day. I take calls with people who speak no English, have no idea what they are doing, and cannot solve a problem without being told exactly how to solve it. But they are cheap! Dell and EMC will be about as successful as HP is/was after swallowing the Great White Whale known as Compaq. The IT industry is in the beginning of the end. And it deserves to fail. I have been in this industry for 20+ years. But in IT nobody cares about maturity and experience. They want cheap labor that can hit the ground running. Whether they know what they are doing or not is inconsequential.
Sadly your comment sounds depressingly familiar: this is what my brother has been telling me for years and what ultimately drove him away from the union he belonged to.
A friend of mine who works for GE Power Generation was sent to Bangalore to train people in the new mega R&D facility Jeff Immelt built there, allegedly as a way to blackmail the US government into giving in to his whims. GE has “sold” this facility to employees by promising it will be “exclusively” devoted to the Asian marker, but nobody’s fooled.
The facility’s simply too modern, too large and too state of the art to be merely devoted to fine tuning products for the Asian market, a process that can be done without problems in the US and Europe.
This is how Western taxpayers are repaid by the companies they nurtured and the governments they keep in power through their hard earned tax dollars/euro/pounds/etc.
Nice post MC. The white poor voting for Trump can’t see he will have ZERO impact on this and other jobs being sent overseas. Trump can do NOTHING. He will do NOTHING. Only Congress can hold the feet to the fire and possibly impact Corp culture. Too bad they have been bought and sold years ago to avoid such real responsibility. A ‘President’ might inspire change but it takes funding and oversight to make it stick. = Congress.
We dont live in a world of laws but we live in a world of Corporate Government influence. The laws only apply to those unwilling to lobby or have the resources to do so. There are 2 worlds now – 1% and the 99%. The 1% have all the assets so the math here is anything but college level LOL!
Trump has said he will at least restrict newcomers into the job market. Whether he does that or not remains to be seen. Clinton, on the other hands, has flat out said open the flood gates and let ’em in.
Imelt at GE has also directly shafted U.S. consumers.
He sold GE’s household appliance operations to the Chinese.
But to his everlasting credit, he served as Obama’s “Jobs Czar”
Immelt may have been the man who put into motion the Mother of All Bailouts in 2008 with the now infamous phone call to Secretary of Treasury Hank Paulson who instantly started running around with his hair on fire.
In reality GE ran absolutely no risk of “going under”: the financial division was bankrupt but the rest of the company was in fine shape. The only risk was to absorb the losses GE would have had to stop paying dividends for at very least two fiscal years, meaning Immelt and a few other top brasses would have joined the unemployment queue as soon as shareholders got the news.
How quickly and easily Paulson caved in to Immelt’s plea is something that will go down in history: even for a Wall Street stoogie he gave in way too easily.
The crowning glory was how even Obama bowed in front of Immelt by stroking his ego with the sad “Jobs Czar” fiasco instead of demanding Paulson and Immelt be made accountable for the disaster they helped create.
It’s unbelievable how so few can affect so much the lives of many…
Is it the same Jeff Immelt who is the special advisor to president Obama?
Thanks for the front line report. Not a very pretty picture, but then, what is these days?
I’ll second everything you had to say. Seen this since 1995, and I’ve been told we don’t have experienced people in the US. Which is complete BS considering the lack of experience any of these people have, plus their complete lack of respect for the locals. One other fact you missed, once they are here and somehow get in a position of power, they only hire their own. Thus increasing the demand for H1Bs. Was at two companies that had been a mix of and after years was dominated by at least 80% Indians. The Phoenix Bios company was 99%, only the receptionist wasn’t Indian. Discrimination at its finest.
You think that’s bad? I worked for a company that would have us work on certain US holidays (Christmas & Thanksgiving comes to mind) but when it came to the Indian holidays they had the Indian employees enjoy their day off while the rest of us worked .
I just resigned my Position as a consultant at an east coast state agency. I was a high level Cisco engineer with a hand in everything we did state wide. The site I worked at was at least 60% H1-B Indian imports working as consultants. There are many Americans working at these agencies that can fill these positions if they were only allowed. As these positions are for contractors only, a state employee cannot even bid for it.
I am surprised the unions stand for it at all.
Everyone should be contacting their Senators/Representatives to eliminate this travesty.
You’re exactly right. The H1B Visa workers can barely speak English, are almost impossible to understand, are under-educated, and many have questionable hygiene given their 3rd World origins (where running water and bathing are luxuries, as is deodorant). They aren’t as good as the people they replace but they’re willing to work for peanuts, as it’s more than they get in their 3rd World countries.
Woh! 3rd World origins? Questionable hygiene? Under-educated? These are a lot of misconceptions about Indians or others who come from the so-called 3rd World countries that you mention…
The engineers or IT folks who travel to the US on the H1B visa are highly qualified. Yes, they do not speak English with an American accent and they may not be fluent in English because it is not their language of choice for communication, but that does not mean they are less intelligent or less capable than anybody else. If the work done by Indians were so bad, then why are more companies hiring them? I agree that many Indians cannot speak English as fluently as those whose mother-tongue is English, but is that the only criterion for judging whether a person can be a great employee?
And for the record, we do have running water and we do bathe everyday (sometimes, twice!), and many of us do use deodorants as well as Gucci perfumes! Don’t judge Indian by their origins. Judge them only by their contributions and capabilities.
Well said. Maybe it’s such preconceived notions that some (many?) Americans hold that undermines their own position!
H-1B labor is not as cheap as you think. Employers must pay H-1B workers the prevailing wage as set by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS). BLS surveys the market and publishes wages based on job title, state, and county. Add to that the cost of the average H-1B case is well over USD $5K in filing fees and attorneys fees.
For FY 2016, only 1 in 4 H-1B cases even made it through the filing acceptance process. Each year, only 65K H-1B visas are issued nationally.
Are there some employers not paying their H-1B workers the prevailing wage? In any population, you’ll run into exceptions. $500 from each new H-1B case goes to pay for fraud detection and site audits. Just sit through a U.S. DOL or USCIS site audit. It’s an experience no employer forgets.
Many engineering and IT occupations have become narrowly focused on a unique subset of skills. It’s interesting that a significant number of foreign H-1B workers are committed to continuing education while their American counterparts are more interested in partying in the evening or watching the next episode of a reality TV show.
If you want to sit back on cruise control and fly under the radar without improving your skills over the lifetime of a career, then look for federal state, and municipal jobs. These are quickly becoming the employment safe havens for those lucky enough to get in. Of course, often you’ll be trading income for job security. But some government jobs pay surprisingly high wages.
You identify yourself only as “Attorney.” Perhaps you should have divulged a bit more of the truth: You are an IMMIGRATION attorney who represents employers who want to replace Americans with CIL (cheap, immigrant labor) by means of these visas: H-1B, L-1, TN-1, O-1, H-4, etc.
“Are there some employers not paying their H-1B workers the prevailing wage?”
After speaking with many of my H-1B bearing counterparts I can say this is the norm, not the exception. In an industry where the mid-level won’t typically make a job change for a $5K adjustment, it’s my opinion that arguments around H-1B fees are simply not worth discussing.
I find experience levels of H-1B workers across the spectrum like any other worker. However, H-1B workers in mid-senior level positions and performance are quite often paid at a junior’s rate. As an American citizen I find that as a contractor I am offered a higher rate as a contractor than as an employee. I often find the opposite case for H-1B workers.
Where are the technical schools that provide the kind of education ITT was snake oiling? We have folks coming out of college not understanding how to use their degrees, and business is working with other countries to inform their educational programs on their curriculum. It’s not like the need for earnest versions of these schools don’t exist.
Rightly said, in fact government also earning more money through H1-B visas and creating more employment at us for processing visas and change of work status,
Your response to the costs may be accurate but you are misleading. You do realize that a company doesn’t just hire a H1B like a permanent employee? The vast majority of H1Bs are not hired to be resident programmers, they are hired to facilitate all of the programming functions offshore. A swarm of H1Bs will descend upon a site, perform KT with onsite staff, and then transfer that knowledge offshore. So a few h1B visas have an exponential affect at eliminating many more jobs. The 80000 or so h1B visa holders move from company to company like locust decimating American jobs. That’s the real story. Not the prevailing wage one you are hustling.
About time techies take a hit . just like the rest of us poor slobs have for years
Ditto. American IT workers are doomed. IT is a race to the bottom. I stopped solving issues caused by incompetent indians at work. If I fix their bugs, upper management doesn’t know. So I let them flounder.
If they are as bad as you say they aren’t cheap, they’re expensive.
The piece says that with 140K employees, there were 5K applications and not all will go forward- so 3% or so will be foreign hires.
I would say the fairly obvious looming bankruptcy of the combo is a bigger threat to IT workers.
But the idea that should be introduced, since as far as I can see it hasn’t been, is simply the Law of Diminishing Returns.
Unlike the so- called Moore’s Law, (which is now invalidated, computing power is not growing exponentially it has plateaued) diminishing returns always applies.
The argument I’m making is that the application of IT to the economy is not producing the returns it did in earlier years.
Take the invention that pretty much brought Apple back from the dead, when its Mac ecosystem had sunk below 5%- the i.pod.
The Walkman was the portable recorded music device at that time
In the i.pod, cheap memory chips replaced a motor, capstans, tape,
and gave several orders of magnitude more storage.
Where is the recent hardware app that can compete with this?
Moving to software- no IT invention past, or within the forseeable future is ever remotely likely to save as much human labor as word processing.
I contributed to newspapers for 20 years- without different versions of word processing, (even Micom, a dedicated computer that couldn’t do anything else!) it doesn’t happen,
For folks using type writers they used to sell White Out by the ton!
Sorry there is a competitor for word pro after all- bank accounting.
The expression ‘bankers hours’ refers to the days not long ago when the
bank opened at 10 and closed at 3.
It had to close at 3, so the employees could use mechanical posting machines to process each and ever transaction BY HAND!
Today you take 100 bucks out of the ATM- your account is debited by the computer in real time. Multiply that by billions of transactions per day.
The internet is a great invention- using it to hail gypsy cabs is a good idea ( driven by the artificial shortage of taxis) but it’s not a technical breakthrough. Nor is it a technical breakthrough to use it as a kind of bulletin board for a circle of friends.
The rest of the social media stuff actually aren’t technology no matter how much Wall Street likes to pretend they are- they are applications of technology.
No doubt Microsoft is annoyed that Windows 7, (the one I’m using, having moved up from XP, and that only because I sold my house and junked the desk top) is being used by millions.
And Apple wants you to ‘upgrade’ to a phone with a cordless ear phone AND no jack.
Neither Windows 10 or the new phone offers anything worth replacing older units.
These IT giants are running into the Law of Diminishing Returns.
They are all going to need fewer people because the economic return of a IT worker is declining.
At least with MS and Apple it will be gradual- with Dell and dance partner
it may be over pretty quick.
But the mass layoffs as the AOL- type saga proceeds won’t be due to foreign workers.
They should use H1B to hire Central Bankers. In fact they should use it to hire all sorts of finance people like Private Equity, etc. Heck perhaps the C roles as well.
After all who came up with this idea of stripping company assets, negative rates, stock buyback at nose bleeding levels, hiring H1B workers instead of Americans, etc, etc.
I guarantee the damage will be less than the current people at those roles.
But nah, let’s blame the hired rather than the one making all the decisions.
You are right on the mark !
Algos have already eliminated many traders.Analysts on Wall St will be the next to go as indexing supplants active investing.
Who will be the next to go?Not sure but as robots become more sophisticated investment banking is sure to feel the pressure.
Since most of the decisions of Central bankers are based upon models,it is only logical that there is really no need for people.Robots(algos) can screw up as efficiently as people.
It would be interesting to see the head robot answer questions in Congressional hearings
r cohna: Interesting comment. But one question: if Wall Street analysts and traders are replaced by robots, who will smoke the $200 cigars and snort coke off of hookers?
If these algos can replace your financial adviser – he wasn’t worth paying in the first place- and the majority aren’t.
Up until a few months ago, many financial advisers had never seen an interest rate hike – they probably still think they can only come in .25 % increments!
The downgrades of outfits like Valeant AFTER the bad news hits the fan are normal.
If you are a regular visitor to this site you will be aware that one of WR’s themes ( I hope I’m not overstepping here) is that a huge downturn is inevitable.
The algos, or whatever term you want to use for automated trading, are great at chipping off little trading edges, thanks to HFT, which is actually a type of front running (read ‘Flash Boys’) but not so good at seeing the overall picture. To use another metaphor, they see the trees but not the forest.
But as in the flash crash, they see it once it’s happening.
Their run for the exits will produce a much larger crash, because they will all be running the same data through similar programs.
They aren’t contrarians
I am butting in line to re-affirm what you say, but in a more direct way…
WALL STREET is the intimate reason for every entry that is posted from here down.
Don’t forget, it all leads back to them. Money corrupts, power corrupts and Wall Street has spread your retirement dollars from DC to Beijing, all for your ‘benefit’….
Correction. Typo in address.
Queue “Inspector Javert” to tell us how “…the US does not produce enough technical talent to meet needs (and no, you generally can’t recycle COBOL coders as modern sys engineers)”…
Corporate arrogance and greed will always overshadow pesky technical details. Be sure to remember that when you discover how all of these superior foreign engineers have built in (or worse, missed completely) back doors into the U.S. most prized assets and facilities.
When NASA was run buy engineers they put several men on the moon in under a decade — and got them back safely. Once the bureaucrats and accountants took over they could barely get them in and out of earth orbit without blowing them up.
Are the bureaucrats and accountants H1Bs?
No most are dual citizens though unfortunately for US citizens
Ah but one of those citizenships is a US citizenship no?
Guns/rockets/etc don’t kill Americans. Only Americans blow up Americans.
Rinse and repeat…Look at what happened to all those NASA engineers, they were ABANDONED. And, the country did and said nothing. Sounds just like how we have treated all the military boys who thought they were saving America for America, and got abandoned. For the last 70 years, ABANDONED. Why, if they can be ‘charged off’ can’t you too?
Nothing will change until Americans change, and now they are firmly seated in surround sound and drinking ether injected beer, and GMO popcorn in ‘personal sizes’.
The 99%, some day a way to reduce that number will be found but not with jobs. Robots will, in the end, take over everything including corporations and governments. People are no longer required, even deep state ones.
Why go to the moon again? There is nothing there. The whole thing was a cold war exercise.
I beat you!
Good news -the whole robot thing is massively over-hyped- almost 1950’s delusional- flying cars, robotic domestic servants etc.
There is something about the word ‘robot’ that sets off the artistic impulse in otherwise normal people.
Fact: most robotic i.e, automated apps are in very basic repetitive tasks. e.g. packaging from bulk to individual.
There is no robot that can assemble a lawn mower, make breakfast, or a pair of jeans, or change a tap washer etc, ad infinitum.
Nor are they in the medium term.
While U.S. school systems offer “social justice” degrees
“safe rooms” and racially segregated housing
Foreign educational systems concentrate on teaching their students the skills needed in the silicon revolution.
Guess who gets hired?
The sad, inevitable consequence of putting corporate profit (more useless, dead money for the elite 0.01% to offshore) first, executive egos second and products, innovation and people a distant third.
Very good analysis of Dell BTW, they never did anything new, they just did it slightly better than most of the others – no innovation required. It’s a good lesson for business seeking ‘innovation’ – build a better chip shop and the money will follow. Strive just for the money and you’re likely to fail.
It funny but for all the company speak it’s still pretty difficult to buy a silent, low power, powerful PC for the home office. Lenovo and Intel (NUC) seem to do them, although they are reasonably expensive, but Apple have given up doing anything useful with the Mac Mini (and have just updated their useless – connector free – macbook 12 to leave it still useless, not a good sign – a laptop I’d have already bought if it had the same connections as my Airbook 11.
So this week I was reduced to hollowing out an old Shuttle PC case, adding an quiet/silent SF form factor PSU at the front, a micro-ITX motherboard and a huge Arctic Cooler 13 stack to meet what must be a very common requirement of quiet power on the desk or next to the audio.
And I’m sure EMC are a wonderful (storage?) company (but there’s still a lack of affordable storage servers (quiet, Linuxable, low power, plug in disks). I can’t be the only one on the lookout for a quiet linux disk server… can I?
Time to make what you need. Market it via startup and get on board the H1B bandwagon to profit yourself there Graham LOL! :)
There are tons of smaller Linux storage servers. Synology gets a lot of love. Drobo was a thing until Synology. And I know there are a bunch of others. And of course for larger things you can get Supermicro servers with lots of disk trays and fill them up. At some point SSD will take over spinning rust all the way, not quite there yet but.
EMC is very high end, very expensive. Them and Network Appliance (Not sure if HDS is still a player.) Their reliability is strong.And it will cost you a ton.
A lot of these servers are rack-mount for server rooms or made by super niche tiny firms, something like a HP Microserver would be ideal – but one made by an ethical company instead – would be good.
Maybe there’s just no demand for them, although I’m sure more people are using Ubuntu, Debian or the rather less secure Mint Linux these days – for which these mini-servers are ideal.
Maybe the real answer is to buy (another!) obsolete Shuttle PC and stick mini-ITX MBs in them with a big disk or two :D. I do feel somehow that someone, somewhere has lost an obvious sale.
I have an airTop Server, silent, powerful, with all kinds of connections, 2K though. It is either an UK company or Iserial company.
15 years go I was managing a database tech group in a premier financial organization that was targeted for outsourcing. I made a case that average cost, including benefits etc., was $110K/yr while the replacing h1b guys from India will cost almost same. However, the challenge will be their lack of understanding of our business applications dispersed all over the country not to mention communication issues. I was told that the CEO has already signed off on 2500 technical staff reduction via outsourcing and our share needs to be honored. Apparently, markets love staff reduction, while increased expenses are buried somewhere in other expense categories.
We spent huge amounts of time training the guys with our applications and ultimately laying off of our experienced, loyal and productive staff because the CEO had made this ‘strategic decision’ after seeing some fancy power point presentations.
BTW, I migrated from India 40+ years ago to this great country. I hope that my staff understood that it was not my decision.
I’ve always been impressed by the people I’ve met from India, they’re quite bright, hard working and have high morals. FWIW, that’s my impression.
I’ve worked with them in IT, and I’m not so impressed. Their main feature is they work cheap. In my personal experience they have no special expertise and their communication skills are frequently substandard for an American work environment. Everyone else has to work more to make up for their deficiencies. But management don’t care about the quality of their work — they save money in the short term and that’s all that matters to them.
Actually, I meant from a personal perspective. I should’ve been more specific about that.
Every 10 years, on the Anniversary of my 18th birthday, I read ATLAS SHRUGGED.
Why? During the Summer after my 18th Birthday, I found in my dad’s library a First Edition, First Printing, Signed copy of her book. (My dad, being an airline pilot during the 50’s and 60’s met many “famous people” and he has many autographs and signed copies by authors at that time. This copy of Atlas Shrugged has an “Amazon, Alibris, Ebay value of over $5,000).
When I opened it, as curiosity, I found myself on the page(s) where John Galt and Ms. Dagny Taggart are getting frisky with each other……how could an 18 year old American boy NOT want to read this…..thus, I read the entire 1,300 pages and it completely changed my life. It woke me up. It is why I am a “success” today. No wonder it is the #1 Book in the English language.
Anyway, every time I re-read it, I gain more of an insight. What does this have to do with this post/topic? Easy. Every company she has in her book is Family or Individually owned. I wondered about this, until I realized that the “stock corporation” , international corp. idea…is wrong.
When a person pours their heart into their business, creates it, nurtures it and want to pass it down to responsible family members, then they think LONG TERM. That is the way it should be.
The cold, indifferent, brutal, stock corporation is anti-human. Basically, it is evil, as we are beginning to see.
In many positions, working cheap benefits the stockholders more than working perfectly
I had one indian developer tell me that his data files (in UNIX) requires a “chmod 777” permission. Yeah, these guys are brilliant.
If management doesn’t care about the quality of their work then who is the customer?
How you can save money in a precision area like IT with useless employees?
There is something not adding up.
If the employees are dis-functional but retained anyway, then the customer must be also dis-functional.
If the customer is government – say na more.
This is University educated ignorance. Not ONE company I ever started went under. Not ONE even went from profit to negative. Not ONE ever downsized. Not ONE ever lost a dime. NO employee ever felt the need of ‘want’, they were always covered.
WHY? Because I always hired people smarter that I was.
I think virtually every business is now openly dropping US workers to save a few short term bucks (rather than use the old strategy of investing in inputs) at the expense of long term viability. For example, caterpillar just finished with a big labor swap:
But, what is even better is that taxpayer funded educational institutions are jumping on the band wagon, too:
At the rate things are going, the US, as a country will no longer be an innovation destination on the planet by 2020 (there is already some hefty competition). One of the reasons I say that is because I have talked to several “freshly adult” people and they are electing to NOT get into college STEM degree programs as they see the career as nothing more than something short-term due to the quickly declining payscale (hard to compete when your foreign labor competitor only needs $300 USD/month to survive in their country’s economy) – assuming they can get into entry level positions to begin that career that are weighted with foreign labor.
Tick, tock. The US’s end is at hand.
The global labour arbitrage with continue Also while people with a more entrepreneurial spirit, like Kenneth Griffin, Jeff Bezzoz etc. will do much better. Most average adults are actually morons. Some of them grew up in the post ww2 era, when the American labour had no competition from anywhere.
I’m in tech and in my 50s and can tell you it ain’t pretty. Between age discrimination in general and the influx of H-1B workers, the outlook is bleak. It started with the dot bomb era and is now in full force. I’ve seen articles on people going as far as plastic surgery to look younger. Absurd and obscene.
I was RIFed from Dell along with a suspiciously large number of older workers as part of a plan to eliminate the pay band I was in, which by any measures was generous beyond a doubt. I’ve been invited to return on several occasions but the future is software, not hardware. Dell is a fast follower in a dying business model.
My advice to older tech workers is to find the means to update your skill set before you get laid off. In software that means Agile/Scrum/Kanban and SaaS. Social media is important although I’m hoping that fad dies a horrible death sooner than later.
I wish social media would die NOW!
I’m 64 years old and I’ve never seen so many alleged adults expressing such childish and puerile nonsense as if it were profound thought.
What’s worse is that most of the people pontificating on Facebook actually believe their own hogwash.
We’ve become a nation of children, all whining for our mommies.
WHAT? You won’t “friend” me?
If whining is what you do, how is whining on wolfstreet better than whining on Facebook?
Fakebook sucks. No one in my family including teenage daughters use that crap. I can’t wait for the whole damn narcissistic time wasting BS Web 2.0 companies to get flushed down the toilet in the next tech downturn.
BTW last big downturn in SillyCON valley was in 2002 with stalwart hardware companies took brunt of it and overconfident millennials in SillyCON valley who will soon learn thing or 2 about gravity and filing UI.
VB…..I have been calling them Farcebook and Fritter since Day 1. Like I really want a 20 something in a hoodie owning every bit of info I post until Hell freezes over OR wasting my life 140 characters at a time.
My sister was mentioning a friend who posts bits of crap from her daily life on FB. If they’re having lunch she posts a pic.
!5 nanoseconds of fame?
Sad reality as I started career out of college in 1986 as a hardware design engineer at tape and hard drive head company (BK’ed 15+ yrs ago). I was assigned to sustaining engineering of ancient 9-track half-inch tape heads. Left for medical device industries and tiptoed back to hardware at once largest software company. Switched gear to pharmaceuticals where thankfully older workers are still valued for now but that can change in next few years.
Redmond area had thousands of H1Bs from India crammed into apartments. IT department at my big pharma company has been over-run by the H1Bs too. Lots of H1Bs are low paid indentured servants with coveted green card dangled over their heads. Yes it’s all about globalization but damn it what about our kids?
The vast majority of productivity gains have been realized with tech. The hugh tech companies will continue to shuffle the deck chairs on the Titanic, as it were, and of course come up with creative ways to screw the lowest man/woman/small company on the totem pole.
Unethical ,immoral,dishonest but legal.
While the US is certainly not fascist in the German or Italian model of the 1930’s and 1940’s, we have EVOLVED to a new form called “corporatism”
I would respectfully disagree. Instead of an overt militarized police state, the US is an electronic police state. People don’t need to spy on their neighbors in this day and age. NSA already performs that function for the State.
Obviously they are friends of Zuckerface the lover of cheap foreign slaves that he is
Yep he is at forefront lobbying for more cheap H1Bs, suppress conservative news and finance liberal agenda. He is young Soros .
The trend of hollowing out the majorities ability to earn a living will eventually bring everything down.
If you can pay your employees less then go for it. US government has had a subsidized policy of exporting jobs and importing workers for decades now, I guess lawyers and insiders make money this way?
Where I work we hire tech “talent” on contract to help finish specific projects. The managers cannot hire at lower rates because of preset pay bands and always get lowball candidates from the contracting agencies since the pay we offer doesn’t compete with silicon valley. They also hire lower-level candidates for inflated (higher level) positions to make the budget work.
Of the last 3 candidates:
One spent 3 months to do a project that could have been done in 2 weeks to a month by someone competent and I had to do much more hand holding than I should have even though I wasn’t really supposed to be involved.
One talked all the buzzword bingo but then was allowed by management to work off site when personal problems at home came up. 6 months later he needed to be fired for delivering only a couple weeks to a month of work and consistently returning no work for months in a row on end.
Our best contractor isn’t technically skilled but at least can follow instructions if her hand is held, works hard (though not very intelligently) and is willing to work and is personable. It seems her level it’s the best our hiring people can manage to get.
2 of the 3 were Indian nationals and held computer science degrees but with surprisingly poor technical skills and background–not sure if h1b or green card holding. The “hot shot” American was the one who stopped working and delivered no results.
Management is the biggest problem for us since they continue pinching pennies to hire incompetence or only semi-competence when they could spend less by hiring better people even if they had to pay them higher rates since they’d get things done much faster and more intelligently.
It’s now part of the executive playbook to hire h1b holders. I think, like preschoolers, companies watch what everyone else does and imitate whether it makes sense or not. One preschooler does something and the other kids imitate. One CEO does something and many others follow.
They continue pinching pennies to hire incompetence or only semi-competence when they could spend less by hiring better people even if they had to pay them higher rates
This. Hiring cheap has become an MBA ideology. It’s more important to keep the workforce intimidated even when it costs more money in the end.
Mike G……Once I entered the working world after high school it didn’t take me long to figure out that MBA stood for : Masters of Bullsh*t Allocation. I laughed my butt off every time I changed a light bulb for one of these “educated idiots” @ $ 30/hr. LOL
In Germany and Japan there was until quite recently no such field- the two of them pretty much ran Detroit of the road with better cars but no MBA’s.
Just before it went TU- GM had become a master of financial engineering run by MBA’s and even at one stage a lawyer!
Many of the Indians with BS and MS degrees from India get them at diploma mills. They do attend classes but it is basically going through a programming text book and that’s it. I would agree with most of what I have read here, they mostly hire their own unless they need a skill they can’t fake. I got my first job from a Brahman because he needed an assembly language programmer and I was it, and because as woman he could underpay me.
Add Dell to the growing list of companies that I boycott.
I saw firsthand the evil HR process in re-engineering, downsizing and rightsizing and variations. It distressed me to see and hear the executives lie to the employees. They targeted older employees because those people cost too much, notwithstanding the experience and productivity. The results weren’t pretty but the shareholders were mollified for a quarter.
I would and do boycott Dell because they have a terrible reputation going back to their first incarnation. They made all their money selling warranties they didn’t honor. Pure profit.
H1-B abuses? The H1-B program IS an abuse by design. It was designed to drive down engineering wages and it has been a spectacular success.
Twenty six years ago, I was still an electronics design engineer. My employer hired a grad student as a temp. He was here studying on an H1-B visa. They went thru the now familiar process of disqualifying citizen applicants because they weren’t an exact match so they could hire this guy and pay a technician’s wage to an engineer. Within a few years, I got no more pay raises, as I had “topped out”. I left and went into software but the same thing is happening in the software field too, maybe worse.
The same story has played out all over the country with employers soon becoming so bold as to notoriously require those US citizens whose jobs were to be eliminated to train their H1-B replacements. For decades, we’ve heard dire predictions of engineering shortages that never materialized.
But now, it may have become a self-fulfilling prophecy. Many young people are shying away from STEM fields. And the curriculums have changed in response to the realities of the job market. For example, the study of circuits has been de-emphasized in most EE curriculums due to the low demand for circuit designers in the US. They have created the shortages they’ve predicted.
I used to love transform analysis to a degree unimaginable and was wholly disappointed I never had an opportunity to make use of it in my career.
THERE IS NO MORE AMERICA!
ONLY A BIG COUNTRY BUILT AND BEING BUILT ON SLAVERY!
if a corporationcan save money to give better returns to its shareholder all the poer to them.
i wish we could do the same in canada in regards to government jobe in canada cops and firefighters make over 200k a year the government employees do not work and get paid way to much .
why can we not hire hi visa guys to run our goverments at 70 percent less wages imagine the taxes we could save.
way to go michael dell
Which is the reason it is America that has silicon valley, wall Street, JP Morgan, Goldman. Sachs, apple, all the while Canada is a resource, oil and agriculture driven economy. Hard nose capitalism has things going for it.
here’s a tip: learn how to spell and how to punctuate the English language.
You might get a little more respect with your ‘quarterly profits’ grasp of the economics issued posited here by all manner of folks more insightful than yourself. Or maybe not.
Rosengren: “This is your captain, brace for impact.”
– Doesn’t DELL-EMC understand that by doing this they are undermining demand in the entire US economy ? And for their own products as well ?
Dell and thousands of other independent actors all seek to maximize their own situation without much regard to the greater world. That is a recipe for long-run disaster, but with short-run thinking they don’t look out that far.
The moral hazards available for application in such instances are one growth industry. As has been said in various ways, It isn’t what is illegal that is a surprise, but what is legal!
Every globalist’s dream.
Yes, it’s planned this way and will end up with no jobs in America or only those jobs that service the bosses or have a compatible wage with third world countries.
The only way this ends is when the global “unit of labor” is low enough to allow net profits to meet the bosses needs. Many here in the states will be relegated to living in a box, much like many do now in the third world, but the global labor rate will be adjusted down to where a profit can be eked out.
Either labor pays the price for the loss of cheap oil or the bosses do. I think we know who the winner is there. There are many countries with cheap labor left to exploit.
So everybody wants to make money while it lasts. Too much money at stake. Older people will always get canned for new fresh of the boat Indians and Chinese for all tech. They are CHEAPER.
Most driven people who lose their jobs have an idealistic view of business world. Most dedicated older people have an Idealistic sense of Loyalty. Thinking that they won’t get canned because of hard work… these new brown nosing MBAs are crunching numbers and making power point presentations… that’s all they care about numbers.
There is too many things at risk, and to much money. CEO want to make the money now… it’s like musical chairs… get it while it lasts….
Find a way to work for yourselfe, only.
IF that means mowing lawns, do it.
If that means having a pool cleaning business, do it.
If that means being an independent painter, do it.
Best yet (and I financed this for one of my sons) is to have the hottest and best sports bar in town.
Having been in “professional” work my entire life, I told this son to NEVER, EVER go into anything medical. He opened his sports bar, on money borrowed from me, and we discussed the best way to make it # 1
1) More and better TV’s than anyone.
2) Design the layout so you can show numerous games at one time with each “section” able to enjoy their game, but aware of all the action in the rest of the place.
3) Give the best looking women that come in FREE food, FREE drinks.
4) Have the best prices. Burgers $3. Hotdogs $2, Fries $1. Have the largest selection of beers, even if most of them don’t sell. VOLUME and Gluttony is the key, along with sex (pretty women).
5) PACK the place, then slowly raise the prices, but keep it PACKED. You want to turn people away.
6) On big days, (SuperBowl, World Series finals) charge to reserve each table to those willing to pay. Make it extremely exclusive and price what the market tells you. If $100 for the table sells out fast, raise it next time to $150. Maximize the prices since there is no real value….only what you can sell it for.
(I could go on and on, but you get the idea). Own your own business, be your own boss, hire yourself and stay away from the BS jobs like Doctor, Dentist, where your life is a living hell. Sell booze, burgers and fill the place with young beautiful women and your live will be successful and happy)….plus dear old daddy likes to show up and…………..you get the idea………………………….
I totally Agree on this route. The Volume and Big Portions is Key. charge low for food and high for all drinks… I am working on this one saving monies to finance that. It won’t be a sports bar. But it will be food. The wife loves to cook and went to culinary school, plus has recipes from both grannys.
My problem is that I’m in California. It’s hell to start a small biz here with the permits and the cost of everything. Then now it’s gonna be $15/ hour to hire help… so yeah. I’ll save more money and move to either Colorado or Texas to start a food biz.
I have friends that went to get MBAs that are making 10-15% more than I make and have 60-80K student loans… for the privilege of brown nosing a lot. I’ll the 80k and be my own boss. I’m 33 and already tired of commutes and office BS.
What state are you in? what kind of money got your son started?
When I moved to Key West in 1973 when this place was a ghost town, I thought as always…being my own boss…to start a mail order company for all the kool things I saw here including smoked fish! Trying to do it the right way I applied for mail order permit. The FEE, 1973, was 2,500.00 per year. (Remember hourly was 85 cents, gas was 59 and a nice house was 6,500). Why? Because SEARS had lobbied to get the fee that high so no one could compete. Well, look at their dying model now for success. Me…I did just fine because I never take no for a reason to keep me down. You should not either, your talents are your life raft, sell them back to the CEO as a contractor and write off ALL the things you could not as an employee.
There are purely selfish reasons for supporting a higher minimum wage.
A question. Could you survive on the hourly wage you are planning to pay your employees? Probably not. So the rest of us get to pick up the slack with our charitable contributions to food banks, etc. and with the taxes we pay to support programs for the indigent. You have a dream, we get to subsidize it.
Then there is the consumer economy you’re hoping to make a living from. As Wolf so effectively demonstrates, it is collapsing from within, due among other things to wage suppression. What results is less and less discretionary spending on things like eating out.
I’m sure hoping that the presidential debates will spend some time on this subject. Pointed questions with followup for both candidates.
On a lighter note, I believe Melania Trump at one point was here courtesy a H1B visa. Because there is a critical shortage in the US of tall, voluptuous women willing to be nice to Donald Trump. So they have to be imported.
They are coming for our jobs!! OMG!! Like Jeff Bezo’s said – “your margin is my opportunity”. If you think you have special skills, I guarantee you will find a highly paid job. But if you are one of those french bureaucrats (make it state bureaucrats – google Susan Muranishi pension), then no soup for you.
Its OK to complain about everything going to dogs, but sometimes its good to do a little introspection. Just like a 30 year mortgage (line item) is not a birthright, if you are working for a business, know that you are the business, you are a line item. Yeah sure it sounds cynical, but hey that’s because you were high and now its hangover time. Its like the newspapers complaining about how everything’s changed and why they no longer make any money.
If you go to a third world country today, you’ll see they are drinking Coke and Pepsi, wearing Nike and Adidas, buying Android and iphones. Like Sir John Bowring said during the opium trade in China: “Free trade is Jesus Christ, and Jesus Christ is free trade.” Surely folks on such a fantastic blog like this understand the problem of “You can’t have your cake and eat it too”. At the risk of sounding cliched – ‘Stay thirsty my friends!’
Like Sir John Bowring said during the opium trade in China: “Free trade is Jesus Christ, and Jesus Christ is free trade.”
You make me want to hurl.
Gee how lucky I am, I feel better reading your primer.
Sure, if it makes you feel better. I know quite a few people with very high morals. They are righteously angry at the working conditions in
Chinese factories. But every time they use their smart phones they turn giddy with glee. So glad you liked my primer.
One of the few voices of reason in this thread, thanks for saying it.
The middle-class entitlement of Americans has to go, really. Until the unskilled population learns how does it feel like to ride a cycle or walk on a dirt road for two miles to a factory job which pays $5 an hour, the labour arbitrage will continue. ‘Owning’ a suburban home and two cars used to be a birthright, but it no longer is.
Not much can be said for Facebook’s AI and office skateboard programmers vs Napalm Girl, she wins hands-down as these guys are gurus of yet completely incapable of recognizing importance of social issues..
Same thing killed Yahoo, IMO
Food for thought
The core problem – the failure to stipulate that “persons” referred to in the Constitution are NATURAL persons and not the ARTIFICIAL persons that are corporations who then have the right through corporate person-hood to liberally apply vast sums of money to politics as an exercise in “free speech.”
Pass a single amendment simply stating that all guaranteed rights and protections for “persons” in the Constitution are for natural persons only and was always intended to be so (as it most certainly was). That would make all previous court decisions and legislation assuming otherwise invalid.
Perhaps add that corporations WOULD be considered persons if convicted of multiple felonies, implementing a “three strikes and you’re out” law with them. With that, some major banks and other Wall Street concerns would have already lost their corporate status and perhaps even their right to do business in the US. That would be a far better deterrent to illegal behavior than fines that are a small percentage of the financial gains from illegal behavior.
Of course, the chance of this ever happening is zero.
There are many solutions to our labor market problems and we do need innovation. What amazes me is the incredibly low interest in third political parties in the US in contrast to the avid interest in, for example, the NFL. Whether you like the Green Party or not at least there are some (not all and simply different from the democrats) good ideas and the 2% polling tells you that Americans are not interested in ideas. Until the average American starts to read and think about these issues we will continue a downhill course to armed revolution. Why armed? Because Americans are armed to the teeth.
This article represents one species, so to speak, of a generic problem (another species was treated in the Wolf Street article http://wolfstreet.com/2016/08/05/per-capita-job-growth-employment-population-ratio/ )
How will unemployable human beings sustain thamselves?
How can we encourage High School Students to enter STEM when the reality of the lack of jobs in the STEM fields is not in their future? No one is telling them the reality of foreign competition of their jobs as the result of H1-B VISAs.
MARY, thank you:
“There are purely selfish reasons for supporting a higher minimum wage.
….A question. Could you survive on the hourly wage you are planning to pay your employees? Probably not. So the rest of us get to pick up the slack with our charitable contributions to food banks, etc. and with the taxes we pay to support programs for the indigent. You have a dream, we get to subsidize it.”
NEVER EVER APOLOGIZE FOR WHO YOU ARE OR WHEN YOU CAME HERE. every little shmuck’s just trying to make a living and the problem is when we are fighting little guys when it’s the corporations, rich folks, governments, and banks setting the rules for us all to play and survive or die by.
by reading the comments on this site, particularly this issue of H1B visas, i see why Mary and Petunia are the only women who regularly post on money/biz threads. until Mary wrote about paying wages you yourself could live on, i wondered where the hell i’d landed.
first it was about money and fucking americans over, then it was about …hate and how to get over???
this divide and conquer stuff gets really scary when you’re a colored girl, you’ve got the extra hole, and can’t run fast enough.
Deepak… NEVER apologize for who you are and when you got here. the Mexicans and the Natives are the only ones who get to truly kvetch about the death of EVERYTHING. this country is selling out its own at every turn.
as the other poster above said, it’s ALWAYS been like this since its inception. the whole concept of “america” is based on slavery and division.
P.s. and to the old man who lent his son money so he could open a sports/low-level-titty bar and ogle the pretty young girls he regrets paying minimum wage to:
THAT’s the FUTURE???? that’s NOW, baby love.
i winced when i read your post like “ew” because what young woman wants to serve an old guy who’s a partner sitting in a booth with his hand down his pants, telling his son to “buy cheap! sell high!”, BUT there’s so much flaccidity and asexuality and anti-erotica with these tech people here, i’m actually RELIEVED that there are old men still alive enough to actually sit with their greasy hot wings hands down their pants ogling little girls.
who knew? you never really know yourself when a dirty old man with a “brilliant” titty bar idea actually seems REFRESHING nowadays.
this is what the current san francisco has done to me.
US is the largest economy in the world and will remain so. It became great because of open immigration. Just about each and every person responding to this item has ancestors who arrived from elsewhere to USA. Yes, you may see many Asian workers in tech industry, but that is what has made this industry the only successful, profitable and pioneering industry in the country. You do not see these Asian faces in pro-sports, Broadway, Hollywood or even running a successful sports bar. Tech is just a small part of US economy. These group of tech immigrants from not just India but also from China, Russia and many other countries are just a small proportion of US population making a huge contribution to US economy. Folks may not realize but many other leading economies are begging such talent to migrate to their shores but getting dismal results. German parliament for first time in history began to issue immigrant visas to technical talent. Guess what Germany cannot get these workers to move there. May it is the language or love for USA that brings such talent to this country. Even Japan is suffering a lack of growth in technology field due to unavailability of qualified workers. Japan is encouraging immigration but not getting the number of talented immigrants. Nature of business is to make profit while providing goods and services. One idea to consider is to try to get visas to countries like Germany, Japan and France to work on technology projects and get an experience of off-shore living. Let us be constructive and creative in true spirit of America and find a way to grow and succeed with so many opportunities US provides to all of its residents.
Please don’t keep parroting the US has a labor shortage when 94 million people of working age are not active. Dell terminates 3,000 employees to replace them with 3rd world wage slaves.
Thank you for reminding everybody that the tech industry routinely eliminates half of their potential workforce through low pay and extreme sexual harassment. I left the industry with a load of good ideas and never looked back.
People should retool and retrain with skills that are needed in today’s fast changing modern economy. If immigrants can succeed then why can’t native born when they have many more advantages over immigrants?
This confirms the “free trade agreements” as modern slavery.
It should be pointed out a lot of tech companies don’t bring in their own H1-B’s. What they do is layoff and then contract from other companies that bring in their own H1B staff.
The tech company benefit on this class of employees is clear, they no longer have to pay benefits or spend money on recruiting, interviewing, payroll, etc. To boot, they can jettison the contracted staff at any time and don’t have to worry above severance and the like.
From personal experience I’m not a fan. Typically you end up with people that can perform a narrow set of tasks acceptably, but anything outside that narrow band becomes a blocker. There’s no movement or ambition to remove the block. You then either have to pillage existing resources to deal with this limitation, or you hire babysitters.
It’s not about bringing in highly skilled workers. It’s about bringing in (hopefully) adequate workers who are almost indentured, willing to live 3 or 4 to a room. This creates a large supply of adequate workers, keeping wages in check.