Faster, better, cheaper, more with less. That's the undercurrent of every executive's sales pitch out here in San Francisco. You bring their wares in, your company saves money while growing revenues, the holy grail of all successful operations.
But the word these tech chieftains don't talk about is "lower," as in hiring lower-waged people to do the remaining jobs that aren't wiped out by the automation they are promoting.
As I talk with technology leaders, I realize their innovations are perhaps the reason why there's no need to raise interest rates in this country despite strong employment. That's because it's not the kind of rising employment that the Fed needs to fret about. Innovation like what we see on display at the Dreamforce conference is all about companies paying less money to whoever's left in the enterprise after the new technology eliminates the middle manager and the minions who support her.
Sure, there's a bidding war for the highest-level talent out here. However, that's because there is a shortage of code writers, a shortage of computer scientists and computer engineers. Blame the U.S. school system on that, though, something the Fed can't control. Other than that esteemed cohort, there's a surfeit of individuals searching for decent, higher-waged jobs.
You know why there's such a battle to raise the minimum wage all over the country? Technology, that's why. If state and federal governments didn't artificially try to get wages up, they would most likely be plummeting via innovation.
There's a surplus of laid-off, once-higher-paid workers whose jobs have been destroyed -- or we can use the euphemism "disrupted" -- by the technology that's invented 24-7 here and around the nation.
Take Salesforce.com (CRM). A principal emphasis of this company is to be able to run your business on your cellphone, no matter whether you manage General Electric (GE) or Home Depot (HD) or Philips (PHG) or a host of companies in pretty much every single industry. Think about how many people can be replaced by such a powerful platform. Salesforce.com makes it so the only people you need are revenue producers. Not the expensive support staff. (General Electric is part of TheStreet's Dividend Stock Advisor portfolio.)
You don't produce revenue, you are surplus, dead wood, to be chopped to raise productivity and margins. Consider Amazon (AMZN). Here's a company that's about replacing those who build stores, those who sell product and those who support those sales. You cut those people out, as Amazon has, and all you have left are lower-paid people who put things in boxes. (Amazon is part of TheStreet's Growth Seeker portfolio.)
You think Airbnb creates jobs? It creates wealth for those who want to make more money on their living spaces. But it can stop the hotel industry's expansion in its tracks. Or how about Workday (WDAY)? That's about automating the human capital management portion of the enterprise. HR doesn't produce revenue, so minimize it. Nor do the people who build and service on-premise computing. Hence why the cloud saves so much money. You don't need nearly as many workers to manage the information flow. Using artificial intelligence, the machines figure out how to interpret and organize the data, replacing thousands of high-paid analysts.
Technology's doing that all over the country. Notice how oil production's not going down that much despite lower oil prices? That's all about technology. The oil service industry's been able to discover and drill and produce for far less than even two years ago, eliminating the highest-paid people in the process.
What do you do with all of those leftover people? They cobble together work lives by begging for the low-paid, part-time tasks that algorithms dictate and assign. Technology's building a people-less society that's inherently deflationary.
That's why there's no reason to raise rates. Technology's doing the job for the Fed. I just hope the people running the Fed, so far removed from what's happening on the ground, understand that higher-paid jobs vanish every day, disrupted by the brilliant minds that surround me here in the Silicon -- not the human -- valley.
