Business: Measuring the White Collar

Why have costs gone up so fast, and why does industry find it so hard to cut them? Last week Federal Reserve Economist Murray Wernick gave as his reason the fact that industry has exaggerated the gains in productivity credited to production-line workers. These so-called gains form the basis for wage boosts, and also lead industry to exaggerate the wages it can give without increasing costs.

The reason for this disparity, says Wernick, is the vast increase in so-called "nonproduction" workers, which corporations often fail to take into account. Between 1947 and 1957, nonproduction workers increased by 1,400,000, or 55%, v. only...

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