A shift in federal spending toward investment would boost productivity growth. Two of the panelists saw greater potential for productivity gains from reformed federal policy. In his view some version of a consumption tax would increase the savings pool substantially, which would clearly result in a higher future growth rate for the U.S. economy. Professor Tom Hopkins focused on reform of regulatory policies as a target for growth-enhancing reform. While the panel was skeptical that any combination of changes in federal budget and regulatory policy could increase future productivity growth by more than 0.2 percent per year, such an increase is not trivial.
Economists generally agree that there is too much regulatory interference in the workplace.
In particular, there is little recognition that if worker benefits are created, they will in the end be paid for by the workers themselves because they increase the labor costs of employers. Finegold mentioned specifically the value to workers and firms of more flexible work scheduling, including comp time, and elimination of FLSA rules that impose a significant administrative burden on firms that want to adopt performance based pay systems. He also advocated passage of the TEAM Act to clarify the legal status of employee involvement in workplace decisionmaking in nonunion settings. Employment Policy Foundation research has shown that up to 70 percent of the increase in productivity growth since the 1980s can be attributed to such organizational change. Professor Finegold emphasized the importance of improving the effectiveness of government skills investment and training.