How Productive Are We?
David Warsh writes about the development of productivity measures, what the measurements tell us about productivity in the past, and what we might expect in the future:
Fifty Years On, by David Warsh, Economic Principles: [In] 1957 ..., Robert Solow published “Technical Change and the Aggregate Production Function.” Ten years later, Dale Jorgenson and Zvi Griliches supplied theoretical foundations with “The Explanation of Productivity Change.”
Since then, growth accounting has turned into big business. ... The task ... is to understand the determinants of this elusive factor perhaps even learn to quicken its pace. For the rate of increase of productivity is vital to our well-being. If it grows quickly, we will be rich, able to make all kinds of accommodations with demographic swings and climate change; if it grows slowly, the necessary adjustments will be much more painful. ...
Since the measurement business began in earnest, there have been three distinct eras of US productivity: the long boom from 1948 to 1973, when output per hour worked (labor productivity) grew at an annual average of 3.3 percent; the mysterious twenty-year slowdown after 1973, when the rate slowed to an average of slightly less than 1.5 percent per year; and the unexpected resurgence after 1995, when the annual rate jumped up to 2.5 percent or more.
The period of the slowdown was confusing... Economists advanced all kinds of explanations: the sharp increase in energy prices; the rise of a service economy; the growth of government; a decline in R&D spending in the 1960s; the limits to growth having been reached. Others argued that the slower rate of the ’70s was the normal rate, that the rapid productivity growth after World War II had been artificially high.
Thus the resumption of the earlier trend, after 1995, caught researchers totally by surprise. Recently, Northwestern University’s Robert Gordon recalled the mood that prevailed in January 1998, when the American Economic Association met in Chicago on the eve of another year of meteoric ascent in the stock market...:
Everybody, including Jack Triplett [of the Brookings Institution, a celebrated growth accountant], not to mention me, was still talking about the Solow paradox [“You can see the computer age everywhere these days but in the productivity statistics.”] Nobody was talking about the productivity growth revival….
Yet Business Week had seen it coming in late 1995 [with a celebrated “New Economy” cover story], not to mention Alan Greenspan’s wise remarks in 1996... As late as June 1998…, I was still trying to argue that “there is something wrong with the computers.”
These perceptions totally changed between mid-’98 and mid-’99. Since then, the debate has been an opera of contending voices seeking to explain the change. Stephen Oliner and Daniel Sichel, both of the Federal Reserve Board, touched off the debate, asking in an important paper in 2000, “Is Information Technology the Story?”
Indeed it was, replied Dale Jorgenson, of Harvard University, and Kevin Stiroh, of the Federal Reserve Bank of New York, in their 2002 paper, “Raising the Speed Limit: US Economic Growth in the Economic Age.” Some 60 percent of the gain in productivity stemmed directly from information technology, they calculated.
By 2004, however, Triplett and Barry Bosworth, also of the Brookings Institution, identified a different source. The service industries airlines, broadcast, banking and the like -- had contributed much of the improvement, they argued.
All the while, Northwestern’s Gordon remained the leading techno-pessimist. The speedup was partly a cyclical phenomenon, he argued, partly a one-shot boost from improved Internet-computer communications. It would prove to be no more than a surge.
Last week, when many of the principals met in Cambridge at the National Bureau of Economic Research (NBER), there were more signs of convergence among those who looked to information technology and streamlined industrial structure to explain the productivity resurgence. Gordon, the pessimist, remained in the minority.
The stakes are high, of course. ... If Jorgenson and Stiroh are right, the US economy can grow at around 3 percent...; if Gordon is correct, the “speed-limit” of the economy is around 2.5 percent. ...
Meanwhile, attempts continue to decompose national income accounts and productivity calculations along different lines, in hopes of shedding more light on the issues. ...
Posted by Mark Thoma on Monday, March 12, 2007 at 12:09 AM in Economics, Technology | Permalink | TrackBack (0) | Comments (39)

Two remarks on the use of growth accounting which tries to split GDP growth into its sources (possibly identifying only one as crucial):
1) Felipe and McCombie have shown in several papers in the past years that growth accounting is meaningless because it uses the national income accounting identity and effectively uncovers the distributional change in the economy.
2) Richard Nelson has argued (convincingly in my view) in the early 80s that the sources of economic growth are like ingredients into a cake - all are needed: "where complementarity is important, it makes
little sense to try to divide up the credit for growth, treating the factors as if they were not complements."
So, why is growth accounting still so popular?
Posted by: Stefan | Link to comment | Mar 12, 2007 at 02:27 AM
With IT, come even more invasive ways of keeping an eye on the little slaves doing the work. An admin can track what websites they visit, what calls they make on the VoIP, what emails went out to whom, and a small program keeps track of time like the old time card punch. Never mind that IT programs sometimes act up, don't work right, are so complex you have to be trained for them, or you find your own work-a-rounds. If Bill Gates has his way, he will monator everyone for compliance to his buy-to-rent buggy software, making it even more unstable. Did you know that there were programs in place to prevent illegal usage, and when some reporter lost his LEGAL work, he found out? Yet we pay psychotics like Gates billions. He has made IT and the measure of productivity a study in bigbrotherwatching.
Forget accouting, That is all old hat.
Posted by: real person from the real world | Link to comment | Mar 12, 2007 at 05:21 AM
The old fashion concept of capital stock per employee is still a key determinate of productivity growth.
It grew steadily at a 1.6% annual growth rate from 1945 to around 1980 with very small deviations from trend.
But around 1980 when we started implementing supply side economics with its thesis that giving tax cuts to the investor class would lead to greater capital spending
the growth of capital stock per employee faltered.
Since 1980 its trend growth rate has been only 0.9% and essentially all of that growth occurred in the late 1990s. Through the 1980s this measure had essentially no growth and since 2000 it has flattened out again.
so when you look at this key measure of productivity growth you see that productivity growth since 2000
has essentially been the old fashion cyclical improvement on productivity and not a continuation of the 1990s secular improvement.
But this measure of the capital stock per employee and the resultant changes in productivity is just another example of the massive failure of the supply side tax policies to improve capital spending.
It also implies you should be a bear on proiductivity prospects.
PS. Mark I can send you a chart of this data if you are interested.
Posted by: spencer | Link to comment | Mar 12, 2007 at 06:10 AM
In the seventies, Peterbilt computerized/automated displacing some 500 of it 600-700 man production work force. At the same time, its administrative/management work force increased by some 500. This wasn't unusual at the time.
Posted by: ken melvin | Link to comment | Mar 12, 2007 at 06:15 AM
What exactly is "productivity"?
If the definition is what's in this quote, it's not very clear;
"The result is that today we have one more thing to worry about: namely, productivity, meaning the ratio of the value of inputs to total economic output."
What's an "input"? What's an "output"?
Further, the following paragraph certainly points to an interesting question;
"What’s missing is the sort of method that would permit economists to test the possibility with which Iain Cockburn, of Boston University, only half in jest, closed the NBER meeting last week: that superior American productivity of recent years owes to the vast numbers of MBAs and lawyers churned out annually by the nation’s professional schools."
To my mind, passing a set of documents from one desk, or computer to another, before being "finalized", is not very productive.
To my mind, the "service" sector, ( or rather servant sector), doesn't exactly add to productivity, ( What exactly is productive about fast-food restaurants? What exactly is productive about exercise counselors? What is exactly productive about salespeople?)
Adding "dollar value" to a transaction or a product because of transactions is not productivity.
I think the whole measure is a sham, a chimera, a fiction.
Posted by: evagrius | Link to comment | Mar 12, 2007 at 06:31 AM
My take on productivity is that it is the sum of all production (net of depreciation and externalities) divided by the labor performed to achieve it.
For the US economy it might look like this:
Outputs:
- 14M cars
- 115Mt steel
- 0 televisions
- 30M television distributions (retail sales)
- 15GW net electric capacity additions (capital additions)
- 500M billable hours of legal services
- etc.
Input:
- 300B hours of labor
To reduce it to a single number like GDP is highly simplistic and hides many important details of the economy. By showing the details, one can draw their own conclusions as to the value of each segment, instead of being forced to rely on the market price.
Posted by: yartrebo | Link to comment | Mar 12, 2007 at 06:43 AM
evgrius:
Ignore the confusing journalist. Productivity is the ratio of output to hours of labor. Output here means GDP.
As for why fast-food restaurants, personal trainers and sales people are "productive," (i.e. why their sales count as "output") you should ask the people who pay for their services. Someone seems to think that they're pretty valuable.
Generally, the goal of the BEA is to measure output in terms of what people actually pay for goods and services. (The major exception, of course, being government services.)
Posted by: johnchx | Link to comment | Mar 12, 2007 at 07:03 AM
johnchx;
So....if someone pays for services with a credit card, ( borrowed money) and adds to their loan outstanding, ( which loan is from, say, ultimately China), then is it really "productivity"?
Posted by: evagrius | Link to comment | Mar 12, 2007 at 07:29 AM
Let's take it that "productivity" measures exactly what economists want it to measure, the question is is this a useful piece of information?
When a white collar worker (say a lawyer) shuffles some papers and produces something that facilitates a takeover the value to his firm in terms of the fees earned makes the activity very "productive". However if we want to measure activity which generates socially useful output this work has no value. Changing the names on a firm's letterhead does not generate anything of value.
There was a real change in supply chain management facilitated by computers that made firms more efficient. Walmart is the best example. This was a real improvement in getting the job done with fewer man hours of work.
At the same time we have seen a rise in fiscal intermediaries who play with money and produce nothing. There work is based upon a Ponzi scheme. Whatever financial package they put together only has a value when it can be sold (at a higher price) to the next sucker. This has led to inflation in both real estate and share prices. As the amount of money that changes hands goes up so does the apparent "productivity".
We are in for a rude surprise when the rest of the world decides to stop selling us stuff and taking credit instead of payment. We'll see how the "productivity" figures look then.
Posted by: Robert D Feinman | Link to comment | Mar 12, 2007 at 07:40 AM
"There was a real change in supply chain management facilitated by computers that made firms more efficient. Walmart is the best example. This was a real improvement in getting the job done with fewer man hours of work."
I'm not sure if Walmart realy improved productivity. After all, quite a few small-scale businesses disappeared as a result and quite a few towns lost economic diversity.
Posted by: evagrius | Link to comment | Mar 12, 2007 at 07:52 AM
"I think the whole measure is a sham, a chimera, a fiction"
Yes they lost me when they revised the measure altogether with the release of 2006 Q2 in a way that sliced .3 points off of growth retroactively from 2002-2004.
If you read the press releases you see a number that jumps all over the board between preliminary and final and wildly up and down between quarters.
http://www.bls.gov/schedule/archives/prod_nr.htm
I don't know if it has always been this way but there is a certain casualness to the way they say that this measure of output or that measure of labor input has been "revised". Revised in response to what?
I'm sorry, a number series that is this unstable really should not be relied on for any kind of policy guidance at all. From the outside it seems you would get more certainty having the augurs examine the entrails of sheep.
GDP actually makes some sense, its a measure of what people paid for stuff, these derived measures like productivity just seem too sensitive to revisions in assumptions.
Posted by: Bruce Webb | Link to comment | Mar 12, 2007 at 08:26 AM
evagrius:
I'm as critical of Walmart as the next person. In fact I participate in a Walmart-specific group blog where we constantly cite its poor policies. You can visit (and comment) if you wish:
The Writing on the Wal
That they have driven small firms out of business is true and that their labor policies are terrible is also true, but they have revolutionized the supply chain. They know where all the "stuff" is at any moment. They can predict how much new merchandise will be needed tomorrow and have squeezed producers to lower their costs as well.
All this gets back to a different question: is economic efficiency the only measure that a society should use when regulating corporations? You can see that the EU has a somewhat different answer than does the US.
Posted by: Robert D Feinman | Link to comment | Mar 12, 2007 at 08:58 AM
Sorry I mistyped the link:
The Writing on the Wal
Posted by: Robert D Feinman | Link to comment | Mar 12, 2007 at 09:01 AM
Robert D Feinman:
"[WalMart has] squeezed producers to lower their costs as well."
If WalMart manages to "squeeze" the prices charged by producers in a way that lowers total output in dollar terms (the only terms we seem to track), has WalMart lowered productivity?
Posted by: Scott Ferguson | Link to comment | Mar 12, 2007 at 09:46 AM
Economicprincipals ...not economicprinciples. Only I can be distracted before the first word of the article...Warsh, damn that's a familiar name...David Warsh covered economics for The Boston Globe and Forbes Magazine for 25 years and, earlier, reported from Saigon for Pacific Stars and Stripes and Newsweek Magazine. He is a graduate of Harvard College (1966/72) in Social Studies and a two-time winner of financial journalism's Loeb Award. He was the J.P. Morgan Prize Fellow in Spring 2004 at the American Academy in BerlinOk, it looks like it might be safe to read although the intent:EP reports mainly on university economics, as it affects historical awareness, political debate and public policy. spooks me the same way economic principals does. (You figure I wouldn't be one of those guys handing out the writing awards Warsh won?) [Comment on the grammatical correctness of the following Warsh statement or its effectiveness: "For the rate of increase of productivity is vital to our well-being."] (You know I am totally spooked by his name and unable to hear him.)
Ok, he is totally unrelated to any banker by the same name...my productivity is so appalling this morning. Better hand off to the great Bruce Webb, principal SSTF analyst, chronicler and defender of the public good.
Posted by: calmo | Link to comment | Mar 12, 2007 at 09:48 AM
johnchx...
Your point is correct - but isn't there another issue -how do we measure the price deflator when the quantity of (quality adjusted) output is so hard to measure for services. There is a bit of wishful thinking in saying the value of the services is the price that is paid for it. But we all know that prices are often kept down by squeezing service (Walmart again). How confident are you in the price deflator.
A related issue, is the one obliquely mentioned by some others about the overvalued dollar (as indicated by the balance of payments position). The US is borrowing from the future to consume now and this may be reflected in the output figures (more precisely the debt burden implies future terms of trade deteriation).
Posted by: reason | Link to comment | Mar 12, 2007 at 10:06 AM
"Productivity" is a quasi-empirical statistical measure/estimate in aggregate of output per man-hour in adjusted nominal prices. There might be real difficulties in pinning down the "actual" number because relative prices are always changing and precisely deflating when sectoral productivity is markedly increasing. So divying it up by sector and trying to specify the exact "sources" of productivity increases would be a tricky business, since it would have to use chained indexes of aggregate average price levels to measure changes in relative prices of inputs over outputs, such that nominal prices are recursively measuring nominal prices. But nominal prices would be the only thing we'd have to go by. Are hotshots shuffling papers to mint profits out of profits actually being "productive"? Of course, they are, since they are being paid a price for their "services". Which goes to the point that the first commenter here, Stefan, made, that distributional factors would effect productivity measures. And I would add on my own recognizance that distributional factors infect the system of nominal prices with some degree of monetary illusion, since low wages are partly the equivalent/obverse of high prices and high profits increase the value of capital assets and therefore of the "services" that they render.
In principle, real,- (as opposed to nominal monetary),- wealth per capita can be increased to the extent that the technical "distance" between initial inputs and final distributable outputs can be increased, such that more can be produced from less. But that's not quite the same as market "efficiency", which will be determined by whatever the prices of those inputs are. Are decreasing the inputs of energy and raw materials per unit of output and decreasing the output of pollution or non-recycled wastes economically "efficient"? That would depend on prices and policies. And again, distributions between wages and profits effect the price system in terms of the relative costs of labor and capital, hence the most "efficient" use of either: cheap labor and costly capital would tend toward making lower technical efficiency more economically "efficient".
As usual, spencer hits the nail straight on the head with telling empirical accuracy. Artificially, i.e., as a matter of policy, raising the rate of return to capital does not increase the incentive to invest, by increasing both the pool of investable funds and their returns, and thereby stimulate investment in productivity enhancing technical improvements in production. Rather the increased pool of investment funds competitively bids up and inflates the price of extant capital assets, while lowering the labor cost pressure that incentivizes technical improvements in production together with the wage-level component of aggregate demand. Simply put, capital has to "work" less to earn its return, at least, in the short-run.
IT obviously has a million and one potential uses that can contribute to productivity increases. But as well as decreasing the cost and raising the technical efficiency of capital goods, I think, it also increases the flexibility of both real capital equipment and of business organization, such that both the substitutability of capital for labor and the control of capital over labor has been increased. Hence there would be a relative lowering of both the demand for and bargaining power of many kinds of labor and thus downward pressure on its wage-price. And, in turn, that would lower both the demand-pull and wage-push incentives to further investment to increase technical productivity and fully exploit the possibilities opened up by IT innovations.
Posted by: john c. halasz | Link to comment | Mar 12, 2007 at 10:36 AM
"that superior American productivity of recent years owes to the vast numbers of MBAs and lawyers churned out annually by the nation’s professional schools."
That is a very plausible hypothesis. You can look at it this way: US productivity is allegedly high because official GDP figured are high. Even though Americans work more hours than, say Europeans, the ratio GDP/hour ratio is still high because of high GDP figures. The question for me has always been how credible those GDP figures are, since I cannot detect a higher living standard in the US compared to Europe's richest countries. For example, the US health care sector has a far higher dollar "output" than that of other countries but most experts agree that this high output reflects inefficiency (administrative etc.) rather than a higher economic value being "produced". It is ironic but it is conceivable that "high productivity" is really economic inefficiency in disguise.
Posted by: piglet | Link to comment | Mar 12, 2007 at 10:52 AM
john: "As for why fast-food restaurants, personal trainers and sales people are "productive," (i.e. why their sales count as "output") you should ask the people who pay for their services. Someone seems to think that they're pretty valuable."
The US has a large low-wage sector, much larger than e.g. Germany. Those jobs are not unproductive, but by definition they have low productivity. Yet we are supposed to believe that the US economy as a whole is highly productive. Shouldn't this be a contradiction?
Posted by: piglet | Link to comment | Mar 12, 2007 at 10:58 AM
Next question: what is the relation between measured productivity and trade deficit?
Posted by: piglet | Link to comment | Mar 12, 2007 at 11:30 AM
piglet,
I have answered your false claim against me over on this thread: Go to this post at Mar 11, 2007 5:15:48 AM
Let's be clear. I have answered you. The least you can do is acknowledge it instead of trying to smear my name and walk away.
Posted by: Movie Guy | Link to comment | Mar 12, 2007 at 12:03 PM
The debate on productivity reminds me of the apocryphal legend about scholastic theologians debating how many angels can dance on the head of a pin.
Posted by: evagrius | Link to comment | Mar 12, 2007 at 01:05 PM
Walsh: "Some 60 percent of the gain in productivity stemmed directly from information technology, they calculated."
There is little doubt that Information Technology has contributed to bolstering productivity. But, sometimes it seems that we think of IT as the Holy Grail of economic growth.
What's the difference between a 1935 Bugatti roadster and today's Ferrari? The former went pretty fast on some awful roads. The latter goes faster, much faster, on well made highways.
There is a parallel between the above and IT. If productivity is output per unit of labor input (hours worked), growth in the ratio means that we are producing more per number of hours worked. Production is of manufactured and agricultural goods and services of all kinds.
Is it possible that the manufacture of goods employ different technologies to obtain better output? Of course. Are these technologies "Information Technologies"? No, not always. Some new methods are simply "designed into products". They relate to the designed product and to the way it is made.
For instance, this means that the 1939 Bugatti and the Ferrari are both automobiles, but the resemblance in terms of both cars ends there. The cars are very different in what they are and how they are built. Different materials and techniques are used, some of which are manipulated by computers, but others are not and are unique to automotive engineering.
Or, what if the production of wheat is dependent upon the grain employed that grows on less fertile soil, thereby allowing an increase in production ... having nothing to do with IT. (Anyone familiar with farming will acknowledge that the output today per man-hour employed has no noticeable comparability with pre-WW2 years.)
Or, take a cruise ship of today and compare its capacity with that of pre-war years. More people on those boats are catered to (per unit of labor input) today than in pre-WW2 years (when, admittedly, such liners were reserved for the rich). How about air transportation and the effect of the 747 on commercial airline transport capacity?
None of the examples above have a direct relationship with IT, though many may have an indirect connection to IT. Computers analyzing the DNA of agricultural products can produce trans-genic seeds that produce more crop yield. Computers are great at managing reservations lists for both cruise ships and airlines.
But, IT is not the ONLY factor that is enhancing productivity. It is across the board and depends upon the talent of a great many people that innovate not only new products and not only new ways of producing products ... but use computers to do so.
Pointing a sole finger at IT is underestimating the broad range of new technologies that are at play. Methinks.
Posted by: Lafayette | Link to comment | Mar 12, 2007 at 02:51 PM
Regarding measurement errors, are they really that important as long as the errors are consistent from year-to-year? Afterall, productivity growth is about finding annual differences.
Would productivity increases due to IT improvements show up as higher output from capital, higher output from labor or higher output from the technology component of growth models?
Posted by: 2slugbaits | Link to comment | Mar 12, 2007 at 03:36 PM
Off topic: Movie Guy, you have repeated your claim that Clinton "shifted US trade policy to the left". I am not smearing your name, I'm just saying that this claim doesn't make any sense. Clinton signed a trade liberalization treaty that had been negotiated by his Republican predecessor, and the majority of Democrats both in the House and Senate voted against, while the vast majority of Republicans in both chambers voted in favor of NAFTA. A couple of years later, with Clinton continuing his pro-business trade liberalization policies, left activists from all over the world gathered in Seattle. MG may think that those leftists were there to support Clinton's "left" trade policies but that is not how most of us remember the event. The best I can do is ask whether somebody else in this forum can explain the concept of political left and right to MG. I have done my best but in vain.
Posted by: piglet | Link to comment | Mar 12, 2007 at 04:58 PM
I have come to the opinion that 'Productivity' is indeed a sham. Who cares? If you have control of some capital your proper measure is 'Return'. If you work for a living the measure is 'Wages'. Productivity is some weird hybrid. GDP is real, although hard to measure in practice, return on capital is real and not that hard to measure, real wages are real and equally not that hard to measure. 'Productivity' has shown itself to be extraordinarily squishy over at least the last six quarters. So why bother tracking it?
Posted by: Bruce Webb | Link to comment | Mar 13, 2007 at 05:19 AM
Forgive my ignorance - I'm not an economist but I work for a UK-based charity. I came upon this post as I am interested in how economic theory relates to measuring workforce productivity. Our charity recruits volunteers to deliver services to clients that would not be paid for by government, by the clients or by anyone else. However, recruitment, training and other "management" of volunteers is done by paid staff. We are trying to find a measure of "productivity" for the staff who manage volunteers, as well as the volunteers themselves. I have read through the posts and your discussions seem to be around labor in the private sector. Do you have any suggestions for my problem in the voluntary sector? Thanks for taking the time to read this - sorry if I am completely off-topic!
Posted by: Novice | Link to comment | Mar 13, 2007 at 05:44 AM
Novice-
While not strictly "economics" I recommend the following web site.
Dr. Deming was one of the prime creators of Japan's economic success beginning in the 60's.
There is an entire methodology for increasing quality and productivity available through the site;
http://www.deming.org/
Posted by: evagrius | Link to comment | Mar 13, 2007 at 06:43 AM
Novice: if your volunteers are not paid, then economists say they are not productive. They are not doing anything valuable. They are not, strictly speaking, engaging in an economic activity at all. Sorry but that's the state of economic theory. At least it's easy to measure: productivity = zero.
Posted by: piglet | Link to comment | Mar 13, 2007 at 09:54 AM
piglet and others,
I have provided the link above that provides a thorough explanation of the trade issue under the Clinton/Gore Administration.
piglet apparently lacks an understanding of the Democratic Party Platforms for 1992, 1996, and 2000. That factual information is available in posts below the link I posted above.
piglet needs to move the discussion over to that thread instead of pretending that the information isn't available for everyone to review.
I have posted the facts and subsequent Democratic analysis related to the issue of trade. Click on the link above and try to dispute anything that I referenced or discussed.
Posted by: Movie Guy | Link to comment | Mar 13, 2007 at 10:31 AM
piglet conveniently confused the issue. I answered James Killus' question of providing examples for showing that the Democratic Party shifted to the left on the matter of trade policy during the Clinton Administration. That was the question and I answered it.
piglet acts as though the Democratic Party didn't shift to the left on trade, which is false. It's also false to say that the Clinton Administration did not attempt to shift U.S. trade policy to the left with labor and environmental provisions in trade agreements as well as embracing the Kyoto treaty. Of course, the Clinton Administration shifted U.S. trade policy to the left and attempted to do more.
Read the posts beginning with the link above.
Posted by: Movie Guy | Link to comment | Mar 13, 2007 at 10:47 AM
Correction: My trade response to James Killus was just one of my examples whereby the Democratic Party shifted to the left.
Posted by: Movie Guy | Link to comment | Mar 13, 2007 at 10:49 AM
MG-
You're posting on this thread is not being very productive.
Posted by: evagrius | Link to comment | Mar 13, 2007 at 11:33 AM
Novice: "Do you have any suggestions for my problem in the voluntary sector?"
You can approximate a productivity figure for volunteer services, if you treat the organization as if it were a private sector business.
You must measure the "volume of output" of your services by attributing a value to them. This value could be obtained by imputing a cost to a service were it performed in the private sector. That means obtaining the value of the service in terms of manpower rates observed in private industry presently. (For instance, if you send doctors abroad, you must estimate how much it costs to do exactly the same if your organization was a business that offered medical services globally.)
Then, estimate the number of hours volunteers work on performing services. For this, you must introduce "time management software" that allows your volunteers to estimate the time spent on their tasks. You then add your time expended in terms of "management overhead" that is not related to service tasks. You will then obtain a total number of hours worked.
Divide it into the "value of services performed" and it will give a productivity figure.
Keep updating the "value of production" every year with the rates as observed in the private sector. If your volunteers live abroad, they should use local rates. (Contact companies that employ personnel similar to your volunteer and ask for total manpower expenditure rates (salary plus compensation plus benefits plus operating expenses).
Be sure to do the same for your management overhead. Employ time management software to determine how much is spent managing the organization and how much is spent in performing services, if some people do both. However, the value of the management services must be factored into the "value of production".
Posted by: Lafayette | Link to comment | Mar 13, 2007 at 12:09 PM
Novice-
If you're interested, you may want to look at this site;
http://www.coreproject.org/
This was a two year project in California that I participated in. It involved improving access to health care through using a Quality Improvement method, ( originally devised by W.E. Deming).
Since this was for essentially non-profit organizations, the process may be of use to you.
Posted by: evagrius | Link to comment | Mar 13, 2007 at 07:11 PM
evagrius says... MG- You're posting on this thread is not being very productive.
The thread that I provided the link to is related to productivity if one understands U.S. trade policy and the implications of such shifts.
As for this thread, it doesn't begin to address the full scope of considerations that involve the bottom of productivity and sales measurements. The corporate productivity/efficiency/net sales model is seldom, if ever, brought into such discussions by economists.
You raised healthcare on this thread. I agree that its costs have an impact on productivity cost measurements. I raised domestic vs. foreign source production factors in my above link. And you want to act as though my posts are irrelevant? I suggest that you have limited knowledge of manufacturing and services decisions as relate to offshoring.
Both issues have a bearing on productivity measurements. Industry specialists know this all too well.
Posted by: Movie Guy | Link to comment | Mar 14, 2007 at 08:55 AM
Hope that fixes my posting format error.
Posted by: Movie Guy | Link to comment | Mar 14, 2007 at 08:56 AM
Done.
Posted by: Movie Guy | Link to comment | Mar 14, 2007 at 08:57 AM
Mg- You were "talking" to piglet with a rather peculiar "voice".
Posted by: evagrius | Link to comment | Mar 15, 2007 at 07:18 PM