Measuring Productivity in a Service Economy

[kelley]

MEASURING PRODUCTIVITY IN A SERVICE ECONOMY
Much of the credit for the United States' long-running economic boom has
been granted to the productivity-boosting effects of high-technology. But
technology has been seen as primarily a boon to manufacturing businesses.
The fast-growing service sector, on the other hand, has been slow to improve
productivity by adopting technology. That has led some critics to contend
that the so-called "New Economy," in which technological advances pave the
way for long-lasting growth and prosperity, is a sham, that the economy is
merely experiencing a normal period of prosperity, not an entirely new
paradigm. But there are signs that productivity is up in the service sector.
According to recent government data, which measures productivity as output
per hours worked, barbershops, for instance, registered a 2.7% productivity
gain in 1998 and photography studios enjoyed a 14.7% increase. These gains
are likely due in part to the broad adoption of high-tech tools in service
businesses. As one economist noted after completing a study of 800 firms --
half service sector, half manufacturing, "more technology, more
productivity." (San Jose Mercury News 2 Jul 2000)

http://www.mercurycenter.com/svtech/news/front/docs/produc070300.htm