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7 - implications of workplace change

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New technology and growing global trade have changed the U.S. economy’s mix of jobs and industries. Computers have revolutionized work and workplaces and raised the skill requirements for many jobs. Employers’ need for greater workforce flexibility, coupled with efforts to hold down benefit costs, will increase demand for nontraditional workers. This chapter examines the effects of these changes on American workers.

EMPLOYERS ARE DEMANDING HIGHER SKILLS

Demand for higher-skilled employees is a 50-year trend that has become increasingly important. Where strength and manual dexterity used to be enough to ensure employment and a comfortable standard of living, more jobs now and in the future will require verbal and mathematical, as well as organizational and interpersonal, skills. Emerging technologies, globalization, and the information revolution are also increasing demand for high-tech skills. Workers welcome the increasing number of new job opportunities available in a broad spectrum of industries. The want ads, clamoring for workers in the information technology, communications, and service industries, reflect both the increased opportunities for workers and the increased need for up-to-date skills. American workers and businesses are responding by investing in more education and training.

In the midst of the creation of these new high-tech jobs, most current jobs will endure, albeit in altered form. Skills will need updating as technology introduces new ways of completing age-old tasks. For example, many classroom teachers will continue to stand before their students, while some will appear by video or satellite hook-up and answer student questions at night via e-mail. Editors will still work their magic on the written word, but many will do so from their homes or anywhere a modem is available. The fundamental skills used by these workers will endure but they will also need new skills to function effectively. There are few working Americans who will not face the need for supplementary skills to remain competitive in their existing jobs.

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The changing skill content of jobs

Skill requirements have increased for many jobs in the U.S. economy, but a closer examination reveals a more complex relationship between technology and job content. Consider the change in machine shops from manually-operated machine tools, such as lathes and drilling machines, to computer-programmed machine tools. Manual operation required skill in reading gauges and other measurement devices, as well as manual dexterity acquired through relatively long periods of training and doing. Contrast this with the requirements for users of newer, computer-programmed machine tools. Newer machine tools require much less manual dexterity, but they demand computer literacy and perhaps some programming—a very different skills package.

The machine-tool operator today is more likely to insert a programmed diskette into a control module than to set measurement devices manually. The computer program itself is likely to have been written by a programmer, not by a machine-tool operator on the shop floor. Though it might appear that machine-shop workers’ skill requirements have decreased, some workers may exercise discretion over the programmed tool. In fact, some jobs in the machine shop have been "de-skilled" while others have been redesigned to require formal education in new, abstract skills such as use of programming languages.

The Bureau of Labor Statistics (BLS) periodically projects the types of jobs that will be needed in the U.S. workforce. Table 7.1 shows the latest BLS projections of the occupations in the U.S. labor force to the year 2006.

The occupational groups that require the most education are projected to be among the fastest-growing. Employment in professional specialty occupations is projected to increase the fastest. Technicians and related support occupations will have the second fastest growth rate.

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America's Job Network

Post-school training

To meet rising skill needs, young workers are raising their skills, not only by obtaining more schooling, but also by participating in post-school training to a somewhat greater extent than did previous generations. Between 1983 and 1991, the number of 20-to-24-year-olds participating in formal job training programs increased from 8 percent to 10 percent. 1 Younger workers also participated in post-school adult education and training activities at higher rates than their older counterparts. More than half of all 17-to-27-year-olds had participated in post-school adult education and training activities since leaving full-time schooling. In contrast, only 40 percent of workers over 60 years old had ever participated in adult education and training.2

Much of the investment in post-school adult education is being made by workers who already have higher levels of formal educational attainment. From 1990 to 1991, nearly 80 percent of young workers with some college education had participated in post-school education and training since leaving full-time schooling. Fewer than half of young workers with a high-school degree but no college, and only 22 percent of young workers with no high-school degree, had participated in post-school training.

Large discrepancies also exist among young workers in terms of specific types of employment-related training. The group with some college study participated in supervisory, professional development, or sales and marketing training at about twice the rate of those with only a high-school education. The very low participation rates in computer software training among young high-school-only workers (6 percent) and among high-school dropouts (under 2 percent) is particularly disturbing given the evidence that using a computer on the job significantly raises earnings.3

Basic skills are not so basic anymore

Although the workforce’s educational attainment is at an all-time high, and younger workers are increasing their amount of post-school education and training, more is needed, especially in job-related basic skills. Consistent with the finding that approximately 20 percent of the population reads at or below the fifth-grade level, a 1996 American Management Association (AMA) survey of mid-sized and larger businesses found that 19 percent of job applicants taking employer-administered tests lacked the math and reading skills necessary in the jobs for which they were applying. The AMA’s 1998 survey, however, found that this percentage had increased to almost 36 percent.

My interest is in the future because I am going to spend the rest of my life there.

Charles Franklin Kettering
Inventor.

The sharp increase in the deficiency rate is due, the 1998 AMA report concluded, not to a ‘‘dumbing down’’ of the incoming workforce but to the higher literacy and math skills required in today’s workplace. When labor markets are tight, employers may find it necessary to test a greater number of applicants to find qualified workers. The 1998 study found that although the overall percent of low-education workers increased, companies faced with continuing skills shortages were more willing to hire skills-deficient applicants and train them through remedial programs. 4

WORK REFORMS CAN INCREASE PRODUCTIVITY . . . AND RESHAPE WORKPLACES

Along with efforts to improve productivity through increased worker skills, many employers are trying to improve productivity by reforming the way they organize work and motivate workers. Work reform movements typically proceed in cycles of enthusiasm followed by disillusionment, 5 but, after trial and error, the best elements usually become part of the accepted way of doing business. Successful reforms will shape the workplaces of the future.

To increase quality and lower costs, some firms are experimenting with greater worker involvement and interaction, through innovative work practices such as worker teams, total quality management, quality circles, peer review of employee performance, worker involvement in purchase decisions, and job rotation. 6 Labor unions often work with employers to put such concepts into practice in the workplace.

Additional practices used to boost productivity include profit sharing, linking pay to performance, decentralizing responsibility, and increasing worker autonomy.7 Changes in workplace and factory layouts may also increase efficiency and reduce ergonomic-related injuries. Such work practices can often result in high performance particularly when combined with increased training, new technology, improved communications among producers, suppliers, customers, and company divisions, or new tools for inventory and quality control. Organizations that integrate several of these approaches have been called "high performance" work organizations. 8 Many workplaces, including many where workers are represented by a union, have adopted one or more of these work practices. The Wisconsin Regional Training Partnership, for example, is an organization in which labor and management cooperate, both within and across firms, to build high-performance workplaces where continuous education and innovation are the norm.

Companies now use computers and telecommunications tools to link to customers and suppliers. Sometimes, because of these new tools, companies faced with rapidly changing market conditions rely upon the increased involvement of workers and their unions in managing the production process. Workers and their unions, often through use of teams, can help management to anticipate problems and bottlenecks, participate in new product development, monitor quality, address safety and health issues, and so on.

Increasing the employee stake in company performance

Many firms are experimenting with linking worker pay and company performance more directly through profit sharing. 9 Gain sharing is another type of compensation system in which pay corresponds more directly to worker performance. 10 Some companies allow workers to buy company stock through payroll deductions at rates discounted from the market share price. These practices increase the economic stake that workers have in company performance. Now limited to a small percentage of the workforce, these direct linkages of employees to the success of their companies, if they pay off in company productivity, are likely to spread.

In 1993, BLS gathered data on the organization of work and employer-provided training. 11 The survey covered eight alternative work organization practices: worker teams, total quality management, quality circles, peer review of employee performance, worker involvement in purchase decisions, job rotation, just-in-time inventories, and compensation systems based on a "pay for knowledge" system. The survey found that 42 percent of workplaces used at least one of these practices. In 1994, the Commission on the Future of Worker–Management Relations found that over 95 percent of the largest employers used employee-involvement mechanisms.

Using these new performance-enhancing strategies goes hand in hand with training workers and enhancing their skills. The BLS survey showed that nearly all (98 percent) of the establishments that used these new practices also provided formal training opportunities for their workers. In contrast, only 80 percent of establishments that did not adopt any of the newer workplace practices provided formal training. The difference in the intensity of training (measured by the number of hours per worker) was even more dramatic. Workers in establishments providing both training and new workplace practices spent four times as many hours in training than did workers in establishments providing none of these newer workplace practices. 12

The effectiveness of alternative work organizations depends on appropriate human resource management. One recent analysis maintained that innovative work practices can improve the economic performance of a company only if three requirements are met:

  • The employees possess knowledge and skills that managers lack;
  • The employees are motivated to apply these skills and knowledge; and
  • The organization is structured to channel these skills and knowledge towards improving productivity.13

Many experiments in work organization have resulted in dramatic changes in the way companies operate. Not all will prove superior to previous approaches, but those that do improve productivity are more likely to be found in the workplaces of the future.


1 Norman Bowers and Paul Swaim, “Recent Trends in Job Training,” Contemporary Economic Policy, Vol. XII, January 1994, pp. 79-88.

2 Joseph E. Hight, “Young Worker Participation in Post-School Education and Training,” Monthly Labor Review, June 1998, pp. 14-21.

3 The data on participation in post-school education and training are from Hight. For evidence on the use of computers, see Alan B. Krueger, “How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-89,” Quarterly Journal of Economics, February 1993, pp. 79-88.

4 “More than One-Third of Job Applicants Deficient in Reading & Math Skills, Says American Management Association Survey,” American Management Association, April 12, 1999, http://www.amanet.org/research/specials/skilshrt.htm.

5 Thomas Bailey, “Discretionary Effort and the Organization of Work: Employee Participation and Work Reform Since Hawthorne,” unpublished, Teachers College, Columbia University, New York, 1993.

6 Maury Gittleman, Michael Horrigan and Mary Joyce, “Flexible Workplace Practices: Evidence from a Nationally Representative Survey, Industrial & Labor Relations Review, October 1998.

7 Jeffrey King, “High-Performance Work Systems and Firm Performance,” Monthly Labor Review, May 1995.

8 King.

9 Douglas Kruse, Profit Sharing: Does it Make a Difference? Upjohn Institute, Kalamazoo, MI, 1993.

10 Robert W. Bednarzik, “An Analysis of U.S. Industries Sensitive to Foreign Trade, 1982-1987,” Monthly Labor Review, February 1993, pp.15-31.

11 Bureau of Labor Statistics, the Survey of Employer-Provided Training.

12 Robert W. Bednarzik, The Flexible Enterprise: An Overview of the United States, paper prepared for OECD project on Technological and Organizational Change and Labor Demand, U.S. Department of Labor, Washington, D.C., 1996.

13 Thomas Bailey, “Discretionary Effort and the Organization of Work: Employee Participation and Work Reform Since Hawthorne,” unpublished, Teachers College, Columbia University, New York, 1993.

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