Productivity in American manufacturing industries went up 2.8 percent last year, not a contemptible gain. But in France manufacturing productivity went up nearly 4 percent, in Japan 5 percent and in West Germany almost 6 percent. The Labor Department published an international comparison the other day, and as usual it does not contain a great deal of comfort for Americans.
Productivity rises faster in manufacturing than in most other sectors of the economy, and it contributes directly to a country's performance in world trade. Most of the United States' enormous deficit in foreign trade is owed to the very high exchange rate of the dollar over the past several years, which overpriced American exports and underpriced imports. But now that the dollar is back closer to its true purchasing power, other weaknesses in the American position are becoming more important. One of these weaknesses is the persistently low rise in productivity -- output per hour of labor -- in American factories compared with those in the other developed countries.
A single year's numbers aren't terribly significant in measuring productivity, which is a matter of long trends. The Labor Department's statisticians helpfully provide a more revealing comparison for the 12 years from the first oil crisis in 1973, when productivity growth slowed down throughout the entire industrial world, through last year. Over those 12 years, productivity in American manufacturing rose on the average 2.2 percent a year. In West Germany it rose 3.8 percent, in France 4.5 percent and in Japan 5.6 percent. The leader, incidentally, was not Japan but Belgium at 5.7 percent a year. Great Britain is generally regarded as the world's example of slow growth, but productivity increases there averaged 2.8 percent a year over the period -- significantly faster than here.
It's reasonable to assume that there will be some improvement in this country over the next decade. The young workers of the baby boom are now in their mid-20s and have begun to acquire skills and experience. Low inflation will swing companies' attention away from financial manipulation and back to engineering and the basic business of running the shop. If the world is lucky as well as careful, markets will be more stable. All of these things ought to help productivity.
But no acceleration is visible so far. That's troubling, for two reasons. One is that productivity determines the country's standard of living, and if one grows slowly the other will do the same. Beyond that, productivity is a component of the country's economic strength -- and the crucial component. For this country, to continue to fall consistently behind the competition would have implications reaching well beyond money and incomes.