Social Implications of a Computerized Society

1

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

2
What We Will Cover

• The Impact on Employment
• The Work Environment
• Employee Crime
• Employee Monitoring

3
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
  unemploymentOffshoring company, Lou Dobbs on
  outsourcing
• Employers use of technology to monitor their
  employeesExample Honeywell installs Encase
  software to monitor 10,000 employee computers
  (copies of files, e-mail, etc.)

4
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?

5
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?

6
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.

7
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
  2002. While long-distance callls increased from
  9.8 bill to 94.9 bill.
• Digital cameras Kodak laid off thousands of
  employees.

8
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.

9
Job Gains that may have come from computer
technology

• 1996 100,000 new internet-related jobs. 1
• 1997 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.

10
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.

11
Discussion Question

• Do you think there is too much flexibility in our
  economy (too much hire and fire)? Or too little?

12
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.

13
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.

14
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.
• Is e-mail causing work stress?

15
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.

16
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

17
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?

18
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 1988. Stanley Morgan
  Thats 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.

19
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

20
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

21
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 Insight

22
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

23
Discussion Question

• Do you want to telecommute? How much? Why?

24
Changes in Business Structure

• Changing Structure of Business
• Average Decline in Size (1975-1985) 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.

25
The Work EnvironmentDiscussion Questions

• How has technology made entrepreneurship easier?
  Harder?

26
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.

27
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

28
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

29
Employee Monitoring (cont.)

• E-Mail, Blogging, and Web Use
• E-mail 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 e-mail, voice mail, or
  computer files.
• Supported by software like Encase.
• Most companies monitor infrequently, some
  routinely intercept all e-mail.
• Over half have fired employees for e-mail/web
  use.
• Microsoft access private, password-protected
  folders on work computers.

30
Employee Monitoring legal aspects

• E-Mail, Blogging, and Web Use (cont.)
• Law and cases
• Electronic Communications Privacy Act (ECPA)
  prohibits interception of e-mail and reading
  stored e-mail 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

31
Employee Monitoring Labour Relations

• E-Mail, 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
  e-mail and voice mail
• The B.C. Labour Relations Board sets rules and
  decides cases about worker-employer relations

32
Employee Monitoring (cont.)

• E-Mail, 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.

33
Employee MonitoringDiscussion 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?