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UNIT 9 TOPIC 4

A Changing Economy H E I M L E R S H I S T O R Y. C O M

THEME : Work, Exchange, and Technology

LEARNING OBJECTIVE : Explain the causes and effects of economic and technological change over time.

HOW DIGITAL TECHNOLOGY CHANGED THE ECONOMY

By the time the clock ticked over to the 21st century, America was firmly settled into the economic
demands of the digital revolution. And here we need to start with the advent of the
computer . This device had its origins in the United States in 1946 , and back then a computer
basically required a whole new wing to be built—they were massive.

But over the course of the 20th century, a series of technological innovations like transistors and then
microprocessors steadily decreased the size of the computer. By 1977 the computer
was so small in comparison to its ancient, mid-century relatives, that Apple created a
computer for use in the home . IBM followed suit in the 80s with the production of PCs and
by the time the decade came to an end, personal computers were in nearly every workplace.

In the 90s, the widespread use of the Internet changed everything yet again. The internet was
originally conceived of as a series of interconnected computer pages that could be accessed all over the
world by dialing in to the network .

SUMMARIZE the notes above in your own words. (2-4 sentences)

The technological innovations entering the 2000s included personal computers and the growing use of the Internet.

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UNIT 9 TOPIC 4

A Changing Economy H E I M L E R S H I S T O R Y. C O M

THEME : Work, Exchange, and Technology

LEARNING OBJECTIVE : Explain the causes and effects of economic and technological change over time.

EFFECTS OF THE DIGITAL REVOLUTION

Computers and the internet dramatically altered many aspects of American life, especially with
respect to the workplace and the economy .

Email became the digital replacement for letter writing and handwritten memos. File-sharing
programs like Napster, which allowed people everywhere to share digital music files, quickly became
ubiquitous and it forced the music industry to completely alter the way it did business.

Additionally, the internet had a major impact on the news and media industries
who struggled to digitize their content for the new age. Additionally, thanks to sites like
Amazon.com Americans could now purchase goods remotely and have them
deliver to their door, which had the effect of driving many brick-and-mortar stores out
of business.

The impact of all of this on the economy has been a subject of debate. On one hand the digital
revolution led to an increase of productivity starting in 1995, which is a good indicator of the
overall health of the economy. This increase was primarily attributed to the speed with
which communications across the globe could be handled in the internet age. On the other hand, this
increased productivity has not led to a dramatic increase in standards of living that economists would
have expected. One of the major reasons for this is the changing nature of work in the digital age and a
growing income gap .

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UNIT 9 TOPIC 4

A Changing Economy H E I M L E R S H I S T O R Y. C O M

THEME : Work, Exchange, and Technology

LEARNING OBJECTIVE : Explain the causes and effects of economic and technological change over time.

SUMMARIZE the notes from the previous page in your own words. (2-4 sentences)

Technology transformed the workplace, making email the prime form of communication. It increased productivity, but
did not lead to a dramatic increase in the standard of living because the nature of digital tools in jobs created an income
gap. Everyday life changed for Americans too as Amazon and online shopping put many brick-and-mortar stores out of
business.

MANUFACTURING JOBS DECREASE, SERVICE SECTOR INCREASES

In the late 20th century and early 21st century, manufacturing in America has declined
sharply while the service sector has increased sharply. Since the 1980s there has been
a steady decrease in American manufacturing as that task has increasingly been outsourced overseas,
especially China .

Because of free-trade agreements like the General Agreement of Trade and Tariffs signed in 1994,
it has become far easier to outsource manufacturing to countries who will do the work for much
less than their American counterparts. One major result of this transfer of manufacturing work out
of America is the decline of American labor unions . In 1954 there were more
workers in labor unions than at any other time, and in that year 35 % of all workers were involved in a
union. Today, it’s a little more than 12 %.

A major blow to unions occurred in 1981 when president Reagan worked to get striking air
traffic controllers fired. This action essentially broke their union, and this is consistent with Reagan’s
economic policies. Remember, he was a supply-side economics guy which means in
this case he was standing up for the supply side, which is to say, the airline industry , over against the
demand side, which is to say the airline workers.

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UNIT 9 TOPIC 4

A Changing Economy H E I M L E R S H I S T O R Y. C O M

THEME : Work, Exchange, and Technology

LEARNING OBJECTIVE : Explain the causes and effects of economic and technological change over time.

MANUFACTURING JOBS DECREASE, SERVICE SECTOR INCREASES cont’d.

As the manufacturing sector was in decline , the service sector was rising to take
its place. The manufacturing sector makes stuff. The service sector provides intangible
products like education , legal services, food service operations, etc.

As of today, about 71 % of American jobs are in the service sector.

All of these changes have had a tangible effect on the increasing gap between the wealthy
and the middle class. Over the course of this period real wages have essentially stagnated
for the working class. Between 1979 and 2007 the top-earning 1% of American households have seen their wealth
grow by 275 % while the middle 60% of earners have seen their incomes rise by 40 %. Partly
this has to do with the outsourcing of high-paying manufacturing jobs and the rise of low-wage
service sector jobs. And partly it has to do with the restructuring of the tax code begun
under Ronald Reagan which has privileged the earners in the top 1%.

SUMMARIZE the notes above in your own words. (2-4 sentences)

Manufacturing jobs in America decreased as it became cheaper to outsource manufacturing into other countries, most
notably China. Jobs in the service sector grew to aboud 70%. There was an increasing gap between the wealthy and the
middle class, partly because of Reagan's tax cuts.

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UNIT 9 TOPIC 4

A Changing Economy H E I M L E R S H I S T O R Y. C O M

THEME : Work, Exchange, and Technology

LEARNING OBJECTIVE : Explain the causes and effects of economic and technological change over time.

RESPOND to the learning objective with an evidence-based, argumentative thesis.

LEARNING OBJECTIVE : Explain the causes and effects of economic and technological change over time.

The technological advancements made going into the 21st century increased productivity. However, the income gap
between the upper and middle class increased. Service sector jobs became the most common in America by a wide
margin, while manufacturing was largely outsourced to other countries.

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