The decline in U.S. productivity this year has been twice as steep as reported by the Labor Department, according to a private research organization which includes capital investment as well as labor effort in measuring productivity.
According to the Labor Department, there was a 3.1 percent decline in productivity -- the comparison of the output of goods and services per hour of labor by American workers -- between the first and second quarter.
A grimmer analysis was issued yesterday by the American Productivity Center, showing a 6.7 decline between the first and second quarters, based on its comparison of output with investments in plant, equipment, inventory and land, as well as labor. The decline in the manufacturing sector was even steeper -- down 11.4 percent between the first and second quarters.
The Labor Department figure understates the decline in productivity by failing to account for the impact of inflation in the cost of capital equipment, energy resources and raw materials, according to C. Jackson Grayson, chairman of the American Productivity Center.
A measurement of labor productivity alone is of limited value " and may give a sense of flase security," said Grayson.
A major reason for the steady decline in productivity since the mid-1970s has been the rising cost of energy and the more recent upward spurt in interest rates, which has prompted many business managers to meet demands for greater output by adding employes rather than increasing investments in modern, more productive equipment, the APC says.
The APC plans to publish its productivity index quarterly as part of its effort to analyze the causes of producticity growth and decline.