A recent study found that as companies spent big on software, older workers' wages decreased and their exits increased. So what does that mean for employers?
There are few capital investments that send older workers heading for the exits faster than new software. That’s one suggestion from a study co-authored by Kristina McElheran, assistant professor of strategic management at the University of Toronto. Published in the January 2022 issue of the Journal of Econometrics, “Twisting the demand curve: Digitization and the older workforce” notes that by 2019, spending on business software made up 33 per cent of the total share of spending in the U.S., up from five per cent in 1980. This reflects a big shift in investment from machines, typically run by humans, to software programs, which can increasingly automate cognitive work. So, where does that leave humans?
[This article has been reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management]