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  • Lost Momentum in Manufacturing Multifactor Productivity

    The Bureau of Labor Statistics has released some interesting data on the manufacturing sector today--specifically on multifactor productivity during the great recession and the ongoing recovery. Multifactor productivity--"the change in output per unit of combined inputs"--rose 0.8% (annual rate) in 2011. That rate of increase was a big dropoff from 2010, when multifactor productivity rose an unprecedented 4.5%. From the release: Multifactor productivity in manufacturing grew 1.3 percent annually from 1987 to 2011 with sectoral output increasing at an annual rate of 1.7 percent, faster than the 0.3 percent annual increase in combined inputs. During the same period, output per hour (labor productivity) increased 3.3 percent annually. (See table A.) Of the 3.3 percent growth rate in labor productivity, multifactor productivity added 1.3 percent, capital intensity contributed 0.6 percent, materials intensity added 0.9 percent, and purchased business services intensity added a 0.4 percent increase. The contribution of energy intensity was unchanged. For the 2007-2011 period, multifactor productivity rose at a 0.6 percent annual rate compared to a larger 2.0 percent annual growth rate in the 2000-2007 period. Sectoral output declined 2.3 percent and combined inputs declined 2.9 percent over the 2007-2011 period. In 2011, fewer NAICS three-digit manufacturing industries exhibited an increase in multifactor productivity growth and sectoral output growth compared to the previous year. The number of industries exhibiting an increase in combined inputs remained steady at 13, the same number as in 2010. Eleven out of 18 manufacturing industries exhibited an increase in multifactor productivity. Thirteen industries showed increasing output. Seven industries experienced a decline in multifactor productivity growth. Of these seven industries, two were durable manufacturing industries: primary metals and miscellaneous manufacturing. The remaining five industries were in the nondurable manufacturing sector: food, beverage, and tobacco products; textile mills and textile product mills; apparel, leather, and allied products; petroleum and coal products; and plastics and rubber products. Read the full release here .

  • Dan Ariely on What Truly Motivates Us to do Good Work

    What do we want from our work? Money? Happiness? Well, maybe. But Dan Ariely has found that we crazy humans are motivated a lot by meaning and pride. Companies that can get their workers to feel pride in their work, and feel as though they are accomplishing something that matters, whether that be solving a tricky engineering problem or helping advance a good cause, get more productivity out of their workforce. In this TedX talk, Ariely speaks about some of the experiments he has done that led him to a greater understanding of how to make workers more productive and happy.

  • Richard Florida Calls Rising Creative Class the "Growth force of our time"

    It has been more than a decade since Richard Florida got our attention with his book, The Rise of the Creative Class . Even with the tumult of the last several years, Florida has not changed his position. He continues to believe that workplaces that tap into, and encourage, the creativity in workers will reap benefits in today's global economy. In this Big Think interview, Florida discusses the continuing rise of the creative class:

  • Census Bureau: 10.8 Million Americans Travel at Least an Hour Each Way for Work

    Yahoo CEO Marissa Mayer has us all engaging in conversations about the relative merits of telecommuting . As for real, physical, get in a car or train or bus commuting, the Census Bureau has some data for us. A lot more Americans, it turns out, travel an hour or more to get to work than telecommute. And some 600,000 travel 90 minutes or longer--each way. About 8.1 percent of U.S. workers have commutes of 60 minutes or longer, 4.3 percent work from home, and nearly 600,000 full-time workers had "megacommutes" of at least 90 minutes and 50 miles. The average one-way daily commute for workers across the country is 25.5 minutes, and one in four commuters leave their county to work. These figures come from the U.S. Census Bureau's annual American Community Survey, which provides local statistics on a variety of topics for even the smallest communities. According to Out-of-State and Long Commutes:2011 , 23.0 percent of workers with long commutes (60 minutes or more) use public transit, compared with 5.3 percent for all workers. Only 61.1 percent of workers with long commutes drove to work alone, compared with 79.9 percent for all workers who worked outside the home. "The average travel time for workers who commute by public transportation is higher than that of workers who use other modes. For some workers, using transit is a necessity, but others simply choose a longer travel time over sitting in traffic," said Brian McKenzie, a Census Bureau statistician and author of the brief. Rail travel accounted for 11.8 percent of workers with long commutes, and other forms of public transportation accounted for 11.2 percent. Workers who live in New York state show the highest rate of long commutes at 16.2 percent, followed by Maryland and New Jersey at 14.8 percent and 14.6 percent, respectively. The estimates for Maryland and New Jersey are not statistically different from each other. These states and several others with high rates of long commutes contain or are adjacent to large metropolitan areas. Here is a helpful breakdown of commute times from the Out-of-State and Long Commutes report: Read the full release here .

  • BLS: Productivity Decreased in Fourth Quarter

    Productivity dropped 2.0 percent (annual rate) in the fourth quarter of 2012, according to new figures released by the Bureau of Labor Statistics . Output rose just 0.1 percent while hours worked rose 2.2percent. From the report: Unit labor costs in nonfarm businesses increased 4.5 percent in the fourth quarter of 2012, the combined effect of the 2.0 percent decrease in productivity and a 2.4 percent increase in hourly compensation. Unit labor costs rose 1.9 percent over the last four quarters. BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them. Manufacturing sector productivity increased 0.5 percent in the fourth quarter of 2012, as output increased 0.7 percent and hours increased 0.1 percent. Productivity increased 1.6 percent in the durable goods sector and decreased 0.5 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.3 percent, as output increased 2.8 percent and hours worked rose 1.5 percent. Unit labor costs in manufacturing increased 0.4 percent in the fourth quarter of 2012 and increased 3.4 percent from the same quarter a year ago. Read the full release here .

  • The Cost of Sleep to U.S. Productivity

    Many Americans need to get some sleep in order to get to work. The Wall Street Journal 's Lauren Weber , citing a Harvard Medical School study, reports that exhaustion is costing the U.S. economy "billions of dollars in lost productivity." Some companies are realizing that the nonstop work culture isn't producing enough work and are training their employees to be better sleepers. Weber: The Centers for Disease Control and Prevention estimates 40.6 million American workers, or 30% of the civilian workforce, don't get enough rest. And the Harvard scientists estimated in 2011 that sleep deprivation costs U.S. companies $63.2 billion in lost productivity per year, mainly because of "presenteeism," people showing up for work but operating at subpar levels. One example, from a separate team at Singapore Management University: Workers waste an extra 8.4 minutes online—checking email, refreshing the TMZ.com home page, and so on—for every hour of interrupted sleep the previous night. Managers struggle to motivate exhausted workers. During busy holiday periods at the Park Hyatt Beaver Creek resort in Avon, Colo., long hours sometimes lead to short fuses among staff. "You have to try to figure out who's feeling frustrated and help them cut loose to get some rest," said Scott Gubrud, director of sales and marketing at the hotel, which last week began a series of better-sleep initiatives for both employees and guests. "If we treated machinery like we treat the human body, there would be breakdowns all the time," said James Maas, a former Cornell University psychologist and author of "Sleep for Success." Companies have been slow to grasp the effects of sleep deprivation on productivity, but it is now a hot topic even in hard-driving industries, such as finance, where pulling all-nighters is often viewed as crucial to getting ahead. Read Go Ahead, Hit the Snooze Button here . (h/t Boston Innovation )

  • Chicago Fed: the Slowing of Growth in Productivity

    In a new Chicago Fed Letter , Chicago Fed Economists Jake Fabina and Mark L. J. Wright try to make sense of the reduction of the rate of growth in productivity in the U.S. and other advanced economies. Take a look at the trend: From Fabina and Wright: Figure 1 plots Fernald’s measure of the level of multifactor productivity of the U.S. business sector (i.e., excluding general government and household production) quarterly from 1973 to 2012. The data are scaled so as to equal 100 in 1973:Q1. The figure identifies four distinct periods of productivity growth. The first is the ten years beginning in 1973, which corresponds to the wellknown productivity slowdown of the 1970s. This was succeeded by a period of modest growth of productivity that continued into the mid-1990s. In the third period, multifactor productivity growth increased again to 1.7% per year. The fourth and final period shows a dramatic decline in the rate of growth of multifactor productivity to about 0.5% per year. This period begins somewhere around 2004, in advance of the Great Recession. The Great Recession is associated with a large temporary drop in the level of multifactor productivity, reflecting the fact that both labor and capital were underutilized during the recession. In asking the big question, "Where has all the productivity growth gone?" Fabina and Wright lay out a series of other questions that are helpful in understanding all the key variables to productivity: It is possible that the current slowdown is a short-term aberration, and that as the advanced economies emerge from this period of economic crisis, fasterproductivity growth will also reemerge. If not, then it is tempting to revisit explanations that were proposed for the 1970s productivity slowdown. Is it perhaps simply a problem of measurement related to the increasing share of the economy devoted to services—in particular, business and financial services— for which it is difficult to measure output (and, hence, productivity)? Or is it perhaps due to a more widespread problem with the measurement of intangible investments (see, e.g., Aizcorbe, Moylan, and Robbins, 2009)? Alternatively, might it be due to the exhaustion of the gains from the information technology revolution? Or to declines in the quality of education and, hence, the quality of the labor force? Or even to declines in government investments in infrastructure? Depending on the answer, slow measured productivity growth may be consistent with continued rising living standards or a period of stagnation in the developed world. Read Where has all the productivity growth gone? here .

  • Nissan's Carlos Ghosn on the Bumpy Road Ahead for Automakers

    We may need to be prepared to see a decrease in production from automakers, and the economic impact on the economy from those cutbacks. In the following interview with The Wall Street Journal's Chester Dawson , Nissan and Renault CEO Carlos Ghosn says that the ongoing struggles in the EU are forcing Nissan and its competitors to reconsider their output. Ghosn also discusses other key factors for Nissan's economic outlook--such as growth in China. And while he is focused on his own company, there are lessons in his outlook for all global companies:

  • BLS: Productivity Picked up in 2011 for Most Industries

    Productivity rose in wholesale trade and retail, but was flat in food services for 2011, according to new figures released by the Bureau of Labor Statistics . The breakdown of annual change in productivity by industry is particularly interesting. Take a look: From the report: In wholesale trade, labor productivity rose 1.9 percent as output grew 4.8 percent and hours increased 2.9 percent. Productivity grew 6.3 percent in durable goods, but fell 1.1 percent in nondurable goods. Output per hour increased in all but one of the durable goods industries but in only one of the nondurable goods industries. Output grew in 13 of the 19 wholesale trade industries and hours rose in 15. Productivity increased most rapidly in machinery and supplies wholesalers, where output rose more than in any other wholesale trade industry. Unit labor costs declined in 9 industries. In retail trade, labor productivity grew 2.2 percent – faster than in the other sectors presented here – as output increased 3.7 percent and hours rose 1.5 percent. Output per hour increased in 21 of the 27 detailed retail trade industries in 2011. Output grew in 23 industries and hours rose in 16. The largest productivity increases were in florists and vending machine operators, both of which recorded rapid declines in hours. Unit labor costs fell in 17 industries. In food services and drinking places, labor productivity recorded no change, as output and hours both grew 3.4 percent. Output per hour rose in three of the four detailed industries in this sector, but fell in limited-service eating places, where hours grew at a rate nearly double that of output. Output increased in three industries and hours grew in two. Unit labor costs rose in three of the four industries. Read the full release here .

  • 'How Much is Enough?' Authors on Keynes, Work-hours, and Wealth

    Earlier this month, the Carnegie Council hosted Robert and Edward Skidelsky , the father and son co-authors of How Much is Enough?: Money and the Good Life . Among other topics, the Skidelskys discussed the somewhat counterintuitive finding of their research that by pushing ourselves so hard to attain the things we want, we may not really move in the direction of "the good life," but rather away. Here's a short excerpt in which Lord Robert Skidelsky --who is also a biographer of John Maynard Keynes--talks about Keynes's prediction in 1930 that technological advancement would bring about massive wealth and very short workweeks. A prediction, Skidelsky says, has turned out to be half right. Watch the more of the discussion here .

  • OECD: Canada's high standard of living dependent upon increased productivity

    Let's look north, for a moment. In its latest report on Canada's economy, the OECD credits Canadians with effectively "weather[ing]" the storm during the global economic crisis. The OECD gives Canadian policymakers high marks for a "timely macroeconomic response." And Canadian banks are cited for being more stable and prudent than their respective neighbors to the south. But the report gives some warnings, as OECD evaluators cite "sluggish" productivity as a cause for concern. Canada’s overall productivity has actually fallen since 2002, while it has grown by about 30% over the past 20 years in the United States. At the same time, income has shifted towards the resource-rich western provinces, while the regional economies of Ontario and Quebec are still adapting to increased external competition resulting from the high exchange rate. “Canada is blessed with abundant natural resources. But it needs to do more to develop other sectors of the economy if it is to maintain a high level of employment and an equitable distribution of the fruits of growth,” said Peter Jarrett, one of the authors of the study and the head of the Canada division at the OECD Economics Department. The OECD identifies two key priorities for meeting this long-term challenge. First, Canada needs to boost innovation. Canada has world-class research institutions and provides strong public support to business investment in research and development (R&D). However, the business sector devotes only about 1% of GDP to R&D, compared with 2% in the U.S. and more than 2.5% in Japan, Korea and some of the Nordic countries. Canada remains a low performer on business investment in R&D, even when the large share of natural resource production is taken into account. Here's a look at productivity in Canada relative to the US over the last three decades: Read a summary of the report here . For access to the Economic Survey of Canada (subscription required), click here .

  • Career Advice: Pursue Passion, No Excuses

    Larry Smith teaches economics at the University of Waterloo . Apparently, in teaching his students how to make important personal decisions--like choosing a career--he urges them to think about the big picture, and he doesn't care for excuses. And if his classroom lectures are anything like this talk from TEDxUW , Smith might just be effective in getting them to understand the link between economic success and passion.

  • Labor Department: 4th Quarter Productivity up 0.9%

    Productivity continued to increase during the fourth quarter of 2011, but the rate of growth slowed, according to data released by the Labor Department today. From the Bureau of Labor Statistics report: Nonfarm business sector labor productivity increased at a 0.9 percent annual rate during the fourth quarter of 2011, the U.S. Bureau of Labor Statistics reported today. The gain in productivity reflects increases of 3.7 percent in output and 2.7 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2010 to the fourth quarter of 2011, productivity grew 0.3 percent, as output rose 2.3 percent and hours rose 1.9 percent. Annual average productivity increased 0.4 percent from 2010 to 2011. Here is a look at the 6-year trend: The report suggests employers need to add more employees in order to keep growing output: Manufacturing sector productivity edged down 0.1 percent in the fourth quarter of 2011, as output rose 4.8 percent and hours worked increased 4.9 percent; this is the largest quarterly gain in hours worked since the second quarter of 1996 (6.2 percent). Over the last four quarters, manufacturing productivity increased 1.7 percent. Annual average productivity grew 2.6 percent from 2010 to 2011. Unit labor costs in manufacturing increased 2.0 percent in the fourth quarter of 2011 but were unchanged from the same quarter a year ago. Read the full release here .

  • Brookings Discussion on Manufacturing, Innovation, and Productivity

    We have been trying to keep up with the very robust public conversation among economists about the state of manufacturing in the US. Ever since the president made a push for increased productivity in the manufacturing sector during the State of the Union, there has been no shortage of opinions, and, thankfully, analysis of the potential for manufacturing to be a significant part of the recovery. Yesterday, the Brookings Institution held a panel discussion titled Why—and Which—Manufacturing Matters: Innovation and Production in the United States . It was a thoughtful and informative--albeit wonky--presentation. Susan Helper was one of the participants. In this excerpt, Helper, professor of economics at Case Western Reserve University, speaks to how a successful marketing strategy features coordination of investment and creates both supply and demand: Here is the full panel discussion:

  • Shawn Achor on Happiness and the Bottom Line

    The economic benefits of happiness--to a worker, to that worker's company, and to that worker's national economy--are significant and important. So says Shawn Achor , psychologist and CEO of Good Think Inc . Achor spoke about how effective positive psychology is on productivity in this highly entertaining and instructive Ted Talk: Also, read Achor's article on positive intelligence in the latest Harvard Business Review , here .
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