Regional Wage Productivity Trends in the United States

Southeastern Geographer Vol. 25, No. 2, November 1985, pp. 122-136 REGIONAL WAGE PRODUCTIVITY TRENDS IN THE UNITED STATES Merrill L. Johnson and James S. Fisher 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 of jobs 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 Dr. Johnson is Assistant Professor of Geography, University of New Orleans, New Orleans, LA 70148. Dr. Fisher is Professor and Head, Department of Geography, University of Georgia, Athens, GA 30602. Vol. XXV, No. 2 123 relative shifts of manufacturing from the manufacturing core land to the periphery. The model suggests that industrial systems pass through a sequence of structural and spatial adjustments in response to product evolution. (6) Mature industrial systems are viewed as exporting the standard assembly component of the production process to more favorable labor environments outside the industrial core (defined herein— unless otherwise specified—as the urbanized-industrialized northeastern quadrant of the United States). Norton and Rees argued, for example, that much of the distress experienced by the United States manufacturing core can be traced to the failure of that region to slow both the export of jobs and innovative capacity. (7) The attraction of low wages has been cited as the motivating force for firms in the late stage of the product cycle to export jobs from core to periphery (defined herein as regions outside the core). Rees observed that the standardization phase "... favors low-cost locations, typically peripheral areas where labor costs are low." (S) Hekman argued the same point with reference to United States textile manufacturing. (9) Scott views product-cycle notions as accentuating or contributing to this decentralization, but only as a subsidiary nexus to a historical process driven by production system dynamics. (JO) He would view the primary force as deriving from new technologies, standardization, deskilling of labor, capital deepening, and contemporary firm structure. (JJ) Regardless of the perspective accepted, the implication remains that low-cost labor is a contributor to industrial decentralization. It is argued in this study, however, that the labor advantage offered by those areas benefitting from decentralization may include not only lower wages, but also higher productivity when viewed from the perspective of wage productivity. Relatively little has been written on changes in the labor environment that accompany the product cycle, save references to the composition of the work force (12); but it may be argued that maturation of an industrial structure as described in the product-cycle model is accompanied by maturation of the labor environment , perhaps to the point that core-area workers become less competitive because they are...