The productivity of American workers slumped further last quarter, posting an 0.9 percent decline for 1979 as a whole -- only the second yearly drop since just after World War II -- the government reported yesterday.
Labor Department figures showed that output per workhour plunged at a 1.6 percent annual rate between October and December, following a series of declines ranging between rates of 1.3 percent and 3 percent.
The 0.9 percent drop for the year was the first since 1974, at the start of the last recession, which overall productivity plummeted 3 percent. The last yearly drop before that was in 1947.
At the same time, the department reported that first-year wage increases in major collective bargaining settlements averaged a moderate 7.4 percent in 1979, despite a staggering 13.3 percent inflation rate.
The performance of productivity is important to the nation's ability to dampen inflation. Without gains in output per workhour, business cannot easily absorb higher wage costs without also raising prices.
Yesterday's report showd the 0.9 percent drop in productivity helped push unit labor costs up a sharp 10.4 percent for 1979 as a whole -- a factor that is likely to result in further upward pressure on prices later.
Economists have not been able to agree on precisely what is causing the decline in productivity. Explanations range from a lack of adequate investment to a shift in the economy away from manufacturing and more toward services.
The restraint reflected in the figures on major collective bargaining settlements was especially encouraging to administration economists. The White House had been fearful that the price surge might "spill over" into wage hikes.
The 7.4 percent average for 1979 actually was lower than that of the previous year, when first-year settlements average 7.6 percent. The figures do not include the impact of cost-of-living escalator clauses.
Moreover, analysts said the wage increases negotiated in 1979 were likely to serve as a pattern for settlements in 1980 and 1981 as well. Yesterday's data covered 3.3 million workers in 558 local units of 1,000 workers or more.
As has been the case for several quarters, productivity performance varied widely among sectors of the economy. Output per workhour in the nonfarm economy declined 1.2 percent last year, but manufacturing productivity rose 1.8 percent.
The 1.6 percent-rate decline for the fourth quarter of 1979 came in the face of a sharp increase in the number of hours worked and only a moderate rise in overall economic output.
The drop marked the fourth consecutive quarter that overall productivity has declined. In 1978, productivity edged up 0.5 percent after dipping in the first quarter of the year and then rebounding later on.
The marked slump in productivity is a relatively new phenomenon for the U.S. The average productivity gains here in the early 1960s used to be 3.2 percent a year.