Sorry to interrupt the mainstream media's daily deluge of bad news, but did anybody see the productivity numbers from BLS on Thursday? 2005.2's slightly weak number was revised upward, and 2005.3 came in at an annual rate of 4.1%. We're on track for a fourth straight year of over 3% growth. That is amazing. It's above the upper-bound forecasts of just a few years ago.
Series Id: PRS85006092
Duration: % change quarter ago, at annual rate
Measure: Output Per Hour
Sector: Nonfarm Business |
| Year | Qtr1 | Qtr2 | Qtr3 | Qtr4 | Annual |
|---|
| 1995 | -1.1 |
0.8 |
0.5 |
3.3 |
0.5 |
|---|
| 1996 | 3.9 |
4.2 |
1.1 |
0.6 |
2.7 |
|---|
| 1997 | -1.2 |
5.0 |
3.4 |
1.6 |
1.6 |
|---|
| 1998 | 3.2 |
1.2 |
4.5 |
2.1 |
2.8 |
|---|
| 1999 | 3.6 |
0.5 |
2.8 |
7.1 |
2.8 |
|---|
| 2000 | -2.0 |
7.2 |
-0.9 |
4.0 |
2.7 |
|---|
| 2001 | -0.4 |
5.6 |
1.5 |
6.5 |
2.5 |
|---|
| 2002 | 6.5 |
0.8 |
4.1 |
0.2 |
4.0 |
|---|
| 2003 | 3.1 |
6.6 |
9.6 |
0.8 |
3.8 |
|---|
| 2004 | 2.1 |
4.5 |
1.3 |
2.5 |
3.4 |
|---|
| 2005 | 3.2 |
2.1 |
4.1 |
|
|
|---|
Being in the tech industry, I would like to offer my insights into why this is happening.
You can credit the Y2K date bug. Rather than fix their 20 year-old systems for Y2K, most business elected to purchase new modern computer systems instead. These systems contained the latest in management, production and distribution control theory. It has been a slow process but these new systems have come on line and are bring huge productivity and efficiency benefits to our economy.
Posted by: Jake | November 04, 2005 at 10:49 AM
Productivity and GDP growth are great, no question. The huge problem is falling hourly wages.
To be fair, falling real hourly wages aren't politically relevant because hourly wage earners don't have the money to be significant campaign contributers.
Posted by: ptm | November 04, 2005 at 02:00 PM
I know this is hard, especially if you've never had to meet a payroll (I did this while borrowing short-term money at 21.5% back in the {shudder} Carter years), but long-term, you really cannot afford to pay hourly wage earners more than they're worth in terms of their productivity and the profit they bring in. If you do, eventually, no jobs for wage earners, and the business, and maybe you, are bankrupt.
If you don't believe this, I challenge you to put your money where your mouth is and start a business (or buy one, like I did) and overpay your wage earners. I especially would like you to use your retirement account for this just to prove how much you believe in your theory.
When I bought my business, it was failing slowly. It took 6 weeks to quietly figure out who the deadwood were and ease them out. I went from 16 wage earners to 11. I increased the pay of the 11 useful earners, and over the next few years constantly (every 6 months) increased their wages as they (and the company) became more profitable. I showed them the books: where the money came from, where it went, how much was available for them. As the numbers got better, they got theirs. I never overpaid them, but I never underpaid them either. That's not as easy as some seem to think.
Posted by: JorgXMckie | November 04, 2005 at 11:33 PM