Employment impact of electronic business

Monthly Labor Review, May, 2001 by Daniel E. Hecker

Electronic business both stimulates and dampens employment in many occupations and industries; however, assessments of those impacts can only be qualitative rather than quantitative

Every 2 years, the Bureau of Labor Statistics develops 10-year projections of industry and occupational employment, taking into account likely changes caused by new technologies and business practices. The 1998-2008 series of BLS projections, published in the November 1999 Monthly Labor Review, did not specifically address the effects of electronic business (e-business) on the economy, because of the recent nature of the phenomenon and the relative paucity of information pertaining to it. This article presents a first look at the extent to which e-business could affect industries and occupations over the next decade. The impacts described will be reflected, to the extent possible, in the 2000-10 projections, to be published in the November 2001 issue of the Review.

E-business, consisting of marketing and other business processes conducted over computer-mediated networks, is changing the way organizations in many industries operate. It leads to the automation of some job functions and replaces others with self-service operations, raising output per worker and dampening employment requirements in some occupations, as well as in the industries in which those occupations are concentrated. In contrast, e-business has spurred employment in industries producing hardware, software, and systems used by e-businesses and in computer and other occupations associated with websites and networks. Because of its increasing pervasiveness, e-business may be affecting output per worker and employment in virtually every industry.

Interest in e-business has spawned a host of quantitative projections by private forecasters, most of whom focus on cost reductions and industry sales growth; none specifically addresses the impact on employment. Because of the general dearth of quantitative information, the assessment presented in this article is completely qualitative. Prospective changes are discussed in terms of e-business stimulating or dampening employment or output in an industry or occupation. This approach differs from discussions in previous Monthly Labor Review projections articles, which incorporate the impact of numerous factors and which present employment increases or decreases from the base year to the target year. The approach also focuses primarily on industries and occupations with the largest potential impacts and those which, reportedly, are uniquely affected by e-business.

What does e-business encompass?

Electronic business (e-business) is any process that a business organization conducts over a computer-mediated network. It includes buying and selling, as well as a wide range of customer-, production-, and management-focused processes carried out by for-profit, government, or nonprofit entities.(1) E-business is based upon the processing and transmission of digitized information, including text, sound, and visual images, from one computer or some other electronic device to another. Most e-business processes are self-service, and some are or may soon become fully automated.

Electronic-commerce (e-commerce) is that part of e-business which involves buying and selling goods and services.(2) E-commerce may be classified into three groups:

* Business to consumer (B2C) includes retail transactions of goods, such as books and computers, and services, such as insurance, banking, and travel and ticket reservations.

* Business to business (B2B) includes transactions between manufacturers, wholesalers, retailers, construction firms, farms, service industries, governments, and nonprofit organizations.(3) Completely separating the impact of B2C and B2B is difficult, because online business establishments may use the same resources to deal with both consumers and businesses.(4)

* Consumer to consumer (C2C) consists primarily of individuals buying and selling through auctions.

Besides e-commerce, e-business encompasses many self-service and automated information transmission activities. Customer-focused processes enable buyers to obtain product information online and then complete the transfer of ownership offline, in stores, in sales offices, or with a telephone call or fax. Another component of e-business involves customer relations, including direct marketing by e-mail and numerous customer-self service transactions and after-sale processes and services, such as technical support (assistance in operating and maintaining technical products), requests for changes in service, updating records, transferring funds, and viewing the status of transactions, orders, and deliveries.

Management- or production-focused e-business activities involve the following functions or tasks:

* Procurement, including ordering, automated stock replenishment, payment processing, and other electronic B2B-related activities.

* Personnel-related activities, including online job postings, applications, and candidate screening; education, training, and testing; and employee self-processing of changes in benefits, travel arrangements, expense reports, supply orders, and the like.