ECONOMIC

Chart 3Productivity in the PrivateBusiness Economy1972 DOLLARS PER HOUR (RATIO SCALE)PRODUCTIVITY ATC/iACTUAL PRODUCTIVITY_3 i i • i i i i i i i i i i i i i i i i i i i i i i i i i i1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976J/GROWTH RATE OF 3.3 PERCENT PER YEAR.SOURCE: DEPARTMENT OF LABOR.after adjustment for cyclical factors. The decrease can be attributed to afaster rate of growth of labor input not matched by corresponding increasesin the capital stock. The larger growth in the labor force since themid-sixties has been a result of the postwar baby boom and of an increasedpercentage of women in the work force. Although the average growth rateof fixed nonresidential capital in 1966-73 was higher than the averagegrowth rate for 1948-66, the effective growth rate of capacity may wellhave increased less because of higher obsolescence rates and increasedexpenditures on pollution abatement and safety equipment. While bothtypes of investment contribute to our well-being they do not in generalincrease our capacity to produce measured output. Estimates of thecontribution of increases in the capital-labor ratio to productivity growthare very sensitive to the measure of capital stock used; our analysis suggeststhat perhaps one-tenth to one-third of the productivity slowdown since 1966can be explained by slower growth in effective capital per labor-hour.Composition of the Labor ForceIn the last decade the proportion of the labor force made up of teenagersand young adults has been rising. Workers in these groups tend to be lessproductive to the extent that they have less experience and training than46