- The Washington Times - Monday, December 20, 1999

When the cashiers at Wal-Mart check out customers’ purchases, they are not just ringing up sales. They also are taking the store’s inventory, ordering depleted items, and updating shoppers’ personal files.

Computerized checkout machines have turned sales clerks into super men and women who perform an astonishing array of tasks at a single keystroke.

“At Wal-Mart, cashier is probably one of the most important jobs we have,” said Craig Johnson, manager of 450 employees at Wal-Mart’s Laurel store. “They are the ordering system.”

Wal-Mart’s employees, like all Washingtonians in big and small ways, are players in the “new economy,” where the quickening pace of technological innovation is enabling workers to double or triple their output with little extra effort.

At the Federal Express center in Beltsville, Deirdre Ellison can pinpoint the location of any Christmas package in the country with a flick of the wrist using the freight carrier’s sophisticated computerized tracking system.

“It’s easy to do,” and very accurate, she said, recollecting how when she joined FedEx six years ago, packages sometimes got misplaced because clerks had to take down information by hand and the company’s tracking system occasionally misread their handwriting.

Washingtonians participate as consumers in the new economy as well, each time they process their own gas purchases or banking transactions with the swipe of a plastic card. Without even thinking, they are completing transactions that used to require an army of clerks.

Privacy concerns

Like most workers, consumers for the most part have welcomed advances that enable them to save time and energy, though they may have some reservations about whether the new technology completely safeguards their privacy.

The efficiencies afforded by technology from computers and cell phones to fax machines and satellites are important not only because they make the work and lifestyles of Washingtonians easier. They are enabling the economy to grow faster and longer and help put more of the area’s population to work than ever before.

The 1990s expansion nationwide is expected to reach a record in length early next year, thanks in no small part to the technological revolution that is enabling businesses here and elsewhere to stretch the resources of scarce workers in a tight labor market and keep producing more of what Americans want to buy.

Economists see another year of robust growth for the Washington area and the nation as a whole, with the economy expanding by 3 percent or more. If the year 2000 is like the last four, the flowering of technology may produce another 12 months of strong growth over 4 percent, analysts say.

The possibility of a recession or even a significant slowdown next year is so remote that some analysts are confident in predicting that unemployment will drop to new lows below 2.5 percent locally and 4 percent nationally, in what could turn out to be a very memorable year.

“There has been an enormous shift in the economy,” said Stephen Fuller, professor of public administration at George Mason University. “All this stuff came together and happened at the same time to make the economy much healthier and wealthier. It has changed the kind of jobs we do, how we do our jobs and even when we do our work.”

Technology takes over

The technological revolution came at the same time Washington was experiencing wrenching change from the downsizing of the federal and local government work forces, he said, as well as bankruptcies and layoffs by many retailers and other private businesses in the aftermath of the 1990 recession.

But job losses in traditional businesses have been outweighed by the burgeoning of high-paid jobs in the information technology businesses that are driving today’s economic revolution, he said.

Northern Virginia where the technology revolution is centered locally as well as, in many ways, nationally is where most of the job gains have been. It is on track to add a record 45,000 jobs to the area economy this year, Mr. Fuller said.

“Professional jobs have been growing at 5 percent to 6 percent for eight years,” he said. “We have fewer construction workers than we had in 1990, but the average salary of a construction worker is only $25,000. The average salary of a technology worker is $55,000.”

Mobile work force

Technology has made work and the labor force far more mobile, enabling people to work almost anywhere and at any time. That actually is causing some people to work a lot harder simply because they can, Mr. Fuller said.

Washington’s many professionals, information technology and “knowledge” workers leave little time unfilled as they take laptop computers home to work at night and call clients while they are commuting.

“My sense is one of the down sides of the technological revolution is we’re working harder than we realize,” he said.

As an economic adviser, Mr. Fuller said he used to employ two secretaries to do his paperwork and correspondence, but now he gets along on his own using voice mail, e-mail, faxes, cell phones and the like.

“I run up terrific bills doing all my telephoning when I drive,” but the expense can be justified because it puts otherwise dead travel time to use and saves labor costs, he said.

Quiet transformation

The technological revolution also has worked in quiet and almost invisible ways. Businesses have been streamlining “back office” functions like inventory, supply chain and distribution, eliminating a horde of stock clerks, secretaries and other aides and making life easier for those who remain.
Behind the scenes, it is even transforming the way homes are built. Construction companies strapped to find workers in today’s overstretched labor market are buying prefabricated materials, which enable fewer workers to put together a house.
Businesses no longer have to foot the large expense of stockpiling goods on their shelves for months in case customers need them. Trucking companies now provide “just in time” delivery of goods through far more efficient distribution networks made possible by satellite technology, Mr. Fuller said.
The industries where the most efficiencies and cost savings have been achieved are some that employ the most workers: manufacturing, transportation, communications and banking, according to the U.S. Labor Department.
Rising output in these industries helped propel growth in the output of the average American worker by 1 percent a year during the decade ending in 1996, and since that time the growth rate has accelerated to more than 3 percent today, the department said.

Sustaining growth

Economists view this pickup in worker productivity as the reason the economy has been able to expand at rates exceeding 4 percent since 1996 and wages have been able to grow by more than 3.5 percent a year without stoking inflation as occurred in previous expansions.

Yet many believe the Labor Department’s figures have not even captured all of the improvement, especially in service businesses like those that dominate the Washington economy, where measuring output can be very subjective and hard to quantify.

While the department can easily measure how many widgets a factory worker produces in an hour, measuring the output of a doctor, a researcher or a lobbyist is not so easy. Do you measure the number of patients the doctor sees, for example, or the number of those cured? And how many new ideas does a researcher have to come up with each day to be productive?

Measuring productivity has developed into a minor science at the Potomac Electric Power Co., which looks for a quick, efficient yet polite response from its dozens of customer service representatives when they field calls about electricity disruptions and other customer complaints and requests.

When Albert M. Osterling, a Pepco supervisor, joined the company 25 years ago, he said the average representative was hampered by having to locate a customer’s account in a file of index cards each time he received a call.

Today, as soon as the phone rings, the customer’s phone number, address and account all flash up on the worker’s computer screen without touching a button, thanks to a technology called “Screen pop” that is related to the telephone company’s caller identification system, he said.

More calls

The result: a worker today can field 110 calls a day more than twice the 45 to 50 calls he could fit in a quarter century ago.

“With technology, everything’s a whole lot more efficient,” Mr. Osterling said, noting that most of the innovations that have streamlined Pepco’s response process have come in the last 10 years.

Plagued by complaints about delayed service earlier this year when Washington suffered an unusual ice storm and two hurricanes that downed numerous trees and branches on power lines, Pepco installed its biggest innovation yet a computerized 800 number that can field up to 100,000 phone calls an hour.

“Now, that’s a lot of calls,” said Charles R. Dickerson, Pepco’s customer operations manager, noting that the computer not only automatically records the phone numbers and address of customers who call in power outages, but collates and analyzes the information so the company can locate and correct problems faster than before.

Not all of Pepco’s customers may view the advent of major timesaving technologies as such an unadorned success. Many chafe at reaching a computer instead of a warm human voice at the end of the line when they call in a power outage. Many complain that they can’t get much information from a computer.

But Mr. Dickerson said Pepco’s goal is to free up the company’s personnel from routine calls so they can devote more time and attention to problem cases and resolve them more satisfactorily.

While new technology has made some lives easier, it has been far from a bed of roses for every American worker and business. It’s also stepped up the pace of competition and produced some losers, said Charles McMillion, president of MBG, a D.C. information service company.

Big winners

The biggest winners have been the big, nationally operating companies that can take full advantage of the tremendous economies of scale offered by the new technologies, he said.

Their names have become household words while their stocks have soared to levels unimaginable just a decade ago: Wal-Mart, Home Depot, FedEx, Microsoft, America Online.

“Things are changing so quickly. Fortunes can be made and lost” within days on today’s stock market, he said. “Stores are getting bigger and bigger. There are more and more superstores and fewer and fewer corner stores. Small businesses really don’t have the scale of operations to justify investing in the equipment.”

With the advent of shopping over the Internet, the economies of scale for nationally operating businesses promise to get even better, he said. The savings from not having to locate a store in a prime location and allocate large amounts of space for inventories is so great that it justifies the added cost of delivery for on-line sales, he said.

“It’s very often as cheap at your front door as it is off the shelf. This is particularly attractive with the traffic congestion we have in the Washington area.”

Because technology is driving down the costs of goods, and they have become so plentiful and cheap, Mr. McMillion and other economists say consumers are among the biggest winners in the new economy.

Small businesses

But the new economy has been “extremely difficult” for small business, not only because of the cutthroat competition but because of the immensely increased power of leading corporations like Microsoft, who are willing to use that power to squash their rivals, he said.

The press’ focus on these huge corporations and their skyrocketing stocks might lead people to think all businesses and investors are prospering and becoming millionaires, he said, even though average stocks have not risen nearly as much.

“There’s no question the Nasdaq, S&P; 500 and Dow Jones have been phenomenal over the last 10 years, but the rest of the economy has been in a slow but steady expansion,” he said. “The incredible divide between the haves and the have-nots is not so much in wages that’s actually narrowed in the last couple of years. It’s between those who invested in Cisco Systems and those who didn’t.”

L. Douglas Lee of Economics from Washington Inc., said that while small business has not appeared to have benefited as much as big business in the new economy, the seemingly continuous drop in the cost of computer technology each year makes it possible for even tiny firms to get ahead.

“I don’t see any evidence it’s hurting small businesses,” he said, noting that the Internet has opened up new ways, for example, for small companies to save money storing and transferring information.

Despite the leaps and bounds that businesses already have made adopting new technologies, Mr. Lee sees even more revolutionary changes ahead, especially when the full extent of the technology revolution reaches small businesses and the government.

“There should be some real advances in government, and I’m sure we’re headed in that direction,” he said. “The government by its very nature has to be somewhat cautious. More and more people are filing their tax forms electronically every year, and that’s all good. But there are things that business has done in the procurement area that the government hasn’t really touched.”

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