The Productivity Boom
RedState reports that non-farm economic productivity has skyrocketed in the last four years - an astonishing 17%. The previous high-water mark was 12.8% for 1961 - 1960. Why is this important?
Productivity is a key factor that determines whether living standards are improving. Productivity gains allow companies to pay workers more from their increased production without having to increase the price of products they sell, which would fuel inflation.
Productivity, by itself, is not a pure measure of economic well-being. For example, one was productivity can theorectically rise is is 8-hour workdays suddenly become 12-hour workdays. If workers put in 50% more labor, then total productivity will see a corresponding increase. (To examine the practical pitfalls of this theory, just try working 12-hour days without a break sometime. Does your productivity go up or down?)
One likely reason for productivity gains is the maturity of information systems in the workplace. Increased access to information about themselves and others make companies more efficient and more productive. Increased access to information and information networks also enables new forms of business that might not otherwise have existed previously. The new systems also create opportunities for products that did not previously exist.
Our economy has begun to harness these networks and systems in 2001 - 2004 in ways that generally improve our standard of living. As this trend continues - and it is likely to continue for some time - our productivity will continue to grow at a much faster rate than ever before. Much of this productivity translates directly into greater availability of goods and services, increased competition for consumer dollars, and new sources of income for workers. The demands of productivity increases mean more focus on efficiency, higher standards for workers to meet, and a growing disparity between the value of high-skill workers and low-skill workers.
Things are just starting to get interesting around here.
Great article!
Do you know if there is any research available describing how productivity translates into lives saved? Seems to me that there is entirely too much emphasis on safety these days, at the expense of productivity. While safety does save lives, so does productivity, and it seems to me that the maximum number of lives saved can only be achieved through a rational balance of safety and productivity. Any ideas on this?