Computers' Impact on the Labor Market

In taking a computer class today, I encountered an interesting argument in my textbook and from my professor regarding the negative impact that computers have on the labor market. Both my textbook and my teacher made it clear that computers are becoming more efficient than human beings at many different jobs. Where it took 100 people to do a job in the past, 10 people with 10 computers can do the same thing with twice the productivity and half the effort. This was then portrayed as a disadvantage of computers, because it resulted in things like outsourcing and laying off of workers.

Frederic Bastiat, the fiery guardian of free market theories in mid 19th century France began a work called Economic Sophisms with the the question: "Which is preferable for man and society, abundance or scarcity?" In a sarcastic tone, he then asked his readers if there was "any question about it." Bastiat contended that of course abundance was preferable for man's wellbeing over the poverty that comes with scarcity.

Yet, Bastiat then identified that there are people who constantly demonstrate their lack of economic understanding by praising the desireability of scarcity. He says "Do we not hear it said every day: 'Foreigners will flood us with their products?' Thus, people fear abundance."

He used other examples, including how workers wreck mass production machines, demonstrating their desire for scarcity over abundance.

How does this apply to my encounter with the argument about computers and the labor force? Quite frankly, computers have enhanced American society in more ways than many of America's previous technological advancements. One of their greatest advances is the ability to produce more with less effort and greater efficiency. In short, computers have created a more efficient and abundant society. There's no reason to contend that they are bad for the labor market or the economy in general; instead they should be praised for the benefits they have provided. Yes, their improved efficiency might cause some outsourcing and the termination of old jobs that are no longer needed. But is this a bad thing for the job market?

Absolutely not! There are plenty of ways in which computer technology has benefitted the job market far more than it has hurt it. First of all, with the creation of the computer industry came the creation of thousands of job opportunities. Millions of people since the 1980's have been employed in highly technological fields because of the growth in the computer industry. Yes, computers have made things more efficient, and have therefore taken away some jobs, but whenever you create a new industry, there will be plenty of jobs to go around to cover for the old ones when everything works itself out (as it always does in a free market).

Some would now say many of these high tech jobs are being shipped overseas through outsourcing, but this is also based off of flawed economics and little understanding of the statistics. Daniel Griswold at the Cato Institute wrote in May, 2004 that "The best estimates from the IT industry are that perhaps 300,000 to 400,000 jobs previously performed in the U.S. are now done overseas through contractors. The much-cited Forrester Research report of November 2002 projected that 3.3 million jobs would be outsourced from 2000 through 2015, or about 220,000 a year. (More than half of those would be call-center type jobs, and only one out of six would be white-collar IT jobs.) Even if accurate, those numbers are just drops in the huge bucket of an $11 trillion economy that employs 137 million people and creates and destroys millions of jobs every month. Even in times of healthy employment growth, 350,000 people file for unemployment insurance every week."

In other words, outsourcing of highly technical jobs is nothing more than a slight bump in our market economy and there's definitely no logical way (based on the statistics) to link technology to job loss. As Griswold also shows in the article, outsourcing lowers the cost of goods and services so that you and I can use them for less cost.

Also, do you realize how much computers have connect employees and employers, enabling mobility and networking. Where would we be without Power Point presentations, Microsoft Word, Excel, web cams, video networking, the graphics capabilities of Apple computers, or that superhighway of information known as the internet? The efficiency and productivity these things provide enable workers and the economy instead of destroying them.

Need a job? Ever heard of Monster.com? Or what about CareerBuilder.com? Without computers and job hiring services like these available through them, so many people would have much fewer options in both job applications and the employees they have available for hire. In this area, computers enable the labor market in ways that extend far beyond the technical world. Even if you don't think pursuing a degree and a career is your thing, that's ok! With a computer connected to the internet, you might just be able to employ yourself and make a nice 6 figure salary without even leaving your home!

The best argument in favor of computer technology and job growth lies in the statistics themselves. In 2004, Griswold reported that there were about 137 million workers in the U.S. labor market. Today, even with the tough recession we are in, the United States employs over 145 million workers, according to the most recent Employment Situation Summary by the Bureau of Labor Statistics (BLS). Additionally, when the first Apple computer went on the market in 1984, the United States employed a grand total of 105 million workers, according to more statistics from the BLS. So in 25 years, the United States has roughly 40 million more workers in their labor force than when computers were in their baby stages.

With this information in mind, can we really link job loss to the increased use of computers? I think not.

So go ahead and enjoy the abundance, efficiency, and prosperity that computers provide to our society. As much as we use them and work them, there's simply no excuse to keep blaming them for negative impacts on the U.S. job market. Let's avoid the economic sophism of desiring scarcity over abundance and welcome with full arms the power, efficiency, and jobs that computers provide to our modern economy.