ABC News Daily The productivity problem with car washing
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Aug 20, 2025 Ian Verrender, ABC's Chief Business Correspondent, explores Australia's troubling productivity woes. He dives into the surprising shift from automatic to hand car washes, linking it to immigration policies. Verrender discusses how these changes reflect broader economic trends. The conversation challenges the notion that productivity must always precede wage increases, suggesting that higher wages could actually drive productivity. He also highlights critical factors such as population growth and property dynamics that were overlooked in recent economic discussions.
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Productivity Is Output Per Input
- Labour productivity measures output per worker over a fixed time and depends on tools and management.
- Using better machinery can drastically raise output for the same input.
Services Make Productivity Hard To Measure
- Measuring productivity is harder in services than in manufacturing because outputs are intangible.
- Doubling class size raises measured productivity but likely reduces service quality.
The Car Wash Turning Point
- Automatic car washes in 1968 massively cut the time to clean a car compared with hand washing.
- Around 15–20 years ago many hand-wash businesses reappeared despite the machines.