Doing a Job on Labor

A Harvard economist finds that the Internet's impact on the workplace is substantial -- and mostly for the better

The Web may not have made the Old Economy obsolete. But it has profoundly affected labor markets, according to a study by Richard B. Freeman, a Harvard University economist.

Using government survey data from 1998 through 2001, Freeman found that workers who used the Internet on the job worked 5% longer hours than those who didn't, other things being equal. That doesn't include the extra time that people spend checking into work from home over the Internet. Freeman said there's no way to tell whether the extra hours worked are productive.

Freeman also found that people who use the Net at work get paid more. But with Internet usage widening to all types of jobs, he predicts this difference will eventually disappear. And there's no doubt that Net usage at work is picking up steam. In 2001, 41% of all workers 18 to 65 used the Net, compared with 17% in 1997.


  Freeman goes on to predict that the Internet will allow more cross-border connections between job seekers and job offerers. "A person in Russia or India has the same access to job listings as a person in Detroit," says Freeman of Internet-based recruiting. At the same time, the Web lets workers commute to work virtually. So a Russian could accept a job in the U.S. without moving there.

In the future, companies may stretch the time it takes them to make a decision about hiring, Freeman says. Since they know they have access to a larger pool of labor through the Net, waiting to find the perfect match might make sense. But for European labor markets, which are far less mobile than those in the U.S., Freeman believes the way the Net tears down borders will outweigh the effect of companies waiting for the right match. That could lower unemployment in Europe.

Labor unions' recruiting and communications with members have also become much more efficient thanks to the Internet, argues Freeman. The National Writers Union, for example, gets one-third to one-half of its new members off the Web. That means unions don't have to pay expensive union reps to reach workers.

Since their Web sites are accessible to nonmembers as well, unions can broaden their influence through information dissemination. Union Web sites publish information about laws that affect workers' rights. Over the Internet, nonmembers can learn about their rights and forward the unions' agenda independently, says Freeman.

By Peter Coy in New York

Before it's here, it's on the Bloomberg Terminal. LEARN MORE