8/11/15 Productivity Schizophrenia – I am going to have to be committed
There was a lot of hue and cry over the poor increase in the
unit labor cost index. Here it is year
over year. Very disappointing they
say. Why? Because it wasn’t higher. Like in higher cost to employers. Well which is it we like? We like employers to have low labor cost and
we like employees to be paid well.
Worse, here is the year over year of total output per man
hour. Everybody today was saying how we
need better productivity. That
productivity is the key to higher wages and a better living standard. One leading financial website called it a
crisis. But I ask, with more automation,
that is, more productivity, what happens to wages in general? Suppose businesses respond to this wailing about low
productivity with an all-out effort to buy robots and
replacing their workers. Productivity
will increase on this chart nicely. But
what happens to that living standard with laid off or not hired workers?