DOCUMENT RESUME ED 053 260 VT 010 815 AUTHOR Crossman, Edward R.F. W.; Laner, Stephen TITLE The Impact of Technological Change on Manpower and Skill Demand: Case-Study Data and Policy Implications. INSTITUTION California Univ., Berkeley. Dept. of Industrial Engineering and Operations Research. SPONS AGENCY Manpower Administration (DOL), Washington, D.C. Office of Manpower Research. PUB DATE Feb 69 NOTE 382p. EDRS PRICE EDRS Price MF-$0.65 HC-$13.16 DESCRIPTORS Bibliographies, Case Studies, Charts, Critical Incidents Method, Economic Research, *Labor Economics, *Manpower Needs9 Measurement Techniques, *Profile Evaluation, Semiskilled Workers, *Skill Analysis, Skilled Workers, Tables (Data), *Technological Advancement, Unskilled Workers IDENTIFIERS *Skill Profile ABSTRACT To prove or disprove the hypothesis that automation and technological change impose increased skill demands on manufacturing and service industries, case studies were made of a bank and a steel and air products company, and of two oil companies, airlines, and electric power companies. The basic conceptual tool used to measure skill demands was the skill profile, a study of the distribution of total manhours required to produce a unit product (or service) along a scale of the Least to the most highly skilled labor. The study found that there was little or no net overall tendency for the mean skill level of the workforce to increase with technological change. Small changes in mean skill were largely offset by larger overall productivity increases, and thus, decreases in absolute demand measured in manhours per unit of production for specific skill brackets were more prevalent than increases. Declines in absolute labor demand were greatest for semiskilled workers and the next greatest declines were for laborers. Skilled workers were the least affected. A bibliography, charts, and tables used to develop the skill profiles are appended. (BC) S 4,` "1- 'N, \...akt:r 0, (14, \\:;01.F " .. / 16, "vfft .4 1,,,,f< v- . ,,,:iN .....," :. .:...:::4': H1.1MA4.:::''T:FACidtSIi.V.':-::'.t.ECHt,VOLCid.,::.RESE*Rc1'e.'1:::Gli01.1P,:'':: .:., ..... ...,........,,..::, .,, . -..-:::. ... .. --, FlpiN6At.ip-OPERATIONS RESEARCH'' '. -4-'-'777-;,-,+, ".-.;-44'..-=',,,,,, , DEPARTMENTIOFittIDIJTRIAl.';'.ENGIN77--.--.::. :, ,-.. :. 11,4,;;;11-1=r-i. .17E11,1 :i:.:,:.!.-:-,..,,::::,... ,- ::..;.q15:-.17.z:T=4.51.7671.1-14-11.1(iyrta&f.is-' -*!,;:,,,,,-.-,-:1.,'T,`,......':.'..=7'rirl I UNIVERSITY (:)F.:'i..,::CALIFORNIA......:::,:..,,..... BERKELEY \ , ." ,.'I', , THE IMPACT OF TECHNOLOGICAL CHANGE ON MANPOWER AND SKILL DEMAND: CASE-STUDY DATA AND POLICY IMPLICATIONS by Edward R.F.W. Crossman and Stephen Laner, assisted by Stanley H. Caplan, TaraldKalseth and Frederick Schneider Department of Industrial Engineering and Operations Research University of California Berkeley, California February 1969 U.S. DEPARTMENT OF HEALTH. EDUCATION & WELFARE OFFICE OF EDUCATION THIS DOCUMENT HAS BEEN REPRODUCED EXACTLY AS RECEIVED FROM THE PERSON OR ORGANIZATION ORIGINATING IT. POINTS OF VIEW OR OPINIONS STATED DO NOT NECES- SARILY REPRESENT OFFICIAL OFFICE OF EDU- CATION POSITION OR POLICY. This report was prepared for the Manpower Administration, U.S. Depart- ment of Labor, under Research Contract 81-05-66-30 authorized by Title 1 of the Manpower Development and Training Act. Since contractors per- forming research under Government sponsorship are encouraged to express their own judgment freely, the report does not necessarily represent the Department's opinion or policy. Moreover, the contractor is solely responsible for the factuality of all material developed. PERSONNEL ENGAGED ON THE RESEARCH Edward R.F.W. Crossman, Ph.D. Faculty Investigator, Part-time, 1966-1968 Louis E. Davis, M.S. Faculty Investigator, Part-time, 1966 Stephen Laner, Ph.D. Project Director, Full-time, 1966-1968 Stanley Caplan, M.S. Assistant Specialist, Part-time, 1966-1968 Tarald Kvalseth, M.S. Research Assistant, Part-time, 1966-1968 Frederick Schneider, M.S. Assistant Specialist, Part-time, 1966-1968 ACKNOWLEDGMENTS The researchers wish to record their gratitude to the following firms which have provided extensive assistance and cooperation during this phase of their study: Bank of America The Management, the Mechanical Department, and the Personnel Relations Department in San Francisco. A steel firm which does not wish to be identified by name. Pacific Gas and The Management, the Steam Generation and Electric Company Electricity Operations Department and the Power Stations personnelin the San Francisco Bay Area. Southern California The Management, the Engineering Department Edison Company and the Industrial Relations Department in Los Angeles, the Steam Generation Depart- ment and Power Stations Personnelin the Los Angeles Metropolitan Area. Two oil companies which do not wish to be identified by name. Industrial Air The Management and Engineering Staff. Products Company American Airlines The Management, the Reservations Office, the City Ticketing Offices and the Airport Ticketing Office in San Francisco; the EDP Operations Group and the Personnel in the Central Records offices in New York. Pan American World The Management, the Reservations and Ticket Airways Office, and the Airport Ticket Office Personnelin San Francisco, the Data Pro- cessing Operations and Reservation Control Groups in New York, Communications and Reservations. Development. The researchers also wish to thank The General Electric Corporation, The Union Oil Company of California, American Cryogenics, Inc., The Bunker Ramo Corporation, Trans World Airlines, Inc., Delta Air Lines, have supplied Inc. and The AmericanCement Corporation, which aspects supplementary informationespecially on the technological firms were covered of the processes involved. None of the latter in the detailed studies. TABLE OF CONTENTS SUMMARY OF OBJECTIVES, METHODOLOGY AND CONCLUSIONS i-xii MAIN REPORT 1. INTRODUCTION AND OUTLINE OF PREVIOUS RESULTS 1 1.1 Structural Unemployment and the Skill Demands of Newer Processes . .......... 1 1.2 Outline Objectives and Results of Phase I . 3 2. PROCESS TYPES, SELECTION OF CASE MATERIAL, AND GENERALIZATION OF RESULTS 6 2.1 Statistical Basis of the Sampling Procedure . 6 2.2 Selection of Previous Case Studies 7 2.3 Selection of Present Case Studies 8 2.4 General Nature of Technological Advances Studied 10 3. METHODOLOGY: GENERAL AND INDIRECT LABOR 11 3.1 Formal Statement of Methodology 11 3.2 Pilot Trials of General Methodology--Direct Labor . 16 3.3 Extension to Indirect Labor 18 3.4 Technology of Maintenance and Prcduction Control . 23 4, METHODOLOGY FOR ASSESSING SKILL IMPACT OF TECHNOLOGICAL CHANGE AT INDIRECT LABOR LEVEL: PILOT STUDIES IN DEMAND- DEPOSIT ACCOUNTING AND STEEL-STRIP ANNEALING 25 4.1 Introduction 25 4.2 Pilot Study 1: Indirect Labor Requirements of Check Processing at Two Technological Levels 26 4.3 Pilot Study 2: Indirect Labor Requirements of Annealing at Two Technological Levels 28 4.4 Discussion of Results Obtained from Pilot Studies 1 and 2 39 5. IMPACT OF REMOTE CONTROL CENTRALIZATION ON SKILL DEMANDS IN ELECTRIC POWER GENERATION (DIRECT AND INDIRECT LABOR). 45 5.1 Introduction 45 5.2 Decentralized and Centralized Control in Electric Power Generation 45 5.3 Manpower and Skill Impact of Centralization 50 5.4 Discussion of Effects of Centralization of Control . 73 6. IMPACT OF THE APPLICATION OF DIGITAL PROCESS-CONTROL COMPUTERS ON SKILL DEMANDS OF CONTINUOUS-FLOW PROCESSES (DIRECT AND INDIRECT LABOR) 75 6.1 Standard Automatic Control vs. Computer Control of Continuous Manufacturing Processes 75 6.2 Process Computers in Electricity Generation 78 6.3 Process Computers in Hydrocarbon Catalytic Cracking . ( O i l Refinery Application). ....... 95 6.4 Process Computers in Air Separation (Chemical Industry) 110 6.5 Conclusions on the Manpower and Skill Impact of Com- puter Process Control 120 7. IMPACT OF COMPUTER -BASED CENTRALIZATION ON RANDOM DEMAND REAL-TIME SERVICES: AIRLINE RESERVATION SYSTEMS (DIRECT LABOR ONLY) 124 7.1 Introduction 124 126 7.2 Process Description . ........... 7.3 Manpower and Skill Changes Due to Computerization . 131 7.4 Job Types, Education and Experience 139 7.5 Discussion of Skill Impact of Computerization in Airline Reservation Systems 142 8. CONCLUSIONS ON THE MANPOWER AND SKILL IMPACT OF TECHNOLOGICAL CHANGE 144 8.1 Technological Change and Labor Productivity (Quantitative Changes in Labor Input Per Unit Product) 145 8.2 Productivity Changes by Process Types . 148 8.3 The Skill Impact of Technological Change (Qualitative Changes in Labor Input Per Unit Product) 153 8.4Work Force Educational Levels 167 9. POLICY IMPLICATIONS 170 9.1 The Framework of Manpower Policy 171 9.2 Short-Run Manpower Supply Policies Related to Tech- nologically Induced Changes in Manpower Demand . 175 9.3 Long-Run Training and Educational Policy in Relation to Technology 180 9.4 Full Employment Policy, Aggregate Demand, and the "Laborstatic" Hypothesis 183 REFERENCES 198 7 APPENDICES A. INDIRECT LABOR SKILL REQUIREMENTS FOR CHECK PROCESSING AND ACCOUNT POSTING IN A MULTI-BRANCH BANK B. INDIRECT LABOR SKILL REQUIREMENTS IN BOX AND CONTINUOUS ANNEALING C. POWER PRODUCTION BY STEAM-ELECTRIC PROCESS D. FLUID AND THERMOFOR HYDROCARBON CATALYTIC CRACKING IN OIL REFINERIES E. AIR SEPARATION (CHEMICAL INDUSTRY) F. AIRLINE PASSENGER RESERVATION SYSTEMS G. COMPARISON OF SKILL LEVELS ACROSS PROCESS TYPES H. LABOR-ELASTICITY OF VARIOUS INDUSTRIES AROUND 1960 SUMMARY OF OBJECTIVES, METHODOLOGY AND CONCLUSIONS A. Objectives