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numbers of displaced agricultural workers
moved into manufacturing. Similarly, beginning
in the 1970s, displaced manufacturing
workers moved into service jobs. These
moves can be painful and can involve signifi -
cant cuts in pay and benefi ts, but they avoid
long-term unemployment.
With both channels, the economy produces
more goods and services per person.
Thus, the mechanical harvester allowed the
same volume of crops to be produced with
fewer farm laborers. Depending on demand,
the displaced laborers produce either additional
farm output or additional output in
the industries to which they moved.
This additional output, representing income
for someone, is no economist’s fantasy.
In 1947, the median U.S. family income stood
at $20,400 (in 2001 dollars). By 1964, it had
risen to $31,773. The growing purchasing
power largely refl ected increased output per
worker stemming from technological improvements
and a more educated workforce.
Today, median family income stands at
about $51,000, and a signifi cant fraction
of recent gains has been spent on computer-
related consumer goods: cell phones,
advanced medical treatments, CDs, DVDs
and so on. These purchases, in turn, increased
employment in those occupations in which
labor had a comparative advantage.
In sum, plenty of evidence supports
Simon’s argument that computerized work
does not lead to mass unemployment. But
Simon also made clear that computerization
could sharply alter the economy’s mix
of jobs.
The Mix of Jobs
How do computers affect the economy’s job
mix? Most predictions have fallen into one
of two categories. The fi rst is that computers
will do low-level, routine work, so that people
have to move into higher skilled work to survive.
The second is that computers will largely
do high-level work, leaving most people no
alternative but menial jobs.
Peter Drucker, the management theorist,
belongs in the fi rst category. In Drucker’s
mind, computerization subsumes routine
work, and so the real danger is a shortage
of trained managers to direct what computers
should do. By contrast, Jeremy Rifkin,
the author of The End of Work, argues that
the economy’s requirements for high-level
Fourth Quarter 2004 67
knowledge workers
can never compensate
for the number of jobs
computers will eliminate.
The result will be
a large concentration
of workers in low-level,
dead-end jobs. Apparent
support for this prediction
comes from the
U.S. Bureau of Labor
Statistics, which projects
that food preparation
and service workers,
who require little
training, will gain more
jobs between 2000 to
2010 than any other occupation.
In his 1960 essay, Herbert Simon made a
set of predictions about the job mix in a typical
corporation in 1985. Simon’s predictions
were closer to Drucker’s than to Rifkin’s, but
they were more nuanced.
Blue-collar workers: “There will be a few
vestigial ‘workmen’ – probably a smaller part
of the total labor force than today – who will
be part of in-line production, primarily doing
tasks requiring relatively fl exible eye-brainhand
coordination.”
Machine maintenance workers (i.e., technicians):
“There will be a substantial number
of men whose task it is to keep the system
operating by preventative and remedial
maintenance.”
Clerical workers: “The departments of a
company concerned with major clerical functions
– accounting, processing of customers’
orders, inventory and production control,
purchasing and the like – will have reached
an even higher level of automation than most
factories.”
Salespeople: “If we think that buying decisions
are not going to be made much more
objectively than they have in the past, then we
might conclude the automation of the salesman’s
role will proceed less rapidly than the
automation of many other jobs. If so, selling
will account for a larger fraction of total
employment.”
Managers: “There will be a substantial
number of men at professional levels, responsible
for the design of product, for the design
of productive process and for general management.
We have still not faced the question
of how far automation will go in these areas,
and hence we cannot say very fi rmly whether
such occupations will be a larger or smaller
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