OM in the News: The Productivity Challenge AUGUST 12, 2016 by Barry Render tags: Productivity, U.S. economy Plunging Productivity Gains in US worker productivity have slowed dramatically since the early 2000s, a trend that could restrain the economy's future growth Labor productivity (output per hour) Percentage change from previous quarter at annual rate 5-year moving average What better way to start the fall semester but with a discussion of the importance of productivity (see Chapter 1, pages 13-18). There we write: "only through increases in productivity can the standard of living improve. For well over a century, the U.S. has been able to increase productivity at about 2.5% per year, meaning U.S. wealth doubled every 30 years. But in the past decade, the news is not good. As The Wall Street Journal's (Aug. 10, 2016) front page headline declares: Productivity Fall Imperils Growth." 02.2016: 0.5% 2000 New way adjusted Sur Laborament 1975 0 00 This longest slide in worker productivity since the late 1970s is haunting the U.S. economy's long-term THE WALL STREET EL prospects. Productivity in the 2nd quarter was down 0.4% from a year earlier, the first annual decline in 3 years. That was a further step down from already tepid average annual productivity growth of 1.3% in 2007 through 2015, itself just half the pace seen in 2000 through 2007, and the trend shows little sign of reversing. Productivity has slowed dramatically since the information technology-fueled boom of the late 1990s, when strong productivity gains translated into robust growth for household incomes and the overall economy. Adds Fed Chair Janet Yellen: "the outlook for productivity growth is a key uncertainty for the U.S. economy and a very difficult question that has divided the economies profession. Some are relatively optimistic, pointing to the continuing pace of innovations that promise revolutionary technologies, from genetically tailored medical therapies to self-driving cars. Others believe that the low-hanging fruit of innovation largely has been picked and that there is simply less scope for further gains." Throughout our text we examine how to improve productivity through operations management. Classroom discussion questions: 1. Why is productivity important to OM managers? 2. What can be done to raise productivity levels in a company? In a country