Longer hours, not technology, explains labor productivity advances

[Louis Proyect <lnp3@xxxxxxxxx>]

NY Times OP-ED, February 14, 2000

Working Better or Just Harder?

By STEPHEN S. ROACH

The United States ended 1999 on a truly spectacular note -- two consecutive
quarters of close to 5 percent growth in worker productivity, according to
government figures reported last week. The long boom, which many economists
attribute largely to growing productivity, seems to be moving into
uncharted territory. Little wonder, with each worker producing more and
more per hour, that inflation remains at bay, or that corporate earnings
and the stock market continue to surge.

Yet it doesn't take much detective work to uncover a troubling aspect of
the productivity miracle. In the late 1990's, productivity sped up fastest
in the service sector -- transportation, public utilities, trade, finance,
insurance, real estate, and a broad array of professional and business
services. And this is precisely the kind of work where traditional measures
of productivity may be least reliable.

Collectively, this segment of the economy employs 77 percent of the part of
the work force that is not in government or on farms. And, contrary to
stereotype, these people are not, for the most part, low-paid, unskilled
hamburger flippers. More than two-thirds of them are in white-collar jobs.
And nearly half of those -- managers, executives and professionals -- are
knowledge workers, the largest occupational category in America.

These people are central to the productivity equation. They are engaged
largely in cerebral tasks. These tasks take time -- and often plenty of it.

Yet you would never know that from government statisticians. The government
holds that the average workweek in the service sector is 32.9 hours; that's
no different than it was 13 years ago and is actually about five hours
shorter than in 1964.

I have long harbored the suspicion that these numbers are ludicrous.
Surveys by the Labor Department as well as by groups like the Harris Poll
suggest that people in these jobs work a good deal longer than the official
numbers imply. So does the anecdotal evidence all around us. The dirty
little secret of the information age is that an increasingly large slice of
work goes on outside the official work hours the government recognizes.

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The arithmetic of the productivity renaissance hangs together only if you
believe that the white-collar, knowledge-intensive service sector is at the
forefront of economic dynamism. But if productivity growth in the service
sector is as overstated as I fear, the arithmetic breaks down.

In looking back at the miracles in Asia before it fell into deep recession
in 1997, some have argued that the region's leap in productivity was "more
perspiration than inspiration" -- in other words, pushing people and
machines to their limits rather than discovering smarter ways to run
economies. Acceleration of productivity growth through hard work alone
isn't sustainable: people simply can't work harder and harder indefinitely.

That's a lesson that should not be lost on America and its brave new economy.

Stephen S. Roach is chief economist and director of global economics for
Morgan Stanley Dean Witter.

Full article at: http://www.nytimes.com/yr/mo/day/oped/14roac.html


Louis Proyect

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