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Saturday, March 06, 2010

Is productivity a sham?

By standard government measures, productivity has been increasing over time.  But is this all a sham, and we have really become less productive?

From http://www.nytimes.com/2010/03/06/opinion/06Tonelson.html?th&emc=th Tonelson and Kearns op-ed essay notes:

"Productivity measures how many worker hours are needed for a given unit of output during a given time period; when hours fall relative to output, labor productivity increases. In 2009, the data show, Americans needed 40 percent fewer hours to produce the same unit of output as in 1980.

"But there's a problem: labor productivity figures, which are calculated by the Labor Department, count only worker hours in America, even though American-owned factories and labs have been steadily transplanted overseas, and foreign workers have contributed significantly to the final products counted in productivity measures.

"The result is an apparent drop in the number of worker hours required to produce goods — and thus increased productivity. But actually, the total number of worker hours does not necessarily change.

"This oversight is no secret: as Labor Department officials acknowledged."

Just to note the obvious: if we're getting LESS productive, we're in even greater economic trouble than we think. In some large sectors, we clearly are getting less productive.  Health care is much more expensive per year of useful life than it used to be in the U.S. or than it is in other countries.