Monday, September 3, 2007

U.S. leads in productivity but not wages

A new report released today by the U.N. International Labour Organization (ILO) indicates that U.S. workers lead the world in total productivity. U.S. employees work more hours than employees in many other countries, but even when productivity is considered on a per-hour basis, the U.S. does well, coming in a close second behind Norway. The ILO report goes on to indicate that the gap in productivity between the U.S. and many other countries is widening.

Despite the impressive performance in productivity, hourly compensation (salary and benefits) for U.S. workers is less than that of many other developed countries. Some of those differences are due to the deteriorating exchange rate position of the U.S. dollar. However, for several years, productivity in the U.S. has been rising while compensation, on an inflation-adjusted basis, has been falling. Indeed, the most recent Census Bureau report on incomes and insurance showed that annual inflation-adjusted earnings for full-time, full-year workers fell by about one percent from 2005 to 2006.

U.S. workers are creating tremendous wealth for businesses. Their pay should reflect those contributions.