Technology People and Productivity - Productivity As Reflected In Income -business

This presentation is like the previous one, but here the entire Business sector is charted. Please note that this sector includes Manufacturing. Corporate profits after taxes are added. Two things stand out. The productivity index (output per hour, 1992 = 100) is flatter. It grew at a slower rate, 2.2% a year versus 3.0% in manufacturing. Manufacturing presents more opportunities for automation. The average income per employee is lower, $36,630 in 2000, versus $44,950 in manufacturing. We are dealing here with a much greater part of the economy.

The table of growth rates is shown again, but this time the period used is 1958 to 2000 so that all series can be presented on the same basis; data for corporate profits after taxes in constant dollars are not available prior to 1958. Comparable data for Manufacturing are shown in the last column for all items except corporate profits.

Category	Compounded, annual increase, 58-00 (%)	Data for Manufacturing alone, same period (%)
Aggregate wages/salaries	3.0	1.4
Productivity	2.2	3.0
Wages/salaries per employee	0.7	1.0
Corporate after tax profits	3.8	-
Employment (not shown)	2.3	0.4

Noteworthy here is that aggregate wages and salaries grew at more than double the rate they did in manufacturing; this is explained by the much greater growth in private sector employment as a whole: this period saw the rise of the Services Sector. Productivity has grown at a slower rate because Business as a whole provides fewer opportunities for leveraging technology. Corporate after-tax profits outpaced all of the other indicators shown here. Once again, productivity and wages/salaries per employee diverge.

As manufacturing becomes a smaller percentage of the total economy, it might be logical to assume that productivity growth will flatten. In fact, as shown in an earlier section, productivity has been trending up again in the "second computer revolution" which began in the late 1980s. It may well be that the cyber world will bring productivity increases to the more labor-intensive Services sectors. For that to happen, corporate profits will have to produce the necessary capital. As shown in the graphic, profits are growing healthily. In the next and last panels in this chapter, we take a closer look at corporate profits.

Sources: Productivity data are from the Bureau of Labor Statistics, U.S. Department of Labor; wage and salary disbursement data and data on corporate profits are from the National Income and Product Accounts maintained by the Bureau of Economic Analysis, U.S. Department of Commerce; profits are normalized using the GDP deflator; employment data are from the Bureau of Labor Statistics.