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PERSPECTIVE ON LABOR

The American Dream, in Technicollar

New kinds of jobs are reshaping industry, but demand outstrips supply; we need tax breaks for human investment.

September 01, 1996|ROBERT B. REICH | Robert B. Reich is the secretary of labor

There's good news this Labor Day. For some, of course, the story is neither very good nor very new: traditional white-collar workers who continue to be down-sized out of jobs; traditional blue collars who are barely beginning to catch up after two decades of stagnant wages. The real story concerns a growing group that I'll call--with apologies to Hollywood--"technicollar" workers. Technicollar jobs are reshaping the industrial base, forming a foundation for a renewed middle class. The task before us is to speed this process.

Technicollar workers neither plug along at repetitive tasks (like traditional blue collars) nor do work by giving orders (like the old white-collar manager). Instead, they ally their skills with smart machines.

Many of them have traditional job titles although they don't do traditional work: sales clerks who tap into PCs to replenish inventories; secretaries who orchestrate spreadsheets and retrieve data on the Internet; vending-machine repairers who use hand-held computers to diagnose what's wrong and communicate back to the home office for extra advice; truck drivers who make just-in-time deliveries by relying on computers and modems right in their cabs; miners who extract coal not with picks and shovels but with computer-controlled cutting machines; garage mechanics who diagnose and fix the electronic systems that run today's cars.

The neo-Luddites are correct when they charge that computers are doing away with many old jobs like bank teller, telephone operator and gas station attendant. But the new technologies are simultaneously creating new jobs (and mostly better jobs) for technicollar workers to sell, service and manage the machines that now do the work and to upgrade and link the software that run these machines.

The line between professionals and their assistants is blurring, shaking up old hierarchies and linking pay to skills rather than credentials. Hospital technicians run tests and perform other routine tasks that doctors once handled; paralegals research cases by computer and use computers to prepare documents for attorneys; graphics technicians back up designers and architects; financial technicians run specialized software for accountants and auditors. Most technicollar jobs pay solid middle-class wages, and they're among the fastest-growing jobs in America.

Here's the catch: Almost all these jobs require some education and training beyond high school, and the supply of technicollars isn't keeping up with demand. In fact, a shortage of technicollar workers threatens to retard the nation's economic growth. Employers across the country complain that they don't have nearly enough technical sales and support personnel. On surveys conducted by the National Federation of Independent Businesses, small-business owners cite lack of skilled workers as one of the major impediments to their continued growth.

Who's to blame? For years, American companies have loaded up on computers but haven't invested proportionally in training their employees to use them. Private investment in equipment--about a third of it information technology--has grown by 55% since 1991 in real terms. By contrast, business spending on worker training hasn't even kept pace with the growth of the work force. So it's not surprising that, despite all the new equipment, output per worker is still growing at an annual rate of about 1.1%, no faster than in the early 1980s.

Won't market forces lead companies to correct this imbalance and train more technicollar workers? Economists Lisa Lynch and Sandra Black have found that raising the average education level of a company's workers by one year boosts business productivity about 10%.

Unlike new equipment, which the company can own, newly trained technicollar workers are free to walk out the door and sell their skills elsewhere. To make sure they don't leave, companies that make the investments then have to share the returns with their workers in the form of higher paychecks. As a result, companies are reluctant to invest as much in technicollar training as the economy needs.

Will the lure of higher paychecks induce individuals to invest in their own skills? To some extent, of course it does. Record numbers of high school graduates are continuing their educations and community colleges are brimming with adult students. But for too many families, the costs of higher education are prohibitive. College tuition has been increasing nearly three times faster than the growth in household income, while state support for colleges has been plummeting.

Given the current imbalance between smart machines and skilled people, it's ironic that some firms still insist on ever-richer tax breaks for capital equipment, even at the expense of resources for education. There's a better way to spur productivity growth than passing a capital gains tax cut--even if, this time, such a cut were to result in more capital equipment instead of a new round of tax sheltering. It's to reduce the cost of investing in human capital by tax cuts targeted to such investments: For families, tax deductions and refundable credits for continuing education; for companies, tax breaks for employee training.

The biggest impediment to growth in America is not a shortage of physical capital but a shortage of human capital. If we face up to this and fix the investment imbalance, we can parlay the good news about technicollar jobs into a new generation of middle-class prosperity.

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