Thread: Productivity has been declining since 2004

and the article claims they don't know why.

Article from todays MSN

http://tech.msn.com/news/articlecnet.as ... &GT1=10938

What increased in 2004?(sarcasim)
Could it possibly have been the year Bush was reelected and he opened the floodgate from Hell into this country?

That's exactly what Romney was saying, you don't grow your economy with more cheap labor, you grow it with increased productivity. If more cheap labor made an economy grow, India would have an economy 4 times bigger than ours!

Originally Posted by Bowman

That's exactly what Romney was saying, you don't grow your economy with more cheap labor, you grow it with increased productivity. If more cheap labor made an economy grow, India would have an economy 4 times bigger than ours!

Great point about India "Bowman"

Perspective: The Productivity Paradox
By Brent Frei and Mark Mader, Smartsheet


If there were a Productivity Hall of Fame, John Deere would definitely occupy a place of prominence.


The 19th century inventor introduced his cutting-edge steel plow with a polished and curved blade in 1837. In the process, he revolutionized agriculture. Tilling an acre of land with a spade required 96 hours and plowing an acre with a yoke of oxen and a crude wooden plow took 24 hours. Deere's steel plow reduced the time to five to eight hours.


Fred Smith would also be inducted into the Productivity Hall of Fame. On the night of April 17, 1973, the Yale-educated logistics master sent the first FedEx narrow-body Dassault Falcon jet roaring down the runway at the Memphis airport. From that moment on, packages were delivered more rapidlyâ€"absolutely, positively overnight.

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Another sure-fire member of our pantheon of productivity would be Andy Grove, the co-founder and former CEO of Intel. Under Grove's leadership, Intel brought out a new generation of microchips that powered the first wave of PCs in the 1980s. Those PCs with Intel inside spelled the demise of typewriters and paper account ledgers, and set the stage for digital time-saving tools like e-mail.


Deere, Smith, and Grove each made it possibleâ€"and easierâ€"for us to do more work faster.


That's the nature of productivity. And productivity is the lifeblood of a nation's economy. America's efficient assembly line culture, spurred by Henry Ford and General Motors' Alfred Sloan, certainly proved this in the 20th century.


Once the Model-Ts started rolling, America's labor productivity growth started surging, averaging about 2 percent each year. That growth rate helped double the U.S. standard of living every 35 years.


As the hyper-prosperous high-tech 1990s unfolded, Americans were living better than at any time in our history. Indeed, the Internet accelerated the U.S. productivity revolution, pushing annual labor productivity growth up to 2.5 percent between 1995 and 2000, and 2.8 percent between 2000 and 2004.


Productivity growth has slowed since 2004, however, and nobody is sure why.


Certainly, technology has done its job. In the wake of downsizing, budget cuts, re-engineering, and outsourcing, it has filled in the gaps at company after company. As a result, supply chains are efficient and lean, the financial services industry is automated, and manufacturing processes are flexible. Indeed, the average company in America now spends between $5,000 and $10,000 per knowledge worker on hardware and software designed to boost productivity.


One theory that may explain declining productivity growth has been advanced by McKinsey consultants, who believe that companies have finally cut the noncomplex transactional positions that benefit from productivity-stimulating technology. All that's left are complicated and nuanced jobs requiring experience, expertise, judgment, interaction, and collaborationâ€"or tacit knowledge. Increasing productivity for these employees, whose jobs can't be automated, has thus far proven to be a challenge for software developers.


Another way of explaining the decrease in productivity growth is to admit that much of the productivity-enhancing technology now in use hasn't made us more productive. According to Basex, a research firm focusing on the knowledge economy, interruptions from e-mail, cell phones, instant messaging, text messaging, and blogs eat up nearly 30 percent of each day; on an annualized basis, this represents a loss of 28 billion hours for the entire U.S. work force, or a $588 billion cost to the American economy.


An equally sad truth is that even though we now have the technological ability to do faster work, we may not be doing better work. More problematic is the fact that we're generally not working easily or happilyâ€"in groups or on our own.


A 2006 research study conducted among sales and marketing teams at Intel indicated that 54 percent of those surveyed believed e-mail had a negative impact on their stress levels.


And a number of other studies show that productivity-enhancing hardware and software has helped heighten distraction and discontinuity in the workplace at the expense of critical and creative thinkingâ€"as well as constructive collaboration.
This is a large and looming problem because, as McKinsey says, we are entering an interaction revolution that will require employees to truly and sensitively come together to achieve top- and bottom-line goals in a hyper-competitive global marketplace.


Automating the knowledge economy is essential to our nation's health. And when this technological turn of the wheel takes place it will almost certainly drive productivity growth back up--but in the right way that makes sense for well-meaning companies and the hard-working people within them.


Brent Frei is chairman and Mark Mader is chief executive of Smartsheet, a software as a service provider based in Bellevue, Wash.
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It's even worse than they think: http://www.businessweek.com/magazine/co ... 039001.htm
http://www.businessweek.com/the_thread/ ... m_gdp.html

they know what's wrong and it's CHEAP labor!

The assumption is that illegal aliens are cheap labor. In reality they are not. They work for one season, cost the Taxpayer about $32000 a piece per year and then they disappear into our welfare net. Every season new illegals have to be brought in. What happens is the work long enough to get into the entitlement system, then they quit. But in the end they are not cheap, they just promote subsidized labor as we have to foot the bill. Productivity is low because our dollar is weak and we have masked inflation. Our currency notes have lost agood deal of their value and we are in massive debt. This causes innovation to decline and soon cosumption follows. Low consumption equals low productivity for obvious reasons. Productivity is basically what you get out of a certain amount put in. The so called cost of labor is a very misleading statistic as it does not include the purchasing power of workers. The decline in purchasing power and the massive ioncrease in the cost of scoial welfare and entitlements and oil has created a high cost of getting products made. Couple that with drops in purchasing power and disposable income and you have a real problem. Many American manufacturers have configured their corps not function in response to the market, supply and demand and such as they have come to expect bail outs and corporate welfare. They survive by producing en masse, which fails when consumption drops people save their less and less valuable income. These corps then try and unload their good in foreign markets. They truly dont react to supply and demand, they decide to make something and want no risk in doing so by utilizing subsidized socialist labor.

Chosen wrote:

The assumption is that illegal aliens are cheap labor. In reality they are not. They work for one season, cost the Taxpayer about $32000 a piece per year and then they disappear into our welfare net.

They are most definitely "cheap" labor to those who employ them!

Americans are getting sick and tired of subsidizing big businesses "cheap" labor.

And costs in China are rising so all that corporate outsourcing is beginning to come back and bite them in the _ss! It's hard to believe that the corporate elites were so blinded by their own greed!


Rising Costs in China Seep Into U.S. Market
Importers Pay More or Cancel Orders

By Ariana Eunjung Cha
Washington Post Foreign Service
Saturday, February 9, 2008; Page D01

SHENZHEN, China -- A year ago, Mei Meng's factory sold foot-tall plush teddy bears, rabbits and ducks for export to the United States for $1.30 each. Now they're $2, and he doesn't rule out the possibility that prices will go up again.

Likewise, manufacturers say wholesale prices of cowboy hats made in China have gone from $1.65 to $2, cotton duvet covers from $3.30 to $4, portable electric ranges from $9 to $10 and office water dispensers from $50 to $56.

A confluence of events -- the weakening dollar, soaring domestic inflation, new labor laws, the end of some government export subsidies, the increasing cost of raw materials, more stringent product safety regulations, and bad weather -- means the cost of goods produced in Chinese factories is rising fast.

Those increased costs are already showing up in import prices. After falling for years, the price index of goods from China rose 2.4 percent in 2007, according to the U.S. Bureau of Labor Statistics division of international prices. That's the largest annual increase since the index was first published four years ago.

The added costs could compel U.S. companies to shift their manufacturing elsewhere -- particularly to Southeast Asia, where countries such as Cambodia have already seen an increase in U.S. investment.

Or the increases could be passed along to U.S. consumers.

That would mean that the cheap goods that were synonymous with China and allowed megastores such as Wal-Mart to dominate the U.S. retail sector will likely no longer be as plentiful.

"We'll see maybe a 5 to 10 percent increase in consumer prices, depending on who has power" in a specific part of the supply chain, said Sun Mingchun, a senior economist at Lehman Brothers.......continued

http://www.washingtonpost.com/wp-dyn/co ... 03604.html