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D12:   Demographics of the U.S. Information Economy
    By Paul A. Strassmann
    17 Pages
    Date Published: 02/2004
    Online Price: $6.95

Summary

The frequently used phrases about the “information economy”, the “knowledge economy” and the “digital economy” have little meaning with measures that would define what is included and what is excluded from such definitions.

The most frequently used indicator about the increased importance of information in economics is based on demographic data. Such data have the advantage that they are traceable with a reasonable measure of consistency over several decades. Demographic time series also allow making international comparison where they are used almost exclusively to map the transition from agricultural, industrial stages of historical development what is nowadays loosely labeled as an “information society” and sometimes with greater pretense as “knowledge society.”

The purpose of this paper is to shed some light on the problems associated with the use of occupational information as an indicator of advancement. Our purpose is to highlight the difficulties one encounters in using headcount and occupational classifications as proxies for assessing information economics.

The data presented here should be sufficient to suggest that the most frequently used economic indicators applied in judging gains in productivity (e.g. output per man-hour or sales per employee) or in benchmarking what are the “right” levels of spending on information technologies (e.g. IT spending per employee) are probably misleading. Employee-based ratios should be always questioned when used in comparisons involving firms or populations that have dissimilar economic structures, such as differences in the mix of employee skills, regional differences in wages, amounts of outsourcing and a disparity in how funds (and profits) are generated.

Table of Contents

Executive Summary5
U.S. Information Demographics6
Defining Information 6
Workforce Occupational Indicators6
Supply-Side Indicators9
Uses of Workforce and Supply Side Indicators14
Summary17

List of Illustrations

Table 1 – Management Occupation Show a Widespread Variance in Compensation7
Table 2 – Employment and Compensation Shares of the US Information Workforce8
Figure 1 – Managerial & Professional Occupations Show Highest Growth9
Table 3 – Views of Information Occupations10
Table 4 – Actual and Inflation-Adjusted Measure of IT Producing Industries11
Figure 2 – IT Investment Portrayed as Dominant Source of Total Investment12
Figure 3 – Personal Consumption of IT Small Relative to Corporate Uses13
Figure 4 – Bank Compensation Reflects Variability in Occupational Ratios15
Figure 5 – Firms in the Identical Business Show Different Average Compensation16

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