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Reaping Productivity's Payoff
No matter how much we focus on
work and jobs, an economy’s true test lies in
how well it provides for the vast majority of consumers.
Even the most spectacular advances in productivity would
be hollow if they didn’t translate into better
living standards.
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As they get richer, most societies
move down a list of priorities. We first take care of
the basics of food, clothing and shelter. We then move
to furniture, transportation, health care, and a long
list of other goods and services. At some point, most
of us begin to prefer nonmaterial benefits, ranging
from leisure time to a cleaner environment. The richer
the society, the more likely it will take productivity
gains as something other than more consumer goods.
As output per hour has increased
steadily over the years, we’ve taken plenty of
our added productivity as material gains—more
cars, bigger and better-equipped houses, an abundance
of goods and services. We consume more than any other
nation, but we’ve sacrificed some potential consumption
to take at least part of our productivity gains in other
ways.
For example, we work less. Over
the past few generations, the typical worker has gone
from a six-day workweek with little vacation to an average
of 34 hours plus three weeks off. Anecdotal reports
suggest that Americans have begun working longer hours
in recent years, but the trend doesn’t show up
in the systematic studies of how we use our time. Neither
Department of Labor surveys of work hours nor University
of Maryland time diaries find lengthening average workweeks.
Statistics measuring productivity
capture added output and the shorter workweek. Still
other ways of capitalizing on greater productivity don’t
show up in the numbers, largely because they aren’t
fully accounted for in gross domestic product. Unmeasured
payoffs of productivity include better working conditions,
new products and greater variety. All improve living
standards, and all ultimately derive from increased
productivity:[1]
- Compared with what previous generations experienced,
modern workplaces are safer, cleaner, quieter and
less crowded. Employers, aware that happy workers
are more productive, offer relaxed dress codes, flexible
work schedules and other extras not included in GDP.
- Today’s Americans pack cell phones in their
pockets, pull in television signals from outer space
and shop the world over the Internet. Our daily lives
are filled with new and better products, improving
life by more than the GDP numbers indicate.
- We’re also enjoying a dazzling diversity
of goods and services in the marketplace, an array
of sizes, colors and flavors—yet the explosion
of consumer choice barely shows up in GDP.
Commerce Department statistics
show the U.S. economy has been doing very well in becoming
more productive. In reality, it’s even better.
The numbers capture productivity’s contribution
to greater consumption and leisure, but they miss the
gains we’ve achieved in other areas.
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