Teaching Tip: American Productivity–a Double-Edged Sword

Last Saturday, we had a bunch of friends over for dinner and the talk turned to  productivity, about which we write in Chapter 1 (p.13): “Productivity is an excellent way to evaluate a country’s ability to provide an improving standard of living for its people. Only through increases in productivity can the standard of living increase“.

But here was the gist of the conversation— From a pediatrician: “We have a practice of 22 doctors and business is stable. Six staff turned over this year, but because of the economy, we only replaced two. The  work was split among the rest, who each got more hours”. From an ophthalmologist: “I am a sole practitioner, but when two staff left this year, I only replaced one.” From a lawyer: ” My firm made offers to two dozen new associates this year. But with the downturn, we rescinded the start dates by one year. Current associates will pick up the slack”. From a second attorney: “We did exactly the same with new hires. But we  placed each of them with a non-profit for the year and picked up their ( lower) salaries”.

The Wall Street Journal writes about “superjobs“, a situation where employees do more than one job’s worth of work. (More than 1/2 of workers surveyed said their jobs had expanded, but usually without a raise). So it’s no wonder that US productivity increased twice as fast in 2009 as it did in 2008, and twice as fast again in 2010. This makes American workers the world’s most productive. We not only work longer hours (Americans put in an average of 122 hours more per year than Brits and 378 hours more than Germans), but technology investments have increased their rates of return, and companies have become more efficient.

With more productive workers supporting a growing population, the employment rate and living standards are falling. This can make for a good classroom discussion as your students provide their view of our productivity gains. Perhaps this is lean management at its best.