As the economy has recovered from the Great Recession, things have gotten better financially for most people, although there’s been a lot of attention paid to the fact that the recovery has benefited the top layers of our economy more than those at the bottom. The so-called income inequality has accelerated since 2007 and is alarming lot of people who see the that the rich seem to be getting richer and poor are getting poorer. Although I understand their concern, I think they are ignoring history. After every great economic downtown, you have a huge shakeout of employment, with many jobs that existed pre-economic collapses disappearing forever. The fact is, economic setbacks like the great recession are unfortunate but necessary evils of our capitalistic society. It is during these downturns, when companies are forced to innovate, improvise and trim costs in order to survive that economic revolutions are created, and technology has always been at the center of those revolutions.
The naysayers also ignore the fact that since 2007 we have added millions of people to the ranks of millionaires in this country, and do you know where the most new millionaires are being minted? California! Any guess why? If you say Silicon Valley is located there, you’d be dead right. The fact is that technology start-ups have become a millionaire-making engine, and not just at the top. Yes, when you look at Facebook, for example, you see a billionaire like Mark Zuckerberg, but you miss out on the thousands of people who are now millionaires be, including lots of non-technical people like HR directors and maintenance managers. That’s because the way a lot of these start-ups work is they invest everyone who works their in the success of the company by giving them generous stock options as either additional incentive or, in the case of some of the most senior and talented executives, in lieu of salary.
Take the former Chief Technology Officer at Facebook. When the company went public, he owned options that amounted to less than one tenth of one percent of the total amount of shares outstanding yet he still was worth tens of millions of dollars, enough so that he was not only able to improve his lifestyle, but he was also able to donate several million dollars to charitable causes that he supported. Suddenly finding yourself rich when the company you work goes public or gets acquired by a larger company for a ton of money also gives you freedom. Many of these young, enterprising newly minted millionaires leave the company they worked for when they got rich to start their own new business, which continues to perpetuate and expand the cycle.
Call me an optimist, but when I see what is going in technology hubs like Silicon Valley, I get excited. Here’s where the future rich will come from. Unfortunately for many people who lost those jobs that will never come back, the world changes and we have to adapt with it. For some people, getting new skills is hard if not impossible, but for many, it represents an opportunity. I can tell you from personal experience we do not have IT-savvy people available to us in this country. We struggle to find qualified talent every day, and millions of tech jobs ho unfilled because we do have a big skills gap, yet again something that you’d expect after an economic shock that upends the status quo.