Work's next leap forward

During lunchtime at SAS Institute, a large software company here, you can play soccer, take a swim, work out with your personal trainer - or just grab a gourmet lunch. The fresh-baked red tilapia (a mild South African fish) is to die for.

SAS employees send their children to subsidized Montessori day care and the free onsite health clinic. At a discount rate, professionals on this tree-lined 200-acre campus will clean workers' cars, change their oil, give them a haircut or a massage, and do their dry cleaning. The idea: By bringing amenities on campus, employees will have less incentive to leave during the day and more incentive to work.

Welcome to the workplace of the New Economy, at least one version of it.

Ever since the dotcom bubble burst, the New Economy has looked rather dubious as a vision for the future.

Indeed, some of the hoopla proved illusory. But the same technological, economic, and demographic forces that over-enthused Wall Street during the 1990s are still grinding away. And over the long term, they promise to transform the way Americans work.

While it's unclear what the workplace will look like, say, a decade from now, New Economy advocates are beginning to spot the building blocks of the future. American workers will get better pay, fewer will hold dead-end jobs, and education will remain key to advancement, despite periodic bouts of unemployment.

One more tantalizing possibility: Americans may work fewer hours than they do today.

"We're moving to a more meritocratic society," says Rob Atkinson, director of the technology-and-New-Economy project at The Progressive Policy Institute, a Washington, D.C., think tank affiliated with the Democratic Leadership Council. And "the main impact Americans will feel is [that] they're going to be wealthier. If productivity rates grow 1 percent faster in the next 40 years, the average American will earn $41,000 more than if growth of productivity continued at the pace of the 1970s and '80s."

Not everyone agrees with that assessment. "In terms of making life better for workers, I actually don't see that," says Jeffrey Pfeffer, professor of organ- izational behavior at Stanford University. Even during the boom, "many of the New Economy companies didn't treat their employees very well."

Nevertheless, some trends are beginning to take shape here in the tech-heavy Research Triangle region of North Carolina that suggest some workplaces are already evolving into New Economy employers. While some perks of the recent dotcom boom have all but disappeared (think midnight foosball and pets in the office), others remain. These range from the superficial (free snacks) to the substantial (high-paid jobs and good benefits).

That's one reason the region's median household income ranks above the national average. SAS, in particular, showers employees with full health benefits, a help staff ready to assist with everything from adoption to caring for elderly parents, and all the soft drinks and M&Ms employees can consume. (The company buys more than 20 tons of the coated candies a year.) As the world's largest privately owned software company, with 98 of the top 100 companies in the Fortune 500 buying its business-intelligence software and services, it can afford to pamper its workers.

"Our motto has been stability," says Jeff Chambers, the company's director of human resources. "We don't try to go after people who are going to be here two to three years.... How can you have a long-term relationship with your customers if you are not going to have a long-term relationship with your employees?"

That attitude has kept turnover low. Fewer than 5 percent of workers have left in any one year. Professor Pfeffer estimates SAS saves at least $60 million a year by retaining so many of its employees.

During the high-flying '90s, the company's conservative style looked out of date. Jeff Polzin, a systems developer for 18 years at SAS, decided to look for a new challenge at Cisco Systems, one of the darlings of the high-flying '90s. Nine months later, he was back at SAS.

His motive speaks volumes about the New Economy. Cisco's software proved much harder to debug than SAS's, because technical procedures took hours that at SAS had taken minutes. Such barriers made Mr. Polzin feel unproductive - a big no-no for New Economy workers.

"I came back and I felt energized," he says. "I did more in three weeks [at SAS] than in nine months at Cisco."

Improved productivity underpins the New Economy optimism. As firms reorganize themselves to take advantage of information technology, they'll become more efficient and profitable, the theory goes.

That's why, even during the recession and the agonizingly slow recovery, the US has managed to grow faster than in previous recessions, New Economy optimists speculate.

"When digitization hits an industry, it's kind of like a hurricane hitting a town," says W. Brian Arthur, economist at the Santa Fe Institute in Santa Fe, N.M. "It flattens a great deal but it [also] changes that industry completely." The computerizaton of genome research, for example, is already transforming the medical industry, he points out, and much more change lies ahead.

Another key underpinning of the New Economy: demographics. Optimists say the demand for labor will outstrip the supply, allowing workers to demand - and secure - more engaging work. "Certainly in the next 20 years we will be able to shift a lot of workers out of low-skilled information jobs to much better paid, more interesting jobs," says Dr. Atkinson of The Progressive Policy Institute.

That doesn't mean an end to dead-end positions. Federal statistics suggest that half of the 12 occupations expected to grow the fastest by 2008 pay poverty-level wages or less for a family of four, the AFL-CIO points out. For the foreseeable future, computers look unlikely to perform all the tasks of janitors, cashiers, and other low-paid workers.

"There's an awful lot that humans do that we can't explain in rules" that computers understand, says Frank Levy, professor of urban economics at the Massachusetts Institute of Technology in Cambridge. But he sees computerization creating more educated jobs than low-end, poorly paid positions. "The question is whether the workforce will be educated enough to take those jobs."

The New Economy won't simply demand high levels of education. It will require the right kind of education. Some workers in North Carolina are already finding that a computer or engineering degree no longer guarantees a job. (See story, opposite page.)

Among people who are employed, it's not clear whether the New Economy will mean more work or less. With such creative work to do, employees may log more hours at the office. At Red Hat Inc., a well regarded software company in nearby Raleigh, engineers typically work 50 hours a week.

And because not all the work happens onsite, employees may end up devoting more time to their jobs by slipping upstairs to their computer after dinner.

Red Hat not only allows employees to work from home, it has even hired some employees sight unseen, based on their software-engineering reputation online. On the other hand, New Economy optimists like Atkinson foresee pressure for a shorter work week.

Jan Payne, SAS's elder-care coordinator, represents this second kind of worker. She already keeps her hours down to the minimum 35 per week. "Jan is extremely selfish with her time," she says about herself.

Many compare SAS to IBM's workplace 30 years ago - with one major difference.

"IBM was much more hierarchical," points out Pfeffer of Stanford. "The story of SAS Institute is not just about its benefits and its employees." The company has maintained a much flatter, leaner organization in which ideas and creativity - and free M&Ms - flow easily.

• This is the third installment in an occasional series. Part 2 ran Sept. 30. Part 1 ran Sept. 9.

RALEIGH, N.C. - On a recent Wednesday morning in the basement of St. Andrew's Presbyterian Church in Raleigh, some 60 unemployed workers gathered to network and boost one another's spirits. They listened to a speaker, listed accomplishments of the past week, and shared leads.

The twist: Most of them have the kind of technical education that in the past would have kept them on the job.

Of the five men gathered at one table, four had bachelor of science degrees in engineering, communications, or accounting. Yet they averaged nearly seven months without a full-time job.

The New Economy, in other words, probably won't eliminate unemployment.

If North Carolina's Research Triangle region represents a peek into the future, even highly trained technical workers will go jobless if their specialty falls out of favor. Here, the debacle of the telecom industry has thrown thousands out of work.

In two years, the region's unemployment rate has quadrupled. Telecom giant Nortel has let go nearly half its 7,000-strong workforce. Residents with a dark sense of humor have started referring to Research Triangle Park as R.I.P. instead of R.T.P.

"There's no loyalty and security anymore," says Jim Russell, an accountant. So "you had better stay connected with people all the time in maintaining relationships."

"I wish it weren't this way, but the rules of the game have been redefined," adds Doug Greene, who started with IBM in the 1970s but lost his job there in 1994 and has since held several positions. "I have to live by the new rules or die."

Those no-loyalty, hire-and-fire rules fly in the face of the employee-friendly companies, such as SAS Institute and Southwest Airlines, which try to nurture workers.

And even if employee-friendly companies eventually win out, that's scant comfort for today's unemployed, especially older workers.

"All I'm trying to do is find a way to fit in and make enough money to retire," says an engineer worked for two start-up computer companies that went under.

The first time it happened, jobs were plentiful. This time, they're scarce, as even established companies close their doors.

"I tell people I used to have to work for a company for a couple years before they'd close," the engineer quips. "Now, all I have to do is send in a résumé."