First published 1987 by Westview Press
Published 2018 by Routledge
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Copyright 1987 by Conservation of Human Resources, Columbia University
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Library of Congress Cataloging-in-Publication Data
Stanback, Thomas M., Jr.
Computerization and the transformation of employment.
(Conservation of human resources studies in the
new economy)
Includes bibliographies and index.
1. Corporations, NonprofitUnited StatesManagement
Data processing. I. Title. II. Series.
HD62.6.S73 1987 658'.048'0285 86-22372
ISBN 13: 978-0-367-01370-7 (hbk)
Two decades have passed since the Conservation of Human Resources, Columbia University, published The Pluralistic Economy (Eli Ginzberg, Dale L. Hiestand, and Beatrice G. Reubens, 1965). Important ties link this earlier investigation to the present book by Thomas M. Stanback, Jr., which reports on the current status and future prospects for computerization in the not-for-profit sector, that is, the governmental and nonprofit arenas combined.
The authors of The Pluralistic Economy called attention, for the first time, to the flaws in the conventional model of the U.S. economy. According to the conventional view, the economy consisted of a predominant private sector and a small government sector. The model failed to allow for a significant third sectorthe nonprofit sectorwhich plays a leading role in such critical fields as health care (hospitalization), higher education, and cultural activities (museums, orchestras, opera, etc.), as well as religious institutions and a broad array of social welfare organizations.
Furthermore, analysis of national product and employment data revealed that the not-for-profit sector accounted for between one-quarter and one-third of gross national product and between one-third and two-fifths of employment. These proportions challenged the established view that the private sector dominated and provided the motivating power of the U.S. economy.
It is no accident that this conventional belief dominated public opinion for such a long period even after investigations had challenged it. Economists who developed and propagated the private-sector modelwith help from business, politicians, and the presshave long been wedded to the conviction that the U.S. economy has been and remains a basically competitive economy dominated by competitive markets. The existence of multinational corporations such as GE, Exxon, IBM, GM, and many others supports this model.
Ideology played the key role in the continuing dominance of the private-sector model. But it was the lack of sensitivity among opinion leaders to the critical importance of such infrastructure institutions as government, health care organizations, and colleges and universities that reinforced the model. To this very day, the U.S. economic system is known as "capitalism," which suggests that financial and physical capital are the key inputs into the system. But the facts are otherwise. More than 80 percent of national income is paid out each year in the form of wages and salaries, benefits, and the labor earnings of the self-employed. Returns to property, including interest, amount to less than 20 percent.
Another serious shortcoming of the conventional model is that it neglects the role of services, which today account for roughly 70 percent of the nation's output and jobs. Along with Marxists, market economists have often placed a faulty emphasis on commodity production. They have denigrated and disregarded the role of services both as final products and as transforming agents in a specialized economy.
In this important book, Stanback explores the role of computerization in the not-for-profit sectora sector that accounts for a significant proportion of the nation's income and employment and provides a range of essential services. The not-for-profit sector not only ensures the continued dynamism of the economy, but also satisfies the critical needs and desires of the public.
To reiterate the above points from a somewhat different vantage: Without properly functioning municipal governments, the contemporary U.S. economy (in which roughly 70 percent of the population lives in Standard Metropolitan Statistical Areas) could not exist, much less flourish. It is difficult to conceive of what life would be like in the United States if steadily improving health and educational services were not available.
So much for setting the scene. Let us now look more closely at the theme that Stanback sets forth in this book. He focuses on the impact of computerization on the restructuring of work in municipal government, hospitals, and universities and colleges. Specifically, he assesses not only the impact of technology on patterns of work, but also on the impact of the changed production cycle on workers and their careers.
His findings, greatly oversimplified and generalized, are:
1. New technology is opening up important frontiers in each of three important industries. These breakthroughs result in new outputs, lower costs, improved quality, and new work assignments that for the most part lead to skill-expansion rather than skill-contraction.
There is nothing simple, quick, or inexpensive about implementing the new technology and tuning it to where it is fully functional. Installing a computer system usually takes sizable investments in capital; retraining existing staffs takes time; and getting the management and the work force to accept technology as a friend and not as a threat takes even more time.
2. From a theoretical standpoint, Stanback questions William Baumol's thesis that the service sector is characterized by "cost disease," by which Baumol meant that since services depend so greatly on labor inputs, they cannot benefit from the rationalization that characterizes the commodity sector, where machinery can be used to cut costs. Service outputs eventually will be constrained by their ever-rising absolute and relative costs. But Stanback argues that Baumol's view of services is flawed and that the economics profession, which, for the most part, had accepted Baumol's view, has been misled in assessing services. Stanback presents overwhelming evidence that these critical services can be rationalized, costs reduced, and the value of output per unit of input enhanced.
3 . Another important result ol Stanback's work is his recognition of the time factor involved in introducing new technology. The capacity of the computer to change the way work is performed in the three industries does not mean that those in a position to set policy will jump at the opportunity to introduce technology. Many employees in senior positions are reluctant to change their ways. Stanback notes that considerable time must pass before managers in top positions have had the training and experience to embrace a new technology wholeheartedly. How quickly they accept new technology will, of course, be influenced by the competitive pressures they confront. Stanback argues persuasively that in the face of resistance to higher taxes by U.S. citizens, third-party payer pressures on hospitals for cost containment, and the financial vulnerability of institutions of higher learning in a period of declining enrollments, many senior managers are likely to be persuaded to move quickly to adopt the new technology but may nevertheless delay because of the costs of capital.
