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U.S. Clings to Lead in Productivity

Productivity is a word you hear often in the fuzzy world of economics. Americans have drawn comfort from our traditional perch atop world rankings in output per worker as measured in monetary value. he Bureau of Labor Statistics is even projecting a modest productivity gain of a percentage point or two again this year, despite a troublesome recession.

But what is productivity, really? Half a century ago, it was a snap to calculate the output per worker in automobiles or aluminum pans or bicycles by simply totaling the products' market value and doing some quick division.

But now it's trickier, since we don't make so many tangible toasters and television sets and trucks. We have become, largely, a service economy, that works more out of offices and even our homes, and less along assembly lines. How does one put a dollar figure on the output of a Web designer or a cancer researcher or flight attendant? How do you piece together the value of toil by millions of part-time workers?

To increase productivity in the old days, companies could expand their factories, build new ones, or install slicker equipment. But hair stylists can beautify only so many heads of hair, and professors can teach only so many classes. So the upward trend in U.S. productivity is slowing, while that of rapidly industrializing countries like China is spiking.

And American productivity is slowing as companies nudge older folks, who cost a lot to pay and insure, out of the work force. Younger workers are cheaper but less productive.

So a nation long accustomed to productivity gains has its hands full trying to remain the most productive place in the world.

Read more of Ted's personal reflections and stories from the road on his blog, Ted Landphair's America.