U.S. Workers Top Japan’s, Germany’s in Productivity : Commerce: The key reason is that America’s market is more open and thus more competitive, a study says.
U.S. workers are more productive than their German or Japanese counterparts, largely because of America’s highly competitive and open trade environment, a new study said Tuesday.
American workers are 11% more productive than West German workers and 23% more productive than Japanese workers, said William Lewis, director of the McKinsey Global Institute, which sponsored the study of five big industrial nations.
If the United States is considered at the top of a scale of 100, French worker productivity was five points below at 95, West Germany was third at 89, Japan fourth at 77 and Britain fifth at 75, Lewis said.
“There’s more competition for U.S. companies,” said Martin Baily, an economics professor at the University of Maryland and a co-author of the study. “Managers are forced to raise productivity in order to survive and be profitable.”
In 1990, each full-time U.S. worker produced $49,600 in goods and services, compared to $44,200 for West German workers, $38,200 for Japanese workers and $37,100 for British workers, the study said.
East Germany was not included in the figures because data in the study was collected before the reunification of Germany in October, 1990. The study also excluded statistics about workers in government, education, health and real estate.
Productivity is the ratio of goods and services produced to the resources used to produce them. Worker productivity measures goods and services produced by employees in an hour, week or year.
Lewis said the findings should dispel the notion that America should follow the lead of other nations.
“There’s a lot of talk about how the U.S. should adopt a model from another country if economic operations in those countries were proving to be more productive,” he said. “But we found no evidence of that, so it’s not obvious the United States should look to copy a model from somewhere else.
“It’s more a case of making this model work better,” Lewis said.
Researchers had expected to find the five countries about equal because of the increasingly global marketplace and were surprised by the results, Lewis said.
Wassily Leontief of the Institute for Economic Analysis at New York University said the results also surprised him.
“The wages of American workers are not the highest--they are lower than some other countries, and usually wages are supposed to reflect productivity,” Leontief said. “Supposedly, the more productive labor is, the higher wages usually are.”
Japan led the United States in productivity in automobile production and consumer electronics, but the rest of its economy lagged, Lewis said.
Japanese productivity in general merchandise retailing, for example, was 44% of that of American workers, and Japanese factory workers overall produced 80% as much as Americans on an hourly basis, the study said.
“What they’ve done is create a powerhouse in automobiles, semiconductors and consumer electronics, and they’ve exported those products around the world,” Baily said. “But they don’t encourage competition in the rest of their economy, so the rest has really languished.”
The McKinsey Global Institute, a Washington-based division of the McKinsey consulting firm, combined data from a Dutch study on manufacturing with figures it compiled on the service sector for an overall estimate of productivity. The service sector now employs three-quarters of all American workers.
Lewis’ institute gave the data to three of the nation’s most respected productivity experts: Nobel laureate Robert Solow; Francis Bator of Harvard, and Baily, who is also a member of the Brookings Institution, a Washington think tank.
Worker Productivity
Thousands of dollars of goods and services produced by an average full-time worker. U.S.: $49.6 France: $47.0 Germany: $44.2 Japan: $38.2 Britain: $37.1 Source: McKinsey Global Institute
