Regional Wage Productivity Trends in the United States

Abstract

INTRODUCTION. The subject of labor productivity and its relation to United States industrial location patterns is receiving increased attention in both the academic and popular press. (J) Yankelovich reported that while the American work ethic is still intact, recent research suggests that labor no longer works as hard as it once did. (2) This perspective, if correct, corresponds with what seems to be a popular view that a wage-productivity imbalance in the United States is contributing to a hemorrhage ofjobs from America's heartland to lower wage areas elsewhere in the United States and abroad. Yet research suggests that low-wage areas—e.g., the United States South—tend to be associated with regions of relatively low productivity. (3) This condition seems incongruent with the ability of areas such as the South to attract industry. Moomaw and Miller observed, however, that regional differences in wages may overcome differences in productivity, restoring the attractiveness of such low-wage areas to industry. (4) In other words, lower labor productivity, if existent, may be offset by lower wages. A relatively sophisticated body of research on labor productivity has appeared. (5) However, only limited research has been done on the issue of wage productivity, per se. The purpose of this study is to provide a preliminary assessment of the wage-productivity context in which regional industrial change has been occurring in the U.S. The central question addressed is whether evidence exists to suggest that regional wage-productivity differences relative to overall labor productivity may be contributing to postwar regional shifts in industrial capacity? Examination of this question should lead to further hypothesis generation. THE CONCEPTUAL FRAMEWORK. The product life-cycle model is frequently used to provide a conceptual framework for explanation of