Doesn productivity improvement eliminate jobs?
This is probably the oldest myth in productivity. In fact, the only thing that can guarantee a person a job is that he/she is productive enough so that they add at least as much value as they receive in terms of pay. What usually happens when a company increases its productivity is this: first, the company is able to produce more goods and services than they were able to do before with the same amount of manpower, capital and equipment. That means that they can sell more products or services, particularly because it is now possible to lower prices, because the overhead is allocated across more units. Lower prices increases demand, and eventually that will lead to the hiring of more people rather than to the firing of people. The best example of the refutation of this argument is that the American economy has been able to create jobs at the same time as productivity has increased in an unprecedented fashion for many years after World War II. If the argument were true that productivity w
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