Pages Navigation Menu

Business to Business Key Findings – July/August 2011

Cloud Computing Gains Attention of CIOs
U.S. Income Disparity Reaches Great Depression Level
Most Workers Enjoy Their Jobs, While Open to Change
Capital vs. Labor Spending

Cloud Computing Gains Attention of CIOs

An IBM study of more than 3,000 global CIOs (Chief Information Officers) shows that 60% of organizations are ready to take up cloud computing over the next five years. This is almost double the number of CIOs who said they planned to utilize cloud computing when asked in IBM’s 2009 CIO study. The 2011 study revealed a large increase in the focus on cloud, specifically in media and entertainment (both grew to 73%), automotive (70%) and telecommunications (69%).

A review of specific countries shows that seven out of 10 CIOs in the U.S., Japan and South Korea, as well as 68% in China, currently identify cloud as a top priority. In 2009, CIO interest in cloud was only about 30% in each of these countries.

U.S. Income Disparity Reaches Great Depression Level

Since 1987, repeated surveys by the National Opinion Research Center have shown that 60% or more of Americans agree or strongly agree with the statement that “differences in income in America are too large.”

Income disparity in the U.S. has now reached levels not seen since the Great Depression. For example, in 2008, the top 0.1% of earners took in more than 10% of the personal income in the United States, including capital gains, and the top 1% took in more than 20%.

According to a 2010 landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim, the largest chunk of the highest-income earners are executives and other managers in all types of businesses.

The top 0.1% of earners make approximately $1.7 million or more, including capital gains. Of those, 41% were executives, managers and supervisors at non-financial companies with nearly one-half of them deriving most of their income from their ownership in privately-held firms. An additional 18% were managers at financial firms or financial professionals at any sort of firm. The next largest group was lawyers with 6.2% and real estate professionals at 4.7%. Media and sports figures – who are often assumed to be a large portion of very high-income earners – collectively made up only 3%.

Most Workers Enjoy Their Jobs, While Open to Change

Most workers (95%) do not expect to work in the same job for the remaining years of their careers. Since the recession, 62% feel less secure in their jobs and 37% feel more negative about their job than they did before the recession. Some 53% have had to assume added responsibilities during the recession because coworkers were laid off. About 59% say they enjoy their job but would consider another one with better pay and/or benefits; 27% dislike their job and are actively looking for a new one; and 9% say they dislike their job but will wait until another opportunity presents itself or for things to improve before they look for a new job.


Capital vs. Labor Spending

Since the recession recovery began in mid 2009, U.S. companies’ spending on capital has grown much faster than spending on labor. For example, spending on equipment and software has jumped 25.6% in the last seven quarters, while companies’ aggregate spending on employees has grown only 2.2%.

Historical analysis shows that it’s typical for hiring to lag capital spending, but the gap in spending growth is significant this time around. In the seven quarters immediately following each of the last 10 recessions, equipment and software spending rose on average 15.6%, while labor spending rose on average 8.8%.

One reason hiring has been so sluggish is that equipment and software prices have been dropping quickly, while labor costs have been rising fast. The higher cost of labor is primarily being driven by rising benefits costs and, in particular, rising health insurance costs. For example since mid 2009, wage and salary costs have only grown about 2.8% while healthcare costs have risen almost twice as much. On the other hand, the cost of equipment and software dropped by about 2.5% during this period.



  • Executive compensation at the U.S.’s largest firms has nearly quadrupled in real terms since the 1970s, while pay for 90% of Americans has stalled.
  • Assuming current trends continue, the U.S. will not have enough workers with the right education and training to fill the jobs likely to emerge over the next two decades. By 2020, there will possibly be 1.5 million too few college graduates to meet demand and about 5.9 million more Americans without high school diplomas than employers can use.
  • Managers estimate it takes nine weeks to determine if a new hire is going to be a good fit in their job for the company.

Read All Bullets

Leave a Comment

Your email address will not be published. Required fields are marked *