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Productivity Is Flat (Thus Explaining Flat Wages) While Productivity Is Rising (Thus Explaining Unjust Worker Exploitation)

Here’s a letter to American Compass’s Oren Cass:


This past Thursday your organization, American Compass, as part of its series meant to encourage tighter restrictions on immigration, released “A Guide to Labor Supply.” In this Guide you offer 16 graphs that are obviously meant, individually and together, to tell about the American economy a tale of woe.

Before agreeing to share your despair, however, I’ve some questions about your data.

In graph #8 (“Economy-Wide, No Evidence That Employers Are Investing to Boost Productivity”) you report that annualized productivity growth over the past decade was negative 1.8 percent. In graph #10 (“The U.S. Lags Far Behind Other Nations in Automation”) you offer data purporting to show that U.S. factories lag far behind factories in counties such as Korea, Japan, China, and Sweden at installing productivity-enhancing robotics. In graphs #11 (“Manufacturing Productivity Growth Has Slowed, and Output Growth Collapsed”) and #12 you report further on the alleged dire state in the U.S. of productivity: Graph #12 is titled “Over the Past Decade, Manufacturing Productivity Has Actually Declined.”

Yet in graph #13 (“Productivity, Profit, and GDP Have Risen in Lockstep Since the 1960s, While Wages Stagnated”) and #14 (“Something Looks Wrong: 50 Years of Economic Growth”) we’re treated to data that show that over the past several decades productivity has impressively risen; your goal with these latter graphs is to indict the U.S. economy for allegedly failing to share the fruits of productivity growth with workers.

So which is it? Has the productivity of the American economy over the past few decades stagnated (as you claim) or not (as you also claim)?

I would myself dig into your data for answers to this question, but the source information that you supply in each graph is wholly inadequate for readers to determine from where exactly you get your data and how you adjust these for inflation. You give only the names of the bureaus (for example, “U.S. Census Bureau”) from whose cites you extracted these data, but you list none of the pages at these sites. Because the number of data pages at each of these sites is gargantuan, readers wishing to check the accuracy of your data are required to spend hours searching amidst these practically countless number of pages.

Might I ask you to publish more detailed information on the sources of each graph’s data?

If you detect in my question doubts about your data’s accuracy, you detect correctly. As I discovered a few days ago about what you call “the problem of wage stagnation that has now bedeviled America’s economy for 50 years,” your carelessness with data cannot help but instill doubts about their accuracy and about your interpretation of them. These workers’ on-the-job real incomes have in fact, contrary to your claim, risen quite impressively for more than a quarter century.

Perhaps there’s a plausible means of squaring your claim that productivity is flat with your claim that productivity is rising. If so, I urge you to share it.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030