Prometheus 6   

IT was like waiting for Godot. We waited for years for productivity to accelerate, and now, unlike Godot, who never showed up, that day has finally arrived. Productivity is soaring, holding out the promise of rising prosperity. Unfortunately, now we're waiting for the prosperity to kick in. A second term for President Bush could ride on whether it does, and how soon.

The United States economy has not experienced anything like this since World War II. Normally, a spike in productivity is accompanied by an even greater spike in demand. Simply put, productivity rises when workers produce more and sell more each year, and do so without putting in extra hours. The production part is working just fine. The demand, however, is lacking.

That, in turn, is having nasty repercussions for jobs and incomes. The increase in productivity has allowed many employers to cut payrolls or workers' hours. Why pay six people to assemble 90 toaster ovens an hour when only four workers are needed to assemble the 60 ovens that can be sold? Better yet, why not speed up the line and cut the four workers to three, each one forced to work faster? But that leaves three workers unemployed, without income and unlikely to buy toaster ovens — or much else — until they get work again. Gradually, the demand for toaster ovens falls to 50, then 40, and another worker is laid off, or everyone's hours and pay are cut. And demand falls even more, producing its own negative dynamic.

improvements in productivity means less workers are required to produce the same output

we said

improvements in productivity mean workers produce the required value with less effort

what would the impact on employment policy be?