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Policy Options and Recommendations
Our discussion of policy options and recommendations is based on the
conclusions that technological change is essential to growth in U.S.
employment and living standards and that an appropriate policy structure
can facilitate such change. In devising these policies, policymakers are
aided by the nature of technological change, which tends to be gradual in
its effects on employment and the work environment. We have developed
recommendations that emphasize three broad initiatives in public and
private sector policies: (l) public policies to aid worker adjustment to
technological change; (2) public policies to support the development and
application of advanced technologies; and (3) improvements in labor-
management cooperation in the adoption of new technologies, as well as
improvements in private managers' expertise in evaluating and imple-
menting new technologies.
Although the overall U.S. standard of living and average real wages
increase as a result of the productivity advances associated with techno-
logical change, individuals also suffer losses. Many of our public policy
recommendations stem from the belief that a portion of the affluence
created by technological change should be used to assist those suffering
losses as a result of it. In addition, public policies that deal with the
equitable distribution of gains and losses from technological change can
facilitate such change by reducing the resistance of potential losers to new
technologies in the workplace. Just as management policies to support
adoption of new technologies within the firm must address worker
concerns about adjustment and employment security (see Chapter 7),
177
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178 TECHNOLOG Y AND EMPLO YMENT
public policies that aid adjustment can reduce potential resistance to
technology and support its more rapid adoption. On balance, if policies
are developed that ease the burden of adjustment for those individuals
faced with job loss, thereby facilitating the adoption of new technologies,
all members of our society can benefit.
RECOMMENDATIONS FOR THE PUBLIC SECTOR
Policies for Worker Adjustment
Our review of the evidence on the employment effects of technological
change has identified two groups of workers that may be adversely
affected: experienced workers, who may lose their jobs as a result of the
adoption of technology, and labor force entrants, who may find that job
opportunities are reduced by technological change. Our public policy
recommendations also address the impacts of technological change on
female and minority workers. The evaluation of policies affecting the
educational attainment and basic skills preparation of labor force entrants
is beyond the scope of this report. We therefore make no specific
recommendations in this area beyond noting the severity and urgency of
the problem and recommending that additional research and actions
based on that research be undertaken. We do propose several steps to
improve and expand programs serving technologically displaced workers.
These recommendations are necessarily tentative the available data and
program evaluations provide limited information about the needs of these
workers, the effectiveness and costs of various adjustment strategies, and
the rates of participation by technologically displaced workers in retrain-
ing programs that offer income support. Nevertheless, the costs of
inaction are great, as are the potential benefits from improvements in the
adjustment assistance policies of this nation.
AIDING WORKER ADJUSTMENT TO TECHNOLOGICAL CHANGE
The panel's charge called for an identification and analysis of the
efficacy of existing and alternative policies for dealing with the
employment-related effects of technological change. Two existing federal
programs offer adjustment assistance to technologically displaced work-
ers. One program is Title III of the Job Training Partnership Act (JTPA),
which provides assistance to all displaced workers, including those
displaced by new technology; the other is Trade Adjustment Assistance
(TAA). Eligibility for TAA, however, is restricted to those workers in
goods-producing industries who can demonstrate that their displace-
ment was caused by imports. Certifying the causes of displace
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POLICY OPTIONS AND RECOMMENDATIONS 179
ment for this program is time-consuming and reduces its ability to provide
job search assistance, retraining, and other adjustment services rapidly
following displacements.' We have therefore chosen to focus our recom-
mendations and options for changes in publicly financed worker adjust-
ment assistance programs on Title III of JTPA.
The fact that Title III does not differentiate among displaced workers
by the cause of their displacement is an important positive feature of this
program, one that strengthens its ability to deal with technological
displacement. This assessment of JTPA reflects the severe administrative
difficulties and service delivery problems of programs that attempt to
distinguish among workers according to the causes of their displacement.
Although the charge to the panel focused on the employment effects of
technological change, our judgment, based on our review of the evidence,
is that a program of adjustment assistance for technologically displaced
workers enforcing a strict requirement that the cause of such displace-
ment be certified is unworkable.
Determining the precise causes of worker displacement is extraordinar-
ily difficult, in part because of the complexity and number of channels
through which the impact of technological change on the economy is
realized. For example, when a worker is displaced by the closure of a
U.S. plant supplying basic steel, the usual explanation is the absence of
technological change in the U.S. steel industry. The lack of such change
makes costs higher and quality lower than otherwise could be the case. In
fact, however, much of the worker displacement in the steel industry
reflects the slow growth of markets for steel products as a result of
technological change in materials. How are we to determine the relative
importance to steel industry worker displacement of materials substitu-
tion due to technological change, increasingly severe foreign competition
as a result of technological change in steelmaking overseas, predatory
pricing by foreign producers, and competition from domestic steel pro-
ducers? Such distinctions are virtually impossible.
Moreover, the requirement that such a determination be made intro-
duces severe delays and uncertainties into the delivery of services to
displaced workers. One of the essential attributes of successful worker
adjustment programs is rapid response as we noted in Chapter 7 and
discuss below, workers benefit most from adjustment assistance that is
offered prior to or immediately after displacement, rather than after a lag
of several months. The TAA requirement that the causes of displacement
be determined has delayed the delivery of assistance to workers by as
'A portion of import-related displacement, as we have noted previously, reflects more
rapid adoption of new technologies by foreign firms. This share, however, cannot be
estimated with the available data.
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180 TECHNOLOG Y AND EMPLO YMENT
much as 14 months. The severe uncertainties among workers and service
providers concerning their eventual eligibility for assistance under TAA
(or any other program with such a determination requirement) further
reduce the effectiveness of the program.
Options for Adjustment Assistance for Displaced Workers
We recommend that action be taken to improve existing JTPA Title III
job search and placement assistance programs and programs for training
in both basic and job-related skills for displaced workers. We recommend
that some or all of the following options be implemented:
· broadening the range of employment services provided to displaced
workers and those facing imminent displacement, including job counsel-
ing, skills diagnosis, job search assistance, and placement services;
· increasing the share of Title IIIfunds devoted to training in basic and
job-related skills;
· broadening income support for displaced workers engaged in training;
· instituting a program of federally provided direct loans or loan
guarantees, administered by state or local authorities, to workers dis-
placed by technological change, plant shutdowns, or large-scale layoffs
(these loans could be used by displaced workers to finance retraining or
relocation or to establish new businessesJ; and
· establishing a program for demonstrations and experiments with
rigorous evaluation requirements to test and compare specific program
designs.
In addition to these modifications to JTPA, we recommend revising
state unemployment compensation laws to guarantee explicitly that
displaced workers who are eligible for unemployment compensation can
continue to receive benefits while undertaking retraining.
Expanded job search assistance, counseling, and skills diagnosis serv-
ices for displaced workers could be provided by existing JTPA Title III
service providers and state programs. The state agency or organization
providing these services might also act as a provider or referral agent for
basic skills and job-related training for displaced workers. Income sup-
port for displaced workers undertaking retraining could take the form of
a federally financed 26-week extension of unemployment compensation
(for those eligible for unemployment compensation) or a training stipend
of comparable duration for individuals enrolled in retraining or basic skills
training. To encourage early enrollment in training by recipients of
unemployment compensation, benefit extensions of up to 26 weeks could
be made available only to those who enrolled during the early weeks of
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POLICY OPTIONS AND RECOMMENDATIONS 181
receiving regular unemployment compensation (e.g., during the first 6-10
weeks). Extended unemployment assistance could be offered on a
"matching" basis, with incremental extensions of unemployment com-
pensation beyond the conventional benefits for each week the recipient is
enrolled in training with the support of regular unemployment compen-
sation. Individuals not eligible for unemployment compensation could
receive the training stipend if they satisfied an attendance or performance
requirement.
As Chapters 3 and 7 noted, some displaced workers require more
financial support for retraining and other forms of adjustment assistance
than that provided by unemployment compensation. To meet these
needs, we recommend that consideration be given to making other funds
available (possibly on a trial basis or as part of a large-scale program
experiment) through mechanisms similar to those used for individuals
suffering dislocation due to natural disasters. Both state and federal
governments alike provide extensive emergency assistance to victims of
natural disasters. Federal financial assistance in these cases often takes
the form of direct loans or guarantees for loans to individuals in business
or to homeowners. The dislocations induced by permanent layoffs or
plant closures often are no less severe than those caused by hurricanes or
floods. The direct provision of loans from federal sources or the extension
of federal guarantees to cover loans made by private institutions are
important potential sources of income support for workers interested in
relocating, establishing independent businesses, or pursuing retraining.
Although the evidence on the benefits of adjustment programs for
displaced workers is limited, it is generally positive. Unfortunately, this
evidence does not provide clear guidelines for the design of effective
displaced worker adjustment programs. There are few data on the ideal
mix of job counseling, job search assistance, skills diagnosis, or training
in basic or job-related skills within these programs. Therefore, estimates
of participation rates, training costs and duration, and overall program
effectiveness for the economic adjustment program detailed here are
subject to uncertainty. As evaluation data accumulate, however, the
program's design can be modified and improved. It is important that any
adjustment assistance initiatives incorporate carefully designed, rigorous
evaluations.
Operation and Costs of Program Options
We have concluded that the federal government should be the primary
source of funding for the abovementioned policy options. Federal fi-
nancing is preferable to state funding because of the inequities created by
differences in the level of state resources for such programs. Indeed,
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182 TECHNOLOGY AND EMPLO YMENT
states experiencing severe economic dislocations are likely to face serious
problems in funding worker adjustment assistance programs. In view of
the fact that one of the central motives for these programs is the equitable
distribution of the employment-related costs and benefits of new technol-
ogy among the U.S. population, the avoidance of regional inequities is an
important consideration. One option for financing the economic adjust-
ment loans, like the arrangements for other federal loan programs, would
use the Federal Financing Bank and therefore would not require federal
funds from general revenues.
Estimates of the costs of the adjustment assistance options for workers
displaced by technology depend on estimates of this population. There
are no reliable estimates, however, of the number of U.S. workers
displaced by the adoption of technology within this and foreign econo-
mies. The lack of such data reflects the difficulties of determining the
precise causes of worker displacement within a complex economy, as was
noted previously.
Our estimates of the potential costs of these adjustment assistance
options are based on estimates of the annual flow of workers displaced by
all causes. In view of the fact that JTPA Title III currently does not
restrict eligibility according to the cause of displacement, this basis for
our cost estimates also is the most realistic alternative. In Chapter 3, we
note that estimates of the number of workers displaced annually by all
causes range from 1 million, if displaced workers are defined as individ-
uals with 3 years of employment in their jobs prior to layoff, up to 2.3
million when all displaced workers are included. Cost estimates also
depend on assumptions about the rates of worker participation in the
program, an area in which reliable data are scarce. Existing programs that
combine income support with retraining for displaced workers, such as
the UAW-Ford program, have enrolled 10-15 percent of the eligible
population (see Chapter 71. Although we lack conclusive evidence on this
point, it may be that participation rates would be higher in programs
involving displaced workers from industries that pay lower wages than
the automotive industry.
We have made estimates of the costs to the federal government of job
search assistance, training, and extended unemployment compensation
for two values of the annual flow of displaced workers: 1 million workers
and 2.3 million. As estimated rates of participation in these adjustment
assistance programs are increased from 5 to 30 percent of the displaced
worker population, the estimated costs of these policy options range from
$131 million (S percent participation rate) to $786 million (30 percent) for
Participation rates also will be affected by the policies and guidelines adopted by states
in administering any system of training, job assistance, and income support.
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POLICY OPTIONS AND RECOMMENDATIONS 183
an annual flow of 1 million displaced workers.3 It is important to note that
the highest estimated participation rate exceeds any observed thus far in
a displaced worker training program in the United States. If we assume
that the How of eligible displaced workers is 2.3 million annually, the
estimated costs of the program range from $301 million (5 percent
participation rate) to approximately $1.8 billion (30 percent).4
How could these policy options be financed? The panel discussed
revenue alternatives and found no single method that was preferable to all
others on equity and other grounds. In the absence of evidence suggesting
that one alternative is superior to all others, the decision on funding
sources and budgetary reallocations is properly political, involving con-
siderations that extend well beyond this panel's charge.
Advance Notice of Plant Closures and Large Permanent Layoffs5
Although the options discussed above will improve JTPA's ability to
deal with the problems of workers displaced by technological change and
for other causes, a substantial body of evidence (summarized in Chapter
7) suggests that these programs are more elective when they are
instituted prior to the dismissal of workers. This is especially true of
large-scale layoffs or plant closings because public and private groups
providing adjustment assistance may require additional time to assist a
relatively large number of workers. We therefore view advance notifica-
tion of these events as an indispensable component of JTPA Title III
improvements.
We have concluded that substantial (a minimum of 2-3 monthsJ
advance notice of permanent plant shutdowns and large permanent
layoffs others significant benefits to the workers who are displaced and to
the nation by reducing the average duration of the workers' unemploy
ment and lessening the public costs of such unemployment. The current
system of voluntary advance notice, however, fails to provide sufficient
advance notice to many U.S. workers. We therefore recommend that
federal action be taken to ensure that substantial advance notice is
provided to all workers. Although the panel agreed on the needforfederal
action to broaden the coverage of advance notice within the U.S. work
force, panel members were not unanimous in their support of a specific
legislative or administrative mechanism to achieve this goal. The panel
3If the annual flow of displaced workers is estimated to amount to 1.2 million workers (the
estimate used by the Secretary of Labor's Task Force on Economic Change and Disloca-
tion, 1986), the estimated costs of these options range from $157 million to $943 million.
4JTPA Title III outlays for fiscal year 1987 are roughly $200 million, although a significant
expansion in this program has been proposed in the President's budget for fiscal year 1988.
sPanel member Anne O. Krueger dissents from this recommendation. Her statement
appears in Appendix D.
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184 TECHNOLOGY AND EMPLO YMENT
believes that the following alternatives are viable options to achieve
broader advance notice, with appropriate provisions to reduce the burden
on small business and provide for unforeseen circumstances:
~ federal action to require employers to provide substantial advance
notice of permanent plant shutdowns and large permanent layoffs; or
· federal action to provide tax incentives for employers to give such
notice.
The current system of voluntary advance notice does not provide
workers with the "best-practice" amount of advance notice (a minimum
of 2-3 months) as Chapter 7 notes, too few workers are notified in
advance of permanent plant closures or large permanent layoffs, thus
hampering their adjustment. When workers receive sufficient advance
notice, the evidence suggests that they adjust more rapidly and more
successfully to job loss, which reduces the costs of displacement to them
and to the public sector. We believe that the benefits of advance notice
more than outweigh the costs of such a policy costs that exist, but that
are distributed differently, when no advance notice is provided. When
advance notice is given, the costs of worker displacement are shared by
taxpayers, by the displaced workers, and by the firms closing plants or
permanently discharging workers, rather than being borne primarily by
taxpayers and the workers being laid off.
Through its public policies, this society has made a judgment that the
costs of many regulations (e.g., those covering health and safety, con-
sumer protection, or securities markets) that enhance the flow of infor-
mation to workers and consumers and distribute costs more equitably
among workers, consumers, and firms are more than offset by the benefits
of such policies. We believe that advance notice falls into the same
category of public policy.
The policy options to achieve greater coverage of U.S. workers by
advance notice all emphasize the need for such a policy to be national in
scope and design, rather than being left to the discretion of states and
cities. This feature of our policy recommendation is based in large part on
the panel's conclusion that all of the U.S. work force should be covered
by these policies, an outcome that is feasible only if federal action is
taken. Moreover, leaving the development of advance notice policies to
the discretion of the states and cities is likely to produce a patchwork of
conflicting policies with which managers would have to contend, increas-
ing their costs of doing business while reducing the coverage of the U.S.
work force.
Both of the policy options offered above for extending the coverage of
advance notice have advantages and disadvantages. We do not endorse
any specific piece of legislation in listing these options but wish to
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POLICY OPTIONS AND RECOMMENDATIONS 185
contribute to the debate and formulation of policy in this area. The first
option, requiring advance notice of all firms above a specific size and
exempting those firms encountering unforeseen business circumstances,
has the advantage of directly affecting corporate behavior and thereby
yielding benefits to workers. This goal is achieved, however, at the cost
of restricting managerial discretion to respond to the changing business
environment.
The second alternative also could exempt firms below a specified size
threshold and those encountering unforeseen business circumstances. Its
implementation could include a combination of credits on the corporate
income tax for firms that pledge to provide advance notice and/or
surcharges on federal unemployment insurance taxes for firms choosing
not to make such a commitment. This alternative "internalizes" the
social costs of plant closures and large layoffs without advance notice (in
other words, firms will make such decisions based on a more complete
accounting of the social and private costs), while preserving managerial
discretion-firms choosing to close plants and lay off large numbers of
workers without providing advance notice are able to do so while
incurring higher costs. If a large number of firms decide to incur the higher
taxes and/or forego the tax credits associated with providing advance
notice, however, the second alternative may benefit a smaller share of the
U.S. work force.
Choosing among these and other options is a political function and must
be carried out through public, congressional, and executive branch
debate. The choice of enforcement mechanisms for either policy option is
particularly important for the effectiveness of advance notice policies. We
strongly urge that action be taken by the federal government to aid worker
adjustment to technological and other types of economic change by
extending advance notice of plant closures and layoffs to as many workers
as possible.
TRAINING FOR LABOR MARKET ENTRANTS
We share the concerns of other studies, set forth in the reports of the
COSEPUP Panel on Secondary School Education for the Changing
Workplace ("High Schools and the Changing Workplace: The
Employers' View," 1984', the Task Force on Teaching as a Profession, of
the Carnegie Forum on Education and the Economy ("A Nation Pre-
pared: Teachers for the 21st Century," 1986J, and the U.S. Department
of Education ("A Nation at Risk: The Imperative for Educational
Reform," 1983), regarding the amount and quality of basic skills prepa-
ration provided to labor force entrants by U.S. public schools. Improve-
ment in the basic literacy, problem-solving, numerical reasoning, and
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186 TECHNOLOGY AND EMPLOYMENT
written communication skills of labor force entrants is essential. We
endorse additional public support for research on strategies to achieve
this goal, as well asfinancial support for the implementation of programs
that improve the basic skills of labor force entrants and of those already
in the labor force who lack these skills.
Although technological change is not likely to impose significant
demands on labor market entrants for additional job-related skills, the
basic skills of this group are often weak and must be strengthened. U.S.
elementary and secondary school systems, as well as providers of adult
education, must improve basic skills training. In addition, the gap
between white, black, and Hispanic educational attainment must be
closed if all members of our society are to deal successfully with the
demands of the workplace of the future.
EQUAL EMPLOYMENT OPPORTUNITY
We recommend more vigorous enforcement of policies to combat racial
and sexual discrimination in the labor market as a means of improving
the ability of minority andiemale workers, as well as minority andfemale
labor force entrants, to adjust to the demands of technological change.
It appears that technological change will not induce large-scale unem-
ployment in the occupations historically accounting for a large proportion
of minority and female employment. Nevertheless, policies to reduce
discrimination within the job market broaden the employment prospects
for minority and female labor force entrants as well as experienced
minority workers and women, thus improving the ability of these groups
to adjust to workplace changes triggered by the adoption of new technol-
og~es.
Science and Technology Policy to Support the
Adoption of New Technologies
We support continued high levels of investment by industry and the
federal government in basic and applied research this is the essential
"seed corn" of innovation, and such investments play a significant role in
the education of scientists and engineers. Federal support for nondefense
R&D is particularly important, in view of the limited commercial payoffs
from the high historical levels of defense R&D in this nation (there are
important but limited exceptions to this generalization, as noted in
Chapter 21. The foreseeable contribution of defense R&D to the civilian
U.S. technology base appears to be limited at best.
In addition to a strong research base, however, public policies to
support more rapid adoption of new technologies within this economy
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POLICY OPTIONS AND RECOMMENDATIONS 1 87
deserve consideration. The historic focus of post-World War II science
and technology policy on the generation rather than the adoption of new
civilian technologies (once again, a generalization with several important
exceptions) contrasts with the orientation of public science and technol-
o~v colicv in several other industrial nations (e.g., Japan, Sweden, and
in, .~ ~
West Germany) and may have contributed to more rapid adoption of
manufacturing process innovations and more rapid commercialization of
new product technologies in these nations. We therefore support the
development and evaluation of additional public policies to encourage the
more rapid adoption of new technologies within the United States.
We recommend increasedfederal support for activities and research to
encourage more rapid adoption of new technologies. Although the
. . . ~ .~ · r
achievement of this goal requires actions in a number of areas not
considered by this panel, our review of policies leads us to recommend
the following options for consideration:
· Strengthen research on technical standards by public agencies
(primarily the National Bureau of Standards) to support, where appro-
priate, private standard-setting efforts.
Although standards are important to the adoption of many innovations,
they play a particularly significant role in the adoption of computer-based
manufacturing and information technologies. In many cases, the estab-
lishment of product standards requires extensive and diversified research
efforts, which may not profit any single firm. Public agencies can play an
important role in providing technical support for standard setting as well
as in supporting research on alternatives to current standards. Because
research by the National Bureau of Standards in these areas is financed by
U.S. taxpayers, the results of its research could be licensed to U.S. firms
on a royalty-free basis and licensed to foreign enterprises in return for the
payment of royalties.
· Strengthen research programs supporting cooperative research be-
tween industry and the federal government in the development and
application of technologies.
Research in the "gray areas" lying between fundamental research and
development plays a major role in validating design concepts and dem-
onstrating technological feasibility. The President's Office of Science and
Technology Policy (1982) clearly recognized the importance and appro-
priateness of federal support of such research in its report on the
aeronautics research program of the National Aeronautics and Space
Administration. The success of this program in supporting high rates of
technological change and adoption within an internationally competitive
U.S. industry merits cautious emulation in other sectors.
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188 TECHNOLOGYAND EMPLOYMENT
.1 .
We also believe that stronger research linkages between industry and
the fundamental research performed on the nation's campuses can
support more rapid adoption and commercialization of a number of
advanced technologies; thus, we support recent federal efforts, led by the
National Science Foundation, to
provide seed money for
university-industry research collaboration. Besides strengthening the
financial foundations of higher education within the United States, such
collaboration allows U.S. firms to monitor the development of new
technology in a wide range of areas, attract high-quality graduate stu-
dents, and join with other firms and academic researchers in precom-
mercial research.
· Increase support for federal programs to improve U.S. firms' access
to foreign science and engineering developments and innovations.
Chapter 2 noted that an important change in the economic environment
during the past two decades is the increased technological and scientific
capabilities of foreign nations and firms. The panel believes that U.S.
firms on average do too little to gain access to foreign scientific and
engineering research, despite the importance of these "offshore" sources
of commercial technologies. Options to increase such access include
continued expansion of public support for translations of foreign scientific
and engineering journals (e.g., broadening and expanding P.L. 99-382, the
Japanese Technical Literature Act) or strengthening the links between
U.S. science attaches stationed overseas and the U.S. industrial commu
nity. These and other steps could improve the transfer of technologies
from foreign sources to U.S. firms.
The Adequacy of the Data
We recommend that the post-fiscal year 1980 reductions in key federal
data collection and analysis budgets be reversed and that (at a minimum)
these budgets be stabilized in real terms for the next decade in recogni-
tion of the important "infrastructural" role data bases play within
research and policymaking. We urge that a portion of these budgets be
devoted to improvements in the collection and analysis of employment,
productivity, and output data on the nonmanufacturing sector of this
economy.
We recommend that a new panel study or a supplement and follow-up
to the Current Population Survey be undertaken by the Bureau of Labor
Statistics to examine the effects of technological change on the skill
requirements, employment, and working conditions of individuals of
working age. We also support the development by the Census Bureau of
better data on technology adoption by firms.
,.
;
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POLICY OPTIONS AND RECOMMENDATIONS 189
In the course of this study, the panel has found that the data available
from public sources are barely sufficient to analyze the impacts of
technology on employment. In some cases these data problems reflect the
rapid expansion of new sectors of the economy, such as services, for
which federal agencies have been hard-pressed to monitor and collect
data comparable in quality and quantity to those available for manufac-
turing. In other cases the data have declined in quality during the past
decade as a result of reductions in collection budgets and efforts.
We recommend that the Bureau of Labor Statistics expand its survey of
displaced workers (the special supplement to the Current Population
Surveys to allow annual data collection and that this survey improve its
question on the nature and effect of advance notice of lay odds.
We recommend that any expansion of adjustment assistance services
for displaced workers be accompanied by rigorous evaluations of these
programs to provide information on the long-term effectiveness of dif-
ferent program designs and strategies.
To reduce the potentialfor conflicts of interest that may arise when an
organization charged with operating adjustment assistance programs has
sole responsibility for the design and administration of evaluations of
these programs, we recommend that federal and state agencies respon-
sible for the operation of such programs share with other agencies the
responsibility for evaluating them, or conduct such evaluations with the
advice of independent expert panels.
We recommend that evaluations be undertaken of the implementation
of the provisions of the Perkins Vocational Education Act of 1984 that
allow federal and state funds to be used for improving the skills of the
employed work force. In addition, a federally sponsored evaluation of a
sample of state-level programs in upgrade training should be undertal<;en
to determine the overall effectiveness of such programs and the specific
design features that contribute to success.
Better data on the needs of displaced workers and better evaluations of
the effectiveness of adjustment assistance programs for them, including
retraining and advance notice of plant closures and large-scale layoffs, are
urgently needed. To promote the development of the most appropriate
evaluation designs and techniques, it may be useful to divide the
responsibility for the evaluation of worker adjustment programs between
the agencies in charge of program administration (at the federal level, the
Departments of Labor and Education) and another federal agency, in a
fashion similar to that recommended by the U.S. Department of Labor's
Advisory Panel on Job Training Longitudinal Survey Research (19851.
Such an assignment of evaluation responsibility would ensure a critical
and rigorous evaluation of the numerous experiments that we believe are
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.
190 TECHNOLOGY AND EMPLO YMENT
necessary in this area. Another alternative would be for the departments
to carry out their evaluations in cooperation with an expert standing
panel, organized by their secretaries, the National Research Council, or
another independent group. One model for such a panel is the Panel on
Decennial Census Methodology of the National Research Council's
Committee on Behavioral and Social Sciences and Education, which
works closely with the Bureau of the Census.
Health and Safety Impacts of Technological Change
We recommend a major interdisciplinary study of the consequences of
technological change for workplace health and safety and the regulatory
structure designed to ensure that worker health and safety are protected.
These areas also should be monitored carefully by federal and state
agencies.
The impacts of technological change on workplace health and safety
raise important issues in areas ranging from engineering and toxicology
to employee rights. Many of the workplace hazards associated with new
technologies are not themselves novel, but they may raise issues for the
enforcement of health and safety regulations as a result of changes in the
structure of the workplace and the composition of the work force. On
the other hand, significant opportunities for improving health and safety
should be created by applications of information and computer-based
manufacturing technologies. In view of the importance of this issue for
the welfare of the American population, we feel that a major study
should be undertaken of worker health and safety in the workplace of
the future.
RECOMMENDATIONS FOR THE PRIVATE SECTOR
Labor-Management Collaboration in Technology Adoption
Rates of adoption of new technologies, as well as the exploitation of
computer-based manufacturing and office automation technologies to
increase worker productivity, satisfaction, and safety, are affected
significantly by the management of the adoption process. If the process
proceeds smoothly, both workers and management can benefit from
these technologies, which have the potential to enrich work as well as
enhance its efficiency. The potential payoffs from cooperation between
labor and management in technology adoption are high, but such
cooperation has been lacking in some U.S. industries. Our recommen-
dations in this area highlight some key components of successful
adoption strategies.
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POLIC Y OPTIONS AND RECOMMENDATIONS 191
ELEMENTS OF BEST-PRACTICE STRATEGIES FOR
TECHNOLOGY ADOPTION
We recommend that management give advance notice of and consult
with workers about job redesign and technological change.
The adoption of new technology carries with it multiple requirements
for work reorganization, retraining of workers, and job redesign and
reclassification. Managers must plan the process well in advance and
should consult with workers in such planning because these technologies
often place greater responsibility on workers for maintenance and quality
assurance. Considering the inevitable uncertainties surrounding the char-
acteristics and potentials of new technologies, input from workers in job
redesign and technology adoption can be extremely valuable.
We recommend that the adoption of new workplace technologies be
accompanied by employment policies that strengthen employment secur-
ity; such policies include retraining of affected workers for other jobs and
reliance on attrition rather than on permanent layoffs wherever possible.
At the same time, workers and unions must recognize their stake in a
more productive workplace and consider modifications of work rules and
job classifications in exchange for such employment security policies.
Employment security is a central concern of workers in organizations
that are adopting new technologies. Management can address these
concerns directly through a combination of retraining and assurances of
employment security for workers. The fact that the adoption and "de-
bugging" of new technologies often take considerable time means that
work force reductions, when necessary, often can be accomplished
through attrition rather than by permanent layoffs. In some cases, unions
can agree to revisions in job classifications in exchange for employment
security guarantees by management. Retraining and employment security
programs similar to the UAW-Ford and UAW-GM training and job
security programs, as well as the new training programs established by
the agreements between the Communications Workers of America and
Pacific Telesis and the American Telephone and Telegraph Company,
have considerable promise for application in other industries.
PROTECTION FROM THE COSTS OF DISPLACEMENT
We recommend that management and labor explore the use of sever-
ance payments for permanent layoffs of experienced workers. To preserve
such benef ts in the event of afirm's bankruptcy, we also recommend that
employers and workers consider establishing a joint insurance fund.
As noted in Chapter 7, the needs of middle-aged displaced workers
from high-wage, unionized manufacturing industries differ from those of
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192 TECHNOLOGY AND EMPLO YMENT
other groups of displaced workers. Middle-aged displaced workers face
significant financial losses as a result of displacement and may require
income support as much or more than retraining. In industries such as
steel and automobiles, these workers have been covered by employer-
funded supplements to unemployment benefits, by early retirement
pensions, and by other forms of severance payments that have reduced
the financial hardships of permanent layoffs. Such privately funded plans
appear to address the needs of the high-wage, experienced worker who
has been displaced, regardless of the cause of displacement. Supple-
mented by our proposed system of loans (discussed earlier in this
chapter), these union-management agreements protect the interests of an
important portion of the displaced worker population and provide a
partial cushion against the financial consequences of job loss. These plans
may require some form of insurance or guarantee, however, to guard
against the consequences of bankruptcy of the firms providing the
benefits.
Education for Managers
We recommend that the current efforts to strengthen the quality of
managerial education in the management, adoption, and evaluation of
advanced manufacturing and service production processes be continued,
both within business schools and through other institutions. Additional
research on this topic is needed and could be funded through
university-industry research collaboration, among other possibilities.
Education for those currently employed as managers also must be
strengthened to incorporate instruction in the adoption of new technolo-
gies and in strategies for helping the work force to adjust to technological
change.
Many observers ascribe the slow rates of adoption of new technologies
in some sectors of U.S. manufacturing and the often disappointing
productivity and quality gains resulting from the use of these technologies
to failings in U.S. management. What is not widely appreciated is that
new technologies impose requirements on managers for reorganization of
the entire work process and, frequently, the redesign of products. All of
these demands can impede the adoption process if managers are not well
trained in evaluation techniques and methods for the adoption of new
technologies. In some cases, for example, outmoded management ac-
counting systems are unable to take into account the payoffs from the
adoption of advanced manufacturing or office automation technologies.
As a result, actual productivity and quality gains may not be incorporated
in management analyses of new technologies.
Continued efforts to revise these accounting and project evaluation
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POLICY OPTIONS AND RECOMMENDATIONS 193
techniques and to instruct both students and managers in their application
could contribute to more rapid and effective adoption of new technologies
in U.S. industry. Further research and managerial education in the
management of the relationships among research, product design, and the
adoption of new production technologies also could improve the perform-
ance of some sectors of U.S. industry.
Representative terms from entire chapter:
advance notice
