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The Demand Increase for the Skilled Worker Throughout history, the labor force has been affected by many changes, especially the industrial revolution, and now similar changes are occurring due to the technological revolution. Both have made an impact on the economy and to the people who comprise the labor market. During the industrial revolution, the unskilled laborers were the group who were most directly helped due to the improvements in factory machines. These machines enabled them to work more efficiently to produce further goods than they had in the past. Likewise, the information revolution is enabling people to be more efficient. The lower-skilled labor force, however, is being hurt and becoming unemployed in this age rather than helped.
For years, economists have anticipated mass unemployment created by information technology, but rather than unemployment occurring, employment is shifting from one end of the spectrum of workers to the other. The unemployment rate has fallen to four percent, which is the lowest it has been in thirty years; however, it is true that many jobs are being lost. These jobs are those held by low-skilled workers, but there are even more jobs that are being created for those who are educated and skilled. It is unfortunate for those who are low skilled and losing their jobs due to the fact that there are few employment opportunities they qualify for with their level of skill. For example, information technology may have created advances in the steel industry and replaced a steelworker, thus causing him to lose his job, but the technology developed may have created jobs developing and monitoring and maintaining this technology. The problem rests with the fact that this steelworker, who has just been laid-off, is not the same person who will gain a job due to the increase in technology.
This loss of jobs for the unskilled and gain of jobs for the skilled is creating a widening of wage differentials in favor of the better educated. The jobs that are being created are available for those educated in the computer and technology industry. Increased technology creates a demand for those who can develop and maintain the equipment. These skills are acquired with through training and upper-level education, which all people are not able to partake in, thus excluding a large amount of the labor force, namely the lesser skilled.
Many of the workers who are deemed low skilled are high-school dropouts and those without college degrees, which are also those who do not meet the criteria to hold jobs in the information technology field. It is imperative that workers invest in their human capital through improving their level of education and knowledge in the technology field and thus possibly gain entry into this field, and eventually receive a greater rate of return to those who do not acquire the knowledge or skills. There is a greater demand for labor among the skilled than the unskilled and laborers must equip themselves to take part in this labor expansion. Due to the theory of labor demanded, the optimal level of employment for a business firm is based on many factors, such as the cost of labor, the productivity of the work force, the level of production, and the price the business can charge for its product. Advancements in information technology have altered each of these factors. The productivity of the work force for lower-skilled workers has increased due to technology, but at the same time replaced the jobs of many.
A job that may have taken two people an hour to accomplish may now only take one worker half the time due to the development of new technology. The cost of labor has also been changed. In most cases a machine is more economically effective than paying a worker to do the same task. The level of production is also increased with the introduction of technology because technology allows products to be produced at larger masses, which in turn, changes the price a business can charge for its product, and therefore, the demand for unskilled labor has decreased. The computing industry is the industry that has promoted jobs for the skilled. The computing service industry is among the fastest growing industry both in size and wage rate.
Between the years 1987 and 1997 the computing service industry increased by 64. 4 % where the service industries, such as gas stations, only had a change of 35. 4 % (textbook pg. 226). Unemployment is also much higher among the blue-collar workers than the white-collar workers. In 1998, white-collar workers had an unemployment rate of 2. 8 % where blue-collar workers had a substantially higher rate of 5. 6 % (textbook pg. 669), thus proving that the white-collar industries, which are rising with the introduction of technology, offer more stable job opportunities for those who qualify. In order to qualify for these positions being created by computer technology people must increase their knowledge of the industry. This is done through education and training courses. As seen in the graph below (graph 12), the amount of jobs available for those who are college graduates far exceed those for high-school graduates and dropouts, verifying the importance of education.
Although college is expensive, the rate of return is much higher for those who graduate than those who do not. This is also evident in graph 13, which shows that the more people are able to use the Internet and other computer services, the higher their income is likely to be. This knowledge has also shown to be acquired through school, the more education, the more likely one is able to use information technology.
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