Select > Modify > Contract

This script also works for contracting selections that touch the edge of the canvas.

http://morris-photographics.com/photoshop/scripts/contract-selection.html

MTSTUNER

Note that the tutorial does not use Select All - just a selection in the middle of the image.

Withe CS4, Adobe inexplicably changed the behavior of selections that touch the document bounds.There is a work-around for this: With your selection active, enter Quick Mask mode, and Select > Load Selection, using the Quick Mask channel. If the selection is from Select All, you can just Select All again.

Edit > Stroke, using 'Inside' and the amount you wish to contract by for the width. The color needed for the stroke depends on if you have Quick Mask set for "Indicates masked area" or "Indicates selection". Deselect, and return to Standard Mode. The selection will now be contracted.

Noel: It was probably the same person who thought the tabbed workspace was a good idea.

That command only applies to Selections.

If there is no active selection it will not work.