More on Higher Productivity and Employment

by

0. R. Strackbein, President

The Nation-wide Committee on Import-Export Policy

June 20, 1972

Among other difficult problems faced by American industry, agriculture and labor, is the one of generating higher productivity hand-in-hand with rising employment.

This problem is highly intractable for reasons that are not readily apparent. The equation is complicated by the pressure of import competition. It is also rendered rather opaque by the habit of looking upon industrial efficiency as a reflection of the rapidity of muscular movement, elimination of wasted motion, etc., as it was interpreted when time and motion studies were the bible of managerial efficiency.

Today, with advanced technology spread throughout industry and agriculture, the human physical factor has been greatly reduced. Coal miners, equipped only with pick and shovel would be hard pressed indeed to keep pace with the mammoth machines that excavate tonnages with one pass of the huge clanking steel maw. It is no contest. Labor diaplacement by machines is indeed the very soul of modern industrial progress. Quite aside from the deplored dehumanization of production, the march of technology has bedeviled the efforts directed toward full employment. This assertion needs

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some elucidation.

While full employment has indeed become a national policy goal since the 1946 Employment Act was adopted, technological progress as assurance of higher productivity has simultaneously been emphasized as the road to a stronger international competitive posture and as the path to greater employment.

Efficiency in Coal Mining

At the outset it must be obvious that industrial efficiency calls for a maximum of output with a minimum expenditure of manhours of labor. Therefore, on the face of it, higher productivity, which reflects and indeed embodies higher efficiency, runs counter to the notion of job-creation. It pulls in the exact opposite direction. In order to stimulate employment, the very act of displacing workers by machines, must in one way or another, lead to lower prices and sufficiently higher consumption, to lead to hiring more workers than those who have been displaced. see, this does not always happen.

As we shall

Coal mining, to resume the example, became astonishingly efficient in the fifteen years after 1950 when the industry faced extinction from the widespread conversion to competing fuels, namely, diesel oil, residual fuel oil and natural gas.

After strenuous efforts to survive including desperate and radical exertion, the output per man-year of the coal miner was tripled. The increased efficiency, indeed, opened foreign mar

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10-12% of our total coal tunnage. Previously exports were de minimis. Domestic production, which had fallen from 516 million tuna in 19% to 410 million tons in 1,58, not only recovered ita ground but rose to 500 million tons in 1969. If rising productivity asture expanded employment, surely the achievement of the

al industry shuld have produced that effect.

On the contrary, employment in the industry declined disastrously, falling from 415,000 miners in 1950 to 127,000 in 1968. (statistical Abstract of the United States, 1960, Table 982, p. 728, and 1971, Table 10), p. 6×2). In other words, while bituminous eral production more than recouped its loss because of the phenomenal increase in efficiency or productivity, the sharp descent in empi vyment was not sterned at all. (Anthracite has been on a lɔng course of deine and is now a minor part of the coal industry). This record should be sufficient to put us on guard against the notion that increasing productivity will automatically help employment. The displaced coal miners had no place to go. The distressful conditions in which they soon found themselves became known as the Appalachian problem. Rehabilitation has cost hundreds of millions of dollars without dispelling the distress. The handsome growth in cual experts which reached some $900 million in 1771, did not save the jobs of the coal miners.

Imexampled Efficiency in Agrin.

The agricultural program that began in the mid-thirties provides an even clearer example of the disastrous effects of advanc

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The output per acre and per man-year rose as sharply as productivity in coal mining and distinctly more than in industry as a whole. Although much more of food and fibers was produced after thirtyfive years of unexampled progress than formerly, the number of farm workers dropped precipitately. Once more we find the notion that productivity will lead to increased employment harshly contradicted.

In 1935 civilian agricultural employment was 10.1 million. At that time agricultural employment exceeded that of manufacturing and mining by a slight margin. (Ibid., 1951, Table 207, p. 175; and 1960, Table 263, p. 205.) In 1970 the number had fallen to 3.1 million, or less than a third of the 1935 level, while employment in manufacturing had doubled. (Ibid., 1971, Table 347, p. 222, and Table 341, p. 217). Meantime population had increased from 127 million to 204 million or 60%.

Farm output rose from an index of 59 in 1940, where 1967 equals 100, to 103 in 1970, while acreage harvested fell from 332 million acres in 1940 to 289 million acres in 1970. (Ibid., 1971, Table 952, p. 586). The index of output per man-hour on the farms, the important factor so far as employment is concerned, rose from 21 in 1940, where 1967 equals 100, to 112 in 1970. (Ibid., Table 953, p. 586). This was more than a five-fold increase! Exports of farm products rose from $679 million in 1937-41 to $6.6 billion in 1970, but obviously did not halt the worker displacement, even though the increase in dollars and cents was ten-fold!

In terms of employment this phenomenal record led to urban dis

welfare rolls. Crowding of the ghettoes was one of the bitter fruits, or more than a veritable vintage year of aridulous grapes of wrath. ~ the other hand, e mpared with 1940, en 32.0 of personal numiti n expenditures went for food, beverages and t Late

137% the share hai derlined to 19.54. (Ibid., 19, Table 45. p. 307; 1971, Talle 469, p. 308, and U. S. Dept. of Agri.). In unexampied fashion our farmers had helped the American consumer; but there was price tag, as we have seen. They released billions of dollars of consumer purchasing power to be spent on nonessential goods.

Rising Pm ductivity as a Mixed Blessing

These two examples, of coal and of agriculture, demonstrated the mixture of bitter and sweet as it occurs in increasing output per man-hour, or higher efficiency.

Yet t'e very te he egal ren ris f rising caused so much distress,

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dual or press that ate pussitle that intivity cited at ve but that also rely led t higher employment in ...f the ef, nj. De greater

ther set

efficien, y and versatility of the automobile and truck, which also was the fruit of technologs, e mpared to the horse, wagin and tɛry, led to expanded employment as the latter were all but iriven cut to pasture by the at mated forms of transport.

The same may be said of the development of numerous other products, me new, some substitutes and some in the form of radical improvements of established products.