More IT means lower salaries for uneducated workers

By Casey Johnston | Ars Technica June 28, 2010

If you don't have enough education, information technology can have a negative impact on your salary, according to a research paper published this week. A study on the education level of workers in Hong Kong and the penetration of IT in their fields showed that IT can lead to higher salaries—but only for highly educated individuals. Contrary to previous research, scientists found that IT has actually depressed the salaries of many less-educated workers.

The authors of the paper suggest that retraining programs for unskilled workers are in order. However, computers are replacing workers at more and more complicated tasks, and eventually it may be skilled workers that need to make sure they are able to adapt to new technologies, lest they be displaced by them.

Research on the economic interaction between the use of IT and education has been fairly limited so far, but one study in 2003 did find that IT seemed to have beneficial effects to some degree on all workers' salaries, from construction workers to bankers. To refine the picture a bit more, another group of researchers decided to look more directly at IT's interaction with education, and took metrics from Hong Kong's 2006 census on salary, education level, and the penetration of IT technology in various industries.

The data showed that the penetration level of IT and its interaction with education did have a beneficial effect on salaries. Highly educated individuals will earn much more money in an industry with high IT penetration, like finance or community and social services, while a low-education, low-IT field like construction gets only a small bump.

But those small bumps can be outweighed with increasing IT involvement. 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.

The authors of the study recommend that governments establish a system to provide retraining to workers left in the dust by computers. They also advocate for a push towards more complex reasoning, problem solving, and critical thinking in education. They note that giving the tools of skilled workers to all workers may help everyone work in tandem with computers, instead of getting replaced by them.

However, we wonder how much longer workers will be able to overcome this problem by applying more critical thinking and problem solving ability. Computer scientists are hard at work developing these skills in computers themselves, and it's not beyond the realm of possibility that computers, once they've conquered unskilled work, will move on to more skilled tasks. For example, video store clerks and their (sometimes) insightful recommendations are on deck to be fully eclipsed by services like Netflix.