As America's productivity guru, Jack Grayson doesn't mince words. ``The American dream is coming to an end,'' he tells a conference of managers here in suburban Chicago. ``It isn't there yet, but if we don't change, that dream and the extensions of it are not going to happen for our children, grandchildren, and for some of you.''
If that sounds scary, it's meant to be, says Mr. Grayson - author, former university dean, and chairman of the American Productivity Center, a Houston-based research and consulting firm. His book, ``American Business: A Two-Minute Warning,'' to be published in November, predicts that the US will lose its top spot in the global economy in the next two decades if American managers and workers don't wake up.
``Most people do not realize what's happened to incomes in this nation,'' Grayson says. ``Household income is now 8 percent less than 1973 [in] real dollars. Real compensation per hour is equal to that of 1969. And real weekly earnings are less than they were in 1962.''
That's a radical shift from the '50s and '60s, he adds. ``We grew up in an era where incomes were growing so children always thought they were going to be as well off - twice as well off - as their parents.'' A 40-year-old in the 1950s could expect to have 36 percent more real income a decade later. A worker in 1963 would be 25 percent better off a decade later. But thanks to a slowdown in productivity growth and inflation, a worker in 1973 was earning 14 percent less in income by the time 1983 rolled around.
This trend has been masked by adjustments in living style, Grayson says. ``More people have gone to work. They've postponed housing. You find more people living with their parents, making decisions to postpone marriage, postpone children, getting parental help.''
And they're borrowing heavily. Counting all kinds of debt, each American now owes roughly $35,000, he says. Borrowing abroad has been especially heavy. From a creditor nation with a $141 million surplus in 1982, ``we have run that down like somebody spending an inheritance. We now owe foreigners $220 billion, and we will owe them $750 billion by 1995 if the scenario's not changed.
``What it's doing is changing our lives. It's going to change our children's lives. [If the 1995 projection holds true], the interest on that debt will consume all the growth in the United States. Interest alone,'' he warns.
While the US limps, other nations, such as Japan, are galloping. From 1973 to 1986, Japan grew 2.8 percent - seven times the US rate. ``The only [competitor] that really is a challenger for the United States' No. 1 position is Japan,'' says Grayson. ``The average Japanese citizen is not only richer than we are in real terms [$18,100 vs. $17,700 at today's rates], he is better educated than the average American, he works harder than the average American - more hours of work, and he saves more. ... Those are powerful ingredients.''
Japan's growth is not limited to manufacturing, he adds. ``They're coming and getting into services as fast as they can. What's the largest advertising agency in the world? Dentsu. The world's largest securities firm? Nomura Securities. The world's largest bank? Dai-Ichi Kangyo. Insurance, health care - any sector I can think of, I know the Japanese are planning a way to come into our market.''
The solution? Many legislators and others are pushing tough new trade legislation. But Grayson says that Japan, while highly protectionist during its high-growth phase, is now no more restrictive than the US. His solution: make American management and workers more competitive with big boosts in productivity.
Some economists are a bit skeptical of that single prescription. ``He says productivity is the major issue of our times,'' says John Zalusky, an AFL-CIO economist. ``It's a major issue. But not the major issue. ... The game is looking after the citizens of the United States [by] not exporting our jobs, not exporting our technology.''
Says Grayson: ``I'm saying the private manufacturing base had better save itself.'' With small but steady gains in productivity, plus a willingness to make sacrifices, the US can compete, he says. That's how Britain replaced the Netherlands as the world's economic leader around 1785. A century later, the US took over the No. 1 post with an average growth rate of less than one percentage point above Britain's.
``A report that the ship is sinking - or has a leak - is not defeatist,'' he adds. ``With the report ... you can blame all the sorts of people you want to, the ship will sink. Or, you can man the pumps.''