Thursday, April 28, 2016

The NYT says American productivity is stagnant. Here's a theory why.

The New York Times observes that American productivity is stagnant, and considers three theories why.
During the 2008 recession, labor productivity soared. Was this because employers laid off their least productive workers first? Because everybody worked harder, fearful for their jobs? Or was it a measurement problem as government statistics-takers struggled to capture fast-moving changes in the economy? We don’t know for sure.
None of the Times' three theories use this armchair psychoanalysis to consider one obvious reason American workers aren't more productive these days:

It isn't friggin' worth it.

Since the end of the Great Recession, Americans have become more and more aware — aided by growing discussion of income inequality and movements like Occupy Wall Street — of two very salient points:

• For decades, American productivity has soared.

• During those same decades, worker wages have stagnated.

Here's The Atlantic, reporting in February 2015:
Though productivity (defined as the output of goods and services per hours worked) grew by about 74 percent between 1973 and 2013, compensation for workers grew at a much slower rate of only 9 percent during the same time period, according to data from the Economic Policy Institute.
That increased productivity has been good for the bottom line of a lot of businesses, but it hasn't meant boo to most workers. (Top earners, though, have seen their income and wealth soar.) Why have Bernie Sanders and Donald Trump been so successful this  election cycle? Because a fundamental American promise — worker harder, you'll probably do better — seems to be broken.

I come from the news industry, where we've spent most of the last couple of decades under constant pressure to do more with less, more with less, more with less. At some point, there's no more to be wrung from less. And if giving more won't gain you more, why not just put in your time, clock out at the end of the day, and stress out a little bit less?

This isn't the kind of thing that economists measure, I don't suppose. But maybe productivity is declining because workers are tired of the cycle. Maybe they need incentives.

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