Productivity miracle? (Scan).

When new machines, new information, or new techniques allow workers to produce more in the same period of time, this is what economists call "productivity growth." Producing more with less is the only lasting way to improve our standard of living. And it's something we've recently been doing extraordinarily well.

"Since the business cycle peaked in 2001, productivity has risen at an annualized rate of 3.8 percent," announced Secretary of Labor Elaine Chao at the American Enterprise Institute not long ago. That is higher than the already-strong 2.5 percent rate of 1995-2000, and far exceeds the 1.4 percent annual rate achieved from 1973 to 1995. For more than seven years, American productivity has been zooming, and Federal Reserve chairman Alan Greenspan predicts that strong growth may continue for years to come.

This is very good news for Americans. If workers are able to put out more goods and services per hour of work, then employers can afford to pay them better. And because it lowers costs, higher productivity makes purchases more affordable to consumers. There are other benefits as well. Kathleen Utgoff, head of the Bureau of Labor Statistics, estimates that one extra percent of annual increase in productivity will reduce the federal deficit by $2 trillion over 10 years--and cut our Social Security shortfall by up to half.

There are ...