The role of computers in reshaping the work force

Monthly Labor Review, August, 1996 by Sheila McConnell

Today's versatile computers have some impact on nearly every occupation and industry in the U.S. economy, unlike past technology which usually affected only specific jobs

Computers may be the most profound technology since steam power ignited the Industrial Revolution. Computer technology is altering the form, nature, and future course of the American economy, increasing the flow of products, creating entirely new products and services altering the way firms respond to demand, and launching an information highway that is leading to the globalization of product and financial markets.

In addition to affecting the methods of production among firms, computers are changing the relationship between labor and organization. The traditional pyramid-shaped organizational structure of most corporate firm is the by-product of the Industrial Revolution, which moved work from the individual or family unit to an organizational structure.

Computer technology challenges the traditional management hierarchy, moving many organizations from a pyramid-shaped structure to a flatter structure. Historically, decisions were passed from top management to the next management layer; today, computers permit companies to communicate throughout their organizations instantaneously, without regard for traditional management structures.(1) Such wider distribution of authority in some companies has put new emphasis on enhancing labor efficiency by replacing fragmented work with integrated work tasks. This can lead to upgrading worker skills, as shifting flexibility among the production of various goods and services requires a more highly trained work force.(2)

This issue of the Monthly Labor Review explains how computers have affected jobs in selected manufacturing and services industries and in high-tech defense industries, and discusses an emerging market made possible by computers - the home market. This article presents an over-view of the six articles included in this series; it begins by summarizing some of the rapid changes that have occurred in computer technology over the years.

Rapid computer technology

In the last 20 years, there have been dramatic changes in computer technology. In the 1970s, computers were time-sharing mainframe and mini computer systems which allowed dumb terminals to share informations and computing services.(3)

The 1980s saw personal computing. The microprocessor-based computer brought computing power to the individual at the office and home. The development of user-friendly software applications allowed for more uses, however, for the most part, computing was still done in isolation. The use of local-area networks in the workplace helped users communicate beyond the desktops, but only to other users within the organization.(4)

Network computing arrived a decade later, ringing in the age of the information highway. The Internet, a confederation of interconnected networks, connects millions of computers using existing telephone lines.(5) With the help of special software a powerful new computing platform on which to build brand new computing applications is open to all types of computers.(6) Network computing is possible because of speed and cost of die technology. The power of the devices and networks run by microprocessors and software is increasing at a rate never seen before, roughly doubling in performance every 18 months or so.(7) This trend has caused the unprecedented reduction in the cost of microchip-based technology, allowing computers to be used more widely and rapidly.

The decline in costs has assumed a central role in the use of computers. As the production costs of hardware and software fall in comparison to the development cost, it makes sense for firms to sell their products at a lower cost to establish a market hold.

Production flexibility in manufacturing

Semiconductors. Computers have reshaped manufacturing plants, allowing manufacturing firms to serve many markets and produce a wider range of goods. Computer technology helps engineers, managers, and workers schedule the flow of materials, control quality, and change production lines as the demand for products changes.(8) It allows manufacturers to respond quickly to demand, and deliver a larger variety of products more quickly. With computers, retailers can gather and aggregate sales data electronically, convert the data into orders and transmit the information to manufacturers. Manufacturers with computer links to production systems, distributors and customer networks can respond quickly to the markets. For manufacturers, customized runs can now compete on a cost basis with production runs of standardized products with dedicated assembly runs.

All of this depends on the speed and functions of a computers which "in turn is determined by the system design and the underlying capabilities of its components."(9) Semiconductor devices are the basic functional components of computers upon which computer performance depends. In the first article of this series, Francisco A. Moris discusses technology in semiconductor manufacturing, and examines employment and other trends in the industry, including worker productivity, offshore employment, technology diffusion, and export growth. (See pages 6-17.)