The Business of America
Rosow, Jerome M.
"The Business of America" Just as it takes two to tango, there are two sides to the inflation equation—too much money chasing too few goods and services. This means that efforts to limit government spending and the supply of...
...If agriculture is included, the rate was slightly better-2.2 percent...
...The damage which concern for the environment inflicts on productivity can be exaggerated, however, especially to the extent that attention to the environment is substituted for emphasis on style changes...
...Some of the reasons for the productivity slowdown are short-term...
...manufacturing productivity increases have lagged behind those of other major industrial powers, though the lag was greater from 1965 to 1970 than since...
...Even when prices do not rise with each visit to the grocery store, our high and rising standard of living depends on our ability to produce efficiently...
...At current levels of double-digit wage and benefit increases manpower utilization is a necessity, not a luxury...
...Recent developments provide strong evidence that we must pay more attention to the human factor: 1. Changed worker expectations and rising levels of education increase the potential impact of people on the production process...
...We must serve the fundamental economic objectives with adequate attention to the quality of life at work...
...One of the best ways is to increase productivity—the amount of goods and services produced by an hour of work...
...Decision-makers often take the human factor for granted...
...We wouldn't have surplus labor either.'' The United States' need to improve its productivity performance developed well before double-digit inflation...
...The only resources that seem unlimited are people...
...Others arc not...
...These can involve workers and unions together with management in agreeing to major changes in methods and organization to advance efficiency with sharing of the gains...
...2. Workers still support the work ethic...
...A production strategy that emphasizes automation and excludes human factors cannot take full advantage of this improved potential of people...
...the consolidation of farms into larger units has passed its peak and increasing food needs have brought more and more marginal land into use...
...But with increased job security, they are less likely to accept authoritarian control in the workplace and more likely to demand more satisfying work...
...This year output has actually fallen as it usually does in an economic downturn because output falls faster than hours worked...
...A recent Wall Street journal editorial (September 16, 1974) stated: "If labor and management could spend the next forty years, even four years, on ways and means to fuel supply instead of demand we wouldn't have too many dollars chasing too few goods...
...7. Scarcities of natural resources andother capital are becoming serious, making the value of human resources critical...
...The U.S., and indeed the entire world, face long-term factors that will make increases in productivity more difficult to achieve in the future than in the past...
...manufacturing productivity growth is lagging behind that of other countries—our ,gains are even less than the United Kingdom's...
...From 1967 to 1973, output per man-hour in the private nonfarm economy rose only about 2 percent a year...
...5. Today's growth industries—for example, trade, health care, education, and other services—are labor-intensive...
...Part of the prcductivity slowdown has been attributed to a belated effort to reduce pollution and conserve irreplaceable natural resources—in itself a reflection of the growing pressure of population on resources...
...a related fact is that some of their equipment is newer and reflects later technology than ours...
...Some of the recent slowdown reflects a slowdown in agricultural productivity gains...
...Our slackened increase in manufacturing productivity compared with other countries reflects in part the fact that these countries recently have had proportionately greater increases in capital investment...
...Human factors are the key to increased productivity, better service, and lower Cost...
...8. Productivity bargaining represents a special aspect of collective agreements...
...America's productivity challenge is basically a challenge to decision makers—to leaders in business, government, and the universities to engage people in a more effective and meaningful way at the workplace to break down productivity barriers...
...Worldwide, a growing population presses on limited resources...
...They weaken, rather than strengthen, the influence of people on the production process...
...This means that efforts to limit government spending and the supply of credit alone cannot solve the price problem...
...and only about one-third those of Japan...
...The work ethic in America is alive and well—if anything it is seeking broader and better outlets for its fulfillment...
...Indeed, fiscal and monetary restraint create grave risks of triggering cuts in production and causing an increase in unemployment and recession...
...In the six years from 1967 to 1973, manufacturing employment fell to 26.2 percent of employment, from 29.5 percent, while employment in government and other services and in retail trade rose from 53.3 percent to 57.1 percent...
...Since the mid-1960s U.S...
...3. Even where the workers' contribution to productivity is limited, we must make sure poor morale does not adversely affect product quality, or lead to the waste of time, energy, and materials...
...4. The inflation of wages and benefits has increased the unit cost of manpower at all levels, so that the need to increase productivity is greater than ever...
...These are the labor-intensive trade and service industries in which the methods we have relied on to raise productivity—increased use of machinery and equipment—have had limited application...
...6. Traditional approaches are not paying off as well as in the past...
...At the same time American workers in alloccupational classes seek better work conditions...
...Some of the slowdown reflects concentration of U. S. employment growth in industries where productivity has traditionally been low...
...American management believes increased productivity depends upon technology...
...The human factor in economic performance often holds the key to costs, productivity, prices, and profits...
...In labor-intensive service industries the factor may exceed 70 percent...
...Despite this, experts estimate that labor quality contributes up to 30 percent of production increases...
...Of equal importance in fighting inflation are steps to increase total production...
Vol. 8 • February 1975 • No. 5
