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August 1996, Vol. 119, No. 8
Technological breakthroughs in the computer industry have been dramatic. For example, musical birthday cards have more computing power than existed anywhere in the world, prior to 1950.1 In addition, computing power that once cost millions of dollars can now be had for hundreds. Gordon Moore, chairman of Intel, has stated: "If the auto industry had moved at the same speed as our industry, your car today would cruise comfortably at a million miles an hour and probably get a half a million miles per gallon of gasoline. But it would be cheaper to throw your Rolls Royce away than to park it downtown for an evening."2
The effects of technology on the cost and speed of computers have been as dramatic as its effects on employment in the computer industry. After the introduction of the world's first personal computer in 1975, the industry enjoyed many years of phenomenal employment growth. Between 1960 and 1984, employment in the manufacturing of computers and computer equipment rose by 259 percent,3 compared with a 74-percent increase in total nonfarm payroll employment. However, from 1984 to 1995, the computer manufacturing industry began to change, losing 32 percent of its work force. This is one of the swiftest declines in all manufacturing industries during this period. (See chart 1.) This article discusses some of the reasons behind this decline, which include a shift in focus from computer hardware to software, changing industry dynamics, international competition, and emerging technologies.
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1 John Huey, "Walking up to the new economy,"Fortune, June 27, 1994.
2 Engil Juliussen and Karen Petska-Juliussen, Computer Industry Almanac, 1994-1995, (Austin, TX, the Reference Press, Inc. 1994) p. 2.
3 Employment data used in this article are from the Bureau of Labor Statistics Current Employment Statistics (CES) program, a monthly survey of the number of employees on nonfarm payrolls, their earnings, and the hours they worked. This data is presented in the Bureau's publication Employment and Earnings.
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