The myth of American productivity

last updated 8 January 2015

Michael Mandel

Washington Monthly

Our view of the U.S. economy has a dangerous blind spot, said Michael Mandel. Politicians and economists reassure us that our economy is fundamentally sound because Americans are among “the most productive workers” in the world. At first glance, statistics back that up: Despite a steep drop in factory jobs in the 2000s, manufacturing productivity increased 74 percent. But government statistics reveal nothing about how a company improves productivity, and sadly, U.S. workers “often have little to do with the gains.”

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If a U.S. manufacturer saves $250,000 “simply by switching from a Japanese sprocket supplier to a much cheaper Chinese sprocket supplier,” that counts as an increase in American productivity. The poor stats extend to imports, where $4 billion in, say, imported refrigerators are considered to displace $4 billion worth of U.S.-made refrigerators. But since foreign-made appliances typically cost less, the loss to domestic production might be far more. We don’t know. Such widespread statistical deficiencies prevent us from knowing the true state of the U.S. economy—and from accurately diagnosing what ails it.

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