Study: Negative salary effects of IT

Here is another item that follows yesterday's "doom and gloom" post. Here, a study found that the salaries of low-skilled workers decreased with IT involvement. This points to some "externalities" that must be addressed and considered when automating processes with IT. The answer, of course, cannot be "don't automate" because the alternative would likely be a much larger salary decrease (to $0 for everyone, when the enterprise folds due to competitive pressure). For those of us who do techno-economic studies, it means that the "benefit-cost calculus" must be expanded to include these effects, or at least the mitigation of these effects.

Researchers found that salary actually varied inversely with IT penetration: the more computers were involved, the less workers were paid. Highly educated workers are able to offset this effect with the positive influence of education-IT interaction— they can integrate new technologies into their workflow. Less-educated workers, on the other hand, are left blank-faced in front of a computer screen.

This negative IT effect results from computers' ability to replace workers at unskilled tasks, according to the scientists (for example, word processing software now stands in for typesetters). More importantly, workers below a certain education threshold lack the resources to adapt their skillset. Once they are replaced, they have difficulty finding other work, and it is increasingly hard to find unskilled jobs that haven't been co-opted by IT.