Everyone an Information Technology Worker? A Peek at Our Future?
There was a time not so long ago when an IT worker was easily understood as someone who worked in the computer industry, designing, building, selling, servicing or using computers. They were programmers and machine operators, or people who designed new uses for systems. In short, they were professionals in the industry, experts in computer technology. One could stretch the definition to include clerks who entered data on computer cards or through terminals. But that was it. They all belonged to several neatly defined job classifications conveniently categorized by the U.S. Department of Labor. These people were physically isolated from the rest of us in data processing departments behind secure doors, requiring identification badges and passwords to open. Then came personal computers, and recently the Internet. Now everyone, it seems, is a data processing professional, an IT worker, a member of the digital workforce. While this last statement is a real stretch, the point is not. By looking at what the IT professional is up to, we gain some additional insights about the changing nature of work and jobs in the American economy.
As computing diffused into the American economy it invaded the daily work of employees, changing what tasks they performed. The injection of IT into the economy, as measured in traditional economic terms, went from 4.9 percent of Gross Domestic Product (GDP) in 1985just as the PC was kicking into 6.1 percent in 1990. Beginning in 1993, when the Internet made its tentative appearance in the economy at large, until 1998, the IT share of the economy went from 6.4 percent to 8.2 percent. Put in simple terms, the IT portion of the economy grew at twice the speed as this healthy economy as a whole expanded. This process did not end in 1998, but kept expanding right into the new century. There were interesting, even pleasant consequences. One of the most important involved its effects on the cost of goods and services. As the cost of computing continued to decline, while the percent of the GDP coming from IT increased, computing helped lower, or keep flat, inflation during the second half of the 1990s, dampening it by about 1 percent per year. Low inflation meant solid economic gains, causing American goods to be more attractive in a global economy. It also drove down interest rates, which meant the U.S. government had a smaller bill to pay for its debts, while making money available to American companies to modernize, improve productivity, and expand.34
Four fundamental information trends involving accumulation, distribution, and use that affect what work is done and how it is performed are now evident. The first trend, already suggested in Chapter 4, is the expansion of the Internet not only through the American economy but also around the world, becoming an integral tool used by workers. While projections about how many people will be on the Net are just guesses, even conservative forecasts speak about one billion users sometime late in the first decade of the new century. That means a lot of computers and phone services are going to be sold in short order, because half of the world's population had not even made their first phone call as of the mid-1990s!
Second, business-to-business (B2B) electronic commerce will expand beyond what it has been so far. This form of e-business was one of the most important uses of computers ever devised, because almost immediately upon implementation companies found they increased their productivity. This occurred, if for no other reason than that electronic commerce drove down the cost of communicating with each other and sped up transactions, from delivering a bill to supporting a customer. The key immediate benefits included lower purchasing costs of goods and services, reduced inventories by having the right products in stock more often than before, faster turnaround times in designing, building, and shipping goods, more efficient and effective customer service, lower sales and marketing costs, and new markets both at home and abroad.35 It was an impressive list of benefits. No wonder that by the turn of the century over $400 billion of business was being done this way.
The road to a more digitized economy will not be smooth because companies face the same problems in how they will function with the Internet in the economy at large as they did with earlier technologies. There is uncertainty, for example, with the lack of a predictable, supportive legal environment. What role would the government play in taxing Internet-based business transactions? And finally, how well will the Internet work? Those who use it are painfully aware of its slowness, and the incredibly difficult task of finding the information they really want.
The third trend is delivery of goods and services via electronics. We already saw some of that at work in our discussion about publications, newspapers, TV, and other forms of information exchange. The trend already is expanding. Most of the research for this chapter came off the Internet, even though I could have obtained paper copies of most of the government reports I used. Airline tickets are electronic, our children pull music off the Internet onto their PCs, we buy books online. In the late 1990s we saw many other services go digital: consulting, distance learning, brokerage services, and information agents (e.g., like those who find you the best interest rate nationally available for a home mortgage).36
The other customer-related trend is the retail sale of tangible goods. By the end of 1998, approximately 20 percent of all automobiles in the United States were either bought off the Internet or their prices and features were researched electronically by customers. There is a serious debate underway in the American automotive industry about what will be the future role of car dealerships. Internet-based sales as of 1998 had already surpassed 1 percent of all sales in the U.S. economy. These were primarily for computers, software, books, CDs, videos, flowers, stocks and automobiles. By the end of 1999, prescription drugs, clothing, and small electronic appliances had joined the list. So a conservative conclusion we could reach is that one could expect to see a great deal more electronic dialogue between customers and people making, shipping, selling, and servicing goods.
Examples of the information effect of the Internet on work suggest tasks and economic benefits. Beginning in the mid-1990s, airlines began selling tickets electronically to consumers. By the end of the decade, a traveler could buy directly by accessing a computer belonging to the airlines, thereby saving the carrier the cost of having a clerk work with a customer. The Air Transport Association of America reported in 1997 that to use a travel agent and a computerized reservation system to process a ticket cost $8. Yet, if a customer directly booked a ticket using the airline's reservation system, it cost the carrier $1 to process the same ticket. Southwest Airlines led the way in 1996 by making it possible for customers to buy their own tickets. Then came the Internet-based reservation systems quickly after: Microsoft's Expedia.com and SABRE Group's Travelocity.com, for example. Agents were being squeezed out of day-to-day transactions, increasingly focusing on complex travel arrangements like tours.37 The number of bank clerks is declining as well for exactly the same reasons: cheaper electronically, can do business 24 hours a day, and it is easy. A third example of the same process is day trading, in which people buy stocks online, paying as little as $8 for a transaction, thereby bypassing brokers who might have charged them as much as 100 times more for the same work.
Consumer support for digital shopping is also fundamentally changing the work of companies. Choice is expanding fast because the Internet offers more options. The national and international marketplace is now open to any consumer online; we are no longer restricted to what is physically available in our neighborhoods. While we can expect this phenomenon to integrate the national economy more, providing national markets for regional firms, what it means for consumers and employees is that they have choices on what to buy and where to work.38 We saw an example of choice with online book buying; online systems, such as Amazon.com and Barnesandnoble.com, offer millions of products, while large brick-and-mortar stores offer only about 100,000 to 110,000 volumes.
Convenience is a second factor. Consumers can buy fast, when they want to, and it is now relatively easy to do. A consumer can model a dress, design a garden, or see a simulation of a desired car quickly before committing to a purchase. Tied to convenience are lower costs, because every vendor knows that others are also offering goods and services online. In fact, the reason why the Internet has so far helped keep the lid on inflation in the United States is because of the competitive pressures enhanced by the Net. Convenience is also enhanced by mass customization, allowing customers to design what they want before a vendor manufacturers and delivers it. It costs very little to allow a Ford Motor customer to pull up an image on a screen of a green car, a red one, and finally select blue.
What was happening with workers? Just as they had to learn new skills to take advantage of all the new manufacturing, communications, and computing technologies that came during the first three quarters of the 20th century, once again they had to repeat the learning process. This time it involved PCs, the Internet, and today's software tools. All through the second half of the 20th century, the economy needed more programmers and other IT professionals than normally were available. Between 1986 and 2006the same period during which the Internet and the PC are expected to work their way fully through the U.S. economythe demand for skilled IT workers is expected to go from about 875,000 to more than 1.8 million. Most will have to be college graduates and some will need graduate training. Demand for low-level IT skills like data entry clerks (very necessary in the 1960s and 1970s) is declining. In this same period, these will probably be cut in half.39
Workers in general need more IT skills than in earlier decades. Today, the ability to use Microsoft or Lotus Notes products like Word, Freelance, or 1-2-3 is almost a given for office workers. In the mid-1990s, those were very attractive skills a worker could leverage for higher salary. Today, knowledge of those tools and the ability to navigate on the Internet is almost the price of admission to the job market for professions from clerical and secretarial positions to consulting and engineering.
We are finally beginning to see credible data on the use of the Internet in the workplace, evidence that documents the growing importance of this technology, and taking us past press hype to the sobering facts. A Pew Foundation survey done in 2000 in the U.S. determined that 37 percent of all full-time workers and 18 percent of part-time employees have access to the Internet at work. Two-thirds accessed the Internet daily, and most reported using it for work-related activities. Seventy-two percent said that the Internet helped improve their performance on the job. Just over half spend an hour or less on the Internet in any given day. Those with the highest salaries, positions, or complexity of jobs are most likely to be extensive users of the Internet.40
Downsizing and flattening of organizations stabilized the flow of jobs out of the economy while new ones were created. The majority of downsizing initiatives resulted from mergers of companies, in part made possible by the ability of information technology to make such mergers financially productive because work could be automated or computer systems consolidated. Failures of companies still occurred, of course, but we have not witnessed the demise of a great number of familiar corporations in recent years; normally they are swallowed up in some merger before they die. While downsizing continues on a regular basis and actually increased in early 2001, the doom and gloom projections economists put out in the mid-1990s have now been replaced with concern about the lack of a sufficient number of workers. Unemployment in the United States at the end of the century was at an historic lowless than 5 percentand, even accounting for the underground economy and for jobs that paid too little to sustain a minimum standard of living, the fact remains that downsizing is currently not the critical issue it was a decade earlier. Meanwhile, as workers acquired skills that they could take from one firm to another, pension programs became more portable. During their extensive downsizing days of the early 1990s, many firms essentially broke their promise to provide lifetime employment.
All these circumstances made workers more mobile. Allegiance to a profession and to what skills one had increased over loyalty to an employer. Teams of empowered employees worked increasingly as the decision makers in what used to be hierarchical command-and-control business structures, leaving the firm if they were not allowed to do their "thing." Flexibility also meant being able to do work in many places. Don Kolenda can do his consulting out of his home office or in a customer's conference room. He is not alone; the U.S. Department of Transportation now reports that some 15 percent of the American workforce is mobile and their ranks are growing in number.
Corporations prize knowledge workers more than unskilled labor. For those with only a high-school education and no technical skills, the future in the American workforce is expected to be harsh. Entry-level jobs that such folks went to in the past are now technical. Today's automobile mechanic is a skilled technician who uses computer-based diagnostic tools. Walk behind the counter of a McDonald's restaurant today with folks who worked at the firm twenty years ago, and the amount of technology will impress you and them. It begins with the point-of-sale terminal that captures information on cash flows, product demand, inventory on hand, and continues all the way to the back of the store where cooking is programmed and structured.
The demand for technically trained employees plays out on payday. IT industries today, on average, pay almost a third more salary than other industries. Salaries for all workers in the U.S. in the 1990s grew at about 3.8 percent annually; for IT professionals closer to 5.2 percent. Statistically, in 1996 an IT employee received $48,000 in salary while workers in other industries averaged $28,000.41 A college graduate, certified as a Microsoft customer support professional, could make $50,000 one year out of college in 1998. Software experts in that same year averaged over $60,000 in salary. Certain industries are also more sensitive to the need for highly skilled IT personnel. For instance, the financial sector today hires about a third of its workforce from this high-skill pool. In retail that figure is closer to 12 percent. Not everyone needs to be a technical genius. But increasingly, many jobs are acquiring technical content, which means more and continuously changing information is required by the workforce.
To be sure, the number of these jobs remains small today. Across the entire U.S. economy the percent of the workforce totally dedicated to IT activities is tiny, 1.18 percent of the total at the turn of the century, but growing.42 However, all the forecasts from the U.S. Government and the European Union speak of substantial and steady growth for those jobs that have a high IT content to them. Today that demand is mostly driven by software development. The U.S. Government expects that the biggest changes will come in distribution and trade, where the promise of computing is already beginning to be felt with e-commerce. In the dry language of a government economist, "Electronic commerce is driving demand for IT professionals but it also requires IT expertise coupled with strong business application skills. Therefore, it generates demand for a flexible, multi-skilled work force....E-commerce is likely to accelerate existing upskilling trends," continuing America's reliance on more and newer forms of knowledge and information than it experienced through the past 150-odd years.43
But back to an earlier pointunskilled workers will find the job market more hostile toward them. Already their future is here. In the U.S. banking industry, for instance, the extensive increase in the use of computers made it possible to reduce the number of clerks, enabling the huge mergers that occurred in the late 1990s. During the first half of the 1980s, employment in the industry kept rising, from 2.3 million in 1983 to a peak of 2.6 million in 1989. Then, technology began to influence productivity as banks offered digitally based services such as ATMs and online banking. Beginning in 1990, employment in the industry began to drop rapidly, to below 2.4 million by 1992 and on the way down to 2 million expected by 2006.44 The insurance industry, adopting computer-based services later than banks, is experiencing the same kind of shift in employment.
The flip side to this pattern is already evident too. Employment in information-laden industries like computer programming, radio and TV, advertising, motion pictures, records and tape, is growing. Between 1977 and 1995, these industries went from employing 1.5 million workers to 3.7 million, and are expected to have 5.1 million by 2006. As a percentage of the total workforce, these accounted for 1.6 percent in 1977, reached 3.08 percent in 1996, and should reach 3.7 percent by 2006.45 The numbers are suggestive of the changes we are experiencing, even though today they remain relatively small.
Related new types of jobs are simultaneously being created around the world, not just in the U.S.A. Consultants expert in entrepreneurial startups are in great demand as new businesses are formed based on the Internet. They also are guiding existing firms into Internet-based forms of business. Application developers are needed to design new systems that take advantage of the Internet and e-business. Information brokers using online tools who can match customers to providers represent one of the fastest growing job areas. Network security specialists and e-business analysts are increasingly in evidence, particularly in large organizations. A whole slew of Internet experts are needed: Internet architects, Web designers, network analysts, and programmers familiar with such new software tools as Java, Windows NT, and TCP/IP. All base their value on new forms of information, most are college graduates or went through extensive training, none make less on average than $50,000 a year, while the best average is over $100,000.