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Employment Impact of Electronic Business E-Business Employment impact of electronic business Electronic business both stimulates and dampens employment in many occupations and industries; however, assessments of those impacts can only be qualitative rather than quantitative Daniel E. Hecker very 2 years, the Bureau of Labor Statis- fecting output per worker and employment in vir- tics develops 10-year projections of indus- tually every industry. Etry and occupational employment, taking Interest in e-business has spawned a host of into account likely changes caused by new quantitative projections by private forecasters, technologies and business practices. The 1998– most of whom focus on cost reductions and in- 2008 series of BLS projections, published in the dustry sales growth; none specifically addresses November 1999 Monthly Labor Review, did not the impact on employment. Because of the gen- specifically address the effects of electronic busi- eral dearth of quantitative information, the as- ness (e-business) on the economy, because of sessment presented in this article is completely the recent nature of the phenomenon and the rela- qualitative. Prospective changes are discussed tive paucity of information pertaining to it. This in terms of e-business stimulating or dampening article presents a first look at the extent to which employment or output in an industry or occupa- e-business could affect industries and occupa- tion. This approach differs from discussions in tions over the next decade. The impacts described previous Monthly Labor Review projections ar- will be reflected, to the extent possible, in the ticles, which incorporate the impact of numerous 2000–10 projections, to be published in the No- factors and which present employment increases vember 2001 issue of the Review. or decreases from the base year to the target year. E-business, consisting of marketing and other The approach also focuses primarily on indus- business processes conducted over computer- tries and occupations with the largest potential mediated networks, is changing the way organi- impacts and those which, reportedly, are uniquely zations in many industries operate. It leads to the affected by e-business. automation of some job functions and replaces others with self-service operations, raising out- What does e-business encompass? put per worker and dampening employment re- quirements in some occupations, as well as in the Electronic business (e-business) is any process industries in which those occupations are con- that a business organization conducts over a com- centrated. In contrast, e-business has spurred puter-mediated network. It includes buying and employment in industries producing hardware, selling, as well as a wide range of customer-, pro- Daniel E. Hecker is a software, and systems used by e-businesses and duction-, and management-focused processes labor economist in the Office of Employ- in computer and other occupations associated carried out by for-profit, government, or nonprofit ment Projections, with websites and networks. Because of its in- entities.1 E-business is based upon the process- Bureau of Labor Statistics. creasing pervasiveness, e-business may be af- ing and transmission of digitized information, in- Monthly Labor Review May 2001 3 E-Business cluding text, sound, and visual images, from one computer or business operations as well. Among these systems are some other electronic device to another. Most e-business proc- intranets and extranets—networks built on Internet-based esses are self-service, and some are or may soon become fully technology. Unlike the Internet, intranets and extranets are automated. accessible only by certain individuals or organizations. Electronic-commerce (e-commerce) is that part of e-busi- Intranets limit access to those within an organization and may ness which involves buying and selling goods and services.2 or may not be linked to the external Internet. Extranets are E-commerce may be classified into three groups: networks linking organizations with a common interest—for example, customers, suppliers, and other business partners. • Business to consumer (B2C) includes retail transactions Extranets greatly facilitate and speed the flow of information of goods, such as books and computers, and services, such in management- or production-focused e-business activities. as insurance, banking, and travel and ticket reservations. E-businesses create websites that are digital versions of stores, • Business to business (B2B) includes transactions between catalogues, sales offices, branch banks, help desks, trading ex- manufacturers, wholesalers, retailers, construction firms, farms, changes, and telephone and mail communications. These sites service industries, governments, and nonprofit organizations.3 afford self-service or partially self-service sales transactions, elimi- Completely separating the impact of B2C and B2B is difficult, be- nating or shortening the time sales and administrative support cause online business establishments may use the same resources workers spend with customers. E-mail is used by sellers to com- to deal with both consumers and businesses.4 municate with customers, answer their questions, and inform • Consumer to consumer (C2C) consists primarily of indi- them of the status of their orders or transactions, as well as to viduals buying and selling through auctions. develop long-term relationships with those customers, offering them personalized, useful advice, articles of interest to them, and Besides e-commerce, e-business encompasses many self- information on new products. Customers can submit product service and automated information transmission activities. reviews and evaluations, register complaints, obtain product or Customer-focused processes enable buyers to obtain prod- procedural information, and resolve problems, dealing with work- uct information online and then complete the transfer of own- ers in a customer service center. E-mail is also used for direct-mail ership offline, in stores, in sales offices, or with a telephone marketing and advertising. call or fax. Another component of e-business involves cus- Companies are increasingly establishing customer service tomer relations, including direct marketing by e-mail and nu- (call) centers that use e-mail or live phone connections to merous customer-self service transactions and after-sale proc- provide procedural or problem-solving assistance, advice, re- esses and services, such as technical support (assistance in assurance, product information not found on a website, or operating and maintaining technical products), requests for information on the status of orders. While most e-business changes in service, updating records, transferring funds, and transactions can be completely self-service, the availability of viewing the status of transactions, orders, and deliveries. a physical customer service center increases the chances that Management- or production-focused e-business activities a visitor will make a purchase (or complete another type of involve the following functions or tasks: transaction), rather than abandon a site, and may also result in a larger purchase than otherwise. Many industries, such as • Procurement, including ordering, automated stock re- catalogue and mail-order houses, store-based retailers, and plenishment, payment processing, and other electronic B2B- banking, operated telephone call centers prior to the advent related activities. of e-business. • Personnel-related activities, including online job Companies engaged in “e-tailing” tend to keep their inven- postings, applications, and candidate screening; education, tory in one or a few central warehouses for regional, national, training, and testing; and employee self-processing of changes or international delivery, except for digitized products, which in benefits, travel arrangements, expense reports, supply or- are downloaded online. “E-grocers” handling perishables, ders, and the like. online convenience stores, and some stationery and office • The use of networks for sharing information and data- supply stores maintain local warehouses. The most efficient bases, internally and with selected outside organizations, includ- warehouses are designed to “pick and pack” orders, ship pack- ing suppliers, distributors, logistics partners, and customers; ages to individuals, and handle returns, all with a sophisti- these links broaden and speed up the flow of information. cated inventory control system. These warehouse are much • The expansion of communication and collaboration different from traditional retail warehouses designed to ship through discussion forums, video- and audioconferencing, bulk items to stores, but they are identical to warehouses global calendaring, and team and project management.5 used by catalogue and mail-order retailers. As regards deliv- ery services, most sellers with local warehouses ship to cus- E-businesses rely heavily on physical systems—some tomers, using their own fleet of vehicles; those with central unique, others used in “brick-and-mortar” (that is, physical) warehouses arrange with air or trucking courier (package de- 4 Monthly Labor Review May 2001 livery) services or the U.S. Postal Service, as do catalogue are highly scalable (that is, the need for workers depends mostly and mail-order retailers. on the size and sophistication of the system), needs will not grow nearly as fast as the number of contacts or transactions. Impact on occupations Finally, because e-business permits self-service technical sup- port, it dampens
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