In a recent post, I asked for collaboration between American small business owners and workers. Encouraging small business owners to vest workers by sharing profits with them. You can read that post at Can Your Business Produce An Exportable Product?

Since writing that post, I’ve spoken with several experts and business people about my ideas. One comment from a businessman surprised me. He said:

Many of the products that we export were invented by Americans, but labor costs in the USA are so high that it takes a nation with cheap labor to produce the products at a marketable price. How can business people produce products here and compete with products made in nations with $4 an hour labor? Cecil King, Small Business Owner in Charleston, AR.

So today I want to ask several questions about labor costs and efficiency.

Is American Productivity Low
Because Of Ineffective Workers?

The first involves productivity. Last week, the national news media reported that American productivity increased more than six percent, indicating that American businesses are getting more done through each worker.

Because there’s been less business investment during the recession, this productivity increase is more likely due to employees working harder and getting more done, rather than to business increasing productivity through technology.

So what does this say about American workers productivity prior to the recession? If they were capable of working more efficiently now, weren’t they just as capable before the recession? And if so why didn’t they produce more then?

It could be that businesses laid off their less productive workers, while keeping their most productive workers. This would be a good business decision, but in unionized businesses it wouldn’t be possible. And much of American labor is unionized, which has led to incomes far greater than those in other nations.

Is American Productivity Low
Because Of Discouraged Workers?

Another explanation is that American workers weren’t giving a full day’s work for a full day’s pay. This is partially understandable. American big businesses has made it clear, since the early 90s, that they owed no loyalty or consideration to either their blue collar or white collar workers.

As a result, many workers lost faith in their employers, often developing  antagonist attitudes toward their companies and their supervisors. One way to fight back was to hold back.

Management science has found that discouraged and diminished employees never perform as well as encouraged and vested employees. But there’s another aspect, which will influence our future business success, that I don’t believe management science has yet studied.

How Will Americas Youngest Generation Of Workers
Affect Productivity?

Our youngest generation of workers have been encouraged to the point of overestimating their skills and contributions, and what employers should do for them. Here’s a quote about Generation Y from my ebook Know ‘em Sell ‘em: How to Discover The Best Appeals for Your Target Market.

Gen Yers expect a lot in return for what they give. They want jobs that provide “training, fair compensation, and most importantly, a positive company culture.” They want bosses who are “open and positive,” who empower them, consider everything they say and give them “lots of flexibility.” They expect to receive and give loyalty, not based on years with a company, but on the honesty and respect between them and colleagues.”• They have a sense of entitlement and determine for themselves what they “will give to and take from” society and work.••

•  Rebecca Gardyn,   “Wise Beyond Their Years: A Conversation with Gen Y,” American Demographics, (September 2000), p. 59.•• Michael J. Weiss, “To Be About To B,” American Demographics 25:7 (Sep. 2003), 2003, p. 30.

With such attitudes among young workers, how will the USA ever compete globally?

What’s Our Way Forward To
Becoming More Globally Competitive?

To become more globally competitive, I still believe we must have greater collaboration between business and workers.

As small business owners, we are less likely to be unionized, and we have more flexibility to form partnerships with our workers. We need to tie wages to performance. We need  to be quick to fire unproductive workers and to reward productive ones.

We also need to share information with workers by both listening and talking. We need to involve our best workers in business decisions, and give the same loyalty that we ask from them.

We must vest them in our businesses and share profits so they will become motivated to want the best for our businesses, rather than just thinking about “what’s in it for them.”

We must also learn to understand them better. You can get profiles on the working class to better understand blue collar employees, and the middle class to better understand white collar employees. You can see these and other profiles at Market Segmentation: Target Market Profiles.

You can get more marketing information like this by subscribing to my blog. I’ll send you weekly post summaries and a copy of my matrix Market Segmentation report. Just complete the form below:

Posted 3-8-10:
Does USA Labor
Bar Us From Competing
In A Global Economy?

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