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How Computers Are Creating
the Next Job Market
Frank Levy and Richard J. Murnane
RUSSELL SAGE FOUNDATION
New York
PRINCETON UNIVERSITY PRESS
Princeton and Oxford
Copyright © 2004 by Russell Sage Foundation
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Published by Princeton University Press,
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and Russell Sage Foundation,
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All Rights Reserved
Second printing, and first paperback printing, 2005
Paperback ISBN-13: 978-0-691-12402-5
Paperback ISBN-10: 0-691-12402-7
The Library of Congress has cataloged the cloth edition of this book as follows
Levy, Frank, 1941–
The new division of labor : how computers are creating the next job market /
Frank Levy and Richard J. Murnane.
p. cm.
ISBN 0-691-11972-4 (cl. : alk. paper)
1. Labor supply—Effect of technological innovations on. 2. Labor supply—Effect of
automation on. 3. Computers—Social aspects. 4. Employees—Effect of automation on.
5. Automation—Economic aspects. I. Murnane, Richard J. II. Title.
HD6331.L48 2004
331.1—dc22 2003065497
British Library Cataloging-in-Publication Data is available
This book has been composed in Dante
Printed on acid-free paper. (cid:1)
pup.princeton.edu
www.russellsage.org
Printed in the United States of America
3 5 7 9 10 8 6 4 2
CONTENTS
Acknowledgments vii
CHAPTER 1
New Divisions of Labor 1
PART I
Computers and the Economy
CHAPTER 2
Why People Still Matter 13
CHAPTER 3
How Computers Change Work and Pay 31
PART II
The Skills Employers Value
CHAPTER 4
Expert Thinking 57
vi CONTENTS
CHAPTER 5
Complex Communication 76
PART III
How Skills Are Taught
CHAPTER 6
Enabling Skills 99
CHAPTER 7
Computers and the Teaching of Skills 109
CHAPTER 8
Standards-Based Education Reform
in the Computer Age 131
CHAPTER 9
The Next Ten Years 149
Notes 159
Index 169
ACKNOWLEDGMENTS
MANY PEOPLE HELPED US DURING THE YEARS THAT WE
worked on this book. First and foremost, we thank our friend and col-
league David Autor, professor of economics at MIT. David has had a
long-standing interest in the impacts of computers on work. In the sum-
mer of 1998 the three of us met regularly to develop an understanding of
the types of tasks computers can and cannot perform well. Our discus-
sions produced both a good part of the theory that underlies this book
and a large joint empirical project in which David led the way. This work
resulted in an Autor, Levy, and Murnane article published in the Quarterly
Journal of Economics in 2003. A nontechnical discussion of much of the
evidence in that article is presented in chapter 3 of this book. David also
read an early draft of our manuscript and provided comments that were
critical to sharpening our arguments.
Thanks go also to Randy Davis and Peter Szolovits, professors at
MIT’s Computer Science and Artificial Intelligence Laboratory. Starting
in early 1998 they answered our beginners’ questions with great pa-
tience, a patience that eventually allowed us to grasp what they were
telling us.
We have an equally large debt to the Alfred P. Sloan Foundation and
the Russell Sage Foundation, which provided most of the funding for the
research. Hirsh Cohen of Sloan and Eric Wanner, President of Russell
Sage, both took a risk that two labor economists, without a long com-
viii ACKNOWLEDGMENTS
puter track record, could ultimately learn how computers were reshap-
ing work. As our work moved into cognitive psychology, Wanner, with a
Ph.D. in cognitive psychology, served as a frequent sounding board,
pointing out pieces to read and ideas to explore. We hope both men
believe their risk has paid off.
Additional financial support for the project came from MIT’s Indus-
trial Performance Center and the MIT-Ford Motor Company Research
Collaboration. Levy received other funding from the Daniel Rose Chair
in Urban Economics and a one-month fellowship at the Rockefeller
Study Center in Bellagio, Italy, and Murnane received support from the
Juliana W. and William Foss Thompson Professorship for Education and
Society, and from the Spencer Foundation.
The research would not have been possible without people who gave
us access to observe in their places of work. They include Gary Abate
and Roger Perron, Tom and Rozann Buckner, Andy Cooper, Mary Russo
and the teachers at the Murphy School, Jim Soltis and his colleagues at
IBM, John Behrens and his colleagues at Cisco Networking Academies,
and managers and employees from “Cabot Bank” and “Medford Orbit.”
Boeing and Fannie Mae also provided useful information.
Other people who helped us by explaining the nature of their work
and how computers were affecting it include Tim Guiney, Elliott Mahler,
Stephen Saltz, and Jeff Silver. Joan Buchanan provided valuable insight
about computers’ effects on healthcare.
As our theory was taking shape, we faced the problem of how to tell
our story in a way that would be accessible to interested readers. A
number of people gave good advice in this regard, including Gene Bar-
dach, Atul Gawande, Chuck Herz, Nick Lemann, Florence Levy, and
David Wessell. Special thanks go to Flip Kissam, a professor of law at
the University of Kansas, whose broad outlook on life enabled him to
dream up the right title for an economists’ book.
Still other people read parts or all of draft manuscripts to help cor-
rect issues of substance. They include Rosemary Batt, Michael Feuer,
Kurt Fischer, Patricia Graham, Ellen Guiney, Neil Heffernan, Jed Kolko,
Ellen Lagemann, Richard Lester, Richard and Katherine Nelson, Paul
Osterman, Edward Pauly, Thomas Payzant, James Rebitzer, Christine
Sanni, and Robert Schwartz.
ACKNOWLEDGMENTS ix
Several graduate students helped us with research for the book. Thanks
go to Anne Beamish, Isabelle Fernandez, Melissa Kearny, Cynthia Perry,
Hani Shakeel, and Nancy Sharkey.
Kathleen Donovan, a reference librarian at Harvard’s Gutman Li-
brary, tracked down numerous references for us, in some cases antici-
pating what we really wanted to know before we understood it.
We thank Peter Dougherty, the social science editor at Princeton
University Press, his colleague Tim Sullivan, and Suzanne Nichols of
the Russell Sage Foundation for pushing us to clarify the book’s mes-
sage and shepherding the manuscript to publication.
Richard Murnane’s secretary, Wendy Angus, patiently kept track of
the multiple versions of chapters and made sure that the right versions
were sent to readers and to Peter.
We dedicate this book to our families. Our children, David, Marin,
John, and Daniel, would tease us about this book’s movie rights, but
their good humor (most of the time) kept us going. Florence Levy gave
us good skeptical questions and a mother’s encouragement. Most of all,
we thank our wives, Katherine Swartz and Mary Jo Murnane, for shar-
ing their lives with us and for always being there for us.
