Labor productivity in the nation's private, nonfarm businesses rose at a meager 0.2 percent annual rate in the third quarter, the Labor Department reported yesterday.
The increase was good news, however, in the sense that it followed declines at a 3.2 percent annual rate in the first quarter and a 4.1 percent rate in the second, the department said.
Meanwhile, the administration's new pay advisory committee met for the second time and heard the labor representatives urge throwing out the present 7 percent voluntary standard for wage increases and drafting a new one from scratch.
"I think it is essential that we go back to the beginning rather than be in a position of making minor adjustments," AFL-CIO Scretary-Treasurer Lane Kirkland said.
The Labor Department also reported yesterday that major collective bargaining settlements during the first nine months of 1979 provided an average first-year wage increase of 7.5 percent, about the same as the 7.6 percent average for all of 1978.
However, 58 percent of the 2.6 million workers covered by the 414 contracts involving more than 1,000 persons in each bargaining unit also were protected by cost-of-living-adjustment clauses. The average first-year increase in contracts not having such clauses was 9.1 percent.
The continued poor productivity performance has administration economists worried.Unless productivity gains increase, the country could be faced with inflation running indefinitely in the 8 percent to 9 percent range, Charles Schultze, chairman of the Council of Economic Advisers, warned last week.
Historically consumer price inflation in the United States has followed very closely changes in the labor cost of each good or service produced. In the third quarter, output for nonfarm businesses rose at a 2.8 percent annual rate, while hours worked went up a 2.5 percent rate.
Output per hour worked rose at a 0.2 percent rate instead of a 0.3 percent rate because of the way in which the numbers are rounded to the nearest one-tenth of a percentage point.