David Hunt, James Manyika and Jaana Remes in the McKinsey Quarterly article, "Why U.S. Productivity Can Grow Without Killing Jobs," state that increased productivity in the U.S. has consistently increased jobs for the long term. From 2000 to the present, is the only long-term exception where increased productivity came totally at the expense of job cuts. Nearly half of the productivity gains from this period came from computers and related electronics, manufacturing and the information sector, which reduced employment by 4.5 million jobs (Exhibit 2).
Productivity Includes More Than Efficiency
Expanding output also includes innovations that afford added value to goods and services. Additionally, the savings from increased efficiency, can increase employment by companies investing their savings into other areas of the economy and creating new job opportunities.
These cost savings from greater productivity can also be turned into lower prices for consumers and businesses who can spend these savings in other areas of the economy.
How To Create A Strong Economy
The ideal model, that meets the challenges of creating enough jobs to get the U.S. economy going again, is the economic cycle from the period of the 1990s to the year 2000 (Exhibit 3). During this period, two employment sectors, retail and semiconductors and electronics, led the way with gains in productivity and employment. In order to produce the productivity and employment levels comparable to this period, productivity growth must expand by "34 percent, to 2.3 percent annually," according to Hunt, Manyika and Remes.
Hunt, Manyika and Remes maintain that corporate-level actions can power three-quarters of those gains without any change to the regulatory environment (Exhibit 4). The health care industry is an example of where productivity gains can be implemented. Nurses spend less than 40 percent of their time with patients and the rest of their time on paperwork.
Retailing is another sector that has room for improvement in productivity. The lean practices of the stockroom could be added to the storefront and adjust the hours of employees to meet the variations of customer level traffic.
Businesses Can Contribute To Improved Productivity
Hunt, Manyika and Remes suggest that there is plenty of room for improved productivity in the retail business sector. Banking can find ways to service the quarter of Americans who are not currently being serviced to capacity.
Additionally, businesses can improve their services and products with greater innovations. Retailing, for example, is using radio-frequency identification tags with success. This procedure could be applied to the supply activities in many industries.
Government Can Help
The federal government, with the support of business, can help increase the skill base of American workers with strong support of improved education policies. Additionally, there is plenty of room for improving the aging infrastructure in the U.S..
The aging population of America poses a threat to the demands of qualified workers. Perhaps an easing of the age restrictions for the older workforce would be a positive move.
Save The U.S. Economy
The U.S. economy can be saved and reinvigorated with strong productivity and job creation. The ideal model for solving the current economic challenge in America is the 10-year period of the 1990s. This period demonstrated strong efficiency, innovation and added product value.
John A. Marinchek - John is a student and writer of Social-Economic issues, the Human Potential movement, and Martial Arts. His specific interests deal with ...
