Technology Change and Job-Loss - Report Example

…………………………………….. College ……………………………. …………………………………………….. Technology change and Job-loss TABLE OF CONTENTS TABLE OF CONTENTS 2 Introduction 3 Job loss due to technology change 3 Sociologic view regarding technology impact on employment 4 Economics view of Job-loss due to technology change 6 Consequences of Job-loss due to technology change 8 Analysis, Evaluative Conclusion and Recommendation 8 References 10 Introduction Technology changes almost every day and the outcome is that our life and social setup have tremendously been changed. The technology advances in almost all the fields, irrespective of business, government, social and family organizations or systems, have greatly impacted human life. In major industries, human participation and jobs have been replaced by the technologies and therefore large numbers of people have lost their jobs. Technological change and innovations play vital roles in shaping the quantity and quality of employment. This piece of research paper described the impact of technology advances on employment. This paper explains how and why technology replaced employment and how this has caused increased rate of unemployment. The job loss due to technology change will be explained from the economic as well as social perspectives. Job loss due to technology change Both technology and employment are extremely important elements of a developing economy and better standard of living. Technology advancement certainly brings development to the economy, and similarly, fuller employment is a critical element to ensuring improved standard of living. Within the last few decades, a large numbers of machines has been introduced or renewed and all such machineries, including both small-scale and large-scale, have been applied to various industries. Most of such machines have replaced labor works, either by reducing the numbers of workers or by fully replacing the workers. Many technologies have directly caused reducing the numbers of labors in many industries and this is what is referred by Job Loss due to Technology Change. It is important to analyze various aspects of jobs and unemployment in relation to the technology change, because various interdisciplinary approaches have quite different view regarding the job loss due to technology change. One of the most striking is that technology creates jobs as well as destructs them. Economics view technology as a cause of reducing the demand for labor and thus causing a shift in labor-demand curve. Sociologists may view technology as an important advancement to enhance better standard of life for the public whereas as a reason for job loss too. Sociologic view regarding technology impact on employment Sociologists view that technology has played major role in removing jobs-opportunities for the public. As Browne (2006, p. 386) noted, development of technology has been found to have removed the numbers of workers required to perform tasks. Workers and their opportunities have fully been replaced by comprehensive automated work processes either by using or other technologies. Automation has caused removing of many unskilled and semi-skilled manual jobs. In many industries, major parts of workers’ role have been hit, except few where decision making and qualitative thinking required. By the revolution in industrialization, a large numbers of manual, skilled and un-skilled works have been removed. But, by the revolution in information technology and computers, many of the managerial, administrative, official and clerical works have been hit, even though not fully replaced, due to that all such professions always need thinking, decision making and strategic thinking skills. Some of the computerized machines have caused huge redundancies in clerical and office staff. For instance, cash dispensers in banking, insurance and other service sectors have causes job losses of thousands of workers, and many routine clerical jobs have been replaced by with computer machines. In large scale stores like department or supermarket or hyper market stores, sales and other staff have been reduced because of computerized bar-code reader, self-service checkouts and automatic biller etc. Though the job loss and increased rate of unemployment are thus very obvious, Browne (2006, p. 386) admitted that newer technologies have also created a range of new occupations, such as need for computer technicians and support staff, computer and software trainers, hardware and software developers and skilled workers who are able to control and operate the new technology systems. Collins and Ryan (2007, p. 27) found that loss of factory jobs have been happening all around the world. Between 1995 and 2002, 22 million global factory jobs have been disappeared, mainly due to increased productivity. In very recent years, terms like ‘outsourcing and off-shoring’ have got significant widespread attention throughout the media, perhaps because of its easiness to apply in business and possibility to earn more. Since 2001, the U.S economy has been down about 2 million jobs, despite US government proclamation that 308,000 jobs added in 004. Technology helped companies increase workers and other productivity. Off-shoring and outsourcing have played significant roles in using technologies and thus to increase productivity, as productivity simply refers to the ability of a firm or individual worker to produce more with less costs and within less time. In recent years, companies have learned how to produce more with fewer workers and using technology more efficiently. With help of off-shoring and outsourcing, many companies started sending work to countries like China and India. But, it is found that these trends cause relatively impacted little on jobs. It is estimated that outsourcing accounts only for 10 % jobs lost and this would impact less than 2% of the employed Americans. But, from the sociologic perspectives, outsourcing hasn’t caused jobs-loss, because the jobs have been shifted from one country to another and therefore it is simply job-shifting. Economically, it may be a problem according to macroeconomic aspects, but, sociologically, it may not be that way because jobs are still being performed by others. Economics view of Job-loss due to technology change In economics point of view, there are basically four factors of production namely capital, labor, land and organization. Out of these four, capital and land are never affected by the technology change. Organization is very less likely to impacted by the technology change. But, labors are very likely to be impacted by the technology advancement. Economists viewed that there are labor-intensive and technology or capital intensive works. Labor intensive works can be most likely to replaced by the technologies and this can yield positive outcome to the overall productivity despite the fact it may cause unemployment as well. Technology and labor can be considered to be substitute inputs. As McConnell and Brue 2004, p. 44) denoted, a substitute good is one that can be used in place of the other. From the marketing perspectives, tea and coffee are substitute goods, and similarly, from the manufacturer’s perspectives labor and machine are substitute goods. A manufacturer may use machines or labor, according to his discretion as to which one would be more productive and profitable. As and when technology is more productive, the manufacturer will be tempted to depend on machines rather than labors. Addison, Fox and Ruhm (2000, p. 682) argued that skill-based technology improvements have reduced the relative wages of unskilled workers in the US. This has also caused lower level of economic flexibility and resulted in higher employment. Technology improvement mostly impacted less-skilled and manual works. In economists, there are different types of unemployment, namely structural unemployment, frictional unemployment, seasonal unemployment, cyclical unemployment, technological unemployment and disguised unemployment. Unemployment is a persistent economic problem, almost as critical as inflation. Most economic theories and perceptions are prepared based on the concept that fuller employment is critical to economic development and is highly important for better standard of living. Though unemployment is an economic problem, and technology advancement is one of the reasons of it, it is not viewed as something to be discouraged. But rather, technology advancement is considered in Economics as an element that shifts in labor demand curve. According to Mankiw (2008), technological change shifts labor demand curve to right. More specifically, technologic change is good for increasing job opportunities as well as improving the productivity of labors. Between 1960 and 2000, the amount of output that a typical US worker was able to produce in an hour had risen by 140 percent. One of the main reasons for it was technological change as it had profound implication for the labor market and for increasing the productivity as well. As economists viewed, when other market elements remained being unchanged, technological advances typically increase the marginal product of labor and this in turn increases the demand for labor causing demand curve to shift to the right. When more specific and advanced technologies are introduced to industries, demand for the workers to serve in those technologies or to work in them will increase. When a new machine has been introduced to train, for instance, more workers will be required to work in them and to serve travelers. As demand for skilled labors increases, economists view that more people will study and get skilled through training or education and labor supply also will increase. So, in short, technology advancement causes job-creation as well. Consequences of Job-loss due to technology change As is very evident from the industries and from the common examples too, the technology change causes mass-job losses and this has major influence on the sociology of unemployment. Employment provides an income to the people vital for their survival and work in modern societies normally perform a range of other functions as:- The loss of social contact outside one’s immediate house-or family settings, The loss of a sense of collective purpose and achievement, The loss of time structure for a person’s daily, weekly or monthly routines, The loss of self-esteem, dignity, status and identity, and The loss of regular activity (Edgell, 2006, p. 107) Analysis, Evaluative Conclusion and Recommendation Technology change, to be more specific, technological advancement causes both job creation and jobs-loss. As very evident from our day-to-day experiences, toll-booth, bar-code readers in the retail shops, large machines in large scale industries cause mass job loss, but same time, introduction of all such technologies also require large numbers of skilled and trained people to be specified to work in them. This paper has analyzed the sociological and economic perspectives of technology impact on jobs-loss and this paper finds that technology causes both job creation and job destruction, despite the fact that the exact ratios of both job loss and job creation may be unknown or seldom explored. As sociologist, Browne (2006, p. 386) evaluated, introduction of new technologies crates new range of occupations. It thus opens newer employment opportunities such as computer and software technicians, trainer, repairer etc. From the economics point of view, technological change is an element that causes a shift in labor demand because technology change increases labor productivity and also increases labor demand. This paper concludes that technology change increases jobs opportunities as well as decrease them. Both are in quite different ways. How much exactly it destructs or creates the job is unknown or seldom accounted. This paper suggests and recommends that further study is required to study the exact ratios or calculations of technology impact on both job creation and job destruction, because, no literatures have so far detailed any such relation between job loss and job creation that the same technology change may cause. References Addison, JT, Fox, DA and Ruhm CJ 2000, Technology, Trade sensitivity and labor displacement, Southern Economic Journal, Browne, K, Introducing Sociology for AS Level, Illustrated edition, Polity, 2006 Collins DT and Ryan, MH, The strategic implications of technology on job loss, Academy of Strategic Management Journal, Volume 6, 2007 Edgell, S, The sociology of work: continuity and change in paid and unpaid work, Illustrated edition, Pine Forge Press, 2006 Mastrostefano, V and Pianta, M, Technology and Jobs, Economics of Innovation and New Technology, Vol. 18, No. 8, November 2009 McConnell, CR and Brue, SL, Economics- Principles, Problems and Policies, Sixteenth Edition, The McGraw Hill Companies, 2004 Read More