Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 6, 1992 TAG: 9202060129
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
PRODUCTIVITY BARELY ROSE LAST YEAR
The productivity of American workers barely rose in 1991, the government said Wednesday, as the nation struggled to shake off recession sluggishness and meet competition from Japan and Europe.Productivity - a measure of output per hour of work - grew 0.2 percent for non-farm workers last year. The measure fell 0.1 percent in 1990 and dropped by 0.9 percent in 1989.
Economists said the lackluster productivity growth had less to do with laziness - a recent criticism by Japanese officials - and more with the natural fluctuations during the business cycle, the inability of debt-laden corporations to invest in modern equipment, poor management, demographic trends and the educational decline.
Productivity nearly always slacks off as the economy enters a recession, as it did in July 1990. That's because sales and factory production fall faster than businesses can trim their payrolls.
The reverse occurs when recoveries begin. Businesses are reluctant to begin hiring again until they are sure sales and production gains will be sustained. Therefore productivity rises faster than average.
"The fact that the economy was able to crank out productivity when we were struggling to get out of recession, I find promising," said economist Maury N. Harris of PaineWebber Inc.
Other analysts, however, said that even after discounting the effects of the business cycle, productivity gains still were too slight to sustain robust, non-inflationary economic growth.
"I wouldn't go overboard and say it's getting worse, but the fundamental problem we've had for a long time is probably still in place," said economist Lawrence Chimerine, senior adviser to DRI-McGraw Hill, a forecasting firm in Lexington, Mass.
Annual productivity growth averaged 2.4 percent in the 1960s, 1.3 percent in the 1970s and 0.8 percent in the 1980s.
William Dunkelberg, dean of the business school at Temple University in Philadelphia, said demographic trends contributed to the decline but should help increase productivity in the 1990s.
The maturation of the Baby Boom generation and the increasing proportion of women working outside the home swelled the labor force. Businesses sometimes had difficulty absorbing the new workers and putting them to productive use, he said.
But the work force is expected to grow much more slowly through the end of the century, forcing companies to work smarter.
Dunkelberg said U.S. businesses should take a lesson from the Japanese practice of giving more decision-making power to production workers.
"It turns out that workers are great problem solvers, especially when they have the incentive to do it. . . .
People will not work harder and better if they can't get paid for it," he said.