Assessing the future of work: Dick Samson, a researcher and thinker about the changing demographics of the workplace, talks about automation's long-term threat to employment and what steps could be taken now to address it.

How will the nature of work change in the coming decades? No one really knows, of course, but the advent of the information age suggests that more and more work will be done by machines, and less by their human masters. Already, much of the lingering crisis in job creation is being blamed on surging productivity-companies just don't need as many people to get the job done.

Richard W. Samson--he goes by Dick--is looking at this issue intently. As president of the EraNova (its tag line is "a new era through mind extension") Institute in Mountain Lakes, N.J., Samson has written a number of provocative white papers on the way automation and offshoring are imperiling the future of U.S. knowledge workers--including many in finance.

EraNova (www.eranova.com) is essentially a one-man shop, Samson says, with a few "loosely aligned" people working in telecommunications and related areas. Samson himself a lean, well-spoken man with a shock of white hair over wire-frame glasses that gives him a distinctly professorial air--has worked in recent years with companies like AT&T Corp., Cisco Systems, and CMG plc. Prior to that, he says, he worked in publishing and training, as well as for IBM Corp. in internal areas like decision analysis.

Samson contends that controlling the impact of automation on workers will require a large dose of corporate leadership, and minimal input from government. "I believe that America's corporate leaders will support intelligent changes in the playing field that do not disadvantage them with foreign competitors." Companies could tell government what they need, and government could then "tweak" solutions, he says.

A dozen or so people around the country, affiliated with corporations and universities, are allied with Samson in addressing these issues, he says. Currently, there's no funding, but an institute advisory board member is disseminating EraNova's research to the leading presidential candidates, asking them to think about it in terms of formulating their own economic plans.

Samson says he's alternately pessimistic and optimistic about companies' response to these issues and their apparent understanding of what is at stake--though he believes that most American corporations are led by "really good people" who "want to do what's right for their employees, their community and the country."

Samson sat down recently for an interview with Financial Executive. Here is an edited transcript of the conversation:

FE: How long have these job trends been in place--long before the bubble of the late 1990s? Were they accelerated by the bubble?

Samson: We have technology, particularly information technology, following the same kinds of trends that we had in the development of manufacturing. Heavy industry has fallen from about 40 percent [of the workforce] to about 17 percent, and showing signs of going down to about 2 percent, the same way farming has. Now, we've got the service sector with 83 percent of the workforce, but it's being looking at as one lump, as if it's all the same.

One of the things that's being proposed in [my latest] paper is starting to look at that sector as two forms. The first of those is very computerizable, taken over by electronic systems--and in the interim, by offshoring, because it's really an information technology issue. But step two is [taking the approach], why do you need to send it even there?

Simultaneously, we're seeing that job functions have been shrinking-the personal secretary is almost a vanishing breed, middle managers, travel agents, etc. It's even extending to chief information officers--do you really need one?

The question is, which jobs are eminently computerizable and which are not? The next step is to divide those jobs that are appropriate for people to do, as opposed to systems.

Then, with confidence and without destabilizing too many people too quickly, with all due speed offshore these kinds of jobs and totally automate them, while building up human capabilities in these other areas. We'll probably have to do other things, too, that if you proposed them now, people would say, "that's crazy."

FE: You talk of a collective effort involving a variety of existing institutions--business, government, academia, foundations. What would it take to get all of those people in the same room?

Samson: That's already starting, and there are people starting to think this way, at Stanford, Princeton, the Stevens Institute of Technology, University of New Mexico, Fairleigh Dickinson University. They're either starting to think along these lines, or they're saying, "We need to give more thought to these areas." You've got to put out an idea, and have somebody contest it. Even if we had one person now who had the elegant solution, that's isn't going to work, because you need the dialogue in order to say, "Okay, let's adjust it a little."

The academics are important. They do think long-term, and they're not concerned about the next quarter's profits. But a lot of them, especially in fields like economics and the social sciences, are tied right into industry.

There's no question that when Forrester [Research] says that it's not just a good idea to offshore, you must offshore, they're right. If this is the playing field and these are the rules, you need to do what's necessary to survive in the short term.

The basic cause of the problem isn't offshoring, it isn't productivity, but it's the transition that is powering both... We have a job-elimination type of productivity continuing on into the foreseeable future, with probably some recovery of jobs, but a longerterm trend of those computerizable jobs falling sharply.

FE: But, as you write, alternative jobs may not be comparable--they may in be the service sector, and the restaurant industry may grow, but that's not the same as being employed at IBM.

Samson: Exactly. Wal-Mart is something of a microcosm for what's happening in the world. Wal-Mart has a fantastically robust model of using modern technology to minimize costs, to do sourcing all over the world and keep its employment costs down. But the consequences are that the average worker there earns [relatively little], and only 38 percent have health care and benefits.

FE: You actually talk about redefining work in the context of what humans can do better than computers.

Samson: An example of that is in banking, where we used to have tellers that needed to be good on processes. Now, we've got ATMs and computerized systems, so we need fewer tellers. We've actually got banks now that have decided to create a different environment, with their own lounges and even their own coffee brand. So you go in there, and you sit at a terminal and you enjoy yourself, and the bank personnel are trained by folks who really know customer relations.

I did a study a few years ago on call centers, and [General Electric Co.] got an A-plus. Within three rings, a real person answers the phone. However, they've also got a fantastic computer system, and can answer questions on anything from light bulbs to the jet engines that GE makes. So, they do the surfing for you, but you've got this wonderful human presence. It's a wonderful marriage of the human and the technological.

FE: I was struck by the comment that we may be less than 5 percent into the loss of jobs created by electronic intelligence, in the long term. That's a very scary thought.

Samson: Yes, and that's because we are much less into the information age than many people think. It seems like we're in the middle, but in fact, if you look at projections such as those in Ray Kurzweil's book, The Age of Intelligent Machines, those [suggest] we may be only 1 percent in. Within the next 50 to 100 years, we'll start to see some things we can't even imagine now.

The definition of what a job is will be entirely different. There's one prediction that in about 2020, we'll have a peak of Baby Boom retirements, and we'll have a labor shortage. That doesn't affect the overall trends, but at that point, we may want to accelerate offshoring. But at the same time, we may want even more of an imperative to restructure U.S. tasks to emphasize the hyperhuman skills, the things you can't computerize, because people are more valuable and you've got to get more out of them.

FE: When you take this idea out 50 or 60 years, if we've redefined jobs and eliminated a vast number of jobs, it almost sounds like we'd need a welfare state. If we've saved so much through automation, and people can't work, we could have a welfare state where people who used to work don't have to work anymore.

Samson: That's one of the currently unthinkable things, because it sounds like paying people for nothing. If, at that point, enough wealth is being created by electronic systems, almost a robotic culture, then perhaps the only industrial role for people would be in starting new things, or new companies. It may be entirely automated, but your fun is in conceptualizing it and organizing and planning it.

FE: But isn't that confined to highly intelligent and highly educated people? The great unwashed multitude can't do that.

Samson: That's right. And so what does the great unwashed multitude do, and how do you compensate them? That's a question we need to address. Here is one straw answer: You don't want people multiplying at an [unacceptable] rate, so you need some form of voluntary population control. You also have a great need for people to follow the rules--not to engage in terrorism, not to steal, not to do antisocial things. If you're going to have a welfare state--paying people to do nothing--what you pay people for is to live by the rules.

FE: Would we still be educating people the same way, if we don't need people to be trained to join the workforce?

Samson: I would imagine that one of the incredible growth industries at that time would be the school systems and the universities. Long ago, Buckminster Fuller had the idea of scholarships in learning, where you had people learning for the same motivation you have today for astronomers or research scientists. They do it because they love it. They don't get paid a lot.

FE: Let's talk about offshoring. You've noted that there is actually a two-step process, of outsourcing people, and then the technology takes over, and it becomes almost pure automation. Can that happen in just a few years?

Samson: Look at one category of technology--Web services software--which has started automating transactions between companies to parallel the efficiencies already made within individual companies.... The ultimate goal is zero people. A really efficient Web services application should be able to function without any human intervention.

Well, you're always going to have a few people. Let's say you've outsourced 100 people in a department. Now, maybe you're going to need only 10, and they may be in India.

[This] can happen a lot faster than in farming or manufacturing, because in offshoring or off-peopling, you don't need to build new plants. You just transfer bits.

FE: Companies that are offshoring on a large scale will tout their efficiency gains, but they clam up when it comes to talking about how their domestic workforces are being impacted. Can they have it both ways?

Samson: They seem to be having it both ways now; it's doubtful that can continue for long. The unionization effort within IBM is an example, and we see new forms of unionization efforts all over the place.

It's amazing how little protest there is [now,] but logic has it that there's going to be a reaction, and probably a movement, unless top management takes the lead and figures out a winwin solution. You need to start developing the [necessary] intelligence and the awareness, and perhaps develop a pilot program, and talk to your employees and engage them, rather than being their antagonist.

FE: How can U.S. companies compete with offsourcing operations in India, let's say, which are so much cheaper?

Samson: Here's an example. I helped some of the researchers at AT&T Labs form a software company, when AT&T was downsizing. They have been bidding against Indian companies for IT contracts for large companies, and winning the contracts.

FE: But not on the basis of cost alone...

Samson: On the basis of cost. I'll tell you how they do it. The Indian bidder was offering $15 an hour for a project, where they were offering $80 an hour. And they won by convincing them that they were the lower-cost bidder. They did that by developing a proprietary technology that is extremely efficient, so that the final output code takes fewer hours, and the maintenance is less, the problems are fewer--it's less complex.

And that's the kind of thing that needs to be kept in the United States, the kind of software development where there's a high level of creativity and innovation, yet also takes costs into mind. [Then] offshore those things that are more of a commodity, where price is the factor.

FE: Some people in the outsourcing area suggest that offshoring may have been artificially accelerated by the weak economy, and that there will be jobs coming back into this country because of our own knowledge capabilities. What do you make of those arguments?

Samson: There's some truth to them. The overall trend, however, is enormous and inexorable. There's a structural change going on, regardless, that makes it a different ball game. The shift has been for electronic systems to do the head work, and it looks, from casual observation, like they can do all of the head work. They can do the calculations, they can make decisions, even structured decisions, faster and better than humans--until you look at social skills, creativity, entrepreneurship and one very important thing, and that is responsibility. It's hard to program that into a computer.