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Why Is Productivity So Weak? Three Theories

138 points by Osiris30 11y ago

meric 11y ago
Or maybe, just maybe, companies find it cheaper to hire new employees due to the number of people who permanently couldn't find jobs, than to invest in increasing productivity. The past 8 years of overestimating economic growth by central banks have clearly shown hope is not sufficient to boost the economy on its own. Central bank balance sheet have exploded, exploding price of assets, making in unattractive for businesses to invest. They would rather perform stock buybacks from borrowing money, send it to investors to be consumed. In terms of real physical capital (as opposed to financial), the American economy is actively divesting. Any supposed GDP growth from the current monetary policy is due to capital being actively consumed, increasing spending temporarily. The data showing lack of productivity growth supports this pessimistic scenario. Central banks will do well to hike interest rates, collapse the markets, destroying the zombie and hangers on companies, so their physical assets go on firesales, releasing physical capital at massively deflated prices, for well run and well managed companies to gobble up. Only this will rejuvenate the American economy and return its status as the world's economic growth powerhouse. Remember, the current Silicon Valley boom started in the mid-2000's due to the collapse of costs of IT, with the advent of cheap Internet and cloud computing, not because of low interest rates. The cost of building capital got so low from 1999 people were doing it in their parents basements eating ramen.
- carsongross 11y ago
  Also, real wages are declining. After a point, working harder to make the c suite and Wall Street richer begins to seem pointless.
  - illinator 11y ago
    My old boss said, "Million dollar ideas don't come for free." I stopped giving mine away. If the business thinks it needs to funnel money up and away, hire product people who take the credit, then why should I as an engineer care? I am sad to say I care more about my coworkers and learning abstract concepts than the business model because I feel I have been cut out of it.
    - HappyTypist 11y ago
      That's a symptom of division between product and engineering and zero sum mentality. Get rid of that and you have happier and more productive employees.
      - carsongross 11y ago
        That's certainly one pretty-sounding possibility. Another is that it is a zero sum game, or, more likely, somewhere between that and a 1-for-1 game where the product manager and above realizes most of the gains.
- jordanb 11y ago
  That's supported by the observation in the article that companies are not investing much capital in improving productivity. If you've ever seen video of a Foxconn factory you've seen the rows of people carefully placing ICs onto circuit boards. In fact, there are machines to do that. They're called pick and place machines[0]. They've existed for many years. But labor in China is cheap enough that it often makes more sense to pay humans to do it manually than to invest in automation. [0] https://en.wikipedia.org/wiki/SMT_placement_equipment https://en.wikipedia.org/wiki/SMT_placement_equipment
  - SixSigma 11y ago
    Plus you can scale labour up or down whereas you can usually only scale machines up without significant loss.
  - eitally 11y ago
    I'm not 100% certain but I'm pretty sure you don't know what you're talking about. There are several types of components that require surface mounting on PCBs. By far the most common are things like resistors & capacitors that are machine placeable. But others, like BGAs and through-hole components, often require hand placement because they require hand soldering and can't go through a wave solder machine. Additional possible complications are boards with components placed on both sides, or multi-layer boards with non-standard solder. Finally, Debug/Repair stations are always manual. Source: Masters in operations research and 15 years experience writing factory control software for one of Foxconn's direct competitors & largest trading partners.
    - Retric 11y ago
      Generally, increasing automation requires some design changes, but you can start with the same basic design and end up with one focused on automation and another optimized for human asembly. So, it's a little more nuanced than you are suggesting. PS: There are also at least demos of pick and place for through-hole components. But, I don't know how production ready they are. (Manufacturing PCBs is not my area.)
seibelj 11y ago
Perhaps the next big change could be in transportation and infrastructure. If someone could reasonably commute to Boston from NYC (or vice versa) via a 250mph bullet train, wouldn't that increase productivity?
- meric 11y ago
  If and when the central bank finally sends the interest rates up the stratosphere, real estate and equipment prices will collapse to a fraction of its current value, which will make infrastructure like you mentioned possible.
  - ktRolster 11y ago
    If and when the central bank finally sends the interest rates up the stratosphere Why do you think they will?
    - meric 11y ago
      When they hit limits of monetary policy and stop digging into the hole they are in. Japan is the closest to such a limit. It has relentlessly pumped money into stocks and bonds and now all the JPY does is move up.
      - nitrogen 11y ago
        Assuming for the moment this is true, what does that imply for near- and mid-term planning purposes for the average software developer with bills to pay but also spare cash to invest?
        meric 11y ago
        In the medium term - the prices of stock markets are driven by capital flows. Even the price of a money losing company is going to go up if the pension funds[1] are buying it. Central bank pulling liquidity out when they finally realise their monetary policy is only making the inevitable worse, will mean a lot less money to flow into various investments. Therefore, avoid investments that have gone up in the past few years, that went up because of monetary policy (e.g. direct central bank buying, lowering of reserve ratios, lowering of interest rates). Avoid government bonds, avoid municipal bonds, avoid companies that have leveraged up for stock buybacks, ruling out S&P 500. Avoid companies whose stock prices are fueled by margin loans (e.g. tech unicorns). Avoid energy companies that have been limping along because they keep borrowing at low rates. Avoid companies with debt. In January 2016, the only sector that fulfilled all of these requirements were the junior gold miners - the collapse of gold prices since 2011 has wiped out all but the strongest gold mining companies. They have little debt, high margins, lots of cash and very profitable compared to their share prices. The junior gold mining stock index GDXJ[2] has went up 111% in 3 months. Of course, now that they're going up, margin loaning investors are piling in, and it's no longer as safe as a rock as it was in January 2016. I'd wait and see if GDXJ corrects back to the mid 20's, and then I'd buy more. (I have 130% of my portfolio in gold miners at the moment, so I'm biased.) The next sector to look for is overseas iron ore and oil producers. When finally the collapse of iron ore & oil prices has wiped out all the highly indebted and poorly performing companies, you will see the strongest of the bunch go on fire sale shopping spree. Those will be good buys. I think it will happen in 12-24 months. I think we're currently still in the clean up phase at the moment - lots of dead man walking companies hanging on desperately. The Chinese stimulus plan that lit a fire on iron ore prices in the past 2 months is going to prolong this phase for a while yet. [1] Pension funds are big. [2] https://au.finance.yahoo.com/q/bc?s=GDXJ&t=1y https://au.finance.yahoo.com/q/bc?s=GDXJ&t=1y
IndianAstronaut 11y ago
Possible that increased productivity means increase in knowledge required for the job. But people are unable to keep up with those increasing knowledge requirements. I see this on my team a lot. We are pushing hard to spread newer and more efficient programming and data analysis techniques, but people remain stuck and unwilling or unable to learn.
a3n 11y ago
Lots of new jobs, but lots of them are part time, and lots of those are "flexible schedules." So there's a lot of churn, both within the day as part timers come in and out, and within the week as they get scheduled and cut. After a certain amount of productivity, you need motivated people to get more, and where's the motivation, besides fear of losing a job, in that world. And then there's the further churn from people who have more than one flexible schedule job, and the inevitable day when they're scheduled for both jobs. So they lose one job, and the employer eventually replaces them. Training and churn. If more people had full time jobs with realistic chance of advancement, and therefore identity with the employer, I think productivity would increase nicely.
Alex3917 11y ago
The basic math in this article seems questionable. If Americans worked an extra 1.9% and output was up 1.9% then that doesn't mean productivity was flat, because the marginal labor is unequal.
- nobody_nowhere 11y ago
  Amen. Further, I think there's a lot of evidence of actual "productivity" concentrating in fewer and fewer workers as the labor force continues to segment into high-productivity knowledge and low-productivity service jobs.
powera 11y ago
Or maybe "productivity growth" will have to stop at some point; even at 1% year over year, that makes 1000x growth in 700 years. Barring space travel, it's hard to even imagine 1000x growth over the next 700 years in any real sense (as opposed to just adding zeros to currency), and completely absurd to imagine 1 million times growth over the next 1400 years.
- pdonis 11y ago
  > Barring space travel, it's hard to even imagine 1000x growth over the next 700 years in any real sense Why not? 700 years ago most of the things that people produce today weren't even conceivable, and any sort of comparison of functionality is going to end up involving large factors of improvement. For example, how much more functional is a smartphone with the ability to dial anywhere in the world and connect to the Internet, compared to writing a letter that would travel by horseback or sailing ship, which was the best known communication technology 700 years ago? I have no problem at all saying that the smartphone is at least 1000 times more functional, which means that productivity needs to have gone up by a similarly large factor for smartphones now to be about as ubiquitous as letters were then.
- ido 11y ago
  Asteroid mining by autonomous robots, completely or almost completely automatic robotic manufacturing/construction, fusion power & genetically engineered crops (including artificial meat) might consivebly make for 1000x gain in less than 700 years.
- marvin 11y ago
  Massive improvements in standard of living are certainly conceivable. I can't speak for how the maths work out, but if you e.g. consider potential improvements that have no physical law preventing them: - Eliminating the requirement to work for a living - Eradicating disease (including mental health and first-world diseases as obesity, RSI and diabetes) - Reducing health problems related to aging, increasing the number of healthy years of the population, increasing life span - Eliminating aging altogether, enabling replacement of organs and body parts with improved artificial versions - Achieving sustainable energy production and transport - Eliminating the need to perform unwanted boring tasks - Fully-immersive virtual reality - Automating production of goods and services to such a degree that everyone in the world has access to the same standard of living that the richest have today The sky is the limit, so to speak. One obviously has to think outside the box of what the world looks like today, but the limits of economic growth are in physical terms far, far beyond where we are today. This is even without considering the very distant possibility of compelling space habitats that could support greater populations than Earth.
toufique 11y ago
Possibly because it's a lot easier today to generate income without "producing" or creating new value. "Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income." Source: http://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot http://www.theguardian.com/books/2016/apr/15/neoliberalism-i...
- StanislavPetrov 11y ago
  That true, but it also has to do with the way productivity is calculated. If Joe borrows $10,000 from John, and loans $10,000 to Jill, and Jill uses that $10,000 to pay back the money she owes John, that counted as $30,000 worth of productivity as far as GDP is concerned. "Economic activity" does not equal productivity. If the government hires one person to dig a hole, and another person to fill it in, that's "economic activity" but it sure as hell isn't the productivity that GDP says it is.
  - matt4077 11y ago
    No, borrowing and repayment are not included in GDP. But there are some almost similarly absurd situations. If you paint your garden fence and your neighbor plants some potatoes, that doesn't count into GDP. However, if you buy your neighbors potatoes, and she pays you to paint her fence, those exchanges become relevant (ignoring the fact that small stuff like this is hard to measure). This is more relevant than one might think. Considering one of the largest economic developments in the last half century was the integration of women into the labour force, growth statistics would look quite different if were to assign a fair value to unpaid housework they used to do.
    - spangry 11y ago
      Yeah, there's a lot of problems with measuring economic productivity. Almost to the point where I wonder if it's informative at all. In Australia, we've had a 10 year slump in measured productivity (MFP). During the same period, commodity prices were at all-time historical highs and we were raking in a tonne of national income (as our exports are heavily weighted towards commodities). Guess which sector has been the biggest drag on MFP? Yep. Commodities. Because market prices were so high, it was profitable to throw a crap-load of inputs to extract fairly marginal outputs. Hence the drag on MFP. Now that the 'mining boom' is over, our national productivity will probably rise while our living standards fall due to the sharp reduction in national net income. Productivity should not be seen as an end in itself, although it seems to dominate political discourse on the economy. I wonder if there are more sensible (and calculable) metrics that we could use...
Spooky23 11y ago
Look at that chart. I don't think that general productivity swings that widely. The other thing to consider is that productivity tools like automation and outsourcing can bite back. When you lose your competency in "non-core" activity, you're now beholden to a vendor, whose incentives are often not aligned with the business. Also, we have lots of middlemen skimming profits for services of questionable value. My underwear was made in North Carolina in 1990, now it's made in Bangladesh or China, but costs more. That money is going somewhere!
- majewsky 11y ago
  The chart shows productivity increase. Productivity itself is never shrinking.
rumcajz 11y ago
Rational response to the economy that -- for whatever reasons, productivity increase, wealth transfer etc. -- is able to satisfy all the demand by putting just a fraction of the population to work is to create bullshit jobs that nobody needs and that don't add to productivity. I've written about it here: http://250bpm.com/blog:44 http://250bpm.com/blog:44
TheSmiddy 11y ago
I spend over 30% of my time at work (pleb level helpdesk) doing busy work that generates no actual benefit to the business other than making it easier to track the real work I do. If we were more trusted to do the right thing or the tracking of our work was better automated my job could be done with half the staff. The entire company has similar inefficiencies at every level that have all been introduced over the last decande and especially the last two years. From all accounts this seems to be a pretty similar trend happening all across large businesses in Australia and I assume America as well.
- majewsky 11y ago
  > If we were more trusted to do the right thing Is that trust justified? Not on the scale of you, but on the scale of everyone working the helpdesk in your company. While I will concede that many management tasks could be optimized away, or just plainly removed without replacement without impacting performance negatively, these tasks do exist for a reason.
  - Delmania 11y ago
    > Is that trust justified? Not on the scale of you, but on the scale of everyone working the helpdesk in your company. Why did you hire that person, and then not train him correctly?
- maxxxxx 11y ago
  Large companies look pretty similar to a planned economy in a communist state. I remember in East Germany they had banners everywhere "We will increase production next year by 50%" or "We are innovative". Guess what? A lot of companies do the same thing. Big banners, centralized control, tons of people just checking on what other people are doing. I am on a project where it's two engineers doing the work with 5 managers looking over them. And if the work doesn't get done we just need a new steering committee consisting of more managers.
mysterypie 11y ago
The whole premise that bigger GDP is greater productivity sounds like BS. The economists say, If you got more money for the things you made/did, you must have been more productive. But to use a computer analogy: 40 years ago, $100 got you the home version of pong (a primitive computer game) -- today the same inflation-adjusted money would get you something mind blowing. Whoever produced today's game is in some sense a million times more productive than the creators of pong (as brilliant as those developers were for the time). As far as I can see, GDP or cost is not the correct measure of productivity. Trying to connect GDP with productivity is like linking stock market performance to the outcome of the Super Bowl -- there might be a relation but it's very very very remote and tenuous.
- zeroonetwothree 11y ago
  But is the happiness produced by playing Angry Birds (or other modern games) any higher than Pong? I'm sure that people had just as much fun playing cards in the 1800s as they do play video games now. In that sense the overall productivity is far lower, since modern games take more work to produce.
  - meric 11y ago
    I think so - Pong was only available on the arcade machines at first, and cost a coin for each play, and real estate to hold those machines. Angry birds is available on people's phones, 24 hours a day, and the only real estate it needed was a few offices. I'd argue it produced a lot more amusement value than Pong, compared the real capital it used. Card games could only be played with people, whereas Angry birds can be played solo, on a train. When the value of playing card games is higher, people still play card games.
    - zeemonkee3 11y ago
      > Card games could only be played with people, whereas Angry birds can be played solo, on a train Solitaire?
      - 11y ago
dv_dt 11y ago
My theory is that many big employers have structured to carry more part time employees over fewer full time. Worse, many part time employees are working two or three jobs to stitch together enough wage to live. Both part time work and multiple disjoint work contexts reduces efficiency. Also, there are fewer and fewer small to midsize businesses and too many huge businesses. Somewhere between, the ideal scaled company actually has the highest productivity, but we've been skewing larger and larger which is also a drag on productivity.
- iofj 11y ago
  It doesn't just do that. A careful reading of the establishment survey will tell you that the unemployment ratio is unemployment = total jobs reported / people saying they're in the labour force (ie. who have a job or collect unemployment) Part time jobs count as a fulltime job. So a poor person with 2 jobs is counted twice as employed, and long-term unemployed are excluded from the figures. It is hard to imagine, given the successive changes to this variable that this is an accident. In reality the unemployment ratio should be: people that are employed/people that could be employed people that could be employed needs to be approximated, so I'm using the "working age population" figure. I'm sure it's a total coincidence that the first ratio is 5.5%, showing a constant, if excruciatingly slow, decrease under the current administration (except during the GFC in 2008) and the second ratio is currently 25.8%, and shows a constant increase (except for the last 2 months) under the current administration. Caveat: I'm pretty sure the actual 25.8% figure is overstating matters, the changes in the figure are real: they represent either people who enter the workforce and can't find jobs, or people who get fired. Given anecdotes, and sentiment, I'm much more inclined to believe the latter : that there has been a constant increase of the unemployment figure since around 2006, extremely fast increase during 2008-2009, to ~12-13% followed by a slower increase after that, currently at 16% or so. It is also funny that both figures start do diverge, immediately following a change in the way unemployment is calculated. One wonders ... which of those 2 things is cause, and which is effect.
  - coredog64 11y ago
    As I understand it, U1-6 is calculated via statistical sampling. They call people and ask them questions to determine which category they are in. U6 includes people currently holding a part time job but wanting a full time job. U6 is significantly higher than U3 (the usually touted "unemployment rate"), but I don't know how to extract numbers that would show the results of a move to more part time workers.
Jedd 11y ago
I am about two-thirds of the way through Paul Mason's 'Postcapitalism - A Guide To Our Future'. It's a book recommendation I got from some HN comments on a UBI story a while back. The happy / neutral / depressing theories (more hypotheses) don't cover all the possibilities, of course. Weirdly, while the 'depressing' scenario is badly described (is the placement of a computer in front of ever office worker an example of 'innovation'?), the initial premise -- that productivity is / has peaked -- may be accurate, iff we try to measure productivity today the same way we have done for the past hundred years. And that's kind of the problem -- we don't currently have appropriate metrics for productivity in a market increasingly based on information, let alone where information components of products are approaching zero cost. Anyway, I'll pass-on the hive mind's recommendation of Mason's book - I'm yet to finish it, and even further from being convinced of the soundness of all his arguments, but it's the most interesting book on economics I've read.
- omegaham 11y ago
  > we don't currently have appropriate metrics for productivity in a market increasingly based on information I like this xkcd comic for a great representation of this: https://xkcd.com/1629/ https://xkcd.com/1629/ How, exactly, do you quantify the productivity of someone who makes some obscure library for a tool that provides monitoring services for some other utility that... Hell, my own job is hard enough to quantify. I do defect analysis at Intel, looking for defects in chips with a scanning electron microscope. Sure, my output of samples is pretty easy to track, but what's the actual productivity of my work? I am one very, very small cog in a very, very big machine that somehow shits out fantastically small computer chips at the end. How important is my role? Er, I'm not quite sure. All I know is that I'm paid good money for what I do, and I work 12-hour shifts and am frequently asked to work overtime. But not once have I been told, "Hey, thanks to the defects that you and your team found, we got the information needed to increase wafer yield by X! You're doing great work!" Nope. Chips come in, pictures go out, engineers do Stuff with those pictures, and that's about as far as I can tell. How do you measure the productivity of my work? The engineers who use the data I create to tell other people to make changes in the process? The guys who make the tools that I use to do all of this? The janitor who cleans the wastebaskets of the guys who make said tools? We keep going farther and farther down the rabbit hole, and it doesn't get any clearer.
venomsnake 11y ago
I have revolutionary idea - if we create environment where people have a decent chance of making something out of their life - they may have incentive to work smarter. We don't have productivity increase, because we have nowhere to put it. Elites are fine, the bottom people have no expendable income and the middle class is nonexistent.
antoinevg 11y ago
Productivity increases don't boost GDP if no one has money to buy the goods&services being produced. This is why you need to watch out for steep income inequality between the managerial and working classes.
dschiptsov 11y ago
Why, in 90s we have to hard code HTML to make a website. Then PHP emerged, and then WordPress and Joomla and countless themes - making a shitty website became very productive. What happened next? Crappy WordPress sites were not cool, so the Rails era began. Making of big crappy websites became very productive. Nowadays there are React and other indispensable stuff to make very cool crappy websites. The productivity soared - one could make Bootstrap, React, Mongo, NodeJS hello-world website in a half of a day. But if content is crap productivity of making site does not really matter, and if content still is a king, no fucking hipster's frameworks are required (hello, Craigslist and this very site). Same thing happen today with ML tools and techniques. One could download and install Tensorflow in 15 minutes (I am so clever!) - a huge boost of productivity, and then one has to apply ones own brain, which is, usually, not near as productive. That's why.
- SixSigma 11y ago
  That's the same argument as I used to have to make my own hammer, and then I could buy them at the store.
  - dschiptsov 11y ago
    Not exactly.)
facepalm 11y ago
"151 million Americans count themselves employed" Whoa - that would be 47% of the population? Or even higher if you only count percentage of population eligible to work (no kids or pensioners)? That number must be wrong?
- djur 11y ago
  67.4% of Americans aged 15-64, as of 2013. Working age population is around 200 million. There's still a decent number of single-earner married households out there -- roughly 25% of all married households. That accounts for some. 13.5% have no earner at all. That's mostly retired couples, but there's also some who are permanently disabled. Labor force participation rate has hovered in the mid-60% range for a long time -- it increased over most of the latter 20th century, plateaued in the '90s, and dropped a lot during the Great Recession. The main change is that the rate dropped a lot for men -- from 87% in 1948 to 69% in 2014 -- and women increased from 32% to 56%. (Yes, men are still over 10 percentage points more likely to be employed than women in the US.)
  - sievebrain 11y ago
    US Labor force participation drops during recessions, recovers afterwards, but never to the same rate as before the recession. Basically every recession removes some people from the working economy permanently.
thatfrenchguy 11y ago
Thomas Picketty says because the share of capital versus the share of salaries is up by ten points (and usually people notice it, hence all the raising inequalities and the crazy billionaires that "deserved it"). Also, because we're still working 40 hours a week in a world, especially in computer science, where that makes zero sense.
- awinter-py 11y ago
  shocking that the nyt article doesn't mention wage, salary or profit.
thatfrenchguy 11y ago
Thomas Picketty says because the share of capital versus the share of salaries is up by ten points (and usually people notice it, hence all the raising inequalities and the crazy billionaires that "deserved it"). Also, because we're still working 40 hours a week in a world, especially in computer science, where that makes zero sense.
known 11y ago
The Self-Attribution Fallacy Intelligence? Talent? No, the ultra-rich got to where they are through luck and brutality. http://www.monbiot.com/2011/11/07/the-self-attribution-fallacy/ http://www.monbiot.com/2011/11/07/the-self-attribution-falla...
koliber 11y ago
There are two things to consider when talking about productivity. The best way I can explain it is with a little story. There was a contest where contestants had to find a box in a forest based only on a photograph of an item. There were two contestants. One was a spry young fellow who has never been to this particular forest. The other was a limping 60 year old woman who has lived nearby and knows these woods like the back of here hand. The pistol fires and off they go. The young man takes off running. He runs here, runs there, runs circles, looking for something familiar from the photo. His endurance is uncanny and his ability to jump across branches second-to-none. The lady looks at the photo and studies it. After a few minutes, she takes her walking stick and limps off. She recognized the rocks in the photo and knows more or less where to go to find the box. The young fellow is much more productive in "miles ran per hour", or "acres searched", or in "O2-consumption-per-mile" metrics. For the lady, the above metrics are dismal. However, she beats the man in the most important "boxes found" metrics. Nowadays, in the US, a lot of the grueling and repetitive work is done by machines. In order to be successful (whatever that means) you often don't need to run quickly, but you need to know where to go and how to get there. So what if 151 million people are working 1789 hours per year (1) for a total of 27 billion hours worked, if a good number of those hours are productively spent doing things which are in the end deemed useless, are unnecessary, or are done incorrectly. It all comes down to quality vs. quantity in the end. (1): https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
- VOYD 11y ago
  +100.
mback00 11y ago
Because we increased the number of jobs in the public sector, because we instituted a healthcare system where we get less for paying more into it (and one that makes it attractive for business to decrease permanent labor), because our tax policy makes it more attractive for business to hold money overseas, and because government through regulation continually makes it more difficult for individuals to succeed and produce a good or service.
deleted 11y ago
[deleted]
jcfrei 11y ago
Usually not a fan of zerohedge, but they sometimes make some insightful graphs: http://www.zerohedge.com/news/2016-04-01/waiters-and-bartenders-rise-record-manufacturing-workers-drop-most-2009 http://www.zerohedge.com/news/2016-04-01/waiters-and-bartend... They show how waiters and bartenders increased dramatically relative to manufacturing jobs. So it seems to me that high value/margin production is much more likely to be automated and results in big productivity gains for those companies. These workers then find jobs in low production value jobs (or businesses which require low capital investment - for lack of a better word). Ie. machine operators turn into waiters. In summary the productivity gains in one industry are offset by more staff in another. There's more staff in the service industry working for lower wages (think UBER, etc.). Is that plausible? And is there a productivity analysis for each industry?
- raverbashing 11y ago
  Yes, ZH can be a good source of info, but it has to have an amount of filtering and de-sensationalizing
trashtoss 11y ago
If the rewards of productivity increases accrue to capital, what is the incentive for labor to improve their productivity?
pmyjavec 11y ago
Facebook revenue up, productivity down, coincidence? You decide !
OliverJones 11y ago
Productivity is measured in cash value produced per hour. So, what happens when the products people make get cheaper? I daresay filling station employees have declining productivity right now under that measure even if they pump more gas than a couple of years ago. The people at Micron / Crucial are similarly less productive. I can buy a shiny new 4GiB RAM stick for $20, when two years ago it was $80. It's just as good, and that company is a good one. But still, their products have less cash content to them. In a decade when energy cost/use patterns are in flux, are we mismeasuring productivity? In an age when human population is very high indeed, does it makes sense to use a productivity metric that encourages more-more-more? I wonder if it makes sense to measure productivity using some longer-term measure? How many hours must a person work to gain an hour of artificial light at night? (There was a study about this a few years back, but I can't find it.) The advent of LED lamps and solar charging has caused this measure of productivity to soar, especially in developing cultures.
- thrownaway2424 11y ago
  My favorite example along these lines is health care. If USA ever gets a reasonable health care system both GDP and productivity are going to plummet, even though everyone will be objectively better off.
- james1071 11y ago
  Changes in prices are taken account of in the GDP calculation.
- jbpetersen 11y ago
  I typically go with a related argument: "Productivity" is measured in the value of capital transferred during interactions, not utility produced from interactions.
sharemywin 11y ago
It could be that the industry the jobs being created aren't more productive. A server at a restaurant wouldn't add a lot of high productivity value.
phkahler 11y ago
Another option is that "producing" is related to "consumption" and people's free time and resources have become saturated. If this is the case, perhaps we should reduce the number of hours worked to increase the demand side of the economy ;-)
p4wnc6 11y ago
Open plan offices are another sign of this. They exist to foster status effects that go hand in hand with the modern shift to intensive pursuits of rent seeking. As a developer if you're asked to work in non-private conditions, it's a huge signal most of the time that your actual productivity isn't important.
jboydyhacker 11y ago
Productivity gains are usually driven by business investment. ZIRP (zero interest rates) and large accumulation of debt in strange parts of the economy and caused businesses to be reluctant to invest. Without that capital investment productivity tends to stagnate and growth mediates around 1-2% which is precisely where we are.
jernfrost 11y ago
There are so many problems with these sorts of measurements anyway. My own country Norway had on paper rapid productivity growth simply because our main export oil increased in value. A lot of the productivity before the great recession was just an illusion caused by the broken financial industry. The inflation of the asset bubble looked like economic growth and hence productivity growth. Hence what if productivity growth is just normal today? It is simply what it is when financial wizards aren't there to hide the truth. Anyway perhaps people should stop being so obsessed about GDP and productivity numbers as they are distorting reality. If more people get sick or do more crime GDP will increase as health care and police produce more services. More people in prison also produce prison services adding to GDP. But none of this really adds to the well being of the population or the economic strength of the country.
googletazer 11y ago
Misplaced incentives and wrong motivation for workers is the reason for low productivity. Lack of recognition plays a part too. If your betters mainly motivate you by fear of losing your job and getting kicked out, which is how most jobs starting from wallmart and ending at larger tech companies are, how productive can you really be? Part of your mind is already in the wrong place because you're going to be thinking "whats next for me if the worst thing happens?" This is one of the reasons productivity may get a large increase with introduction of basic income, if it ever happens. Intrinsically motivated people who get recognition for their work (likely because they'll be working for themselves) can dedicate 100% of their mindpower to what they're working on.
huherto 11y ago
Perhaps what we produce is limited by what we can consume. If we assume that wealth is not concentrating at the top like many people say; it is possible that people are not consuming. Not because they don't need things, but because they can't buy them.
ilaksh 11y ago
Economics is not a real science. Start over by building measurement and regulation into society by integrating technology.

138 points by Osiris30 11y ago

meric 11y ago

Or maybe, just maybe, companies find it cheaper to hire new employees due to the number of people who permanently couldn't find jobs, than to invest in increasing productivity. The past 8 years of overestimating economic growth by central banks have clearly shown hope is not sufficient to boost the economy on its own. Central bank balance sheet have exploded, exploding price of assets, making in unattractive for businesses to invest. They would rather perform stock buybacks from borrowing money, send it to investors to be consumed. In terms of real physical capital (as opposed to financial), the American economy is actively divesting. Any supposed GDP growth from the current monetary policy is due to capital being actively consumed, increasing spending temporarily. The data showing lack of productivity growth supports this pessimistic scenario. Central banks will do well to hike interest rates, collapse the markets, destroying the zombie and hangers on companies, so their physical assets go on firesales, releasing physical capital at massively deflated prices, for well run and well managed companies to gobble up. Only this will rejuvenate the American economy and return its status as the world's economic growth powerhouse. Remember, the current Silicon Valley boom started in the mid-2000's due to the collapse of costs of IT, with the advent of cheap Internet and cloud computing, not because of low interest rates. The cost of building capital got so low from 1999 people were doing it in their parents basements eating ramen.

carsongross 11y ago
Also, real wages are declining. After a point, working harder to make the c suite and Wall Street richer begins to seem pointless.
- illinator 11y ago
  My old boss said, "Million dollar ideas don't come for free." I stopped giving mine away. If the business thinks it needs to funnel money up and away, hire product people who take the credit, then why should I as an engineer care? I am sad to say I care more about my coworkers and learning abstract concepts than the business model because I feel I have been cut out of it.
  - HappyTypist 11y ago
    That's a symptom of division between product and engineering and zero sum mentality. Get rid of that and you have happier and more productive employees.
    - carsongross 11y ago
      That's certainly one pretty-sounding possibility. Another is that it is a zero sum game, or, more likely, somewhere between that and a 1-for-1 game where the product manager and above realizes most of the gains.
jordanb 11y ago
That's supported by the observation in the article that companies are not investing much capital in improving productivity. If you've ever seen video of a Foxconn factory you've seen the rows of people carefully placing ICs onto circuit boards. In fact, there are machines to do that. They're called pick and place machines[0]. They've existed for many years. But labor in China is cheap enough that it often makes more sense to pay humans to do it manually than to invest in automation. [0] https://en.wikipedia.org/wiki/SMT_placement_equipment https://en.wikipedia.org/wiki/SMT_placement_equipment
- SixSigma 11y ago
  Plus you can scale labour up or down whereas you can usually only scale machines up without significant loss.
- eitally 11y ago
  I'm not 100% certain but I'm pretty sure you don't know what you're talking about. There are several types of components that require surface mounting on PCBs. By far the most common are things like resistors & capacitors that are machine placeable. But others, like BGAs and through-hole components, often require hand placement because they require hand soldering and can't go through a wave solder machine. Additional possible complications are boards with components placed on both sides, or multi-layer boards with non-standard solder. Finally, Debug/Repair stations are always manual. Source: Masters in operations research and 15 years experience writing factory control software for one of Foxconn's direct competitors & largest trading partners.
  - Retric 11y ago
    Generally, increasing automation requires some design changes, but you can start with the same basic design and end up with one focused on automation and another optimized for human asembly. So, it's a little more nuanced than you are suggesting. PS: There are also at least demos of pick and place for through-hole components. But, I don't know how production ready they are. (Manufacturing PCBs is not my area.)

seibelj 11y ago

Perhaps the next big change could be in transportation and infrastructure. If someone could reasonably commute to Boston from NYC (or vice versa) via a 250mph bullet train, wouldn't that increase productivity?

meric 11y ago
If and when the central bank finally sends the interest rates up the stratosphere, real estate and equipment prices will collapse to a fraction of its current value, which will make infrastructure like you mentioned possible.
- ktRolster 11y ago
  If and when the central bank finally sends the interest rates up the stratosphere Why do you think they will?
  - meric 11y ago
    When they hit limits of monetary policy and stop digging into the hole they are in. Japan is the closest to such a limit. It has relentlessly pumped money into stocks and bonds and now all the JPY does is move up.
    - nitrogen 11y ago
      Assuming for the moment this is true, what does that imply for near- and mid-term planning purposes for the average software developer with bills to pay but also spare cash to invest?
      - meric 11y ago
        In the medium term - the prices of stock markets are driven by capital flows. Even the price of a money losing company is going to go up if the pension funds[1] are buying it. Central bank pulling liquidity out when they finally realise their monetary policy is only making the inevitable worse, will mean a lot less money to flow into various investments. Therefore, avoid investments that have gone up in the past few years, that went up because of monetary policy (e.g. direct central bank buying, lowering of reserve ratios, lowering of interest rates). Avoid government bonds, avoid municipal bonds, avoid companies that have leveraged up for stock buybacks, ruling out S&P 500. Avoid companies whose stock prices are fueled by margin loans (e.g. tech unicorns). Avoid energy companies that have been limping along because they keep borrowing at low rates. Avoid companies with debt. In January 2016, the only sector that fulfilled all of these requirements were the junior gold miners - the collapse of gold prices since 2011 has wiped out all but the strongest gold mining companies. They have little debt, high margins, lots of cash and very profitable compared to their share prices. The junior gold mining stock index GDXJ[2] has went up 111% in 3 months. Of course, now that they're going up, margin loaning investors are piling in, and it's no longer as safe as a rock as it was in January 2016. I'd wait and see if GDXJ corrects back to the mid 20's, and then I'd buy more. (I have 130% of my portfolio in gold miners at the moment, so I'm biased.) The next sector to look for is overseas iron ore and oil producers. When finally the collapse of iron ore & oil prices has wiped out all the highly indebted and poorly performing companies, you will see the strongest of the bunch go on fire sale shopping spree. Those will be good buys. I think it will happen in 12-24 months. I think we're currently still in the clean up phase at the moment - lots of dead man walking companies hanging on desperately. The Chinese stimulus plan that lit a fire on iron ore prices in the past 2 months is going to prolong this phase for a while yet. [1] Pension funds are big. [2] https://au.finance.yahoo.com/q/bc?s=GDXJ&t=1y https://au.finance.yahoo.com/q/bc?s=GDXJ&t=1y

IndianAstronaut 11y ago

Possible that increased productivity means increase in knowledge required for the job. But people are unable to keep up with those increasing knowledge requirements. I see this on my team a lot. We are pushing hard to spread newer and more efficient programming and data analysis techniques, but people remain stuck and unwilling or unable to learn.

a3n 11y ago

Lots of new jobs, but lots of them are part time, and lots of those are "flexible schedules." So there's a lot of churn, both within the day as part timers come in and out, and within the week as they get scheduled and cut. After a certain amount of productivity, you need motivated people to get more, and where's the motivation, besides fear of losing a job, in that world. And then there's the further churn from people who have more than one flexible schedule job, and the inevitable day when they're scheduled for both jobs. So they lose one job, and the employer eventually replaces them. Training and churn. If more people had full time jobs with realistic chance of advancement, and therefore identity with the employer, I think productivity would increase nicely.

Alex3917 11y ago

The basic math in this article seems questionable. If Americans worked an extra 1.9% and output was up 1.9% then that doesn't mean productivity was flat, because the marginal labor is unequal.

nobody_nowhere 11y ago
Amen. Further, I think there's a lot of evidence of actual "productivity" concentrating in fewer and fewer workers as the labor force continues to segment into high-productivity knowledge and low-productivity service jobs.

powera 11y ago

Or maybe "productivity growth" will have to stop at some point; even at 1% year over year, that makes 1000x growth in 700 years. Barring space travel, it's hard to even imagine 1000x growth over the next 700 years in any real sense (as opposed to just adding zeros to currency), and completely absurd to imagine 1 million times growth over the next 1400 years.

pdonis 11y ago
> Barring space travel, it's hard to even imagine 1000x growth over the next 700 years in any real sense Why not? 700 years ago most of the things that people produce today weren't even conceivable, and any sort of comparison of functionality is going to end up involving large factors of improvement. For example, how much more functional is a smartphone with the ability to dial anywhere in the world and connect to the Internet, compared to writing a letter that would travel by horseback or sailing ship, which was the best known communication technology 700 years ago? I have no problem at all saying that the smartphone is at least 1000 times more functional, which means that productivity needs to have gone up by a similarly large factor for smartphones now to be about as ubiquitous as letters were then.
ido 11y ago
Asteroid mining by autonomous robots, completely or almost completely automatic robotic manufacturing/construction, fusion power & genetically engineered crops (including artificial meat) might consivebly make for 1000x gain in less than 700 years.
marvin 11y ago
Massive improvements in standard of living are certainly conceivable. I can't speak for how the maths work out, but if you e.g. consider potential improvements that have no physical law preventing them: - Eliminating the requirement to work for a living - Eradicating disease (including mental health and first-world diseases as obesity, RSI and diabetes) - Reducing health problems related to aging, increasing the number of healthy years of the population, increasing life span - Eliminating aging altogether, enabling replacement of organs and body parts with improved artificial versions - Achieving sustainable energy production and transport - Eliminating the need to perform unwanted boring tasks - Fully-immersive virtual reality - Automating production of goods and services to such a degree that everyone in the world has access to the same standard of living that the richest have today The sky is the limit, so to speak. One obviously has to think outside the box of what the world looks like today, but the limits of economic growth are in physical terms far, far beyond where we are today. This is even without considering the very distant possibility of compelling space habitats that could support greater populations than Earth.

toufique 11y ago

Possibly because it's a lot easier today to generate income without "producing" or creating new value. "Sayer argues that the past four decades have been characterised by a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy: from those who make their money by producing new goods or services to those who make their money by controlling existing assets and harvesting rent, interest or capital gains. Earned income has been supplanted by unearned income." Source: http://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot http://www.theguardian.com/books/2016/apr/15/neoliberalism-i...

StanislavPetrov 11y ago
That true, but it also has to do with the way productivity is calculated. If Joe borrows $10,000 from John, and loans $10,000 to Jill, and Jill uses that $10,000 to pay back the money she owes John, that counted as $30,000 worth of productivity as far as GDP is concerned. "Economic activity" does not equal productivity. If the government hires one person to dig a hole, and another person to fill it in, that's "economic activity" but it sure as hell isn't the productivity that GDP says it is.
- matt4077 11y ago
  No, borrowing and repayment are not included in GDP. But there are some almost similarly absurd situations. If you paint your garden fence and your neighbor plants some potatoes, that doesn't count into GDP. However, if you buy your neighbors potatoes, and she pays you to paint her fence, those exchanges become relevant (ignoring the fact that small stuff like this is hard to measure). This is more relevant than one might think. Considering one of the largest economic developments in the last half century was the integration of women into the labour force, growth statistics would look quite different if were to assign a fair value to unpaid housework they used to do.
  - spangry 11y ago
    Yeah, there's a lot of problems with measuring economic productivity. Almost to the point where I wonder if it's informative at all. In Australia, we've had a 10 year slump in measured productivity (MFP). During the same period, commodity prices were at all-time historical highs and we were raking in a tonne of national income (as our exports are heavily weighted towards commodities). Guess which sector has been the biggest drag on MFP? Yep. Commodities. Because market prices were so high, it was profitable to throw a crap-load of inputs to extract fairly marginal outputs. Hence the drag on MFP. Now that the 'mining boom' is over, our national productivity will probably rise while our living standards fall due to the sharp reduction in national net income. Productivity should not be seen as an end in itself, although it seems to dominate political discourse on the economy. I wonder if there are more sensible (and calculable) metrics that we could use...

Spooky23 11y ago

Look at that chart. I don't think that general productivity swings that widely. The other thing to consider is that productivity tools like automation and outsourcing can bite back. When you lose your competency in "non-core" activity, you're now beholden to a vendor, whose incentives are often not aligned with the business. Also, we have lots of middlemen skimming profits for services of questionable value. My underwear was made in North Carolina in 1990, now it's made in Bangladesh or China, but costs more. That money is going somewhere!

majewsky 11y ago
The chart shows productivity increase. Productivity itself is never shrinking.

rumcajz 11y ago

Rational response to the economy that -- for whatever reasons, productivity increase, wealth transfer etc. -- is able to satisfy all the demand by putting just a fraction of the population to work is to create bullshit jobs that nobody needs and that don't add to productivity. I've written about it here: http://250bpm.com/blog:44 http://250bpm.com/blog:44

TheSmiddy 11y ago

I spend over 30% of my time at work (pleb level helpdesk) doing busy work that generates no actual benefit to the business other than making it easier to track the real work I do. If we were more trusted to do the right thing or the tracking of our work was better automated my job could be done with half the staff. The entire company has similar inefficiencies at every level that have all been introduced over the last decande and especially the last two years. From all accounts this seems to be a pretty similar trend happening all across large businesses in Australia and I assume America as well.

majewsky 11y ago
> If we were more trusted to do the right thing Is that trust justified? Not on the scale of you, but on the scale of everyone working the helpdesk in your company. While I will concede that many management tasks could be optimized away, or just plainly removed without replacement without impacting performance negatively, these tasks do exist for a reason.
- Delmania 11y ago
  > Is that trust justified? Not on the scale of you, but on the scale of everyone working the helpdesk in your company. Why did you hire that person, and then not train him correctly?
maxxxxx 11y ago
Large companies look pretty similar to a planned economy in a communist state. I remember in East Germany they had banners everywhere "We will increase production next year by 50%" or "We are innovative". Guess what? A lot of companies do the same thing. Big banners, centralized control, tons of people just checking on what other people are doing. I am on a project where it's two engineers doing the work with 5 managers looking over them. And if the work doesn't get done we just need a new steering committee consisting of more managers.

mysterypie 11y ago

The whole premise that bigger GDP is greater productivity sounds like BS. The economists say, If you got more money for the things you made/did, you must have been more productive. But to use a computer analogy: 40 years ago, $100 got you the home version of pong (a primitive computer game) -- today the same inflation-adjusted money would get you something mind blowing. Whoever produced today's game is in some sense a million times more productive than the creators of pong (as brilliant as those developers were for the time). As far as I can see, GDP or cost is not the correct measure of productivity. Trying to connect GDP with productivity is like linking stock market performance to the outcome of the Super Bowl -- there might be a relation but it's very very very remote and tenuous.

zeroonetwothree 11y ago
But is the happiness produced by playing Angry Birds (or other modern games) any higher than Pong? I'm sure that people had just as much fun playing cards in the 1800s as they do play video games now. In that sense the overall productivity is far lower, since modern games take more work to produce.
- meric 11y ago
  I think so - Pong was only available on the arcade machines at first, and cost a coin for each play, and real estate to hold those machines. Angry birds is available on people's phones, 24 hours a day, and the only real estate it needed was a few offices. I'd argue it produced a lot more amusement value than Pong, compared the real capital it used. Card games could only be played with people, whereas Angry birds can be played solo, on a train. When the value of playing card games is higher, people still play card games.
  - zeemonkee3 11y ago
    > Card games could only be played with people, whereas Angry birds can be played solo, on a train Solitaire?
    - 11y ago

dv_dt 11y ago

My theory is that many big employers have structured to carry more part time employees over fewer full time. Worse, many part time employees are working two or three jobs to stitch together enough wage to live. Both part time work and multiple disjoint work contexts reduces efficiency. Also, there are fewer and fewer small to midsize businesses and too many huge businesses. Somewhere between, the ideal scaled company actually has the highest productivity, but we've been skewing larger and larger which is also a drag on productivity.

iofj 11y ago
It doesn't just do that. A careful reading of the establishment survey will tell you that the unemployment ratio is unemployment = total jobs reported / people saying they're in the labour force (ie. who have a job or collect unemployment) Part time jobs count as a fulltime job. So a poor person with 2 jobs is counted twice as employed, and long-term unemployed are excluded from the figures. It is hard to imagine, given the successive changes to this variable that this is an accident. In reality the unemployment ratio should be: people that are employed/people that could be employed people that could be employed needs to be approximated, so I'm using the "working age population" figure. I'm sure it's a total coincidence that the first ratio is 5.5%, showing a constant, if excruciatingly slow, decrease under the current administration (except during the GFC in 2008) and the second ratio is currently 25.8%, and shows a constant increase (except for the last 2 months) under the current administration. Caveat: I'm pretty sure the actual 25.8% figure is overstating matters, the changes in the figure are real: they represent either people who enter the workforce and can't find jobs, or people who get fired. Given anecdotes, and sentiment, I'm much more inclined to believe the latter : that there has been a constant increase of the unemployment figure since around 2006, extremely fast increase during 2008-2009, to ~12-13% followed by a slower increase after that, currently at 16% or so. It is also funny that both figures start do diverge, immediately following a change in the way unemployment is calculated. One wonders ... which of those 2 things is cause, and which is effect.
- coredog64 11y ago
  As I understand it, U1-6 is calculated via statistical sampling. They call people and ask them questions to determine which category they are in. U6 includes people currently holding a part time job but wanting a full time job. U6 is significantly higher than U3 (the usually touted "unemployment rate"), but I don't know how to extract numbers that would show the results of a move to more part time workers.

Jedd 11y ago

I am about two-thirds of the way through Paul Mason's 'Postcapitalism - A Guide To Our Future'. It's a book recommendation I got from some HN comments on a UBI story a while back. The happy / neutral / depressing theories (more hypotheses) don't cover all the possibilities, of course. Weirdly, while the 'depressing' scenario is badly described (is the placement of a computer in front of ever office worker an example of 'innovation'?), the initial premise -- that productivity is / has peaked -- may be accurate, iff we try to measure productivity today the same way we have done for the past hundred years. And that's kind of the problem -- we don't currently have appropriate metrics for productivity in a market increasingly based on information, let alone where information components of products are approaching zero cost. Anyway, I'll pass-on the hive mind's recommendation of Mason's book - I'm yet to finish it, and even further from being convinced of the soundness of all his arguments, but it's the most interesting book on economics I've read.

omegaham 11y ago
> we don't currently have appropriate metrics for productivity in a market increasingly based on information I like this xkcd comic for a great representation of this: https://xkcd.com/1629/ https://xkcd.com/1629/ How, exactly, do you quantify the productivity of someone who makes some obscure library for a tool that provides monitoring services for some other utility that... Hell, my own job is hard enough to quantify. I do defect analysis at Intel, looking for defects in chips with a scanning electron microscope. Sure, my output of samples is pretty easy to track, but what's the actual productivity of my work? I am one very, very small cog in a very, very big machine that somehow shits out fantastically small computer chips at the end. How important is my role? Er, I'm not quite sure. All I know is that I'm paid good money for what I do, and I work 12-hour shifts and am frequently asked to work overtime. But not once have I been told, "Hey, thanks to the defects that you and your team found, we got the information needed to increase wafer yield by X! You're doing great work!" Nope. Chips come in, pictures go out, engineers do Stuff with those pictures, and that's about as far as I can tell. How do you measure the productivity of my work? The engineers who use the data I create to tell other people to make changes in the process? The guys who make the tools that I use to do all of this? The janitor who cleans the wastebaskets of the guys who make said tools? We keep going farther and farther down the rabbit hole, and it doesn't get any clearer.

venomsnake 11y ago

I have revolutionary idea - if we create environment where people have a decent chance of making something out of their life - they may have incentive to work smarter. We don't have productivity increase, because we have nowhere to put it. Elites are fine, the bottom people have no expendable income and the middle class is nonexistent.

antoinevg 11y ago

Productivity increases don't boost GDP if no one has money to buy the goods&services being produced. This is why you need to watch out for steep income inequality between the managerial and working classes.

dschiptsov 11y ago

Why, in 90s we have to hard code HTML to make a website. Then PHP emerged, and then WordPress and Joomla and countless themes - making a shitty website became very productive. What happened next? Crappy WordPress sites were not cool, so the Rails era began. Making of big crappy websites became very productive. Nowadays there are React and other indispensable stuff to make very cool crappy websites. The productivity soared - one could make Bootstrap, React, Mongo, NodeJS hello-world website in a half of a day. But if content is crap productivity of making site does not really matter, and if content still is a king, no fucking hipster's frameworks are required (hello, Craigslist and this very site). Same thing happen today with ML tools and techniques. One could download and install Tensorflow in 15 minutes (I am so clever!) - a huge boost of productivity, and then one has to apply ones own brain, which is, usually, not near as productive. That's why.

SixSigma 11y ago
That's the same argument as I used to have to make my own hammer, and then I could buy them at the store.
- dschiptsov 11y ago
  Not exactly.)

facepalm 11y ago

"151 million Americans count themselves employed" Whoa - that would be 47% of the population? Or even higher if you only count percentage of population eligible to work (no kids or pensioners)? That number must be wrong?

djur 11y ago
67.4% of Americans aged 15-64, as of 2013. Working age population is around 200 million. There's still a decent number of single-earner married households out there -- roughly 25% of all married households. That accounts for some. 13.5% have no earner at all. That's mostly retired couples, but there's also some who are permanently disabled. Labor force participation rate has hovered in the mid-60% range for a long time -- it increased over most of the latter 20th century, plateaued in the '90s, and dropped a lot during the Great Recession. The main change is that the rate dropped a lot for men -- from 87% in 1948 to 69% in 2014 -- and women increased from 32% to 56%. (Yes, men are still over 10 percentage points more likely to be employed than women in the US.)
- sievebrain 11y ago
  US Labor force participation drops during recessions, recovers afterwards, but never to the same rate as before the recession. Basically every recession removes some people from the working economy permanently.

thatfrenchguy 11y ago

Thomas Picketty says because the share of capital versus the share of salaries is up by ten points (and usually people notice it, hence all the raising inequalities and the crazy billionaires that "deserved it"). Also, because we're still working 40 hours a week in a world, especially in computer science, where that makes zero sense.

awinter-py 11y ago
shocking that the nyt article doesn't mention wage, salary or profit.

thatfrenchguy 11y ago

known 11y ago

The Self-Attribution Fallacy Intelligence? Talent? No, the ultra-rich got to where they are through luck and brutality. http://www.monbiot.com/2011/11/07/the-self-attribution-fallacy/ http://www.monbiot.com/2011/11/07/the-self-attribution-falla...

koliber 11y ago

There are two things to consider when talking about productivity. The best way I can explain it is with a little story. There was a contest where contestants had to find a box in a forest based only on a photograph of an item. There were two contestants. One was a spry young fellow who has never been to this particular forest. The other was a limping 60 year old woman who has lived nearby and knows these woods like the back of here hand. The pistol fires and off they go. The young man takes off running. He runs here, runs there, runs circles, looking for something familiar from the photo. His endurance is uncanny and his ability to jump across branches second-to-none. The lady looks at the photo and studies it. After a few minutes, she takes her walking stick and limps off. She recognized the rocks in the photo and knows more or less where to go to find the box. The young fellow is much more productive in "miles ran per hour", or "acres searched", or in "O2-consumption-per-mile" metrics. For the lady, the above metrics are dismal. However, she beats the man in the most important "boxes found" metrics. Nowadays, in the US, a lot of the grueling and repetitive work is done by machines. In order to be successful (whatever that means) you often don't need to run quickly, but you need to know where to go and how to get there. So what if 151 million people are working 1789 hours per year (1) for a total of 27 billion hours worked, if a good number of those hours are productively spent doing things which are in the end deemed useless, are unnecessary, or are done incorrectly. It all comes down to quality vs. quantity in the end. (1): https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

VOYD 11y ago
+100.

mback00 11y ago

Because we increased the number of jobs in the public sector, because we instituted a healthcare system where we get less for paying more into it (and one that makes it attractive for business to decrease permanent labor), because our tax policy makes it more attractive for business to hold money overseas, and because government through regulation continually makes it more difficult for individuals to succeed and produce a good or service.

deleted 11y ago

[deleted]

jcfrei 11y ago

Usually not a fan of zerohedge, but they sometimes make some insightful graphs: http://www.zerohedge.com/news/2016-04-01/waiters-and-bartenders-rise-record-manufacturing-workers-drop-most-2009 http://www.zerohedge.com/news/2016-04-01/waiters-and-bartend... They show how waiters and bartenders increased dramatically relative to manufacturing jobs. So it seems to me that high value/margin production is much more likely to be automated and results in big productivity gains for those companies. These workers then find jobs in low production value jobs (or businesses which require low capital investment - for lack of a better word). Ie. machine operators turn into waiters. In summary the productivity gains in one industry are offset by more staff in another. There's more staff in the service industry working for lower wages (think UBER, etc.). Is that plausible? And is there a productivity analysis for each industry?

raverbashing 11y ago
Yes, ZH can be a good source of info, but it has to have an amount of filtering and de-sensationalizing

trashtoss 11y ago

If the rewards of productivity increases accrue to capital, what is the incentive for labor to improve their productivity?

pmyjavec 11y ago

Facebook revenue up, productivity down, coincidence? You decide !

OliverJones 11y ago

Productivity is measured in cash value produced per hour. So, what happens when the products people make get cheaper? I daresay filling station employees have declining productivity right now under that measure even if they pump more gas than a couple of years ago. The people at Micron / Crucial are similarly less productive. I can buy a shiny new 4GiB RAM stick for $20, when two years ago it was $80. It's just as good, and that company is a good one. But still, their products have less cash content to them. In a decade when energy cost/use patterns are in flux, are we mismeasuring productivity? In an age when human population is very high indeed, does it makes sense to use a productivity metric that encourages more-more-more? I wonder if it makes sense to measure productivity using some longer-term measure? How many hours must a person work to gain an hour of artificial light at night? (There was a study about this a few years back, but I can't find it.) The advent of LED lamps and solar charging has caused this measure of productivity to soar, especially in developing cultures.

thrownaway2424 11y ago
My favorite example along these lines is health care. If USA ever gets a reasonable health care system both GDP and productivity are going to plummet, even though everyone will be objectively better off.
james1071 11y ago
Changes in prices are taken account of in the GDP calculation.
jbpetersen 11y ago
I typically go with a related argument: "Productivity" is measured in the value of capital transferred during interactions, not utility produced from interactions.

sharemywin 11y ago

It could be that the industry the jobs being created aren't more productive. A server at a restaurant wouldn't add a lot of high productivity value.

phkahler 11y ago

Another option is that "producing" is related to "consumption" and people's free time and resources have become saturated. If this is the case, perhaps we should reduce the number of hours worked to increase the demand side of the economy ;-)

p4wnc6 11y ago

Open plan offices are another sign of this. They exist to foster status effects that go hand in hand with the modern shift to intensive pursuits of rent seeking. As a developer if you're asked to work in non-private conditions, it's a huge signal most of the time that your actual productivity isn't important.

jboydyhacker 11y ago

Productivity gains are usually driven by business investment. ZIRP (zero interest rates) and large accumulation of debt in strange parts of the economy and caused businesses to be reluctant to invest. Without that capital investment productivity tends to stagnate and growth mediates around 1-2% which is precisely where we are.

jernfrost 11y ago

There are so many problems with these sorts of measurements anyway. My own country Norway had on paper rapid productivity growth simply because our main export oil increased in value. A lot of the productivity before the great recession was just an illusion caused by the broken financial industry. The inflation of the asset bubble looked like economic growth and hence productivity growth. Hence what if productivity growth is just normal today? It is simply what it is when financial wizards aren't there to hide the truth. Anyway perhaps people should stop being so obsessed about GDP and productivity numbers as they are distorting reality. If more people get sick or do more crime GDP will increase as health care and police produce more services. More people in prison also produce prison services adding to GDP. But none of this really adds to the well being of the population or the economic strength of the country.

googletazer 11y ago

Misplaced incentives and wrong motivation for workers is the reason for low productivity. Lack of recognition plays a part too. If your betters mainly motivate you by fear of losing your job and getting kicked out, which is how most jobs starting from wallmart and ending at larger tech companies are, how productive can you really be? Part of your mind is already in the wrong place because you're going to be thinking "whats next for me if the worst thing happens?" This is one of the reasons productivity may get a large increase with introduction of basic income, if it ever happens. Intrinsically motivated people who get recognition for their work (likely because they'll be working for themselves) can dedicate 100% of their mindpower to what they're working on.

huherto 11y ago

Perhaps what we produce is limited by what we can consume. If we assume that wealth is not concentrating at the top like many people say; it is possible that people are not consuming. Not because they don't need things, but because they can't buy them.

ilaksh 11y ago

Economics is not a real science. Start over by building measurement and regulation into society by integrating technology.