195. Productivity in the Recession and trends
August 3, 2009 § Leave a comment
From te fed in cleveland
Gains in labor productivity (output per hour) come from three sources: increasing the amount of capital per worker (capital intensity); increasing workers’ average level of skill, education, and training (labor composition); and a residual (multifactor productivity) that picks up economy-wide gains in knowledge and organizational methods not captured by the previous two effects. Only annual estimates are available for the breakdown in labor productivity. The post-1995 resurgence in labor productivity has been spurred largely by capital intensity and multifactor productivity. However, the growth for 2007 to 2008 was fueled more by capital intensity and a bit less multifactor productivity.
But the problem is, there is another source of labor productivity – fewer workers. Outsourceing, declinign wages, moves to part time employees, firing older workerss for younger cheaper ones, all play a role.
What is striking about the general approach of economists is that they pay attention to input and output but not to socially who owns and who is broke. In a system wherethe wealthier are getting wealthier this kind of analysis hides the fact.