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/77V ■ Productivity and the Economy U.S. DEPARTMENT OF LABOR Bureau of Labor Statistics Revised 1973 Edition Bulletin 1779 Dayton & Montgomery Co. Public Library JUL 31 '1973 DOCUMENT COLLECTION Productivity and the Economy Bulletin 1779 U.S. DEPARTMENT OF LABOR Peter J. Brennan, Secretary BUREAU OF LABOR STATISTICS Ben Burdetsky, Deputy Commissioner 1973 Prepared for the National Commission on Productivity by the Bureau of Labor Statistics For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402, GPO Bookstores, or BLS Regional Offices listed on inside back cover. Price 95 cents domestic postpaid or 70 cents over-the-counter. Make checks payable to Superintendent of Documents. Microfiche edition available from National Technical Information Service, Springfield, Va. 22151, at 95 cents a set. Make checks for microfiche payable to NTIS. Preface Productivity is involved in one way or another with most issues of economic policy. As a result, there is a continuous need for information about productivity, although the focus o f attention varies with the economic climate. During periods of economic slowdowns, for example, interest turns to the relationship between productivity and unemployment, and concentrates on the role o f changing technology. On the other hand, during periods o f rising prices, attention centers on the relationship between productivity and wages. This chartbook is designed to show what productivity is and how it operates. With this end in view, the book is divided into three parts. The first part shows how productivity has developed over time, the second presents changes in factors that are influenced by productivity, and the third traces trends in the various factors that influence productivity. Wherever possible, comparisons are made with foreign countries in order to add an international perspective to a subject that is often treated within a solely national framework. In order to create a better understanding o f productivity, this chartbook draws on the best available information, using a variety o f sources in addition to material produced by the Bureau o f Labor Statistics. This presentation in no way implies that the Bureau accepts all o f the measures and concepts involved, but rather our hope o f broadening the scope o f discussion o f that essential element in the Nation’s economic well being — productivity. This bulletin was prepared by the* staff o f the Office o f Productivity and Technology under the general direction o f Jerome A. Mark, Assistant Commissioner for Productivity and Technology. iii iv Contents I. 1 Productivity tren d s .............................................. Output per man-hour trends: The United States Productivity trends in the private economy and the nonfarm and corporate sectors ......................................................... * ............................................................ Recent trends in productivity .................................................................................. Productivity trends in major sectors ....................................................................... Trends in construction labor requirements ............................................................ 2 4 6 8 Productivity trends in industries.................................................................................. 10 Output per man-hour trends: International comparisons Productivity trends in manufacturing .......................................................................... 12 Productivity levels in the iron and steel industry II. ..................................................14 A. Implications of productivity growth for price and cost s ta b ilit y ........... 17 Trends in productivity, unit labor costs, and compensation Recent Trends Trends Trends ............................18 trends in productivity, unit labor costs, and com pensation.................20 in productivity, unit labor costs, and prices ............................................22 in productivity and p ro fits ...............................................................................24 in productivity, unit labor costs, and compensation in manufacturing: International comparisons, 1 9 6 5 -7 0 .......................................... 26 Trends in productivity, unit labor costs, and compensation in manufacturing: International comparisons, 1 9 7 0 -7 2 ......................................... 28 Recent trends in productivity, prices, unit labor costs, and compensation in major sectors .......................................................................................................... 30 Trends in industry productivity and p r ic e s ...............................................................32 B. Other implications of productivity growth .................................................... .3 5 Trends in productivity and real com pensation.......................................................36 Trends in product per person and average weekly h o u r s ....................................38 Trends in productivity and em p lo ym en t..................................................................40 Differences in industry productivity situations.......................................................42 III. Factors affecting productivity g ro w th ....................................................................... 45 The sources of g ro w th ....................................................................................................46 Capital investment Trends in capital stock per m an -h o ur.......................................................................48 Trends in capital investment: International comparisons ..............................50 Technological change Trends in diffusion o f major technological innovations................................... 52 Trends in diffusion o f major technological innovations: International comparisons ............................................................................................................. 54 Trends in R & D expenditures .................................................................................. 56 Trends in employment o f scientists and engineers in industry ..................... 58 Labor quality Trends in educational attainment ............................................................................ 60 Trends in occupational composition ....................................................................... 62 Worker attitudes and p ro d u c tiv ity .............................................................................64 P Trends in productivity Productivity is a concept that expresses the relationship between the quantity o f goods and services produced—output, and the quantity o f labor, capital, land, energy, and other resources that produced it—inputs. Basically, productivity can be measured in two ways. One way relates the output o f an enterprise, industry, or economic sector to a single input such as labor or capital. The other way relates output to a composite o f in puts, combined to reflect their relative importance. The latter type o f measure, which is usually called a total factor measure, is the most comprehensive as it takes all possible inputs into account. However, the practical problem o f identifying and measuring all in puts is a long way from being solved, and no total factor measure has yet won general acceptance. The most commonly used measure o f productivity using a single input relates output to the input o f labor tim e-output per man-hour, or its reciprocal-unit labor re quirements. Labor time includes the man-hours o f all persons employed in the produc tion process. Man-hours are treated as homogeneous: no distinction is made between hours of employees at different levels o f skill or pay. One reason for the usefulness o f a labor productivity measure is that labor input is readily measurable at several levels: the total private economy, its component sectors, industries, or plants. In addition, labor is quantitatively the most important factor in the economy. For these reasons, the productivity measures used in this book are expressed in terms of output per man-hour. Nevertheless, output per man-hour indexes do not im ply that labor is solely or primarily responsible for productivity growth. In a technologi cally advanced society, labor effort is only one o f many interrelated sources of improve ment. Trends in output per man-hour also reflect technological innovation, changes in capital stock and capacity utilization, scale of production, materials flow, management skills, the state o f labor relations, competitive pressure, and many other factors the con tribution o f which often cannot be measured. The output side o f the output per man-hour ratio refers to the finished product or the amount o f product added in the various enterprises, industries, sectors, or the econ omy as a whole. Few plants or industries produce a single homogeneous commodity that can be measured by simply counting the number of units produced. Consequently, for the purpose o f measurement the various units of a plant or industry’s output are com bined on some common basis, either their man-hour requirements in a base period or their dollar value. When information on the amount o f units produced is not available, as is often the case, output must be expressed in terms o f the dollar value of production, adjusted for price changes. 1 P ro d u ctiv ity trends in the total private economy and the nonfarm and corporate sectors Digitized2for FRASER Long-term movements in aggregates such as productivity in the private, nonfarm, and corporate sectors reflect changes within the various component industries as well as shifts in their relative importance. That is, changes in output per man-hour are influenced not only by increases or decreases in the component sectors but also by employment shifts between high and low productivity industries. Between 1950 and 1972, productivity grew faster in the total private economy than in the nonfarm sector. To a large extent, this situation reflected both the greater increase in farm productivity and the shift o f workers out o f the farm sector, where the level o f productivity is relatively low, into higher productivity jobs in the nonfarm sector. This shift contributed about 0.3 percent to the long-term average rate o f growth in the private economy. Corporate productivity also grew faster than nonfarm productivity. This disparity came about because the greater part o f industries where productivity tends to be low — industries such as services, construction, finance, and real estate — are not incorporated and are thus not part o f the corporate sector. Average annual percent change in o u tp u t per man-hour Year and period T ota l private econom y N onfarm sector Corporate sector 1950-72 3.0 2.6 1950-60 2.8 2.2 2.7 1960-65 3.9 3.5 4.1 3.0 1965-72 2.3 2.0 2.7 1968- 69 0.4 -0.1 2.1 1969- 70 1.0 0.6 1.0 1970- 71 3.6 3.6 4.7 1971- 72 4.2 4.7 4.7 Chart i. PerM an-hour in the Private Economy and the Output Nonfarm and Corporate Sectors, *950-72 Index ( 1 9 5 0 = 1 0 0 ) 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 3 Recent trends in p ro d u ctivity Digitized 4 for FRASER Productivity analysis varies with the length o f the period studied: short-term movements show cyclical effects, while long-term movements reveal a secular trend. Typically, productivity movements follow a certain pattern in the course of a business cycle. When business activity starts to decline, output per man-hour generally drops sharply as capacity utilization falls below optimum rates. Once cost-cutting efforts get underway, adjustments are made and the decline in productivity is arrested or reversed. When activity picks up again, output per man-hour increases at a faster rate because of higher capacity utilization. Then, after a sustained period o f production increase, bottlenecks emerge, less efficient resources are brought into use, and the rate of productivity advance declines. Recent movements in productivity show how the business cycle causes shortrun changes that diverge from the long-term trend rate. Chart 2 shows that actual productivity fell behind trend productivity in late 1968 and reached its most distant point in the first quarter o f 1970. The economic upswing started to close the gap in 1971, and virtually eliminated it by the end o f 1972. T otal private economy Average annual percent change Year and quarter 1969 1970 1971 1972 O u tp ut per man-hour O utput I -0.5 3.6 II -0.9 1.8 III -0.1 1.7 IV -0.8 -2.5 -2.6 1 -1.3 II 4.3 1.7 III 6.9 2.3 IV -1.9 -5.1 1 7.5 8.7 II 2.2 3.7 III 3.2 2.5 IV 3.7 7.2 1 3.9 7.0 II 6.2 10.2 III 4.1 6.5 IV 4.7 8.4 Output Per Man-Hour and Output in the Private Economy Difference Between Quarterly Productivity Movements and Long' Term Trend, 1965-72 Percent Difference Between Actual and Potential Output Levels, 1965-72 1965 1966 1967 1968 1969 1970 1971 1 Long te rm trend = 3.0 percent, 1950 - 1972 2Trend of 4.0 percent from 1965 (1st Q tr.) to 1969 (4th Q tr.). Trend o f 4.3 percent fro m 1969 (4th Q tr.) to 1972 (4th Q tr.). 5 Productivity trends in major sectors Digitized6for FRASER Productivity growth varies from sector to sector over both the short and the long term. Between 1950 and 1971, the average improvement in output per man-hour ranged from 5.8 percent a year in the farm sector to 2.9 percent a year in trade and manufacturing. Sectors for which adequate productivity information is not yet available — services, construction, and finance, insurance, and real estate — are estimated to have even lower long-term rates o f productivity growth. Productivity growth in sectors varies in the short run according to the effect o f changes in the business cycle. For instance the farm sector, which is relatively unaffected by cyclical movements, was the only one in which productivity grew faster during the latter half o f the 1960’s than during the early half. Percent change in o u tp u t per m an-hour Sector Farm ................................................... 1950-71 1960-71 1965-71 5.8 6.1 6 .5 5.6 5.2 4.7 E le ctricity, gas, and sanitary services 5.3 4.3 3.8 M ining 3.7 3.3 2.8 ................................ 3.3 4.1 2.9 M a n u fa c tu rin g ................................... 2.9 3.2 2.5 T rade 2.9 3 .2 2.2 Com munications ............................. ................................................ Transportation ................................................... Chart 3 . Per M an-Hour by M ajor Sector, 1950-n Output Index (1950= 100) 1950 1953 1956 1959 1962 1965 1968 1971 7 Tren ds in construction labor requirements 8 Since technical problems still impede development of an adequate productivity measure for the construction sector, the best available insight into changes in construction productivity is provided by studies o f labor and materials requirements for various types of construction over time. Though declines in man-hour requirements would seem to be another way o f expressing increases in output per man-hour, changes in construction labor requirements reflect the introduction o f new methods, equipment, and materials; geographic shifts in demand; and shifts in the type o f building constructed; as well as improvements in productivity. Man-hour requirements declined for all types o f construction studied by the BLS over recent periods, but the rates o f decline varied considerably. The sharpest decline occurred in highway construction in the early 1960’s: a significant slackening was noted in 1964. The average decline for building construction was about 2 percent, ranging from 1 percent for general hospitals to 2.7 percent for elementary schools. Onsite man-hour Type o f C onstruction requirements per and year $1000 constant dollars o f construction Federally-aided highways ig 5 8 ............................................ ................ 1g64 ............................................ ................ 91 72 -|g70 ................................................... ................ 65 1962 ................................................... ................ 72 1969 ...................................................... ................ 64 1g60 ............................................................... ................ 114 1968 .................................................................. ................ 96 Private single-fam ily housing Public housing General hospitals 1960 ............................................................ ................ 2301 1966 .................................................................. ................ 2171 Elementary and secondary schools 1959 1 QRR i Per 100 square feet. ............................................ ................ ................................................ ................ 119 i 1021 Chart 4. Decline in Onsite Man-Hour Requirements for Various Types oj Construction, Selected Periods, 4958-70 Average annual percent change 4 .0 Federally-aided highways < Private single-family housing Public housing General hospitals Elementary and secondary schools P ro d u ctivity trends in industries 10 Variations in output per man-hour growth among industries stem from many sources. For example, the large productivity advances o f the 1960’s in air transportation were produced by the introduction of jets and the great expansion in traffic. The lack of productivity growth in the footwear industry resulted from the fact that footwear producers deal with a variety of sizes and styles that make adoption o f mass-production methods difficult. Low productivity gains in copper mining reflected a situation in which operators were faced with less and less recoverable ore as the richest veins became exhausted. Although productivity trends for individual plants are not shown in the chart, they vary in both the level and the rate o f productivity growth. Some plants may exceed the trend for the industry significantly, while others may lag well behind the average. Chart 5. Growth in Output Per Man-Hour in Selected Industries, 1960-71 1971 P e tro le u m p ip e lin e s A ir t r a n s p o r t a t io n R a d io a n d te le v is io n re c e iv in g sets H o s ie ry M a lt liq u o rs a n d e le c tr ic u t ilit ie s R a ilro a d s , re v e n u e t r a f f ic M a n -m a d e f i b e r s — P e tro le u m r e fin in g A lu m in u m r o llin g a n d d r a w in g — B o ttle d a n d c a n n e d s o ft d r in k s Ir o n m in in g , c r u d e o re — C o p p e r m in in g , c ru d e o re M a jo r h o u s e h o ld a p p lia n c e s C o n c re te p r o d u c ts B itu m in o u s c o a l a n d lig n ite m in in g H y d r a u lic c e m e n t / Paper, p a p e rb o a rd (a n d p u lp m ills Su gar F lo u r a n d o t h e r g ra in m ill p r o d u c ts m in in g C igars T ire s a n d in n e r tu b e s a n d s o lid fib e r b o x e s R a ilro a d s , c a r-m ile s B a k e ry P ro d u c ts C a n d y & o th e r c o n f e c tio n e r y p r o d u c ts M o to r v e h ic le s a n d e q u ip m e n t Ir o n m in in g , u s a b le o re Glass c o n ta in e rs ir o n fo u n d a r ie s P r im a r y a lu m in u m C o p p e r m in in g , re c o v e ra b le n g a n d p re s e rv in g T o b a c c o p r o d u c ts - to ta l S te e l C ig a re tte s , c h e w in g a n d s m o k in g P r im a r y c o p p e r, lead, z in c F o o tw e a r 1960 1971 11 International com parisons: P ro d u c tiv ity trends in m anufacturing 12 Growth in manufacturing productivity since 1960 has varied substantially in the countries for which the BLS makes productivity comparisons. Between I9 6 0 and 1972, average annual gains in output per man-hour ranged from 3.1 percent in the United States to 10.4 percent in Japan. Although the U.S. growth rate was the lowest, the evidence available indicates that the United States continues to have the highest level of manufacturing productivity, though this may not be true for all industries. The largest gap between productivity growth rates existed during the 1965-70 period, when manufacturing productivity grew 2.0 percent a year in the United States and 13.2 percent a year in Japan. The economic recovery that began in 1970 brought about a substantial improvement in U.S. productivity growth. Though productivity still grew at a faster rate in most o f the other countries between 1970 and 1972, the margins by which these rates exceeded the U.S. rate were reduced significantly. 1 Country 1960-72 1960-65 1965-70 1970-72 ......................................... . . . . 3.1 4.3 2.0 4.9 ..................................................... . . . . 4.4 4.3 4.7 5.1 6.0 5.9 6.0 5.7 5.3 7.9 6.5 5.8 4.9 6.0 6.9 United States Canada European economic community Belgium ............................................ France ............................................... . . . . Germany Italy ............................................ . . . . 5.8 6.3 5.7 5.1 .................................................. . . . . 6.0 6.8 5.3 3.5 ...................................... . . . . 7.2 5.5 8.9 6.6 ........................................................ . . . . 10.4 8.5 13.2 7.7 ..................................................... . . . . 7.1 7.2 7.7 4.5 ................................... . . . . 4.2 4.0 3.9 6.6 Netherlands Japan Sweden United Kingdom 1 Average annual percent change, 1960-72 For many of the foreign countries, 1972 estimates are based on data for less than the fu ll year. Output Per Man-Hour in Manufacturing, United States and Other Industrial Nations, 1 9 6 0 -7 2 Index (1 9 6 0 = 1 0 0 ) 1960 1962 1964 1966 1968 1970 1972 13 International comparisons: Productivity levels in the iron and steel industry Digitized 14for FRASER In 1964, productivity in the U.S. iron and steel industry greatly exceeded the levels reached in other major steel-producing countries. Output per man-hour was about 60 percent of the U.S. level in Germany and around 50 percent in France, Japan, and the United Kingdom. In 1971, however, though labor productivity in the British steel industry was still only about half the U.S. level, the French industry was up to two-thirds the U.S. level, the German to about three-fourths, and the Japanese may have exceeded it. Country Index of output per Relative output per man-hour: 1964 = 100 man-hour: U.S. = 1001 1964 United States Japan 1970 1971 ......................................... 100.0 104.8 108.6 ........................................................ 100.0 232.6 234.2 United Kingdom France Germany 1964 100 43-54 1970 100 96-119 1971 100 93-116 ................................... 100.0 115.3 110.6 46-50 51-55 47-51 ..................................................... 100.0 148.2 147.6 48-51 68-73 65-70 .................................................. 100.0 139.6 137.0 54.63 73-84 68-80 ^The data for Japan and the Western European countries are presented in terms of ranges, with high and low estimates, because of data gaps and limitations. Chart 7. Relative Levels oj Output Per Man-Hour in the Iron and Steel Industries of Five Countries, \964-i\ Index (U.S. in 1 9 6 4 = 100) 125 100 Jwi 75 'C m jMf&W Japan ■ 50 France G erm any U n ite d Kingdom 25 1964 1971 1964 1971 1964 1971 1964 1971 15 P art II- a . Im plications o f productivity growth fo r price and cost stability Productivity movements are an important factor in determining price and cost stability. This aspect o f productivity change stems from the role o f output per man-hour — an especially relevant concept when dealing with unit labor costs — as a critical link between the cost o f labor and the price o f goods. In most industries, labor costs, including hourly rates o f pay, overtime, and all types o f fringe benefits, are the largest single cost element. Consequently, the trend of labor costs per unit of output plays a major role in determining the price per unit of output. I f the effect o f an increase in unit labor costs can be minimized by a greater increase in productivity, pressure to increase prices will obviously be lessened, although changes in profits or materials cost per unit o f output may offset this effect. On the other hand, changes in unit labor costs can be a result as well as a cause of price rises. Price increases that cause employee purchasing power to fall lead to pressure for higher wages. I f the wage increases exceed productivity growth, unit labor costs will increase also. These relationships come into play at all economic levels, ranging from competition within an industry to competition between countries. For this reason, achieving productivity growth is a matter o f concern to workers and consumers as well as to employers and stockholders. 17 Trends in productivity, unit labor costs, and compensation Due to the relative stability o f growth in hourly compensation, changes in unit labor costs display a close inverse relation to changes in output per man-hour. The almost mirror image o f chart 8 shows that unit labor costs tend to rise when productivity growth slows and to slow or decline when productivity growth accelerates. Total private economy Average annual percent change 1950-72 1950-60 1960-65 1965-72 1968-69 1969-70 1970-71 1971-72 18 Output Unit Year and per labor per period man-hour costs man-hour Compensation ............................. .................. ............................. .................. 3.0 2.1 5.2 2.8 2.2 5.0 ............................. .................. ............................. 3.9 0.4 4.3 7.1 ............................. .................. ............................. 0.4 ............................. .................. ............................. 3.6 4.7 7.1 7.6 6.5 7.6 3.4 7.1 2.0 6.2 Chart 8. Average Annual Percent Change in Productivity and Labor Costs in the Private Economy, 1950-72 Percent change 10.0 8.0 6.0 4 .0 2.0 0 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 19 Recent trends in productivity , unit labor costs, and compensation 20 U nit labor cost movements are influenced by productivity change which, in turn, is influenced by shortrun changes in output. During 1971 and 1972, the economic recovery was reflected in productivity growth which offset gains in hourly compensation. As a result, quarterly increases in unit labor costs were generally smaller in these 2 years than they had been in the preceeding few years, when growth in compensation far exceeded growth in productivity. T otal private economy Q uarterly percent change at annual rate Year and quarter 1969 1971 1972 U n it labor Compensation m an-hour costs m an-hour I ............................. -0.5 6.3 II ......................... -0.9 8.9 8.0 I ll ......................... -0.1 7.3 7.2 ......................... -0.8 10.7 9.9 ............................. -1.3 8.3 6.9 IV 1970 O u tp u t per I 5.8 II ......................... 4.3 1.6 5.9 I ll ......................... 6.9 2.4 9.4 I V ......................... -1.9 7.4 5.4 7.5 1.7 9.2 6.2 I ............................. II ......................... 2.2 3.9 I ll ......................... 3.2 2.6 5.8 I V ......................... 3.7 1.0 4.7 I ............................. 3.9 4.6 8.7 II .......................... 6.2 -0.6 5.6 I ll ......................... 4.1 0.3 4.4 I V ......................... 4.7 3.0 7.9 Chart 9. Productivity and Labor Costs in the Private Economy, 1966-72 Quarterly Changes at Annual Rates Percent change 10.0 5 .0 0 - 2.0 15.0 10.0 5 .0 0 15.0 10.0 5 .0 0 1966 1967 1968 1969 1970 1971 1972 21 Trends in productivity, unit labor costs, and prices 2 2 for FRASER Digitized During the early 1960’s the unit labor cost component o f price change was slight — mainly because productivity increases kept pace with the growth in hourly compensation. As increases in productivity slowed in the late 1960’s and increases in compensation speeded up, unit labor costs accelerated and came to represent a larger component o f price growth, particularly in 1969 and 1970. In 1971 and 1972, the trends reversed; productivity accelerated and the growth in hourly compensation slowed. Consequently, the effect o f unit labor costs on price increases was much less than in the previous 4 years. T otal private economy Com position o f price change in percentage points Annual percent Year and period change in U n it labor U n it prices costs p ro fits O ther u n it nonlabor payments ................ 1.2 0.3 0.5 0.4 1966 ...................... 2.5 1.7 0.2 0.6 1967 ...................... 2.9 2.2 -0.8 1.4 1968 ...................... 3.6 2.8 -0.1 0.9 1960-65 1969 ...................... 4.5 4.4 -1.2 1.3 1970 ...................... 4.8 4.1 -1.6 2.4 1971 ...................... 4.3 2.2 0.6 1.5 1972 ...................... 2.6 1.3 0.4 1.0 Chart to. Composition of Price Changes, Private Economy, 72 Percent change Points con tributing to percent change 1 2 3 U n it p ro fits includes corporate pro fits, estimated profits o f unincorporated enterprises and net rental earnings o f owner - occupied dwellings. O ther u n it nonlabor costs include depreciation, interest, and indirect taxes. No change. 23 Trends in productivity and profits Profits per unit are affected by many different factors, and the rate of productivity improvement seems to be one o f them. Profits have generally increased when productivity was growing rapidly; they have usually decreased during periods o f reduced productivity growth. Chart u. Average Annual Percent Change in Productivity and Profits in the Non-Financial Corporate Sector, 72 Percent change 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 25 Trends in productivity, unit labor costs, and compensation in manufacturing: International comparisons, 1965-70 Digitized 2 6 for FRASER Unit labor costs in manufacturing, measured in national currencies, rose more in the United States between 1965 and 1970 than in Canada, Japan, or Western Europe. Hourly compensation rose over 6 percent a year in the United States, while output per man-hour increased only 2 percent a year. The result was an average rise in U.S. unit labor costs o f 4 percent a year. A ll o f the foreign countries had larger percentage increases in hourly compensation productivity growth. than the United States, but they also had faster rates of On a U.S. dollar basis, Canada and Germany had rates o f increase in unit labor costs about as large as the United States because they revalued their currencies during the period. Similarly, the United Kingdom had a decline in unit labor costs and France a relatively small increase because they devalued their currencies. Average annual percent change, 1965-70 O u tp u t per C ountry United States man-hour U n it labor costs National U.S. dollar Currency basis Com pensation per m an-hour ................ ............. 2.0 4.0 4.0 ......................... ............. 7.9 1.4 1.3 9.4 Canada ............................. ............. 4.7 3.2 3.7 8.1 France ............................. ............. 6.0 3.8 1.5 10.0 ......................... ............. 5.7 2.6 4.1 8.4 Ita ly ................................ ............. 5.3 3.9 3.8 9.4 Japan ................................ ............. Belgium Germany 6.1 13.2 2.0 2.2 15.4 ................... ............. 8.9 2.8 2.7 11.9 S w e d e n ............................. ............. 7.7 2.0 1.9 9.8 U nited Kingdom 3.9 3.6 -0.4 7.7 Netherlands . . . . ............. Chart 4 2 . Average Annual Percent Change in Output Per Man-Hour, Unit Labor Costs, and Compensation Per Man-Hour in Manufacturing, Ten Countries, i9 6 5 -7 0 O utput per man-hour 0 United States Belgium 4 8 12 U nit labor costs 16 0 2 Compensation per man-hour 4 Y/7777777777) J National currency 2 2 2 U . S . dollars I Canada France Germany 7ZZZ2 ///////P////7 A ....... I ............... I Italy --------------1 Japan '/ / / / / A _ 1 Netherlands Sweden V///////A '/ / / / / / ia m r i ; United Kingdom -0.4 27 Trends in productivity unit labor costs, and compensation in manufacturing: International comparisons, 1970-72 Digitized 2 8 for FRASER Beginning in 1970, the position o f U.S. unit labor costs relative to other industrial countries improved. This reversal was due to a speedup in output per man-hour in the United States and sharp increases in hourly compensation in the other countries. Though productivity continued to grow at a faster rate in most o f the foreign countries than in the United States, growth rates in hourly compensation abroad exceeded productivity growth rates by wider margin than was the case in the United States. The relative cost position o f the United States was further improved by the general realignment o f the world’s major currencies that took place in 1971. A fter taking these changes in currency values into account, the average 1970 to 1972 rates o f increase in unit labor costs abroad ranged from about 6 percent in Canada to 17 percent in Japan, compared with 1.4 percent in the United States. Average annual percent change, 1970-72 C ountry United States . . . . . . . . . . . Belgium .................................... Canada ....................................... France ....................................... G e rm a n y .................................... I t a l y ............................................. Japan .......................................... N e th e rla n d s ............................... S w e d e n ....................................... United Kingdom ....................... O u tp u t per man-hour 4.9 6.5 5.1 6.9 5.1 3.5 7.7 6.6 4.5 6.6 i U n it labor costs ' N ational U.S. d o lla r Currency basis 1.4 6.3 3.4 4.6 6.9 11.3 7.7 9.2 7.8 5.7 1.4 13.0 6.1 9.5 14.3 15.4 17.0 15.9 12.5 8.0 Compensation per man-hour 6.5 13.3 8.8 11.8 12.3 15.3 16.0 16.4 12.6 12.5 i For many o f the foreign countries, 1972 estimates are based on data fo r less than the fu ll year. Average A nnual Percent Change in Output Per Man-Hour, Unit Labor Costs, and Compensation Per M an-H our in Manufacturing, Ten Countries, U nit labor costs O utput per man-hour 8 0 8 12 Compensation per man-hour 16 0 4 8 12 16 20 National currency U.S. dollars United States 1 Belgium mmmmsmmmm Canada ZZZZZZZ2 _____ France Germany ix ! irito '.*: — ^ZZZZZZZZZZZA 7ZZZZZZZZZZZZZZZZZA — Italy Japan Netherlands Sweden United Kingdom 7Z Z Z Z Z Z Z Z Z Z Z Z L vzzzzzzzzzzzzzzzzzm TZZZZZZZZZZZZZZZZZZA V/y////77)/7777A 7ZZZZZZ2 29 Recent trends in productivity, prices, unit labor costs, and compensation in m ajor sectors 30 for FRASER Digitized The rate o f productivity growth in a sector is generally related directly to increases in the prices and costs o f a sector’s production. Unit labor costs and prices usually rise most in sectors where productivity growth is lagging and least in sectors where productivity growth is rising. Between 1965 and 1971, prices rose most in trade, a sector with a relatively low rate o f productivity growth, and least in communications, a sector with a very high rate o f productivity growth. I Chart 14 . Average Annual Percent Change in Output Per Man-Hour, Prices, and Costs by Major Sectors, 1965-74 Percent F a rm Co 1m m u n ic a tio n s E le c tr ic , gas, a n d s a n ita r y services T r a n s p o r t a t io n J Prices M in in g M a n u fa c tu r in g -----------------------1 T ra d e __ h 'i F a rm F a rm C o m m u n ic a tio n s __________ I C o m m u n ic a tio n s E le c tric , gas, a n d s a n ita r y s e rvice s --------------------- 1 E le c tr ic , gas, a n d s a n ita r y s e r v ic e ij ■ T r a n s p o r t a t io n T r a n s p o r t a t io n Compensation per man-hour — Unit labor costs M in in g M in in g M a n u fa c tu r in g M a n u fa c tu r in g T ra d e T ra d e 10 12 10 12 31 Trends in industry productivity and prices 32 for FRASER Digitized A close inverse relationship between changes in prices and changes in productivity exists at the industry level, too. Prices declined between 1960 and 1971 in industries such as hosiery and radio and T V sets, where the rate o f productivity gain was larger than the average. A t the same time, prices increased in industries such as footwear where productivity advances were small. Although there are some exceptions, the pattern shows that as productivity grows faster, prices tend either to decline or increase at slower rates. Chart Annual Average Rates of Change' in Output Per ManHour and Prices fo r Selected Industries, 1960-71 Prices 5.0 • (Copper, lead, and zinc) -1.0 0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 O utput per man-hour ^ Rate of change based on the linear least squares trends of the logarithms of the index numbers. 33 PIl-b. O ther implications o f productivity growth One o f the best known effects o f productivity growth is the increase it makes possible in workers’ incomes. Labor compensation expressed in terms o f its buying power — real compensation — has risen at about the same rate as output per man-hour over the post-World War I I period. Productivity growth not only provides workers with more income, but also increases the amount o f goods and services available for the population as a whole to consume. The increase in per capita product since World War I I has largely been due to the increase in real product per man-hour, though the effect o f productivity growth has been offset somewhat by the continued decline in man-hours. This situation shows that two potential benefits of productivity growth are alternatives: Increases in output per man-hour mean either that a given amount of labor time can produce more output, or that a given amount o f output can be produced with less labor time. Though these two alternatives are theoretically exclusive, in practice the benefits o f productivity growth have been divided between them. A third alternative has received a good deal o f attention during periods of unemployment. Increases in output per man-hour can result in producing a given output with fewer workers. Though this alternative has prevailed in some industries such as railroads or coal mining, experience has shown that many industries increase employment as productivity grows because demand for their product grows even more. Trends in productivity and real compensation Digitized 36 for FRASER Over the long run, labor has shared in the steadily increasing productivity o f the nation: Hourly compensation, adjusted to take account of changes in purchasing power (real hourly compensation), has risen at about the same rate as output per man-hour. In 1972, real hourly compensation was almost 85 percent higher than it was in 1950. Changes in productivity and compensation do not always parallel each other over the short run. In general, when productivity rises rapidly, as in 1971 and 1972, increases in real hourly compensation tend to lag behind. Conversely, in times o f low productivity improvement, such as 1969 and 1970, increases in real wages tend to out pace increases in productivity. Total private economy Average annual percent change Year and Output Real compen- per sation per man-hour man-hour 1950-72 3.0 3.0 1950-60 2.8 3.3 1960-65 3.9 3.0 Period 1965-72 2.3 1968- 69 0.4 i 2.6 2.3 1969- 70 1.0 2.1 1970- 71 3.6 1.5 1971- 72 4.2 2.7 Chart Output PerMan-Hour and Real Compensation Per Man-Hour, Private Economy, 1950-72 Index (1950 = 100) 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 37 Trends in product per person and average w eekly hours 38 One benefit o f productivity improvement is an increase in amount o f goods produced and thus available for purchase by each member o f the population. Gross national product per person rose an average o f 2.1 percent a year between 1950 and 1972. The most rapid increase occurred during the 1960’s, when productivity growth was particularly high. Though productivity growth is the major factor influencing trends in product per person, it is not the only one. Two other factors — the proportion of the population in the labor force and the proportion o f the labor force that is employed — did not change very much between 1950 and 1972. The third factor, average hours per worker, declined 0.4 percent a year and thus partially offset the effect o f productivity growth on the rise in product per capita. (The decline in hours varied from sector to sector; hours did not decline at all in manufacturing.) I f the entire gain in output per man-hour during the last 2 decades had been taken in leisure time, average weekly hours would have decreased by an average o f 3 percent a year. Estimating the actual change in average weekly hours due to productivity growth is difficult since economic fluctuations affect average hours so strongly; nevertheless, the slight decline in average weekly hours, compared with the large increase in per capita product, indicates that increased income had greater appeal than increased leisure. Chart 47. GNP PerCapita and Average W eekly Hours Per Worker, Private Economy, 1950-72 Dollars (1958) 4 ,0 0 0 Hours 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 39 Trends in productivity and em ploym ent Some people think that increases in productivity automatically lead to decreases in employment, but the chart shows that this is not necessarily true. Between 1960 and 1971, for example, productivity went up in every industry studied by the BLS and employment grew in over half o f them. In many industries, large productivity increases are accompanied by large increases in output that require increases in employment. This situation occurred in the air transportation and man-made fibers industries. Productivity growth in petroleum pipelines was also associated with a large increase in output, but technological improvements in this highly mechanized industry enabled it to expand production while further reducing its already low employment. On the other hand, in some industries such as cigars and railroads employment reductions were associated with high productivity gains and only moderate increases in output. Chart 18 . Average Annual Rates of Change' in Output Per Man-Hour and Employment fo r Selected Industries, \960-n Employment 10 8 6 4 2 0 -2 -4 Output per man-hour 1 Rate of change based on the linear least squares trends of the logarithms of the index numbers. 41 D ifferences in industry productivity situations Industries with similar trends in output per man-hour may have vastly different trends in output and employment. For instance, between 1960 and 1971, productivity grew at an average rate o f nearly 6 percent a year in man-made fibers, railroad transportation, and gas and electric utilities, but each one o f these industries has a different productivity story. High productivity growth in man-made fibers represented a big increase in output, accompanied by substantial growth in man-hours, while the same rate o f productivity growth was achieved in railroads by a large reduction in man-hours, coupled with a small increase in output. The rate o f productivity increase for gas and electric utilities stayed close to the rate o f output growth, as man-hours barely changed. These three industries show the major types o f high productivity growth situations. They indicate that the implications o f productivity growth for employment are closely associated with trends in output: Industries that have large increases in output tend to increase man-hours too, while industries that have small output growth tend to reduce man-hours. Chart 19. Change in Output and Man-Hours for Selected Industries with Similar Productivity Growth, i960-7i Percent change 43 III. Factors affecting productivity growth The factors to which changes in productivity can be attributed vary according to whether the movements are short term or long term. As many o f the charts in part I show, short-term movements in productivity are directly related to the business cycle because productive capacity, including the work force, is not so flexible that producers can adjust it immediately to changes in demand. Long-term productivity growth reflects basic changes in the factors underlying productivity improvement, such as increased availability o f capital, improvement in the quality o f labor, and advances in technology. Other factors include improvements in the allocation o f resources, increased economies o f scale, and advances in managerial know-how. Some economists attempt to analyze all o f these factors, however difficult they may be to quantify and measure, and the results of some of these attempts are presented on the next page. Another approach is to measure those factors that are readily quantifiable and to treat them as indicators of the sources o f growth. Capital investment makes an important contribution to growth in output per man-hour. Most researchers have concluded that output per man-hour has increased in large part because the amount o f capital supporting each worker has increased substantially. The role o f capital investment is outlined by measures such as capital investment as a proportion o f output and, most revealing for productivity analysis, capital stock per man-hour in the private economy. Technological innovation is another important source o f growth in output per man-hour. Much o f this innovation is a result o f organized research and development (R & D ) programs, and the amount, rate, and location o f spending on R&D gives some idea o f the importance placed on this activity by both government and industry. An even better approximation o f the pace o f technological development can be attained by tracing the rate of diffusion o f important innovations that have had a clear and direct effect on productivity growth. Otherwise, measuring the effects of so generalized a process as technological change is difficult, if not impossible. A third important contributor to growth in output per man-hour is improvement in the quality o f the labor force. This improvement can be seen clearly in the statistics which compare the skills o f the jobs at which Americans work now with those of an earlier period, or which trace the rise in the median level o f education. And, since worker motivation plays as important a part as worker skill in improving productivity, surveys of worker attitudes are extremely illuminating, particularly when prospects for future pro ductivity growth are being estimated. The sources o f Digitized 46 for FRASER growth The factors affecting productivity growth are so interrelated that determining the separate effect o f each one is difficult. Moreover, the economists who have attempted this task — Denison, Kendrick, Thurow, Grilliches, Jorgensen, and Christiansen, among others — have come up with different measures because o f differences in definitions, concepts, and assumptions. It is not possible to compare the results o f all the research undertaken to date in this area, since not all researchers have focused on the same factors. However, three studies — those by Edward Denison, John Kendrick, and Lester Thurow — encompass similar factors and thus provide a good idea o f current thought in this area. Though their measures differ, they all conclude that improved technology and the availability o f more capital per worker have been the major sources o f productivity growth. For all three researchers, technology refers not to the measured effect of technological improvements but to the residual — the part o f productivity growth not accounted for by the other factors measured.One reason that Kendrick’s residual exceeds Denison’s is that it includes the effects o f economies o f scale and improved resource allocation, which Denison measured separately. Thurow’s residual is smaller than Kendrick’s mainly because he assigned technological progress embodied in labor or capital to the part of productivity growth that he attributed to those two factors. Chart 20. Factors Affecting Productivity More Capital 25.4 Technology Better Resource Allocation Labor Economies of Scale 12.7 Labor Quality 14.3 D EN ISO N THUROW More Capital Technology 18.8 71.9 Labor Quality K E N D R IC K 47 Capital Investment Trends in capital stock per man-hour Digitized 48 for FRASER Growth in capital per man-hour has been an important factor in productivity improvement, since more and better equipment allows a worker to perform his job more effectively. Capital per man-hour rose 2.5 percent a year between 1950 and 1970, as capital increased almost four times as fast as man-hours did. The increase in the capital-labor ratio contributed about one percentage point to the 3-percent average annual increase in output per man-hour between 1950 and 1970. The growth in the capital-labor ratio was faster in the 1950’s than in the 1960’s. Although capital growth accelerated in the 1960’s, the rate of increase in man-hours almost tripled. Capital per Period man-hour Capital Man-hours 1950-70 ...................................................................................... 2.5 3.2 0.7 1950-60 ...................................................................................... 3.1 3.3 0.2 1960-70 ...................................................................................... 2.0 3.6 1.4 Chart 24. Capital Per Man-Hour in the Private Economy, 1950-70 Index (1950=100) 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 Source: U.S. Department of Commerce. 49 Capital Investment Trends in pital investment: International comparisons Since growth in output per man-hour is closely related to the amount of capital supporting each worker, the ratio o f capital investment to output is a precursor of potential growth in productivity. Productivity is more likely to increase rapidly in countries where this ratio is high than in countries where it is low. During the 1960’s, the United States, Canada, and the United Kingdom had the lowest average capital investment ratios in manufacturing as well as the lowest average increases in manufacturing productivity. A t the other end o f the scale, Japan had the highest investment ratio and the highest rate o f productivity gain. Data on capital investment in manufacturing are not available for most of the Common Market countries. Consequently, capital investment ratios for industry as a whole — mining, manufacturing, construction, and public utilities — are substituted in the chart even though they can be imprecise indicators o f capital investment ratios in manufacturing. For instance, Canada has a very high capital investment ratio for all industry, but a relatively low ratio for manufacturing. Average annual Country percent change Capital investment in output per as percent of man-hour in manu output, facturing, 1960-721 1960-70 All industry United States Belgium . ................... ............. 3.1 2 14.5 12.3 ......................... ... . ............. 6.6 19.9 19.6 21.0 15.1 5.8 21.2 N.A. N.A. Canada ................................... France ................................ ................ Germany Manufacturing ................................ ............. 5.8 3 22.2 Italy ...................................... ............. 6.0 17.9 N.A. Japan ...................................... ............. 10.4 28.1 31.4 N.A. ......................... ............. 7.2 21.4 S w e d e n ................................... ............. Netherlands 7.1 18.8 16.7 United Kingdom 4.2 16.6 13.4 ................ ............. 1 For many of the foreign countries, 1972 estimates are based on data for less than the full year. 2 Excludes construction. 3Capital investment, excluding residential dwellings, as percent of total output. Chart 22. Growth in Output Per Man-Hour in Manufacturing and Rate of Capital Investment, Ten Countries O utput per man-hour, 1960-72 (average annual percent change) 12 8 4 Capital investment as percent of output 1960-70 0 0 10 20 30 40 United States Belgium Canada France Germany 2 Italy Japan Netherlands Sweden United Kingdom manufacturing, mining, construction, and public utilities. 2Includes Capital investment as percent of total output. 51 Technological C han ge Productivity growth is directly affected by the rate o f acceptance o f a new technology. Researchers generally concur that the rate o f diffusion o f any major new technology varies considerably within and between industries, but disagree as to the specific factors causing this variation and their relative importance. Factors which are Trends in reported to affect the diffusion rate include cost and profitability o f the innovation, size of the firm, and level o f output o f the firm. diffusion o f innovations o f the post World War I I period: The electronic computer, which has m ajor technological innovations Digitized 52 for FRASER The accompanying chart shows trends in the diffusion o f four major technological achieved significant productivity gains in industry, business, and government; the basic oxygen furnace (BOF), a steelmaking process which reportedly lowers production and capital costs and increases output; numerical control, a system for the automatic operation o f machine tools which has increased productivity in the metalworking industries; and the production o f electricity by nuclear energy. Growth in Use of Some Key Technological Innovations, 1956-72 Number in use (000) Percent of total steel output produced by BOF's 125 60 Source: International Data Corporation, EDP Industry Report: Review and Forecast Issue, March 1972. Percent N/C machine tools comprised of total machine tool shipments Percent of total kilowatt hours produced by nuclear generation 25 3 Numerically 20 controlled machine tools 15 10 (Not available) 1956 Source: 1960 1964 Bureau of the Census. 1968 1972 Source: Federal Power Commission. N o t available. 53 Technological Change Productivity improvement that results from technological change is an important element in international competition. Information available for three o f the innovations examined in the preceding section shows that the United States leads other major industrial countries in both computer installations and the production of Trends in diffusion o f numerically-controlled machine tools, but that it trails Japan and Germany in the proportion o f steel produced in basic oxygen furnaces. m ajor technological innovations: International com parisons 54 Chart 24. Diffusion of Three Innovations, Selected Countries Proportion of steel output produced in basic oxygen furnaces, selected countries, 1960 and 1970 Value of numerically controlled machine tool production in selected countries, 1967 Percent Millions of Dollars 20 40 60 280 300 0 20 40 Electronic digital computers in use, selected countries, 1965 and 1971 Thousands 60 80 20 30 80 90 United States Germany United Kingdom Italy France Japan ] Sweden Source: Organization for Economic Cooperation and Development. Source: U.S.: E D P In d u s try Report, March 1972. Other countries: 1963and 1965: National Bureau of Standards; 1971: EDP In d u s try Report, December 17, 1971 (except Japan); Japan: Japan I nformation Processing Center. 55 Jjchnolvgical Change Trends in Expenditures for research and development can generate increases in productivity through the development and subsequent application o f more efficient equipment and processes. One indicator o f the relative importance o f R & D is the proportion of GNP devoted to it. Over the past decade, this proportion remained relatively stable for both total R & D spending and spending on industrial R &D . R & D funds come from both government and private sources. During the early research and development expenditures 56 part o f the 1960’s, the Federal government provided the major part o f R & D spending. Most o f the Federal funds came, as they did throughout the decade, from the Department o f Defense. Beginning in 1968, however, company-supplied funds exceeded Federal financing. This shift reflected a sharp increase in company spending o f 157 percent between 1960 and 1972, compared with a moderate increase o f 34 percent in Federal spending. The amount and rate o f spending for R & D varied between major industries. For in s ta n c e , tw o in d u s tr ie s h e a v ily in v o lv e d in F e d e r a l c o n t r a c t w o r k f o r d e f e n s e a n d sp a c e programs — aircraft and missiles and electrical equipment and communication — spent proportionately much more on R & D in 1971 than other industries did. Federal funding was a much less significant element in other industries where R & D expenditures were proportionately large. Chart 25. GNP, m o -12 and R&D Funds for R&D as aofPercent Expenditures as a Percent of Net Sales, \9io R&D E X P E N D IT U R E S FU N D S FOR R & D Percent of GNP Percent o f Net Sales (Federal and Company Contributions) SELECTED INDUSTRIES Chemicals Petroleum Rubber Stone, clay, and glass Fabricated metal products Machinery Electrical equip, and communication Motor vehicles Aircraft and missiles Professional and scientific instruments Source: National Science Foundation and U.S. Department of Commerce. Source: National Science Foundation 57 Technological Change Another precursor o f potential growth in productivity is the trend in employment o f scientists and engineers in industry. These employees are primarily responsible for devising and implementing new technology. Trends in Employment o f scientists and engineers increased throughout industry between 1950 and 1970. Increases were particularly pronounced in industries such as aircraft, machinery, and electrical equipment which already had large numbers o f employees in this category. em ploym ent o f scientists and engineers in industry Digitized 58 for FRASER Chart 26. Percent Change in Number of Scientists and Engineers Employed in Selected Industries, 1950 and 1970 Percent change 160 140 120 100 80 60 40 20 0 Ordnance Chemicals Primary metals Machinery Electrical equipment Aircraft Mining Construction Transportation 59 Labor Quality Trends in educational attainment The general upgrading o f the work force over time is usually considered an important factor in productivity growth. This upgrading occurs primarily in two ways: Increases in the proportion o f the work force employed in higher-skilled occupations and improvements in the level o f education o f the working population. The level o f education o f the American work force has risen steadily and is expected to rise even more, largely because young people have been spending more time in school. The proportion o f the working population that has not completed high school has been dropping; by 1980, almost three-fourths o f the work force w ill have a high school diploma. Years of School Completed .... .... .... .... .... .... Elementary: less than 5 years.......................... . . . . 5 to 7 y ears............................. 8 y e a r s .................................... High school: 1 to 3 years................................ 4 y e a rs.................................... College: 1 to 3 y e a r s .................................... 4 years or m o re ....................... 1960 1970 Projected 1980 5.1 9.8 14.4 19.6 31.2 9.7 10.1 2.4 5.9 9.2 17.3 39.0 13.3 12.9 1.5 3.5 5.3 16.6 43.4 14.5 15.3 Chart 27. Estimated and Projected Years of School Completed, the Civilian Labor Force 18 and Over, i960, 197o, and m o Proje Percent of the civilian labor force 18 and over 61 Labor Quality Trends in occupational composition Digitized 62 for FRASER The occupational groups which are growing in importance — professional, clerical, and service workers — are characterized by fairly high educational requirements. Similarly, the occupational groups which account for a decreasing proportion o f the work force — operatives, laborers, and farmers — require relatively little education. Occupational groups Professional, technical, and kindred workers . . . . Managers, officials, and p ro p rie to rs....................... Clerical and kindred w o rk e rs.................................. Salesw orkers............................................................ Craftsmen, foremen, and kindred workers ............ Operatives and kindred w o rk e rs ............................. Service workers ....................................................... Laborers, except farm and m i n e ............................. Farmers and farmworkers ..................................... Occupational distribution of labor force (In percent) 1960 1970 1980 11.4 10.7 14.8 6.4 13.0 18.2 14.2 10.5 17.4 6.2 12.9 17.7 12.4 4.7 4.0 16.3 10.0 18.2 6.1 12.9 16.2 13.7 3.9 2.7 5.4 7.9 Chart 28 . Changes in the Occupational Composition of the Labor Force, i960, 1970, and Projected m o Percent 100 • Farmworkers Laborers Service workers 80 • Operatives 60* Craftsmen I Salesworkers 40 • Clerical workers Managers, officials, and proprietors 20* Professional, technical, and kindred workers 0 1960 1970 1980 (Projected) 63 Labor Qualitx W orker attitudes and productivity Digitized 64 for FRASER Worker attitudes are an important key to productivity improvement: Given conditions in which he can produce more, a worker’s attitude determines whether he will do it. A survey of worker attitudes conducted for the Department of Labor indicated that workers are more concerned with production-oriented goals than has previously been thought. When asked the question, “All in all, what do you feel is the single biggest problem or difficulty you encounter on your job?” most workers answered in terms of day-to-day difficulties in getting their work done. The largest cluster o f “biggest problems” included obstacles such as technical problems, work overload, and inadequate resources. The survey also found high correlations between the content of job (worker’s concern with resource adequacy, autonomy, challenge, and so on) and worker’s job satisfaction. These findings suggest that workers are considerably motivated toward productivity and achievement. Workers' Reports of ‘Single Biggest Problem They Faced on Their Jobs Percent distribution 1 10 1 Percentages do not add to 100 percent, since miscellaneous problems were included. Source: "The Working Conditions Survey", M o n th ly La b or Review, April 1971. 15 Users of this chartbook interested in keeping abreast of current information on productivity can find up-to-date statistics on productivity, prices, wages, costs, and profits in the U.S. economy in the Quarterly Review of Productivity, Wages, and Prices and the Quarterly Review of Productivity and Costs, as well as in the chartbook on Prices, Wages, and Productivity, a monthly supplement to the more detailed quarterly reports. These reports are free and are available from the Bureau of Labor Statistics. Many of the same tables also appear in the Monthly Labor Review and Employment and Earnings, two monthly publications of the Bureau of Labor Statistics that are available by subscription from the Superintendent of Public Documents or from any of the BLS regional offices. 6 U. S. 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