US productivity: hold the obits

Journal Article · Thu Nov 01 04:00:00 EST 1979 · Mon. Econ. Lett. (Citibank); (United States)

OSTI ID:5743790

Between 1973 and 1978, output per man-hour - labor productivity - in the private business economy of the US grew at only a 0.8% rate, far below the 2.4% trend rate of growth in the whole post-World War II period. Now the productivity slowdown is being pointed out as the fountainhead of the economy's woes - from high inflation to recurring recession. The theory is supposed to work this way: if workers demand a real wage increase of 3%, for example, and productivity growth averages 2%, inflation must then accelerate by 1% and real wages will increase by only 2% unless there is a significant increase in the labor share in national income. If, on the other hand, workers demand a real wage gain of 2% and productivity growth averages 3%, inflation will unwind. Actually, this theory overlooks the fact that nominal income cannot, over the long run, rise out of step with increases in the money supply. And, if the Federal Reserve does not validate inflationary wage agreements by hiking the money supply enough to accommodate them, demand will fall off and unemployment will rise. The eventual result will be a cooling off of inflation. The impact of the work force - women, inexperienced workers, etc. - on productivity is discussed. (MCW)

• OSTI ID: 5743790
• Journal Information: Mon. Econ. Lett. (Citibank); (United States), Journal Name: Mon. Econ. Lett. (Citibank); (United States); ISSN MELTA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
CAPITAL
COMMODITIES
DATA
DATA FORMS
DIAGRAMS
ECONOMIC GROWTH
ECONOMY
EMPLOYMENT
GRAPHS
INCOME
INFLATION
INFORMATION
INVESTMENT
LABOR
NORTH AMERICA
NUMERICAL DATA
PRODUCTION
TABLES
TAXES
USA