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2004 News Releases
For immediate release:
May 13, 2004
Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org
Dallas Fed: U.S. Productivity
Transforming Economy and Workplace
DALLAS—Advancing U.S. productivity—fueled
by technology and trade—is transforming the economy,
enriching the nation and altering skills Americans need
to succeed in the workplace, according to the Federal
Reserve Bank of Dallas’ 2003 annual report essay.
In “A Better Way: Productivity
and Reorganization in the American Economy,” Senior
Vice President and Chief Economist W. Michael Cox and
economics writer Richard Alm find that “as companies
and workers achieve greater efficiency at the microeconomic
level, they unleash a power that reorganizes the whole
economy, spurring further productivity gains at the
macroeconomic level.”
The long-term result: bigger paychecks
for workers and lower prices for consumers.
Although macroeconomic productivity
spurs economic growth, it’s often overlooked or
characterized as a threat to jobs.
“But taken together, micro-
and macroproductivity are a potent brew for economic
progress,” the authors state, taking America through
a succession of technology revolutions—from horse
and buggy to the Internet.
The essay points out that trade
is proving as effective at driving up productivity as
it is at holding down prices. Foreign competition is
forcing U.S. producers to shift resources to their best
uses, creating a more productive deployment of labor.
This reorganization results in outsourcing of jobs,
including those in manufacturing and—in the current
recovery—service sectors.
The essay’s “hierarchy
of human talents” shows how American jobs are
changing as a result of greater productivity.
Those who earn their living with
muscle power, manual dexterity or formulaic intelligence
are increasingly finding themselves replaced by automation
or cheaper overseas labor, requiring them to adjust
by utilizing higher-order skills that machinery or outsourcing
can’t do as well.
“Americans who want to prepare
for the better jobs of the future will concentrate on
developing their creativity, imagination, people skills
and emotional intelligence,” the authors write.
Additionally, in his annual report
letter, Dallas Fed President and CEO Robert D. McTeer,
Jr. says that while productivity has temporarily slowed
job growth, “We should do what we can to promote
the dynamic growth that will eventually create new jobs.”
He cautions against actions that
seek to protect jobs at the expense of productivity
growth.
The 2003 annual report can be
found on the Dallas Fed web site at http://dallasfed.org/fed/annual/2003.
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