Former Radial CEO Peter Janis claims U.S. labor productivity is at a 75-year LOW… is he right?

Not even close.

In a recent two-part series of articles on ProSoundWeb.com, former Radial Engineering CEO Peter Janis laments the fall of U.S. labor productivity in a wide-ranging anti-work-from-home piece. It’s hard to imagine a former CEO, with as much global business experience as Peter, misunderstanding the numbers he offers. In one part he writes ‘Company culture has become diluted, work hours have become ‘soft’ and distractions many. Do a Google search for “productivity” and you’ll discover reports that suggest productivity in the United States is at its lowest in 75 years! The domino effect is alive and well.’

Well, that is just absolutely, demonstrably false. It is hard to take it in good faith as a simple mistake or typo, given the depth of the author’s experience in business. Maybe these CEOs aren’t as brilliant as we thought?

The real story is American Productivity is near an all-time high. Worker compensation, however, has yet to keep up, and CEOs like Peter are raking in anywhere from 300 – 600 times the compensation as regular workers in 2023.

Let’s talk productivity

Labor productivity is the amount of output that is produced by each unit of labor input. It is a measure of how efficiently workers are producing goods and services. Labor productivity growth is important because it leads to higher economic growth, which can result in higher wages and a better standard of living for everyone.

Over the past hundred years, labor productivity in the United States has grown significantly. In 1923, the average American worker produced about $18,000 worth of goods and services (in today’s dollars). By 2023, that number had grown to over $70,000. This means that the average American worker is now able to produce nearly four times as much output in the same amount of time as they could a hundred years ago.

View the data shown below for yourself at – https://tradingeconomics.com/united-states/productivity

There are a number of factors that have contributed to the growth of labor productivity in the United States over the past hundred years. One important factor is the investment in capital goods. Capital goods are tools and equipment that workers use to produce output. As businesses invest in more and better capital goods, workers are able to produce more output with the same amount of effort.

Another important factor that has contributed to the growth of labor productivity is technological progress. Technological progress refers to the development of new and improved technologies that can be used to produce goods and services. Over the past hundred years, there have been many advances in technology, such as the development of the assembly line, the computer, and the internet. These advances have made it possible for workers to produce more output with the same amount of effort.

Finally, the growth of labor productivity has also been driven by improvements in human capital. Human capital refers to the skills and knowledge that workers possess. As workers become more educated and skilled, they are able to produce more output. Over the past hundred years, the educational attainment of the American workforce has increased significantly. This has helped to boost labor productivity growth.

The growth of labor productivity in the United States over the past hundred years has had a number of positive effects on the economy. It has led to higher economic growth, which has resulted in higher wages and a better standard of living for everyone. It has also made American businesses more competitive in the global marketplace.

However, there are also some challenges that the United States faces in maintaining its labor productivity growth. One challenge is the slowing pace of technological innovation. In recent years, the rate of technological innovation has slowed down, which has led to slower labor productivity growth. Another challenge is the aging workforce. As the American workforce ages, the number of workers is expected to decline, which could also lead to slower labor productivity growth.

Despite these challenges, the United States is still well-positioned to maintain its labor productivity growth. The country has a strong educational system and a highly skilled workforce. Additionally, the United States is a leader in research and development, which is essential for continued technological innovation.