Ebook The Private Sector and Skill Formation in the United States

Although the United States still produces more output per unit of input than any other nation, we are in the midst of a serious productivity crisis. The nature of this crisis is not so much in the level of productivity but rather the fact that productivity is not growing as fact as it used to in the U.S. In addition, our major economic competitors have much higher rates of productivity growth than the U.S. Figure 1 highlights this issue with a comparison by country of average annual percentage changes in manufacturing productivity across different time periods. Although the U.S. has returned to productivity growth rates in the 1980 sthat are higher than the rates in the 1970 s, a great deal of this improvement was achieved through the closure of inefficient plants and the permanent lay off of workers. This suggests that these productivity gains are likely to be short in duration and that the productivity crisis is not over yet.

Figure 1 presents productivity numbers for the manufacturing sector alone. However, most employment growth in recent years in the U.S. has been in the service sector. Since it is difficult to obtain international comparisons for the service sector, Table 1 presents some figures on productivity growth just in the U.S. in industries other than manufacturing. With the exception of the communications industry, these numbers indicate even lower productivity growth in the service sector than in manufacturing.