Tuesday, August 20, 2013

The Middle Management Party Ended in 2000

First, start with the total number of private employees. Second, subtract off those who are production and nonsupervisory employees. Third, divide by the population. That's what the following chart shows.

Click to enlarge.

That's a scary trend, especially for those in college "racking" up student debt while pursuing their MBAs.

Like a child in his fantasy
Punching holes in the walls of reality
All my life I wanted to fly
But I don't have the wings, and I wonder why
I can't break away
I can't break away

January 7, 2013
There Are Officially Too Many MBAs

Universities are now conferring 74 percent more business degrees than they did in the 2000-2001 school year. Much of that torrid growth has been driven by part-time and executive MBA programs at less-than-prestigious institutions looking to cash in.

June 16, 2011
Your Well-Paid, Middle-Class Job Is in Danger

"A lot of traditional middle-class, upper-middle-class jobs have been disappearing. If you look at general managers and middle-management jobs, those are ones that have been in decline and will decline further," he said.

December 19, 2012
The Future of Middle Management - Scott Adams

When you imagine the upcoming Age of Robots, you probably see the robots replacing humans in jobs that involve manual labor. An assembly line is a good application for robots, for example. And I assume fast food workers will soon be replaced by robots too.

But I predict that one of the first occupations that will be entirely replaced by robots will be middle management, not skilled labor.

Source Data:
St. Louis Fed: Custom Chart


Mr Slippery said...

Since I occupy the thick gristle of middle management in my bureaucracy, I think Scott Adams missed the mark in his article.

I don't think it will be hard to teach computers the basics of project management. Most of the common steps for a project have a predictable order. For example, you know you need to get bids before buying hardware. You know you need to prep the space before installing the equipment. And you know you don't put the equipment into production until after it has been tested. A robot can easily learn all of the steps in a common project.

A robot might know that you need to get bids for new hardware, but there are complex rules on what kinds of bids are required based on how it is funded and how much it is expected to cost. Also, the process can sometimes be avoided by structuring the purchase in pieces. You also need to know if the purchasing manager is going to be vacation, how to get the bid on the agenda for approvals, how to get it through risk management, how to work with the vendors non-robot insurance reps, etc. That is all for a simple bid. I've seen robot assembly lines, but not robot middle managers walking around. I don't think this article holds up.

If there are any robot middle managers out there that want to debate me on this thread, I dare you get by the captcha where you have to prove you are not a robot.

Troy said...

25-54 instead of total pop:


Not so bad . . .

I was ranting on DeLong's site yesterday how the discussion of 1970s' "stagflation" is just utterly ignorant of the effect of the baby boom turning 20:


It was no accident that when those lines kissed we had significant wage inflation!

Plus the mass entry into adult consumerdom changed the economy -- 4M+ new consumers arriving every year!

But now we're on the flip side of that, 4M entering retirement every year.

As you know, I don't have a handle on what's going to happen with this new dynamic, and I do think it might be surprisingly "good" in creating a more demand-driven economy, given the massive redistribution of LBJ's Great Society.

The original vision has been lost, but the realities remain.

Stagflationary Mark said...

Mr Slippery,

For what it is worth, I've seen the other side of middle management.

My managers had no programming experience. Their version of creating a project schedule was to delegate that task to me. My last manager even delegated the writing of reviews to me. I wasn't involved in the review process though. She'd just use what I wrote to tell them how they were doing.

Then there was the time she complained to me that too many were playing video games on company time. Wanted to know what she could do to stop it. I suggested making a rule that nobody plays during normal working hours. She said that wouldn't work. She enjoys playing during lunch. Therefore, nothing was ever done about it.


Stagflationary Mark said...


We normally agree on many things, but as a retiree, I think the demand will be surprisingly "bad". I think malls will see the brunt of it. I very rarely go. My mom very rarely goes. I assume my retired sister very rarely goes. She's now about as frugal as my mom and me. I assume my retired brother very rarely goes. He has other things he'd rather do, like spend time at his lake cabin (generally not adding much to GDP).

Troy said...

I think the demand will be surprisingly "bad". I think malls will see the brunt of it

sure, old people already have bought what they need.

but the redistribution I'm talking about is just the hundreds of billions of new pension pay-outs and medicare spending hitting the general economy.

This is a new flow of money, and it's not small.


is real per-capita (age 25-54) health spending (blue), real spending per health employee (red).

Up 40% since 2000! Still going up, up, up!

Baby boom is aged 50 to 68.

Stagflationary Mark said...


I totally get the health care argument. My girlfriend is going to become a nurse for a reason.

I'm simply saying that I don't think it will be enough to offset the damage elsewhere. Only 10% of the employees work in health care.

Stagflationary Mark said...

And let's not forget what could happen to the stock market (and pension funds) as retirees unwind risk.

Stagflationary Mark said...

Put another way, there are $15 trillion in pension fund reserves, but are they real or imagined?

Next post idea: pension fund reserves!

Troy said...

Only 10% of the employees work in health care.

but these are paychecks that get distributed into the paycheck economy.

That $120,000 per health care worker doesn't get thrown into a furnace, it gets more turns through the economy.

My thesis is simply the paycheck economy needs more cash inputs. With my socialist hat on, I'd say we need to tax the * out of the top 1% and the corporations they own for that redistribution.



real per capita (age 25-54) nonwage personal income

(If I were King I'd tax housing and resource extraction first and most, but that's a pretty hard sell in a democracy, easier to just soak the rich)

Stagflationary Mark said...
This comment has been removed by the author.
Stagflationary Mark said...


That $120,000 per health care worker doesn't get thrown into a furnace, it gets more turns through the economy.

Of course it won't. I'm simply asking if it will be enough to offset the damage done elsewhere. If pension funds *sell* assets to help create that $120,000, then what?

Troy said...

My thesis is that every dollar injected into the paycheck economy ends up in the top 5%'s savings eventually.

The economy is a cycle, and all rivers flow to the ocean.

Well, almost all.