Social Implications of a Computerized Society Lecture 5 Instructor: Oliver Schulte Simon Fraser University

What We Will Cover The Impact on Employment The Work Environment Employee Crime Employee Monitoring

Concerns The introduction of computers in the workplace generated many fears –Mass unemployment due to increased efficiency –The need for increased skill and training widens the earning gap New trends still generating fears –Offshoring of jobs will lead to mass unemployment Offshoring company, Lou Dobbs on outsourcing Offshoring company,Lou Dobbs on outsourcing –Employers use of technology to monitor their employees Example: Honeywell installs Encase software to monitor 10,000+ employee computers (copies of files, , etc.)

Discussion Question Are you worried about the effect of offshoring in our own job prospects? Should be government do something to protect jobs for Canadians, e.g., require Canadian companies to “hire Canadian”?

The Impact on Employment Discussion Questions What jobs have been eliminated due to technology? What jobs that were once considered high- skill jobs are now low-skill due to technology? What new jobs have been created because of technology?

Economic View of New Technology: Existing Jobs A successful technology eliminates or reduces some jobs. –Example: milking machines reduce need for milk hands. –Computers have reduced the need for telephone operators, meter readers, mid-level managers. Old industries/services: Technology leads to productivity gains. –Productivity = output/time. –Basic decision for using productivity gain as a community: work less for same wealth, work the same for more wealth. Individuals may lose jobs (e.g., milk hands). Economists’ answer: –retrain them to do jobs that are needed. –Temporary “transfer” of wealth to laid-off workers. –Question: does that happen enough in actual politics? –Question: What if the job is more than a way to earn money, e.g. a way of life (logging in B.C., fishermen in Quebec). –“The market does not respect lifestyles.”

Job Losses that may have come from computer technology Number of bank tellers dropped by 37% between ‘83 and ‘93. Telephone operators dropped 60% between ‘70 and While long- distance callls increased from 9.8 bill to 94.9 bill. Digital cameras: Kodak laid off thousands of employees.

Economic View of New Technology: New Jobs New industries arise –Internet –Cellular communications. Lower prices increase demand and create jobs –Music industry changed from serving the wealthy to serving the masses, employing more than just musicians.

Job Gains that may have come from computer technology 1996: 100,000 new internet-related jobs : 109,000 jobs in cell phone industry. 1998: 242,000 jobs in chip-making industry. 2004: 10.5 mill jobs in U.S. IT. 2005: $1 trill spent on IT worldwide.

Flexibility and Job Churn Between 1993 and 2002, roughly 30 mill U.S. jobs were opened and closed each year. There is a net increase of about 18 mill jobs. Mark of a flexible economy.

Discussion Question Do you think there is too much flexibility in our economy (too much “hire and fire”)? Or too little?

Winners and Losers from New Technology Technology or Capital Owners win: Can produce the same or more with lower costs. Workers gaining new job opportunities (e.g., in IT) win. Customers benefit from lower prices. Workers losing their job lose  EI.

Employment Trends: Are We Earning Less? Are we earning less? –Since the 1970s, wages decreased but fringe benefits increased –Decrease in take-home pay may be due to other factors, e.g. increased taxes Rising income inequality Globalization: more competition for workers. Decrease of unionization, especially in U.S. –Purchasing power increases as prices fall. Price fall mostly due to cheaper imports (e.g., China). Housing prices have been going up.

Employment Trends: Are We Working More? Are we working more? –People work fewer hours since the Industrial Revolution. –But the average American worker puts in 200 hours more per year than in 1973 (J. Schor). –Tax law, benefits encourage overtime work rather than hiring additional workers. –One-earner per household used to be sufficient for middle class. –See recent sleep study. Free time the major concern in U.s. workers.sleep study Free time –Is causing work stress? causing work stress

The Impact of Technology Unemployment rates fluctuate Growth of computers has been steady, while unemployment has fluctuated widely. Hard to argue for connection one way or another. Information technology supports globalization, offshoring (see next slide). Changing Skill Levels: The new jobs created from computers are different from the jobs eliminated New jobs such as computer engineer and system analyst jobs require a college degree, whereas jobs such as bank tellers, customer service representatives and clerks do not Companies are more willing to hire people without specific skills when they can train new people quickly and use automated support systems The computer can be a “cognitive prothesis”.

The Impact on Employment A Global Workforce: Outsourcing - phenomenon where a company pays another company to build parts for its products or services instead of performing those tasks itself Offshoring - the practice of moving business processes or services to another country, especially overseas, to reduce costs Inshoring - when another company employs thousands of people in the U.S. (e.g. offshoring for a German company means inshoring for U.S.) Almost 5% of U.S. workers are employed by foreign companies

The Productivity Paradox Solow (1987): “You can see the computer age everywhere but in the productivity statistics”. In the 1980s, IT investment grew 24%/year---productivity declined! Many possible explanations offered - can you think of some?

The Productivity Paradox 20 years later Productivity Growth in 2001: 5.4%, 2002: 5.4%, 2003: 8.1%. Possible Explanation: businesses have finally become more efficient through IT use. Alternative explanation: how is output/time measured? –Time: U.S gvt says financial services workers work 35.5 hours as in Stanley Morgan: “That’s absurd---most information workers can work around the clock.” –Output: Hard to measure in services. Gvt uses workers’ compensation instead. Alternative explanation: using cheap overseas labour.

New Job Market Dynamics Getting a Job: Learning about jobs and companies –Online company histories and annual reports –Job search and resume sites (monster.ca) –Online training Learning about applicants and employees –Search online newsgroups and social networks –Hire data-collection agencies such as ChoicePoint –Prospective employees may craft an online profile and presence geared towards the job they want

The Work Environment Job Dispersal and Telecommuting: Telecommuting –Working at home using a computer electronically linked to one's place of employment –Mobile office using a laptop, working out of your car or at customer locations –Fulltime and part-time telecommuting

Telecommuting: Benefits Reduces overhead for employers Reduces need for large offices Employees are more productive, satisfied, and loyal Reduces traffic congestion, pollution, gasoline use, and stress Reduces expenses for commuting and money spent on work clothes Allows work to continue after blizzards, hurricanes, etc. Promoted by many people, CIO InsightCIO Insight

Telecommuting: Problems Employers see resentment from those who have to work at the office For some telecommuting employees, corporation loyalty weakens Odd work hours Cost for office space has shifted to the employee Security risks when work and personal activities reside on the same computer Distractions

Discussion Question Do you want to telecommute? How much? Why?

Changes in Business Structure Changing Structure of Business: Average Decline in Size ( ): 20%. Increase in smaller businesses and independent consultants (‘information entrepreneurs’). Correlation between IT use and small size. ‘Mom and pop multi-nationals’, small businesses on the Web Growth of large, multi-national corporations Not all changes due to technology, could also be tax law.

The Work Environment Discussion Questions How has technology made entrepreneurship easier? Harder?

Employee Crime Embezzlement - fraudulent appropriation of property by a person to whom it has been entrusted Trusted employees have stolen millions of dollars Angry fired employees sabotage company systems Logic bomb - software that destroys critical files (payroll and inventory records) after employee leaves Theft by employees = $17.6 bill retail losses in 2005.

Employee Monitoring Background: Monitoring is not new –Early monitoring was mostly ‘blue-collar’ (factory) and ‘pink-collar’ (telephone and clerical) jobs –Time-clocks and logs –Output counts at the end of the day –Bosses patrolled the aisles watching workers

Employee Monitoring (cont.) Data Entry, Phone Work, and Retail: Data entry –Key stroke quotas –Encourage competition –Beep when workers pause Phone work –Number and duration of calls –Idle time between calls –Randomly listen in on calls Retail –Surveillance to reduce theft by employees

Employee Monitoring (cont.) , Blogging, and Web Use: and voice mail at work –Employees often assume passwords mean they are private –Roughly half of major companies in the U.S. monitor or search employee , voice mail, or computer files. –Supported by software like Encase.Encase –Most companies monitor infrequently, some routinely intercept all . –Over half have fired employees for /web use.Over half have fired employees for /web use. –Microsoft: access private, password-protected folders on work computers.

Employee Monitoring: legal aspects , Blogging, and Web Use (cont.): Law and cases –Electronic Communications Privacy Act (ECPA) prohibits interception of and reading stored without a court order, but makes an exception for business systems –Courts put heavy weight on the fact that computers, mail, and phone systems are owned by the employer who provides them for business purposes

Employee Monitoring: Labour Relations , Blogging, and Web Use (cont.): Law and cases (cont.) –Courts have ruled against monitoring done to snoop on personal and union activities or to track down whistle blowers –Many employers have privacy policies regarding and voice mail –The B.C. Labour Relations Board sets rules and decides cases about worker- employer relationsB.C. Labour Relations Board

Employee Monitoring (cont.) , Blogging, and Web Use (cont.): Some companies block specific sites (e.g. adult content, sports sites, job search sites, social-network sites) Employees spend time on non-work activities on the Web Concerns over security threats such as viruses and other malicious software Concerns about inappropriate activities by employees (e.g., harassment, unprofessional comment) - see NYT article.NYT article.

Employee Monitoring Discussion Questions How much privacy is reasonable for an employee to expect in the workplace? Under what circumstances is it appropriate for an employer to read an employee's e- mail?