>His points on measuring white-collar service-sector productivity are
>valid, but they have little impact on the measurement of
>productivity for the economy as a whole. Almost all of final demand
>is made up of goods and non-white-collar services. Errors in
>overestimating white-collar service-sector productivity shift the
>locus of value added from the assembly line floor and the shipping
>warehouse to the office tower, but it's hard for me at least to see
>how it can distort the economy-wide productivity figures by much...
The concept of "productivity for the economy as a whole" is no straightforward thing. What does is mean, and, more importantly, how is it distributed? It's missing the 41m+ with no health insurance, isn't it? As Roach points out, the latest productivity stats, unlike those of the late 1990s, show much stronger growth in the service- than goods-producing sector. Ok, what service sectors are contributing? Retail maybe? That would mean Wal-Mart, which is miracle of uncompensated labor, from the pants-folder in Texas (paid minimally, discriminated against for her sex, and often forced to work off the clock) to the seamstress in Asia (paid minimally, discrimianted against for her sex, and often forced to work off the clock). What other services? Not finance, as even Jorgenson and Stiroh conceded, if my memory is serving me. How do you measure the real output of the financial sectory anyway? Health care? Ha. Really - where is this 8 or 9% growth in service sector productivity happening? In the 90s, the star of the productivity revo was durable manufacturing, particularly computers themselves - an artifact mainly of hedonic pricing. Is that miracle now eclipsed by an unspecified miracle in services?
By the way, a BLS guy told me that outsourcing is mainly a wash for the productivity stats. If the value is added outside the U.S., it doesn't enter into the numerator (output) - and of course it doesn't enter into the denominator (labor inputs) either.
I think the miraculous aspect of the recession and its aftermath has largely been people working longer hours without them getting accounted for. The hours worked input to the productivity stats measures hours paid for, not hours put in on the job. Which is a great deal for employers, but it's really not what we're hoping for when we talk about productivity improvements.
Doug