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Session 1254

Remote Labor - the New Source of Increased Productivity

Alexei Nesterov, George Piskov Russian Association for Engineering Education

Abstract

Productivity is one of the most important driving forces behind the economic growth and prosperity. Clearly, the labor shortages of the overheating US economy are making acceleration in productivity even more crucial for keeping the growth pace intact. As high technology industries are taking the lead among the economy overall, the productivity in software development, for example, is becoming a critically important factor of survival in this highly competitive world. In this article we attempt to demonstrate, how to increase productivity in "brain hungry" industries through the concept of "remote labor" and distribution of the jobs between geographically remote groups of intellectuals around the world. We also attempt to prove that this is, actually, the only way to dramatically increase the cost efficiency of the US economy in same way as it was done in consumer goods industries in the fifties, when production of the vast majority of consumer items was moved to the Third World countries.

Is there any reason to worry about productivity in a country where the stock market makes its highs year by year, where economy is growing at a pace, unseen in some developing nations and inflation still looks tame despite tight labor market and rising earnings? Yes, there is, and very serious one - it well may be that the United States economy is on verge of the productivity crisis and thus experience serious inflationary consequences.

There is a wide spread opinion that the progress we have made in high technology sphere of the economy gives us a sort of leeway in the indefinitely long expansion of productivity. It is true that in the modern industry the manual labor is almost completely replaced by highly computerized, sometimes even robotized one. But does it really create a growth in productivity high enough to compensate for the wage increase?

As we can clearly see on the Figure 1, the rise of the Employment Cost Index (ECI) is consistently outstripping the Gross Domestic Product growth. Even worse, ECI rises faster then the Output per Hour (OPH), which is one of the main measures of the labor productivity (see Figure 2).

Proceedings of the 2001 American Society for Engineering Education Annual Conference & Exposition Copyright  2001, American Society for Engineering Education

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Piskov, G., & Nesterov, A. (2001, June), Remote Labor The New Source Of Increased Productivity Paper presented at 2001 Annual Conference, Albuquerque, New Mexico. 10.18260/1-2--9733