Productivity - A Few Comments

Over the years, the topic of productivity has often been mentioned.

I've had thoughts on the matter for years. An example is this "Letter To The Editor" I wrote concerning a BusinessWeek story back in 1995 (3rd letter down).

Here is a March 31 Washington Post story on productivity. As the article says, "One of the great surprises of the economic downturn that began 27 months ago is this: Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.

That means high-level gains in productivity..."

Of course, increasing productivity is often a favorable situation to businesses. However, it can also be a misconstrued statistic, as rising productivity can have various side effects that are less than desirable.

My issue with coverage of the issue is that increasing productivity is often hailed unequivocably as a favorable occurrence, with no discussion as to the negative side effects.

Here is a simple example: A high-level employee who, because of extensive layoffs at his firm, is now forced to perform entry-level tasks critical to the firm because if he doesn't perform them, no one else will. Of course, the firm is more "productive" after the layoffs because it is maintaining sales with fewer employees - but obviously having a high-level employee doing entry-level work is inefficient. As well, think of all of the responsibilities and activities this high-level employee has to put off or ignore at his higher level so he can perform the entry-level tasks - as well as other deleterious issues arising from this gain in productivity.

I could write extensively about productivity, as it is complex, very important and far-reaching in many ways to what is currently happening in American business...


SPX at 1178.10 as this post is written