Concurrently during the 1980s and 1990s in the United States, Canada, Australia, New Zealand, and Western Europe, there was a steady trend away from people holding Industrial Age manufacturing jobs. An increasing number of people held jobs as clerks in stores, office workers, teachers, nurses, etc. The industrial world was shifting into a service economy.citation needed
The impact on jobs and income distribution
The information age has impacted the workforce in several ways. First, it has created a situation in which workers who perform tasks which are easily automated are being forced to find work which involves tasks that are not easily automated. Second, workers are being forced to compete in a global job market. Lastly workers are being replaced by computers that can do the job more effectively and faster. This creates problems for workers in industrial societies.
Jobs traditionally associated with the middle class (assembly line workers, data processors, foremen, and supervisors) are beginning to disappear, either through outsourcing or automation. Individuals who lose their jobs must either move up, joining a group of “mind workers” (engineers, attorneys, scientists, professors, executives, journalists, consultants), or settle for low-skill, low-wage service jobs.
The “mind workers” form about 20% of the workforce. They are able to compete successfully in the world market and command high wages. Conversely, production workers and service workers in industrialized nations are unable to compete with workers in developing countries and either lose their jobs through outsourcing or are forced to accept wage cuts.5 In addition, the internet makes it possible for workers in developing countries to provide in-person services and compete directly with their counterparts in other nations.
This has had several major consequences:
Growing income inequality in industrial countries
The polarization of jobs into relatively high-skill, high wage jobs and low-skill, low-wage jobs has led to a growing disparity between incomes of the rich and poor. The United States seems to have been more impacted than most countries; income inequality started to rise in the late 1970,’s, however the rate of increase rose sharply in the 21st century. Income inequality in the United States has now reached a level comparable to that found in South America.6
Increased opportunity in developing countries
Workers in developing countries have a competitive advantage which translates into increased opportunities and higher wages.7 The full impact on the workforce in developing countries is complex; there are downsides. (see discussion in section on globalization).
The globalization of the workforce
In the past, the economic fate of workers was tied to the fate of national economies. For example, workers in the United States were once well paid in comparison to the workers in other countries. With the advent of the information age and improvements in communication, this is no longer the case. Because workers are forced to compete in a global job market, wages are less dependent on the success or failure of individual economies.5
Automation, productivity, and job loss
There is another way in which the information age has impacted the workforce: automation and computerization have resulted in higher productivity coupled with net job loss. In the United States for example, from Jan 1972 to August 2010, the number of people employed in manufacturing jobs fell from 17,500,000 to 11,500,000 while manufacturing value rose 270%.8 It initially appeared that job loss in the industrial sector might be partially offset by the rapid growth of jobs in the IT sector. However after the recession of March 2001, the number of jobs in the IT sector dropped sharply and continued to drop until 2003.9 Even the IT sector is not immune to this problem.
The rise of information-intensive industry and "the new entrepreneurialism"
Industry is becoming more information-intensive and less labor and capital-intensive (see Information industry). This trend has important implications for the workforce; workers are becoming increasingly productive as the value of their labor decreases. However, there are also important implications for capitalism itself; not only is the value of labor decreased, the value of capital is also diminished. In the classical model, investments in human capital and financial capital are important predictors of the performance of a new venture.10 However, as demonstrated by Mark Zuckerberg and Facebook, it now seems possible for a group of relatively inexperienced people with limited capital to succeed on a large scale.11
The impact on jobs and income distribution
The information age has impacted the workforce in several ways. First, it has created a situation in which workers who perform tasks which are easily automated are being forced to find work which involves tasks that are not easily automated. Second, workers are being forced to compete in a global job market. Lastly workers are being replaced by computers that can do the job more effectively and faster. This creates problems for workers in industrial societies.
Jobs traditionally associated with the middle class (assembly line workers, data processors, foremen, and supervisors) are beginning to disappear, either through outsourcing or automation. Individuals who lose their jobs must either move up, joining a group of “mind workers” (engineers, attorneys, scientists, professors, executives, journalists, consultants), or settle for low-skill, low-wage service jobs.
The “mind workers” form about 20% of the workforce. They are able to compete successfully in the world market and command high wages. Conversely, production workers and service workers in industrialized nations are unable to compete with workers in developing countries and either lose their jobs through outsourcing or are forced to accept wage cuts.5 In addition, the internet makes it possible for workers in developing countries to provide in-person services and compete directly with their counterparts in other nations.
This has had several major consequences:
Growing income inequality in industrial countries
The polarization of jobs into relatively high-skill, high wage jobs and low-skill, low-wage jobs has led to a growing disparity between incomes of the rich and poor. The United States seems to have been more impacted than most countries; income inequality started to rise in the late 1970,’s, however the rate of increase rose sharply in the 21st century. Income inequality in the United States has now reached a level comparable to that found in South America.6
Increased opportunity in developing countries
Workers in developing countries have a competitive advantage which translates into increased opportunities and higher wages.7 The full impact on the workforce in developing countries is complex; there are downsides. (see discussion in section on globalization).
The globalization of the workforce
In the past, the economic fate of workers was tied to the fate of national economies. For example, workers in the United States were once well paid in comparison to the workers in other countries. With the advent of the information age and improvements in communication, this is no longer the case. Because workers are forced to compete in a global job market, wages are less dependent on the success or failure of individual economies.5
Automation, productivity, and job loss
There is another way in which the information age has impacted the workforce: automation and computerization have resulted in higher productivity coupled with net job loss. In the United States for example, from Jan 1972 to August 2010, the number of people employed in manufacturing jobs fell from 17,500,000 to 11,500,000 while manufacturing value rose 270%.8 It initially appeared that job loss in the industrial sector might be partially offset by the rapid growth of jobs in the IT sector. However after the recession of March 2001, the number of jobs in the IT sector dropped sharply and continued to drop until 2003.9 Even the IT sector is not immune to this problem.
The rise of information-intensive industry and "the new entrepreneurialism"
Industry is becoming more information-intensive and less labor and capital-intensive (see Information industry). This trend has important implications for the workforce; workers are becoming increasingly productive as the value of their labor decreases. However, there are also important implications for capitalism itself; not only is the value of labor decreased, the value of capital is also diminished. In the classical model, investments in human capital and financial capital are important predictors of the performance of a new venture.10 However, as demonstrated by Mark Zuckerberg and Facebook, it now seems possible for a group of relatively inexperienced people with limited capital to succeed on a large scale.11
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