Productivity.   We keep hearing that productivity is down- again.  And, why do we care?   Because productivity has been the prime driver of economic growth for decades.

Of course, it’s not like corporations have been investing in new technology to enable their American workers to do more with less. (Check their capital spending- it’s way down.)  Which is exactly how worker productivity managed to increase from 1950 forward.  Until 1970 or so.  Funny how that is  about the same time that businesses felt entitled to break the social compact that had obtained- with their employees and their communities.  (I’ve written how Dr. Marty Feldstein propelled this steamroller of a downward doctrine.)

From 1970 to 1990, annualized productivity increases fell to 1.5% a year (down from the previous two decades’ 2.6% annual growth).  Now, it’s running about 0.6%.  Using the conventional measuring sticks.

But, technology has greatly decreased the cost for information, afforded consumers (and businesses) more choices, and helps Americans acquire their needs and desires at lower costs (by finding the cheapest pricing).   Measuring GDP (Gross Domestic Product) doesn’t take into account how much more productive we are able to buy our wares online, or how we can find information at our fingertips in a second via Bing and/or Google.

Keep in mind that the Industrial Revolution also did not manifest in observed productivity gains for nearly a century.  But, the revolution did yield a major change.  After Lee surrendered to Grant at Appomattox, our troops went home- to the farm.  Almost 7/8 of America were engaged in agriculture.  80 years later, by the end of the Second World War, 60% of us resided in cities- down from the 86% that obtained back in 1866.

So, it’s not surprising that the technology explosion has not yet manifested its gains via any of our metrics.  Since 1970, our society has manifested similar changes in our lives, as those experienced from 1866 through 1945.  We no longer seek that single employer that will provide us pay checks until we are ready to retire. Instead, we change jobs every 3 to 5 years.  And, many folks find that they lack the skills they need to acquire that new job, once they reach middle age.

The technology revolution (or maybe it should be called the information revolution), as mentioned above, changed how we consider our cars, how we use mass transit (including taxis), how and where we obtain our news, even how we enjoy entertainment.  We’re still learning how best to employ these technologies- which is why we haven’t refined the cultural practices that will incorporate the technology into our lives.

Moreover, the information/technology revolution has let companies move a lot of their operations overseas.  Effecting tasks that need lower skills elsewhere.  (This also means that US citizens who lack the training and education to perform more technological affairs have been shortchanged.)

Then, there’s also the fact that corporations have moved the ownership (wink, wink, nod, nod) of the stuff we developed here to ‘the Lost Island of the Pacific’ (and other similar locales)  which has no- or certainly, low- tax rates.

So, it shouldn’t surprise anyone that firms may have $ 1 million in invested assets per American employee- but $ 117 million per employee in Bermuda.  (Of course, they may only have two employees there…)  And, since the generation of profits from the patents we have developed in the states is now considered to be a Bermudan or Irish (or that Lost Island of the Pacific) asset, the productivity associated with said activity is assigned to those countries- and not to our own shores, where it really was developed and belongs.

Again, more reasons why metrics on productivity must change.

And, one can only hope that the shallow unemployment census will force American firms to start paying their employees more- because those firms are now finding it harder to find someone to fill their slots.  Not to mention disallowing the make-believe appropriation of American produced and developed assets to overseas entities.

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