Issue 2 - Spring 1995
The High Tech Sector: Conditions & Opportunities (page 1 of 2)
By the High Tech Committee of the National Organizing Committee


This report began as an internal discussion document of the High Tech Committee of the National Organizing Committee. Philosophically, the NOC tries to begin with an assessment of the world as it is. So this report attempts to summarize the objective situation in key areas of the high tech arena, including employment, the National Information Infrastructure (NII), intellectual property, and the high tech police state. The objective situation reveals opportunities for our work, which are also discussed below.

The High Tech Sector of the Economy

High tech is a key sector of the economy. According to the Bureau of Labor Statistics, more workers in the U.S. are employed in electronics than in automobile production. Much of the growth in electronics employment and related industries over the past three decades has been at the expense of traditional industries, as companies replaced workers with electronics and the requisite software to control electronic-based machinery. However, the same forces affecting other industries have affected the electronics industry itself, in the past four years. This is an expected development, as electronics permeates the economy, and the industries mature.

These forces can be summed up as:

  • A glut in the market, with a corresponding crisis in profitability (or, the extraordinary profits of the previous period begin to come in line with overall profitability). For example, software companies are facing the saturation of the business software market, forcing companies to cut into their fat profit margins -- "$500" software packages being dumped at "introductory" prices of $50 or $100. (That is, the price of technology, especially software, is sinking to its value).

  • Waves of new technology making older architectures obsolete, and jeopardizing the companies that championed them. The mainframe and mini-computer companies are the primary victims here (IBM, DEC, Amdahl, Groupe Bull, etc.), where less labor is necessary to produce state-of-the-art systems (these computers are smaller, and require fewer resources to manufacture).

  • In a related move, a shift from complexity in manufacture (expensive to replicate) to complexity in software (inexpensive to replicate). "Massively parallel processing" computers, where hundreds of relatively simple processors work in tandem, are replacing the old model of larger chips and larger systems. Another example is the move to "reduced instruction set computing" or RISC, away from the trend to larger and more complex chips -- the designs tend to get simpler and faster, and the software to coordinate and run them gets more complex.

  • Cuts in military spending. There are several reasons for this -- the end of the Cold War has undermined the rationale for a heavily subsidized military-industrial complex (or at least for particular types of weapons systems). Forces of a technology sector without ties to the Pentagon have emerged which have pushed for more research and spending in non-military areas (these forces, identified with John Sculley, then with Apple, and John Young, then with Hewlett- -Packard were instrumental in Clinton's election). Military spending cuts can be seen as a retraction of the social bribe (defense spending as a public works project) as international capitalist competition increases, and public sector spending must be cut -- a parallel move to cuts in welfare, health care, etc. While military production-related employment cuts continue, however, the Clinton administration has retreated from more cuts in the military budget; at the same time we are seeing military technology bolstering police forces.

Companies have responded in traditional ways:

  • Companies are cutting labor costs through "smarter technology" -- in the case of High Tech, this has been through such developments as object-oriented software, computer-aided software engineering (CASE), and faster and cheaper computers. (As the head of Radius, a company that makes computer equipment, told the San Francisco Examiner recently, "We turn out (custom computer chips) with four engineers and a giant computer. That used to get done with 100 engineers. That's 96 engineers you don't need any more."

  • Companies are cutting labor costs by exploiting cheaper labor markets (made possible by high- -speed telecommunications). Emerging new low-wage high-skill labor markets include the former socialist countries of Eastern Europe, and India, Ireland and Mexico. Particularly in the case of companies caught in the shift to new architectures, tighter profit margins, and shrinking government subsidies, companies are dumping workers as sales drop or as profitability fails to live up to investors' expectations.

  • Companies are consolidating through mergers and buyouts (Aldus+Adobe and Novell+ Word- Perfect most recently, as well as various other partnerships). Companies realize savings by cutting unproductive (sales & marketing) labor costs especially, but also tech support workers, engineers, and the relatively few production workers where overlap occurs.

The cuts have been substantial. Domestic employment in the U.S. electronics industry fell for the fourth consecutive year in 1992. December, 1992 electronics employment was 2,291M or 99,000 (4.1%) less than the 2.39M reported for December, 1991. "The only industry segment that experienced growth in 1992 was Prepackaged Software, with a modest 2,270 new jobs. On the other hand, Defense/ Commercial Guidance Systems lost 30,000 jobs last year. With one exception, U.S. electronics employment showed no month-to-month growth for 30 consecutive months. Since August 1989, our industry has lost 309,000 jobs. And, when the industry's healthy software segment is removed from the total, domestic electronics employment dropped by more than 380,000 in the same period.[1]

That "healthy sector", prepackaged software, only employs about 150,000 workers -- about as many people who work in cement production.

One aspect of the shrinkage in the high tech labor force is the shift from full-time regular employment to contingent work -- temporary; contract and "consulting" work. This parallels trends in other industries (Manpower is supposedly the largest employer now), and is an integral aspect of the new "virtual corporation", where production is organized on a temporary, ad hoc basis, with workers being pulled together by capital as needed, and dispersed when projects are complete. The shock of economic contraction is shifted from the capitalist to the worker, as the worker must absorb training expenses, health insurance, and bear the cost of periods when no work is available.

The high tech workforce, especially in the weapons industry, has historically been a conservative bloc, consistent with maintaining their livelihood through inflated military spending. With the enormous job losses in that industry (an expected 1.2 million jobs in the 1992-1996 period, according to the Federal Office of Technology Assessment), there is a real danger of those workers drifting towards a fascist solution to the economic crisis. One example of this danger are the efforts of the Coalition for Visa Reform, founded last January. "Its goal is to reform the H1 visa program (and any other visa) so that technical professionals will not lose their jobs or see their pay reduced because of the cheap foreign labor being brought to this country."[2] The legitimate issue of pay equity for non-citizen workers is instead raised in the context of a nativist solution. CFVR focuses the problem on foreign workers taking jobs, instead of challenging a system that cannot provide productive the world's engineers. As more high tech work is exported to cheaper labor markets, and mobile lower-paid workers are brought in as temporary workers, "Buy American Labor" could become a popular rallying cry among unemployed engineers.

The communications sector, which overlaps with high tech work, has also been hit hard over the past three years. At the same time the "information super highway" is touted as a jobs savior, some 44,000 jobs were cut last year among the companies who have laid claim to building the "infobahn." According to the Communications Workers of America, the phone companies in particular have been eliminating union positions through automation (particularly among phone installers and operators), and transferring capital to non- union sectors of the industry, through acquisitions of related concerns (e.g., cable companies).

The privatization of information has resulted in the decimation of the public library system and the closing of library schools. The reality of trends in public librarianship belies government and corporate assertions of concern for equitable access to information.

Layoffs and other labor cutbacks especially affect workers over 40. As technical workers get older, their salaries rise, their skills age (Sun Microsystems expects 20 percent of its engineers skills to become obsolete each year [3]), and their willingness to sacrifice family and community for work ebbs. So these workers tend to bear the brunt of "restructuring", "downsizing", etc.

The job market for recent college graduates is also drying up. CFVR concluded, "[t] here are at least 50% more people entering the software programming labor market than new jobs being created. This amounts to an over supply of 22,000 workers or about 4.3% of the overall labor force."[4] These figures have been challenged, but the Institute of Electrical and Electronics Engineers (IEEE) recently found unemployment among electronic engineers to be the highest in more than a quarter century, and some 200,000 engineers were removed from U.S. employment rolls between 1991 and 1993.[5] IEEE also describes the jobs crisis as an international phenomenon. In addition, youth considering engineering or other high tech careers face the problem of getting into college in the first place, with state colleges raising tuition and closing down programs. [6]

The Digital Convergence

As electronics permeates production, the product of production assumes a digital format, a form that can be easily stored and transported electronically. "Digital format" means the symbolic representation of information as 1s and 0s, which can be converted into electrical or light pulses, and transmitted over wires and fiber optic cable; or through air and space as electromagnetic waves. Electronics-based machinery at either end of the transport system encodes and decodes the symbolic traffic, and renders it into material use values. There are numerous enormous cost savings achieved by the digitalization of products: savings in storage space required, in transmission time and cost, and in the application of computers to completely automate the processing and routing of the digital rendering. [7] Just as railroads and trucks were needed to carry the product of production in the industrial era, digital carriers are required to haul the product of electronic production in the electro

Every stage of technical development demands both transportation and a communication system that corresponds to that level of the productive forces. The Industrial Revolution was also a transportation and communications revolution, that is, one could not have happened without the other, as capital demanded better and faster means of coordinating production and circulating commodities and capital; and the manufacture of new communication and transportation systems, especially railroads, spurred industrial production to more and more sophisticated levels. [8]

The ubiquitous debate over the so-called National Information Infrastructure" (NII), also known as the "information super highway", must be examined in this context. As modern production increasingly shifts to a digital basis, as a natural consequence of electronics spreading through production, modern production demands a commensurate means of transportation and communication. Or to put it another way, to paraphrase Marx, the old means of communication and transport handed down from the industrial period have become unbearable trammels on Modern [i.e., electronics- based] Industry.

This process is most intensely affecting the information industries -- especially communications, entertainment (music, film, television and the hybrid "multimedia"), publishing, education, scientific research, financial services, and advertising. But the shift to "information-based" or "knowledge- intensive" production affects traditional manufacturing as well. Just-in-time production requires sophisticated information networks to work. Modern robotics-based production requires not so much assembly workers as computer operators to monitor the workflow. Designs and orders enter into the machinery through digital ports: "‘retooling' with the new "flexible manufacturing systems", simply means changing the software that guides the machines. The assembly line (hardware) remains unchanged. The robots, hardly pausing, begin exercising different actions in obeyance of the newly-loaded programs."[9] The production and circulation of goods is increasingly an information processing function.

The terminal phase in capitalism is being driven by the expulsion of labor from commodity production. Objectively, this manifests itself as rising global unemployment, and for those able to find a market for their labor power, falling wages. The increasing use of information technology in the context of intense global economic competition is rapidly eroding wages. In 1979, 12 percent of the full time workforce earned less than the "poverty wage", so-called because it is the amount necessary to support a family of four above the official poverty level ($13,000 in 1992 dollars). By 1992, 18 percent of the full time workforce was earning less than the poverty wage, an increase of 50 percent. Thus, of those workers able to find full time employment, one in five is not earning enough to support a family. [10] More >>

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