Productivity is a word you hear often in the fuzzy world of economics. Americans have drawn comfort from our traditional perch atop worldrankings in output per worker as measured in monetary value. he Bureauof Labor Statistics is even projecting a modest productivity gain of apercentage point or two again this year, despite a troublesomerecession.
But what is productivity, really? Half a centuryago, it was a snap to calculate the output per worker in automobiles oraluminum pans or bicycles by simply totaling the products' market valueand doing some quick division.
But now it's trickier,since we don't make so many tangible toasters and television sets andtrucks. We have become, largely, a service economy, that works moreout of offices and even our homes, and less along assembly lines. Howdoes one put a dollar figure on the output of a Web designer or acancer researcher or flight attendant? How do you piece together thevalue of toil by millions of part-time workers?
To increaseproductivity in the old days, companies could expand their factories,build new ones, or install slicker equipment. But hair stylists canbeautify only so many heads of hair, and professors can teach only somany classes. So the upward trend in U.S. productivity is slowing,while that of rapidly industrializing countries like China is spiking.
And American productivity is slowing as companies nudge older folks,who cost a lot to pay and insure, out of the work force. Youngerworkers are cheaper but less productive.
So a nation longaccustomed to productivity gains has its hands full trying to remainthe most productive place in the world.