94TH CONGRESS 1st Session SENATE { REPORT No. 94-335 NATIONAL PRODUCTIVITY AND QUALITY OF WORKING LIFE ACT OF 1975 JULY 28, 1975.-Ordered to be printed Mr. NUNN, from the Committee on Government Operations, REPORT [To accompany S. 2195] The Committee on Government Operations to which was referred the bill (S. 2195) to establish a National Center for Productivity and Quality of Working Life; and to provide for a review of the activities of all Federal agencies including implementation of all Federal laws, regulations, and policies which impede the productive performance and efficiency of the American economy; to encourage joint labor, industry, and Government efforts to improve national productivity, and the character of working conditions; to establish a Federal policy with respect to continued productivity growth and improved utilization of human resources in the United States; and for other purposes, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass. PURPOSE The purpose of the National Productivity and Quality of Working Life Act of 1975 is to establish a national policy to encourage productivity growth in all sectors of the economy and to create an independent National Center for Productivity and Quality of Working Life to focus, coordinate, and promote efforts to improve the rate of national productivity growth. HISTORY OF the LegislaTION The original bill reported by the committee is the outgrowth of S. 4130 and S. 4212, which were introduced in the 93d Congress by Senators Nunn and Percy, respectively. Those bills were the subjects of hearings on national productivity conducted by the committee on December 16 and 17, 1974, at which 25 witnesses testified. Senators Percy and Nunn revised and introduced their bills-S. 765 and S. 937, respectively-early in the 94th Congress. Additional hearings, dealing exclusively with these measures, were held on March 20 and 21, 1975. Eight witnesses testified at the March hearings. The original bill reported by the committee represents a combination of the Nunn and Percy bills. The committee also has taken into consideration a bill recommended by the Ford administration which was introduced in the House of Representatives (H.R. 6078) but not in the Senate. BACKGROUND One of the Nation's most important and least understood economic problems during the past decade has been a declining rate of productivity growth. It is important because increases in our standard of living are dependent to a large extent on increases in our national productivity. Unless productivity grows, any increases in income will be absorbed by higher prices. Therefore, improving our productivity growth rate can be instrumental in controlling the spiraling rate of inflation that has gripped our national economy. According to statistics compiled by the Bureau of Labor Statistics, output per manhour in the private economy in the United States grew at an average annual rate of 3.2 percent from 1947 to 1966; however, from 1966 to the present the rate has dropped to 1.9 percent. The rate of decline has been even more pronounced during the past 2 years. As measured by BLS, output per man-hour began a steady decline early in 1973 and has continued from quarter to quarter, with some hesitation, until very recently. By the fourth quarter of 1974, output per man-hour was down 4.2 percent from the first quarter of 1973. Productivity in the key U.S. manufacturing sector has remained virtually unchanged over the past year. By comparison, productivity in the major industrial countries abroad continued to increase. From 1973 to 1974, output per man-hour in manufacturing rose more than 3.1 percent in Japan, 3.4 percent in France, and 2.9 percent in West Germany. While the recent economic recession has had considerable shortterm effects on productivity, the steady decline in productivity growth since 1966 reflects long-term causes in addition to transitory economic cycles. Economists identify some of these long-term causes as (1) changes in the productivity of component sectors and industries and shifts in the relative importance of sectors; (2) changes in the composition of the labor force to more younger workers and more female workers; (3) shifts in the overall economy away from manufacturing to service-oriented industries; (4) changes in the ratio of capital to labor; and (5) the adverse effect of some Federal and State laws, regulations, and policies. In addition to these causes, productivity growth has been affected by two new scarcities: raw materials and energy. Therefore, longterm improvements in productivity will depend on the development of new technologies as well as finding solutions to the long-term causes. A concerted national effort to reverse the decline in productivity growth in the American economy must be addressed specifically to improvements in technology, management techniques, capital formation, education and training of workers, labor-management relations, and government regulation, among other factors. The operation of the American economy is a combination of effort, both physical and mental, by individuals at all stages of the production process. Any effort to improve the economy's performance-in other words, to raise productivity-cannot afford to neglect any aspect of this production process. THE QUALITY OF WORKING LIFE An important element in any program to accelerate productivity growth must involve the worker's contribution, his education, training, experience, attitude and the conditions at his workplace. In any program for productivity improvement the worker must be provided the necessary support in the form of equipment, tools, training, and conditions on his job that will enable him to make his maximum contribution to the economy. Recently, renewed attention has been given to proposals and projects for improving what is known as the quality of working life-namely, those factors which affect the worker's attitude and his output on the job. There have been a variety of programs, many developed through union-management negotiations, which have been pointing towards changes in this general area. One example is the steel industry where since 1971 the major basic steel companies and the United Steel workers of America have established joint advisory committees at each major steel plant to devise ways of improving productivity and promoting the use of steel produced in the United States. The 1974 agreement states that: the future for the industry in terms of employment security and return on substantial capital expenditures will rest heavily upon the ability of the parties to work cooperatively to achieve significantly higher productivity trends than have occurred in the recent past. A joint labor-management memorandum lists the following topics for consideration by these individual plant committees: Maximizing use of production time and facilities; Improving quality; Reducing need for reprocessing products; Eliminating waste of materials, supplies and equipment; Reducing excessive overtime; Boosting employee morale; Improving safety experience; and Focusing employee awareness on the problems of productivity and those posed by the threat of foreign competition. In other situations different approaches have been made. Upon the initiative of management, often with the cooperation of the union representing the employees, new systems of work organization have been developed in a number of new or reorganized plants. Some of these have been directed toward simplifying an individual task in order to relieve the worker of a burdensome job. In others, the effort has been to add more varied or demanding tasks to particular jobs in order to make them more challenging to the individual worker. In both types of situation, these efforts have not only led to improved worker attitude on the job but also to improved productivity performance. The committee feels that efforts of this type which focus on the worker, his training, experience, job conditions, and his role in production, can be an important ingredient in improving the productivity of the economy as a whole. These issues, summarized in the phrase "quality of working life," therefore, form an important aspect of this proposed legislation. HISTORY OF THE FEDERAL PRODUCTIVITY EFFORT The Federal Government's effort to improve productivity in the economy as a whole has been centered in the National Commission on Productivity and Work Quality, although several agencies are engaged in activities and projects related to productivity improvements. President Nixon created the Commission as part of his "new economic policy" of 1970. At the outset, it was known as the Commission on Productivity and had a part-time staff and no independent funding. The Commission was given legislative recognition in the Economic Stabilization Act Amendments of 1971 (P.L. 92-210), which authorized wage and price controls. However, the Commission experienced organizational and funding problems. In 1974 Congress passed P.L. 93-311, which changed the name to the Commission on Productivity and Work Quality and clarified its mandate in an attempt to remedy its problems. However, the Commission has continued to be hampered in its operations by year-to-year authorizations, poor funding, and frequently changing leadership. Former Secretary of Commerce Frederick B. Dent testified at the committee's hearings in March that there was no continuity of leadership. The chairmanship [of agency. While the Commission has embarked on some ambitious and very worthwhile projects, the committee believes that it should be reorganized and its mandate revised if it is to be effective in the future. The Federal Government's effort to improve the productivity of its own agencies has been centered in the Joint Financial Management Improvement Program, which was given responsibility for a continuing Federal Productivity Program by the Director of the Office of Management and Budget in 1973. The JFMIP is a joint and cooperative undertaking by OMB, the General Accounting Office, the Treasury Department, the General Services Administration, and the Civil Service Commission. It was authorized by the Budget and Accounting Procedures Act of 1950. NEED FOR A FEDERAL EFFORT Improving the Nation's productivity growth rate will not be accomplished overnight, and any Federal effort to stimulate productivity growth will be a first step on a long road. As Secretary of Labor John T. Dunlop, who was then Chairman of the National Commission on Productivity and Work Quality, testified at the committee's December hearings, "virtually everything affects productivity." Accordingly, there is no easy or quick method to reverse the downward trend in the Nation's productivity growth rate. Dr. Dunlop cautioned that productivity improvement "is a long term proposition." Any effort directed at improving productivity must incorporate the efforts of management, organized labor, institutions of higher education, State and local governments, and other organizations and individuals as well as the Federal Government. Improvements cannot be mandated; they must be brought about over a period of years with the efforts and cooperation of all segments of the national economy. The Federal Government can provide the leadership needed for such a concerted effort. However, this bill is not designed to force productivity improvements. It does provide a focal point for a national effort to improve America's rate of productivity growth in the form of an independent Federal agency whose role will be to coordinate and stimulate activities in all sectors of the economy to achieve this purpose. It also provides a Federal policy to improve productivity growth, and it directs each Federal agency to undertake certain actions to carry out that policy. A FEDERAL POLICY TO STIMULATE PRODUCTIVITY GROWTH Witnesses at the committee's hearings emphasized the need to establish a Federal policy to stimulate a high rate of productivity growth through the use of all practicable means and measures, and to require that the laws, rules, regulations, and policies of the United States be interpreted to carry out this policy. Accordingly, the bill provides for the establishment of such a policy, and it makes it the continuing responsibility of the Federal Government to use all practicable means to improve and coordinate Federal plans, functions, programs, and resources to achieve a high rate of productivity growth. Much has been written about the effect of governmental regulation on the efficient working of the econony. The purpose of the committee in establishing a Federal productivity policy is to require each agency to assess the impact of its regulations, policies, and programs on national productivity growth. In carrying out this Federal policy, each department, agency, and independent establishment of the Federal Government is directed by the bill to undertake certain prescribed actions, including an internal review of its statutory authority, policies, and regulations, and the support of external activities aimed at increasing national produc |