Technology People and Productivity - The Steady Rise Of Productivity

This chart shows productivity — output per hour — steadily rising since 1947. In that 53-year period, productivity increased at a rate of nearly 2.5% a year. A look at various intervals shows that the growth in the early part of this period (1947-1970) was strongest; growth was weaker in the later decades (1970-1990), but shows signs of strengthening again (1990-2000) — especially in the last five years.

Period	% growth per year
1947-1950	5.08
1950-1960	2.83
1960-1970	3.22
1970-1980	1.84
1980-1990	1.70
1990-2000	2.07
1995-2000	2.64

There is growth in all periods when looked at in such increments. Productivity can drop, however. Note above the one period of recession highlighted (others are omitted). It makes a point. Output declined in the first period of the recession by 0.9 index points; hours worked increased by 0.1 index points. Consequently productivity fell 1.3 points. Adjustments in employment lagged the decline in output. Therefore slightly more hours produced less in the way of goods and services in the total Business sector, the private economy.

Productivity is the result of more output per person. If fewer people are employed, productivity rises. But employment has increased. The conclusion is that machines, new social arrangements, or some combination of these are making people more productive: they produce more value in the same time. Another factor is that economic activity as a whole may lift productivity in good times and depress it in others. A quick look:

• In the immediate post-war years, pent-up demand lifted the economy.
• The 1950s saw tremendous innovation in manufacturing — in all sectors but strongly centered in metals and metalworking, culminating in numerically controlled machine tools.
• The 1960s were a period of explosive developments in materials with plastics, perhaps leading the way supported by important innovations across the board in chemicals.
• The 1970s produced three recessions, the depth and end of the Vietnam war (1973), soaring inflation, and the oil crisis (1979).
• The late 1970s and 1980s saw the rise of the services economy — people-intensive and therefore less capable of leveraging a human hour into dollars. The period was also marked by another recession.
• Beginning in the late 1980s and continuing strongly since, small computers, communications (cell phones), and then the Internet combined to produce an unprecedented period of growth.

In the following panels, we shall take a closer look at this. What is the role of technology? We shall also take a look at the social factor: is labor being transferred to unpaid consumers?

Source: Bureau of Labor Statistics, U.S. Department of Labor, http://www.bls.gov/lpc/.