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8
The Quality of Data on Technological
Change, Its Employment Effects, and
Adjustment Mechanisms
An important part of the charge to this panel called for a review of the
adequacy of the available data on the impacts of technological advances
on employment, productivity, and economic growth in the United
States. For many of the questions of concern to this panel, the data are
sufficient to support informed conclusions. In a number of other areas,
however, especially areas of interest for further research or policymak-
ing, these data are seriously deficient. The problems with the evidence
are both conceptual and empirical. In many areas the only measures
of technological change (e.g., productivity trends) are indirect, respond-
ing to many influences other than technology, or they are direct
measures that capture only a part of the processes of innovation and
adoption (e.g., patents). In other areas, insufficient public investment in
data collection and analysis means that the relevant data are of poor
quality.
This chapter surveys the deficiencies in the public data on techno-
logical change and its economic impacts (in terms of employment,
productivity, and output growth) and suggests a research strategy to
illuminate the effects of new technology on the worker, the firm, and the
workplace. In addition, we briefly discuss potential improvements in
the evaluation of programs to aid worker adjustment to technologi-
cal change. The broader issue is an important one; although data do
not drive the policy formation process, their absence surely leaves
this process less informed, less effective, and potentially counterpro-
ductive.
160
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QUALITY OF DATA 161
DATA ON TECHNOLOGY AND ECONOMIC PERFORMANCE
Elsewhere in this report, we have criticized the use of case studies and
other methodologies to predict the employment and skill impacts of
technological change. Although these methodologies do offer important
insights into the processes and ejects of such change, the consumer of the
findings of such studies must be wary of treating them as applicable to the
entire economy or even to a sector of the economy. Moreover, the large
bands of uncertainty that underlie virtually all estimates of impacts must
be acknowledged, both by researchers and by those who would apply
these findings.
A key reason for caution in interpreting and generalizing the results of
sectoral or case studies is the disjunction between the aggregate and
detailed levels of analysis of the employment and economic ejects of
technology. Virtually all of the data on the ejects of technological change
have been compiled at the individual industry, firm, or even production
establishment level; statements or conclusions about overall trends,
impacts, and rates of change, however, require aggregate data. Unfortu-
nately, sectoral and industry studies do not aggregate well, and the
transition from the detailed or sectoral to the aggregate level of analysis
cannot be made with most data. Data on the aggregate economic impact
of technological change in manufacturing are sparse, and their quality
may be declining, due in part to reductions in federal programs of data
collection and analysis.
Spending under the fiscal year 1987 budget for several key federal
statistical agencies has been stagnant or has declined In real terms since
fiscal year 1980 (Slater, 19861.~ Budget cutbacks have produced significant
deterioration in data on innovation and economic change in several
specific programs. The line-of-business data of the Federal Trade Com-
mission have been an important source of information about R&D and
other measures of economic performance (e.g., sales and net revenues) at
the level of individual product lines within large U.S. businesses. These
data allow a researcher to account explicitly for the multiproduct char-
acter of the modern manufacturing and service sector firm. For example,
Measured in 1982 dollars, appropriations for Census Bureau programs excluding the
Survey of Income and Program Participation (which analyzes household participation in
federal assistance programs, including Social Security, Medicaid, and food stamps) have
declined from $62 million in fiscal year 1980 to $58.6 million in fiscal year 1987; appropria-
tions for the Bureau of Economic Analysis have remained constant, at $18.6 million, and
appropriations for the BLS (excluding the project charged with revising the consumer price
index) have declined from $121.1 million in fiscal year 1980 to $119.9 million in fiscal year
1987.
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162 TECHNOLOGYAND EMPLOYMENT
the line-of-business data allow one to take into account the fact that a firm
like General Electric produces a vast array of goods and services (e.g.,
financial services), instead of assuming that its products are only those of
the electrical equipment industry. Unfortunately, these data are no longer
being collected, and research on the existing data base has been sharply
reduced.
Still another significant data collection effort within the federal govern-
ment has been abandoned recently. In the 1970s a unit of the Patent
Office, the Office of Technology Assessment and Forecasting, began to
compile and analyze machine-readable time series data on U.S. patenting
activity, assessing overall trends and analyzing patenting activity in
specific economic sectors and technologies. Although they are an imper-
fect measure of innovation, patents capture an important part of the
overall innovation process. This unit, however, has been disbanded; its
data analysis and dissemination activities have been reduced consider-
ably.
Any analysis of the impact of technological change is also hampered
by the incompatibility of many of the data bases supported by federal
agencies. As Courtenay Slater (1986), former chief economist of the
U.S. Department of Commerce, has noted, the lack of a central
statistical agency in the federal government has encouraged the prolif-
eration of incompatible statistical series and surveys. For example, the
organizational and analytic categories used by the Census Bureau are
only partly compatible with the data structure developed by the BLS,
which in turn is compatible with only a few of the data bases of the
Bureau of Economic Analysis of the Commerce Department. There are
potentially great returns to better coordination among these publicly
funded data collection and organization efforts. Slater has recommended
that statistical agencies (mainly the Bureaus of Labor Statistics, the
Census, and Economic Analysis) be allowed and encouraged to ex-
change with appropriate safeguards to ensure privacy confidential
information about businesses and individuals. Such a policy also might
require coordination and agreement among federal statistical agencies
on the specific topics of interest in a coordinated data collection and
publication effort.
Another deficiency in our knowledge stems from the fact that data
on technological change within the United States cover only the
generation of new technology. As we noted in Chapter 2, adoption (i.e.,
diffusion) is crucial to a technology's economic impact; but virtually
no data on adoption are collected by public statistical agencies. Devel-
oping statistical series on the diffusion of innovations within the
manufacturing and services sectors would be a useful investment of
public funds.
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QUALITY OF DATA 163
A final area of concern is the poor quality of the data on the economic
behavior and performance of the nonmanufacturing sector, a large and
still growing portion of the U.S. economy that now employs more than 70
percent of the U.S. work force (President's Council of Economic Advis-
ers, 19874. As Representative David Obey and Senator Paul Sarbanes
(1986) noted:
A review of our national data collection efforts with regard to the American labor
force and American businesses would lead one to believe that we are still a
society of blue collar workers primarily engaged in manufacturing. While we
continue carefully to count the number of people employed in the textile
industry who are engaged in sewing on snaps as opposed to those who stitch
sleeves, we have no information on how many Americans now work in computer
sales. We do not know how many people make a living writing software or how
much they make. We have no definite information on whether the Nation's
movement toward a `' service economy" has helped or hurt family income or
what kinds of specific skills are required in growth industries. We don't even
have detailed information on what the growth industries are or how fast they are
growing. (p. 2)
The deficiencies in the data on service sector output, employment, and
productivity to say nothing of technological change in this sector of the
economy (see National Research Council, Committee on National Statis-
tics, 1986Ware such that there is genuine uncertainty as to whether the
apparent productivity slowdown of the past decade is significant or
whether it reflects increasing problems in measuring service sector
productivity growth outside of manufacturing. Neither can one distin-
guish with precision among productivity, trade output, or employment
trends in different service industries because of the high levels of
aggregation within these data. For instance, despite rapid growth in
international trade in the services sector, the categories of primary
interest, such as earnings from the foreign sale of U.S. financial, insur-
ance, and consulting services, are lumped together into a "miscella-
neous" grouping that is the largest single category of U.S. services
exports.
The industrial classification scheme used for service sector data
collection and analysis is in need of major revisions; such revisions
would allow disaggregation of the data and analyses of the trends in
more economically meaningful components of the nonmanufacturing
sector. Whatever specific actions are taken, however, we feel that the
quality of these data are a cause for concern. Continued neglect of the
nonmanufacturing sector data base is dangerous in view of the growing
importance of this sector to the national economy and to economic
policy decisions.
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164 TECHNOLOGYAND EMPLOYMENT
A STRATEGY FOR SURVEYS OF THE IMPACT
OF TECHNOLOGY ON THE WORKPLACE
As we noted in Chapter 4 and the previous section of this chapter,
researchers need representative data bases that combine data on the rate
of technological change and diffusion with data on the changing level and
distribution of employment and investment within firms, allowing aggre-
gate trends to be monitored with greater precision. In addition, they
require better data on the quality and character of the work environment
and on workers' reactions to new technology. In this section we briefly
discuss strategies for collecting such data.
Surveys of Firms
Hunt and Hunt (1985) noted in their survey of data sources for the
analysis of technological change that the Bureaus of Labor Statistics and
the Census have already collected much of the data needed to analyze
aggregate trends in employment and technology. Currently, however,
there is no way to link these data either with one another or with data on
investment and technology. As these researchers put it: "We have
occupational data, but it cannot be linked to specific technologies in use.
We have demographic data, but it does not possess sufficient occupational
or technological content. In the area of the technology itself, we lack even
the most rudimentary data with which to address policy concerns" (p.
421. Another crucial data deficiency stems from the fact that technological
change in most cases involves substituting capital for labor. To analyze
such change, compatible data must be gathered on the evolving demand
of firms for inputs of capital and labor. Currently, no such data exist at the
firm or establishment level.
Responding to these gaps, Hunt and Hunt (1985) proposed that a
"Current Firm Survey" of manufacturing and nonmanufacturing firms be
undertaken to complement BLS's Current`Population Survey. Like the
population survey, the firm survey would be constructed as a sample of
various groups within the relevant population- in the case of the estab-
lishment survey, firms would be chosen from various industries. The
survey would be designed to elicit detailed data on the characteristics of
new capital investment in the lines of business of respondent firms; those
data in turn would enable researchers to develop an accurate profile of the
rates of adoption of new technologies. Similarly detailed data would be
obtained on the characteristics of the firm's work force.
Firm surveys have problems that are well known to anyone who has ever
tried to conduct empirical studies of the behavior of companies over time.
The product lines of large modern firms are extremely diverse, which makes
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QUALITY OF DATA 165
the development of a balanced cross-industry sample of firms extremely
difficult. Moreover, companies vanish and are born with considerable
frequency, although an appropriate sampling technique could reduce prob-
lems from such changes in the population. Resolving these difficulties would
be well worth the time and effort involved, however, because this type of
survey could provide valuable product-line data on investment, technologi-
cal change, and occupational requirements. Without such data, it is unlikely
that significant progress can be made in the study of technology and
employment. If the costs of such a survey are judged to be excessive, a less
expensive alternative is an expansion of the range of questions asked of firms
in the Census of Manufactures administered by the Census Bureau. In
addition, as in the population census, a sample of these firms could be asked
to provide more detailed and extensive data.
A Survey of Workers and Working Conditions
A detailed study of the effects of technological change is also con-
strained by a dearth of reliable data. One survey-based study of U.S.
firms and workers (Mueller et al., 1969) was published 18 years ago, and
serves as a model for the proposal outlined below. The survey of workers
we propose would be more rigorous than that in the Mueller team's study;
it would attempt to resurvey respondents at regular intervals to track
changes in the workplace resulting from the use of new technologies and
to trace the employment and skill effects of technological change on
individuals. The survey also would include a matched sample of employ-
ers and workers for a subset of the worker population, an addition that
allows tests for biases in the survey responses and supports further
analyses of technology's impacts on workers.
The proposed survey would include monitoring and research studies at
5-year intervals in which respondents would be asked about their current
job and the job they had 5 years earlier (the employer would be asked
about the changing mix of jobs over the 5 years). The basic sample would
be drawn from adults of working age (16-75 years old). In addition,
through a sample of establishments, employers could be asked to provide
workplace data for a sample of employees in each establishment, allowing
information to be compiled both on individuals and on their interaction
with a changing workplace. Follow-up interviews would concentrate on
individuals and their experience. The two samples would include some
overlap-for example, interviewing workers in the first sample who work
for employers interviewed in the second sample.
How might such a survey be undertaken? One option is to supplement
the regular BLS CPS questionnaire with these inquiries every 5 years.
Such a procedure, however, does not allow for tracking particular
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166 TECHNOLOGY AND EMPLOYMENT
workers. The alternative is a large-scale study in which a sample of
workers is followed over a number of decades; such a study would
resemble the large panel studies of family income and economic status
that have been developed during the past 20 years. Combined with results
from the detailed survey of firms proposed earlier, these data would
permit an analysis of the effects of technological change on both employ-
ers and employees.
A similar survey was proposed in a recent report to the U.S. Depart-
ment of Labor by a Social Science Research Council (1986) advisory
group. This group proposed collecting information from both employees
and employers. The quality of worklife was the main concern of this
proposed research, but the advisory group's proposed survey could easily
be modified to cover the impact of technology on both employment and
the nature of work.
INFORMATION ON THE EFFECTIVENESS
OF WORKER ADJUSTMENT PROGRAMS
The panel's charge called for an evaluation of adjustment assistance
programs for workers displaced by technological change. Such an evalu-
ation is difficult, however, in view of the embryonic state of research and
knowledge concerning program design and effectiveness in retraining for
displaced workers. As we discussed in Chapter 7, there have been few
rigorous evaluations of displaced worker programs of the type being
supported by Title III of the JTPA. Those that have been conducted offer
limited evidence on the design of successful programs for improving the
long-term employment and income prospects of displaced workers.
We are encouraged by the U.S. Department of Labor's recent support
of rigorous evaluations of displaced worker adjustment programs. With-
out additional evaluative research and related policy experiments, the
knowledge base from which to develop effective programs cannot be
assembled. Evaluations are needed that will provide information on the
effectiveness of adjustment program designs that combine job search
assistance, basic skills training, and job-related training in different quantities
and use varied delivery approaches. Evaluation of these programs also
should incorporate analyses of their effectiveness in assisting displaced
workers with different characteristics.
The requirement for additional research need not and should not
preclude the development of new initiatives to aid displaced workers. A
pluralistic policy is required that will encourage the development and
evaluation of different approaches to worker adjustment, including re-
training in job-related and basic skills. In this regard, we concur with the
report of the U.S. Department of Labor's Advisory Panel on Job Training
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.
QUALITY OF DATA 167
Longitudinal Survey Research (1985), which recommended that more
experimental programs be conducted using randomly selected experimen-
tal and control populations.
A useful principle to guide the evaluation of worker adjustment
assistance programs would be for the federal or state agency charged with
the administration of the program to share responsibility for its evaluation
with another agency or advisory group. For example, the evaluation of
federal adjustment programs might be shared by the Department of Labor
with another agency or outside advisory panel, and a similar procedure
could be used by the Department of Education in evaluating the Perkins
Act. The Advisory Panel on Job Training Longitudinal Survey Research
recommended that the "research process should be monitored by a firm
or group with no ax to grind in order to assure adherence to DOL's [the
Department of Labor's] policy needs and maintain a quality level that will
inspire public confidence in the final research products" (1985, p. 321. An
expert panel could be established under the auspices of the National
Research Council or another group to oversee the design and implemen-
tation of evaluations. Whatever actions are taken in this area should
proceed simultaneously with the development of additional innovative
programs for worker adjustment.
Finally, evaluations are needed of state-level programs in skills im-
provement for the employed work force to determine whether this
strategy is effective in improving the productivity and technological
performance of U.S. firms. To what extent, for example, are these
programs simply providing public funds to support training activities that
otherwise would have been supported by private firms? Answers to this
and other questions are difficult to obtain, but they are essential for
determining the returns on investment in such training. As noted in
Chapter 7, the number and heterogeneity of these state efforts provide an
opportunity for comparisons and evaluations of programs that serve
similar populations but use different designs. Such evaluations could also
inform modifications of the federal vocational education assistance legis-
lation (the Perkins Act) that allows for state support of employer-provided
training to employed workers.
Representative terms from entire chapter:
statistical agencies
