South-Western - Management  
Automation Increases Productivity, Leads to More White-Collar Job Cuts
Topic Managing Service and Manufacturing Operations
Key Words Productivity, job loss, technology
InfoTrac Reference CJ108799548
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News Story

Although manufacturing job losses have dominated headlines lately, companies are also eliminating white collar, administrative jobs to save money, and technology is taking the place of people. As a result, the rising productivity that is being seen lately is not resulting in a jobless recovery.

As of September, service jobs accounted for 83 percent of U.S. employment, while manufacturing's share of the job market has fallen from 20.5 percent in 1980 to 11.2 percent as of September.

For example, Burlington Northern Santa Fe has used technology to streamline its operations. They installed an online customer service system that allows customers to receive services that used to require talking to a person. The company's salaried workforce has gone from 6,800 in 1995 to about 4,800.

Financial institutions are automating operations like check clearing and money transfers. This has resulted in nearly a 50 percent increase in dollars managed per employee in the banking industry.

Working efficiently is one reason U.S. productivity grew by 6.8 percent in this year's second quarter, compared to last year. The nation's total output jumped 4.2 percent in the second quarter compared to the first quarter, but Americans worked 2.7 percent fewer hours. In fact, by the end of the second quarter, 181,000 fewer Americans were employed compared to the end of the first quarter, even though output was up.

There is concern that the rising productivity could mean that there won't be enough new jobs generated to keep the economy growing.

Questions
1.

This article focuses primarily on the more negative aspects of productivity, namely job losses. What are the advantages of increased productivity? How might increased productivity create jobs and/or help the economy?

2.

Two common measures of productivity are partial productivity and multifactor productivity. Explain that these terms mean and how they differ.

Source "Automation Increases Productivity, Leads to More White-Collar Job Cuts," Knight Ridder/Tribune Business News Oct. 13, 2003.
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