Impact of computers on employment

1. Impact of computers on employment Min Phyo Aung John Kugelman

2. Issues covered • Key technological progress over the last two centuries • What jobs have been affected by these changes? • What are the consequences of computerization of the industry? • Recent issue of outsourcing of jobs

3. Technological timeline • 1800s: Industrial revolution – the application of power driven machinery to manufacturing • Invention of the steam engine • Emergence of electric power • Invention of the telephone • Emergence of railroads • Concentration of work force in factories

4. Technological timeline • 1940s: Beginning of early computer era • Transistor invented in 1947 and used in integrated circuit boards • Main technical trends in early computer development: scientific and mathematical applications; mostly for defense projects

5. Technological timeline • 1952: Beginning of modern computer era • Commercially produced Universal Automatic Computer (UNIVAC) by Remington Rand used on TV (CBS News) to calculate outcome of 1952 presidential election • Hydrogen bomb tested from computer research • As of 1952, IBM had installed 250 CPCs (Card Punch Calculating machines) in universities and defense agencies • 1981-82: Marketing of first IBM PC, based on Intel 8088 chip and Microsoft's PC-DOS 1.0. • 1982: Time magazine, PC as Machine of the Year

6. Employment concerns • These two periods of technological revolutions have sparked a concern among the general public: loss of jobs • With many industries automating their processes, people have lost jobs due to reduced manpower needed to perform a particular task • Many people fear that computers will eliminate more high skilled jobs than any other technologies invented

7. Jobs lost due to computerization • Study by Deloitte and Touche predicted 450,000 jobs in the banking sector would be lost because of automation and electronic banking services • Number of telephone switchboard operators dropped from 421,000 in 1970 to 164,000 in 1996 • New York Stock Exchange eliminated the last 150 floor couriers who carried messages between brokers • Travel agencies closed as more consumers make airline reservations online • During early 1990s, IBM, General Motors, Sears and other large companies laid off tens of thousands of workers for corporate “downsizing”

8. Changing skills • Technology can replace skills, opening jobs to less skilled workers • Computers automate high-skilled jobs, but create require new skills from programmers and engineers • Schools train children in new skills

9. 1890: Bookkeepers were highly skilled workers 1800s: Skilled workers earned increasingly more than manual laborers 1900: 0.5 out of 1000 an engineer 1920: High-school graduates using adding machine 1900s: Trend reversed; new tech. reduced skill needed for white-collar jobs 1990s: 7.6 out of 1000 Changing skills

10. Changing jobs • Old jobs open to less-skilled workers • Training software for complex jobs • National Association of Securities Dealers saved 1½ years and $400,000 • Other jobs now require computer skills • Bank teller • Customer-service representative • New jobs replace lost jobs • Computer engineering • Maintenance and support

11. Knowledge-based economy • Traditional jobs create physical products • Computer jobs produce knowledge and information • Move from blue-collar manufacturing jobs to white-collar office jobs • Lack of physical products means work can be done outside of workplace

12. Telecommuting • Computers enable employees to work outside the office • Employees can work at home • “Telecommuting centers” • Sales jobs made mobile • By 2000: 24 million Americans telecommuted regularly or occasionally

13. Pros: Reduced overhead (e.g. real estate) Productivity increased by 15% More flexible hours, location More time with family Reduced traffic, pollution, and energy use Cons: Overhead costs shifted to employee Resentment by other employees Less direction, more distraction Little social interaction Less visibility a disadvantage at promotion time Telecommuting

14. Globalization • Downside to knowledge-based economy: globalization • Companies outsourcing jobs to countries like India and Russia • Workers are cheaper • Can communicate via e-mail • Problems • Foreigner workers not as skilled as domestic workers? • Language and time zone

15. Conclusion • Computers eliminate easily-automated jobs • Manufacturing • Telephone switchboard operators • But, they also create new high-skilled jobs • Programmers, systems analysts, engineers • Repair and support personnel • Telecommuting: convenient but isolating • Globalization: moving jobs out of the United States

16. Questions • Are computers destroying more jobs than they’re creating? • Are jobs diverging into high-paying jobs for the highly skilled and fewer low-paying jobs for those without computer skills? • What are the new skills that these high-paying jobs require and how are the workers displaced to acquire them? • What are the ethical obligations of an employer to workers displaced by technology?