Issue link: http://cp.revolio.com/i/207723
The consequences of a default would be painful in the short term, but the longer it is put off, the longer and more painful the subsequent recovery period will be. The precise time when a default might occur, as well as the chosen route (outright default or default through inflation), is difficult to predict. But no industry—including IT—would be immune from the effects. Furthermore, because a default would greatly harm national credit, government spending on IT, for instance, would likely suffer a major blow. Employment Prospects IT employment faces several challenges that may or may not align with those faced by other markets. Automation is one trend that will exert downward pressure on employment—assuming, of course, that no new jobs arise as a result. Debate is ongoing as to whether the current crop of technologies will break from the pattern of the industrial revolution, which destroyed some jobs through automation but enabled many new ones as well. A conspiring factor is the rising cost of employment, thanks in part to regulations and the new Affordable Care Act legislation (the ACA, or Obamacare). Although the ACA's employer mandate to provide employees with health insurance was delayed until 2015, it is another cost that some employers will face. IT companies will face less of a problem here than, say, food-service companies, as many of them already provide insurance. But as more people are covered by health insurance, demand for health services will increase, thus leading to higher costs for health care. Insurance providers will thus increase rates to match, raising the costs to employers. So, indirectly at least, the ACA will also hinder employment even at companies that already provide health-insurance benefits. Broader employment will take a similar hit from the ACA legislation. The workforce participation rate is at 63.2% as of August 2013, according to the Bureau of Labor Statistics, having fallen from a maximum of over 67% around the year 2000 and matching the rate of the late 1970s. Although the overall unemployment rate stands around 7.3%, down significantly from the highs of about 10% during the Great Recession, this number omits discouraged workers and the underemployed. Furthermore, although net job creation in 2013 is positive, the new jobs are almost entirely part time and barely offset the loss in full-time jobs. Absent an improving job situation, consumption will be hard pressed to grow, creating an overall economic malaise that will affect IT as well as other industries. Conclusions The biggest barrier to growth in IT and the broader economy is central planning, which imposes a growing tax and regulatory burden on business—particularly smaller businesses that cannot afford to hire lobbyists to plead their case to politicians. Enabling the debt-fueled government control over the economy is the Federal Reserve, which manipulates the currency and interest rates to prevent the growing debt burden from overwhelming the government budget. Unfortunately, however, the mindset of governments is generally that if the current system of taxation and regulation isn't working, the solution is to expand it. So, for instance, the out-of28 | THE DATA CENTER JOURNAL control health-care costs created largely by government regulations are to be cured through government-mandated health insurance and tightening price controls. Unfortunately for the economy, one of the results will be harm to an already fragile employment situation. Government default on its enormous debt will occur one way or the other: the question is only when and how. In the meantime, however, IT is staying afloat with modest growth in spending in 2013. Gartner predicts much greater increases in 2014 and beyond, but changes in macroeconomic conditions could easily upset any otherwise reasonable forecast. Also of concern is the global economy. The situation in Europe largely mirrors that in the U.S., although countries such as Spain and Greece are facing direr circumstances. In Asia, economic growth in China is slowing, raising concerns regarding what effects it will have on other nations in the region and globally. For these reasons, IT managers are facing uncertainty. Business goes on, however, so many have a sense of cautious optimism. The agonizingly slow economic recovery following the Great Recession (ignoring the stock market) unfortunately lacks a foundation of new policies that might bolster hope for solid growth. But in the face of rising demand for services, the IT industry will largely ignore the more ominous future possibilities and make the best of mediocre conditions. n VENDOR INDEX Server Tech ................................................... Inside Front www.servertech.com Sumitomo Electric .................................................. pg 4 www.sumitomoelectric.com System Sensor ......................................................... pg 5 www.systemsensor.com/faast Rittal ........................................................................ pg 8-9 www.rittal-corp.com/makeITeasy Starline DC Solutions ................................ p11 & p12 www.starlinepower.com Corning ..................................................................... pg 17 www.cablesystems.corning.com/1-prentiumedge Raritan ..................................................................... pg 25 www.raritan.com/coloredPDU AFCOM ............................................................ Inside Back www.afcom.com Energy Star ............................................................. Back www.energystar.gov/lowcarbonit www.datacenterjournal.com