In order to
increase labor productivity, we have to increase the amount and/or the quality of capital that
we use. We use labor and capital to make products, so the only way to increase the productivity
of labor is to make the capital better and/or increase it.
One may to make
the capital better is to invent better tools. In the case of the production of computer games,
if the games come on physical DVDs, we could increase a workers productivity by having a machine
that will burn more DVDs per hour.
Another way to increase worker
productivity is to have more capital. Lets say that we notice that the worker is tending one DVD
burning machine, but that they actually have time to tend two. We buy another DVD burning
machine and increase the workers productivity.
Not all capital consists of
machines. Workers skills and ideas are part of what is called human capital. If we educate or
train our workers more effectively, we can increase their productivity. For example, if we have
programmers coming up with code for the new computer games, we can increase their productivity
by giving them more training so they will know more about coding.
Finally, we
could increase worker productivity by doing a better job of managing the workers. Let us say
that we have a manager who antagonizes the programmers or lowers their morale. By changing that
managers style of management, we can make the workers happier and hopefully increase their
productivity. This is particularly true of people who are doing brain work. We could also
manage the workers better by finding more efficient ways to use the capital that we have. We
might, for example, split up the job that the workers are doing into more specialized tasks,
allowing each worker to do their job more quickly.
All of these are possible
ways to increase labor productivity.
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