Matthew Slaughter on Globalization, Technology and IT Jobs

Matthew Slaughter, coauthor of Globalization and the Perceptions of American Workers, is an associate professor of business administration at Dartmouth College. CIO Executive Editor Christopher Koch recently sat down with Slaughter to discuss globalization, technology and IT jobs.

CIO: You’ve studied American opinion on globalization for years and found that most Americans don’t support globalization if it will affect jobs in the United States. How does that translate into political support for economic policies?

Matthew Slaughter: There is a real schism between what people think of globalization and what they think of technology. People understand that to get the gains from technology innovation, you have to accept some job loss. But what’s striking is that if you have the same sorts of survey questions and replace “technology innovation” with things such as “trade” and “foreign direct investment,” people’s opinions are almost completely flipped around. The majority of Americans support the churning in the process of technology innovation; and the same majority of people oppose those same sorts of dynamic forces from globalization.

If you look back at the last big labor transition, between farm work and manufacturing, the transition seems to have fewer financial repercussions than the shift of white-collar work offshore that we’re seeing today. The farmers were not investing huge sums of money in their children’s education and were not gathering years of specialization in a particular job to see that job displaced, followed by a substantial loss of income.

Those sentiments are real, and they are important in terms of thinking about what I should do for myself and for my kids and how I should vote. Mechanization in agriculture meant you just didn’t need all those people working on the farms. It’s the same thing today. Why should I spend all this money on college education when I don’t know if my children might have a job when they graduate? The sentiments are always present in a market economy where you have this churning going on. They are heightened in recent years, particularly in IT, because these processes have become much more a part of how business gets done.

In the past, the low-skilled, low-income workers were the ones being displaced. Now you’re talking about people who are really at the power core of this country: knowledge workers. What do you think will happen, given the high degree of political power that these people have? Will there be a strong political reaction?

I don’t think so. Not in terms of shutting down globalization. Very few IT executives could reasonably argue that their companies are not better off today than they were 20 years ago because of globalization. Not just in terms of their companies’ profitability but in terms of their incomes. The more important benchmark is not where you were in terms of income in 2000, but where you were in 1993 and 1983—where you might see more activity in terms of the labor market. There will be pressure to make it easier for people to have portability of pensions and be able to gain education later in life, the kinds of things that will enable workers to better transition from these kinds of shocks. The U.S. labor market lacks a lot of those buffers that I think would ameliorate a lot of the sentiment that’s out there about this insecurity.