Increased Worker Productivity Has Destroyed Millions of Jobs, and We Should Be Grateful

Carpe Diem ^ | 17 July 2010 | Mark J. Perry

[Palter]

Ron Bullock, chairman of Bison Gear & Engineering Corp, writing in the Washington Examiner:

"More effective foreign competition has led to increasing manufactured-goods trade deficits and the loss of 7 million U.S. manufacturing jobs since 1980."

Don Boudreaux responds:

"This account – repeated ad nauseam – would be more plausible if it were also the case that U.S. manufacturing output, during this same time, had declined. But this output rose. Manufacturing output today is nearly 100 percent higher than it was 30 years ago (see chart). Importantly, manufacturing output is up while manufacturing employment is down for a reason that is cause not for the pessimism that universally attends accounts such as Mr. Bullock‘s but rather for optimism. That reason is substantial growth in productivity, which is the only source of sustained and widespread prosperity."

MP: The graphs above tell the story. U.S. Manufacturing output has more than doubled since 1975 (data here) while manufacturing employment has decreased by about 8 million jobs (data here), resulting in more than a three-fold increase in worker productivity (output per worker) since the 1970s. Therefore, it's the dramatic increase in the productivity of American workers that helps explain the loss of millions of manufacturing jobs, and this a a cause for optimism, not pessimism, as Don points out.

Just like we should celebrate, not mourn, the loss of millions of farm jobs due to the ongoing and significant increases in worker productivity that reduced farming jobs as a share of total jobs from 90% in the 1700s to the current level of only about 2.6% (see chart below, data below). Any time we can get more output with fewer workers, whether it's farming or manufacturing, it's a sure sign of economic progress and a rising standard of living.

[Pessimist]

I used to work in manufacturing.

When I started, in the mid ‘70’s, we were using single spindle Brown & Sharpes to make a single fitting in about 30 seconds.

A few years later, we were using multi spindle machines to make a fitting in 4 seconds.

Interestingly, we would sometimes still get beaten out price wise by Mexicans running single spindle equipment.

[ClearCase_guy]

Any time we can get more output with fewer workers, whether it's farming or manufacturing, it's a sure sign of economic progress and a rising standard of living.

*ahem* My standard of living has risen to uncomfortable heights. I hear rumors that my chocolate ration is being increased from 30 grams to 20 grams.

[cripplecreek]

Look at it this way.

At least we won’t have to work and can milk the productive people for our survival. LOL

[Fido969]

Increased productivity was supposed to create a leasure society, a paradise for the workers.

[Hodar]

In the 70’s, you were given a quota of making ‘x’ widgets; and day in, day out you and others made those widgets. Bonus programs were in place that paid a premium for making 5% more widgets; and people retired after having worked their lives making widgets at a rate of ‘x+5%’, and lived comfortably the rest of their lives on their retirement.

You had stability, you had consistency, you had expectations that were well within reason. You had a non-verbal contract with your employer - loyalty went both ways. You made your quota, and your employer kept you employed through thick and thin.

Today, you make ‘x’ widgets; but you had better make ‘x+5%’ every year, increasing by 5% until you cannot meet the quota - then you are replaced.

So, yes; we are making almost double from what we made 20 years ago; but are we in a ‘better place’? I would argue ‘no’, we are in a far worse place. People no longer have job security, work is becoming more and more stressful. Loyalty to the company is now punished, and there is absolutely NO loyalty from the company to any employee.

As a group of Americans, we are now no longer the leaders of the world in manufacturing, we are lagging the rest of the world in education, and a great many people not only have lost their retirements due to layoffs - they are losing their homes as well. This is not progress.

[r9etb]

Any time we can get more output with fewer workers, whether it's farming or manufacturing, it's a sure sign of economic progress and a rising standard of living.

Unless you're one of the guys who no longer has a job.

[ImaGraftedBranch]

For me, it simply means our salaried employees have to work longer hours.

[SunkenCiv]

Thanks Palter.