This document provides an overview of the key topics discussed in Chapter 10 on work and wealth. It discusses how automation and information technology are affecting the workplace through increases in productivity, the globalization of job markets, changes to company organization structures, the rise of telework and workplace monitoring. It also examines the impacts of these changes through the digital divide and winner-take-all effects in society. Specific areas discussed include the effects of automation on employment, workplace changes like flattened organizational structures and the gig economy, the impacts of globalization, and critiques of the concept of a digital divide.

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Chapter 10
Work and Wealth

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10-2
Chapter Overview
• Introduction
• Automation and employment
• Workplace changes
• Globalization
• The digital divide
• The “winner-take-all society”

3. 1-3
10-3
10.1 Introduction
• Information technology and automation
affecting workplace
– Increases in productivity
– Globalization of job market
– Organization of companies
– Telework
– Workplace monitoring
• Impacts of information technology on society
– Digital divide
– Winner-take-all effects

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10.2 Automation and Employment
10-4

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10-5
Automation and Job Destruction
• Between 1979 and 2011…
– U.S. population increased 39%
– Manufacturing employment dropped 40%, from
19.4 million jobs to 11.7 million jobs
• Lost white-collar jobs
– Secretarial and clerical positions
– Accountants and bookkeepers
– Middle managers
• Juliet Schor: Work week got longer between
1979 and 1990

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General Motors Exited Bankruptcy in
2009 with 30% Fewer Employees
10-6
Danny Lenman / Corbis

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Layoffs May Increase Stress on
Remaining White-Collar Workers
10-7

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10-8
Automation and Job Creation
• Automation lowers prices
• That increases demand for the product
• It also increases real incomes, increasing
demand for other products
• Increased demand  more jobs
• Number of manufacturing jobs worldwide is
increasing
• Martin Carnoy: Workers today work less than
workers 100 years ago

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Automation Can Create Jobs, Too
10-9

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10-10
Effects of Increase in Productivity
• We have used higher productivity to achieve a
higher material standard of living
• This is in contrast to medieval or ancient times
(before modern capitalism)
• In medieval or ancient times
– Low caloric intake meant pace of work was slow
– Work was seasonal and intermittent
– Laborers resisted working if they had enough money
(i.e., they weren’t consumers)
– When wages rose, laborers worked less

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Case Study: The Canceled Vacation
• Stuart is a software developer for Seattle start-up
• Everybody works 60 hours/week
• Company’s vacation policy is 3 weeks/year
– Nobody takes that much
– Some of Stuart’s coworkers have had zero vacation in 2+ years
• Six months ago, Stuart learns his parents are moving
from San Diego to Australia
– He gets permission for one week’s vacation in San Diego
– Doesn’t tell parents
10-11

12. 1-12
Case Study: The Canceled Vacation
• One week before vacation, supervisor asks
Stuart to delay vacation
– Important product update
– Offers Stuart three weeks’ vacation next year
– Round-trip airfare
• Stuart agrees to request and cancels
vacation to San Diego
10-12

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Kantian / Social Contract Theory
Evaluation
• Stuart broke no promises and didn’t
deceive anyone
• Stuart was not obligated to visit his parent
before they moved from San Diego to
Australia
• Stuart did nothing wrong
10-13

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Act Utilitarian Evaluation (1/3)
• Stuart had two alternatives: accept or reject
supervisor’s request
• Consider duration, certainty, propinquity, and
purity of two alternatives
• Duration
– San Diego: 1 week
– Australia: 3 weeks
– Trip to Australia 3 times better
10-14

15. 1-15
Act Utilitarian Evaluation (2/3)
• Purity
– San Diego: Will be worrying about upset boss
– Australia: Realistically, will also be worrying about
upset boss
– Two options equivalent
• Propinquity
– San Diego: Next week
– Australia: Next year
– Trip to San Diego much better (2 times better)
10-15

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Act Utilitarian Evaluation (3/3)
• Certainty
– San Diego: 100%
– Australia: Much less certain, given history of Stuart’s manager
and fact no one has ever taken 3 weeks’ vacation, say 25%
– San Diego the better choice
• Summary:
– San Diego: 1 x 1 x 2 x 100% = 2
– Australia: 3 x 1 x 1 x 25% = 0.75
– San Diego the better option
– Stuart made the wrong decision
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17. 1-17
Virtue Ethics Evaluation
• Stuart demonstrated a lack of courage and a lack of
consideration for himself, his coworkers, and his parents
• By caving in to his boss
– he let his boss get away with bad behavior
– he made reasonable vacations less likely for himself and for his
fellow employees
– he deprived his parents of the pleasure of his company for at
least a year
• Stuart’s decision is not characteristic of a good co-worker
or a good son
10-17

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10-18
Rise of the Robots?
• Some experts suggest most jobs will be taken
over by machines
• Artificial intelligence: Field of computer science
focusing on intelligent behavior by machines
• Rapid increases in microprocessor speeds have
led to various successes in AI
• What will happen as computers continue to
increase in speed?

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10-19
Notable Achievements in AI since 1995
• Computer-controlled minivan “drove” on freeways across USA in
1995
• IBM supercomputer Deep Blue defeated chess champion Gary
Kasparov in 1997
• Honda’s ASIMO android climbed and descended stairs (2000)
• Electrolux introduced robotic vacuum cleaner in 2001
• Five autonomous vehicles successfully completed 128-mile course in
Nevada desert in 2005
• Watson trounced two most successful human Jeopardy! champions
in 2011
• Google’s self-driving cars logged more than one million miles
between 2009 and 2015 without an accident (caused by the car)

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Watson Wins Jeopardy! Challenge
10-20
© AP Photo/Seth Wenig

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Google Self-Driving Car
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10-22
Moral Question Related to Robotics
• Is it wrong to create machines capable of making human
labor obsolete?
• Would intelligent robots demoralize humanity?
• Is it wrong to work on an intelligent machine if it can’t be
guaranteed the machine will be benevolent toward
humans?
• What if a malevolent human puts intelligent machines to
an evil use?
• How would creative computers change our ideas about
intellectual property?
• How will our ideas about privacy change if superfast
computers constantly analyze our electronic records?

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10.3 Workplace Changes
10-23

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10-24
Organizational Changes
• Information technology integration into firms
– Automating back office functions (e.g., payroll)
– Improving manufacturing
– Improving communication among business units
• Results
– Flattened organizational structures
– Eliminating transactional middlemen (supply-chain
automation)

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Inexpensive Interactions Lead to
Flexible Information Flow
10-25

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Winners, Losers in the Workplace of
the Future
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<Insert Table 10.1 here>

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10-27
Telework
• Employees work away from traditional
place of work
• Examples
– Home office
– Commuting to a telecenter
– Salespersons with no office
• About 37% of Americans do some telework

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10-28
Advantages of Telework
• Increases productivity
• Reduces absenteeism
• Improves morale
• Helps recruitment and retention of top
employees
• Saves overhead
• Improves company resilience
• Helps environment
• Saves employees money

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10-29
Disadvantages of Telework
• Threatens managers’ control and authority
• Makes face-to-face meetings impossible
• Sensitive information less secure
• Team meetings more difficult
• Teleworkers less visible
• Teleworkers “out of the loop”
• Isolation of teleworkers
• Teleworkers work longer hours for same pay

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10-30
The Gig Economy (1/3)
• Companies less committed to employees
• Lay-offs not taboo as they once were
• Companies hiring more subcontractors and
temporary employees
– Saves money on benefits
– Makes it easier to downsize

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10-31
The Gig Economy (2/3)
• Some start-ups make money by connecting
people who want a service with people willing to
provide that service
• Gig economy: Service workers making a living by
completing short-term jobs for clients
• Examples
– Uber, Lyft: Connect riders and drivers
– Instacart: Grocery delivery service
– Airbnb: Connect travelers and those with
accommodations

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The Gig Economy (3/3)
• Proponents say workers gain independence,
flexibility
• Critics say these are last-resort jobs and
competition among workers drives down wages
• Robert Reich: “The big money goes to the
corporations that own the software. The scraps
go to the on-demand workers.”
• Uber and Lyft drivers filed lawsuits to be
classified as employees
10-32

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10-33
Monitoring (1/2)
• Two-thirds of companies monitor Internet use of
their employees
• Other examples of monitoring
– Video surveillance
– Monitoring keyboard activity
– Monitoring time spent on phone
– Monitoring emails
• Purpose: Identify inappropriate use of
company resources
– Can also detect illegal activities

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10-34
Monitoring (1/2)
• Other uses of monitoring
– Gauge productivity
– Improve productivity
– Improve security; i.e., in schools
• Evidence that monitoring…
– Makes employees more focused on work
– Reduces job satisfaction

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10-35
Multinational Teams
• Software development teams in India since
1980s
• Advantages of multinational teams
– Company has people on duty more hours per day
– Cost savings
• Disadvantage of multinational teams
– Poorer infrastructure in less developed countries

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10.4 Globalization
10-36

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10-37
Globalization Basics
• Globalization: Process of creating a worldwide
network of businesses and markets
• Globalization causes a greater mobility of goods,
services, and capital around the world
• Globalization made possible through rapidly
decreasing cost of information technology

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Declines in Computing & Communication
Costs Spurred Globalization
10-38

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10-39
Arguments for Globalization
• Increases competition
• People in poorer countries deserve jobs,
too
• It is a tried-and-true route for a poor
country to become prosperous
• Global jobs reduce unrest and increase
stability

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10-40
Arguments against Globalization
• Makes the United States subordinate to the
World Trade Organization
• Forces American workers to compete with
foreigners who do not get decent wages and
benefits
• Accelerates exodus of manufacturing and white-
collar jobs from United States
• Hurts workers in foreign countries

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10-41
Dot-Com Bust Increases IT Sector
Unemployment
• Dot-com: Internet-related start-up company
• Early 2000: stock prices of dot-coms fell
sharply
• Hundreds of dot-coms went out of
business
• Half a million high-tech jobs lost

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10-42
Foreign Workers in the IT Industry
• Visas allow foreigners to work inside U.S.
• H-1B
– Right to work up in United States to six years
– Company must show no qualified Americans available
– Congress still authorizes 65,000 H-1B visas per year, plus
20,000 more for foreigners with advanced degrees
– Quota not filled in 2009 due to economic downturn
• L-1
– Allows a company to transfer a worker from an overseas
facility to the United States
– Workers do not need to be paid the prevailing wage
– In 2006 about 50,000 foreigners in U.S. under L-1 visa

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10-43
Foreign Competition
• China is world’s number one producer of
computer hardware
• IT outsourcing to India is growing rapidly
• Number of college students in China increasing
rapidly
• ACM Collegiate Programming Contest provides
evidence of global competition
– No American team has placed first since 1997
– From 2011-2015, only 1 of 20 teams earning gold
medals was from the United States

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Growth of China’s Computer-
Hardware Industry
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10.5 The Digital Divide
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10-46
Concept of the Digital Divide
• Digital divide: Some people have access to
modern information technology while others do
not
• Underlying assumption: people with access to
telephones, computers, Internet have
opportunities denied to those without access
• Concept of digital divide became popular with
emergence of World Wide Web

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10-47
Evidence of the Digital Divide
• Global divide
– Access higher in wealthy countries
– Access higher where IT infrastructure good
– Access higher where literacy higher
– Access higher in English-speaking countries
– Access higher where it is culturally valued
• Social divide
– Access higher for young people
– Access higher for well-educated people

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Percentage of People with Internet
Access, by World Region
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Models of Technological Diffusion
• Technological diffusion: rate at which a new technology is
assimilated
– Group A: highest socioeconomic status
– Group B: middle socioeconomic status
– Group C: lowest socioeconomic status
• Normalization model
– Group A adopts first, then Group B, finally Group C
– Eventually A use = B use = C use
• Stratification model
– Group A adopts first, then Group B, finally Group C
– A use > B use > C use forever

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Two Models for Technological
Diffusion
10-50

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10-51
Critiques of the Digital Divide
• DD talk suggests the difference between
“haves” and “have nots” is simply about
access
• DD talk puts everyone in two categories, but
reality is a continuum
• DD implies lack of access leads to less
advantaged social position, but maybe it is
the other way around
• Internet is not the pinnacle of information
technology

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Massive Open Online Courses
• Rate of tuition increases at US universities has exceeded
inflation for several decades
• Financing college education increasingly difficult for
poorer families
• Free massive open online courses (MOOCs) promoted
as a way to make higher education more affordable
• Study by Community College Research Center
– Students less likely to complete and do well in MOOCs than
traditional courses
– MOOCs widen achievement gap between white and black
students and between those with higher GPAs and those with
lower GPAs 10-52

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Net Neutrality
• Tiered service: Charging more for high-priority routing of Internet
packets
• Supporters of tiered service say it is needed to support Voice-over-IP
and other services
• Opponents to tiered service (e.g., Google, Yahoo!) say it would hurt
small start-up companies and lower innovation
• Other critics believe companies controlling Internet might favor some
content over other content
• Net neutrality legislation would require all Internet packets be treated
the same
• Opponents of proposed legislation say consumers should be able to
pay more to get higher quality service; e.g., those doing video
conferencing willing to pay more than those sending email
• February 2015: FCC issued the Open Internet Order to preserve net
neutrality; the ruling being challenged by lawsuits 10-53

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10.6 The “Winner-Take-All Society”
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The Winner-Take-All Phenomenon
• Winner-take-all: a few top performers have
disproportionate share of wealth
• Causes
– IT and efficient transportation systems
– Network economies
– Dominance of English language
– Changing business norms

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CEO Pay v. Production Worker Pay,
1980 and 2003
10-56

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Is Rory McIlroy That Much Better Than Sergio
Garcia or Derek Ernst?
10-57
<Insert Table 10.2 here>

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Reducing Winner-Take-All Effects
• Limit number of hours that stores remain
open
• Businesses form cooperative agreements
to reduce positional arms races
– Example: salary caps on pro sports teams
• More progressive tax structures
• Campaign finance reform
10-58