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> The economic gains brought about by labor productivity growth make it possible for an economy to achieve higher growth in labor income,5 profits and capital g

by mikeg8 5y ago

> The economic gains brought about by labor productivity growth make it possible for an economy to achieve higher growth in labor income,5 profits and capital gains of businesses, and public sector revenue; these economic gains also hold the potential to lead to improved living standards for those participating in an economy, in the form of higher income, greater leisure time, or a mixture of both. The use of “possible” and “hold the potential to” are telling. My belief is that as the profits and shareholder compensation have risen disproportionately to wages, the workers who are the key to unlocking the productivity growth have lost their incentives. Why increase productivity when your pay doesn’t increase? This is obvious with the current anti-work movement and labor “shortage”. If the wealth and growth was shared more evenly, and greed was kept in check, I believe we could easily be at the 2% rate.

fanzhang 5y ago
Is there any evidence of this in the data above (or elsewhere)? Labor productivity is a low degree-of-freedom datapoint and your explanation is indirect and has a lot of degrees of freedom.
- mikeg8 5y ago
  My opinion was anecdotal. But I think it could be argued the entire field of economics has a lot of degrees of freedom - which is why they do not have firm conclusions as to the causes of productivity loss in the article. Edit: also see: https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/
  - webmaven 5y ago
    It is possible that the drop in productivity growth, if it goes on long enough, will have the effect of closing the gap.
neilparikh 5y ago
> My belief is that as the profits and shareholder compensation have risen disproportionately to wages It's not that simple: https://www.brookings.edu/wp-content/uploads/2015/03/finalincomeviz.png https://www.brookings.edu/wp-content/uploads/2015/03/finalin... (From https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/ https://www.brookings.edu/bpea-articles/deciphering-the-fall...) The takeaway is that these additional gains in productivity are being captured by land (as expected based on the law of rent). The problem is that this is popular when the majority of voters (or at least, the ones active in politics and making their opinion heard) are homeowners.
gremloni 5y ago
I believe it’s a mix of an explosion of recreation and entertainment options that people can’t wait to get back to and it getting increasingly hard to maintain the paradigm of work being a virtue.
ddingus 5y ago
The promise was it was going to get much cheaper to live. That didn't happen, and here we are.
- le-mark 5y ago
  Some make the case that cheap goods from China via Walmart was precisely that.
  - ddingus 5y ago
    Was not enough. On family wage income, yes. However, moving that stuff offshore also reduced wages as service jobs became the norm. For many, buying power dropped.
yobbo 5y ago
The metric in question might be "labour share of income" and it has indeed been decreasing for a long time. But it's not obvious that incentives in individual jobs are affecting overall productivity (can one factory worker really make the conveyor belt move faster?). A plausible explanation could be that it's becoming easier (and profitable) to hire more low-wage workers than systematically increasing productivity.
- le-mark 5y ago
  My understanding is that cheap labor (China) is why there was nearly a complete stop of factory automation. Instead of increasing automation, low cost labor was utilized instead. Now that wages are rising around the globe, there should be increased innovation around automation. Explicitly that would be factory robots.
neilwilson 5y ago
"Why increase productivity when your pay doesn’t increase?" Because the neoliberal belief is that pay should remain largely fixed and the productivity bonus comes through as reduction in prices or increase in function. So this season's iPhone does more than last at roughly the same price. Which then leads to the paradox of productivity - since profits cannot then grow either unless there is ever greater leverage from banks.
ajross 5y ago
I agree with the moral principle of what you're saying. But, meh. My belief is that this is just measurement error. The linked article is a bunch of yelling about a perceived drop in what amounts to the second derivative of per capita GDP. It's just not a well-characterized "problem" to be solved.
- lottospm 5y ago
  > The figure—$10.9 trillion—represents the cumulative loss in output in the U.S. nonfarm business sector due to the labor productivity slowdown since 2005, also corresponding to a loss of $95,000 in output per worker. Exactly that. This is characterized as a loss but productivity has actually grown every single year except 2011 (which had zero growth, so not a "loss" either). Maybe 1998-2004 were just exceptional. My guess is that's when computers started to take over larger swaths of the most productive industries. > above-average growth of the late 1990s and early 2000s On top of that, the article (at least to me) reads like there was about a decade of above-average growth whereas it was really more like 6 years. Edit: This reads a lot like this: https://xkcd.com/605/ https://xkcd.com/605/
  - jfoutz 5y ago
    aside from the massive adoption of a global distributed communication network enabling communication between almost everyone on the planet, coupled with a vast repository of saved knowledge, I can't really think of anything that might have improved productivity in that timeframe.
  - Nasrudith 5y ago
    Growth as a norm in industrial sections should be expected even given "fixed" levels of experience from industrial learninh curves as processes grow more optimized and efficient and features move from revolutionary to old hat. Of course there is a matter of growth in what too - product count and quality (utility value) in some combination or profit. It is a known irony paradox that sectors which grow more efficient become less paid relative to what is produced. Part of the general economic trend of diminishing returns via saturation.
- 5y ago
maxerickson 5y ago
The labor shortage is plenty real and is going to be for a long time. We could massively expand immigration, but we won't.
- dillondoyle 5y ago
  Which would also massively help with our population growth and funding entitlements problem. We celebrate quickly giving citizenship to pro bball players (Enes Freedom, who btw I think he's awesome and congrats). But it's inaccessible for so many that would be net contributors to our country! I firmly believe it's rooted in racism & the electoral benefits of Republicans rather than an actual policy/economic debate. Doesn't help when one political party and their news media empire catastrophize and fear monger dangerous, gun toting, drug muling, cartel infested, caravans of chain migration invasions every October on the dot. But perhaps now I'm the one politicking ;)
  - throwaway1777 5y ago
    Expanding an underclass of poor migrant workers does not help anyone. How would population growth help us when we also supposedly have a housing shortage in almost every city? Of course we should try to get elite athletes and academics to come to America, but the picture is much less clear for other types of immigration.
    - coliveira 5y ago
      Your thinking goes against the entire history of the US. The goal of having immigrants is that they will come to work and improve their and everyone else's lives, not that they will come rich to support the country.
    - josuepeq 5y ago
      Strongly disagree. Especially in tech, many of our success stories are from people who themselves are first generation Americans with parents that arrived here with literally nothing. American poet Emma Lazarus wrote “The New Colossus,” which now hangs in bronze in the Statue of Liberty’s base. The end of the sonnet goes: “Give me your tired, your poor, Your huddled masses yearning to breathe free…” America remains competitive by keeping the door open. If we slam the door shut, we could be missing out on the next Steve Jobs.
willcipriano 5y ago
Ive reached the same conclusion, with some additional ideas to why. In recent decades the availability of capital has increased dramatically. Low interest rates, spray and pray venture capitalists, creation of new dollars at a rapid rate. The idea behind capitals returns were that it took great risk as capital is rare and hard to get. If capital becomes easier to get, that alters the risk/reward ratio. I think we are just watching the reward part shift to where it belongs in contrast to the lower risk.
- mschuster91 5y ago
  > In recent decades the availability of capital has increased dramatically. Yeah, if the receiver of the capital is already rich and/or well-connected. If you're not in the top 10%, all you get is 10%+ APR credit cards, payday loans and other usurious crap.
  - b9a2cab5 5y ago
    You don't need to be in the top 10%, you just need to be likely to be able to repay your loans. Government subsidizes home loans, student loans, and small business loans to the tune of hundreds of billions of dollars a year through the Fed's asset purchase program. The reason broke people can't get anything better than a 10%+ APR credit card is because they're so unlikely to repay the loan that the issuer has to charge that much interest to break even. I actually took a look at my banking app and I'm offered "personal loans" up to $20k at under 6%, which is actually incredible considering this is an unsecured loan to a random person.
    - lovich 5y ago
      Do loan providers typically break even? Even with the federal loan systems you mentioned, they’re making a profit each year.
      - b9a2cab5 5y ago
        You make fat profits in normal years and potentially lose out catastrophically during Great Recesssion-like events. Lots of lenders straight up went bankrupt due to defaults. Of course since the government made it so you can't discharge student loans in bankruptcy that market isn't functioning anymore.
becuz99h 5y ago
I mean, yeah. Money effectively == agency in our society. Have piles of food, will eat. Don’t have piles of food, will starve. So long as unnecessary industrial development to validate the “us v them” meme is the status quo, politically corrupt industrial development is what you’ll get. Enjoy.
oh_sigh 5y ago
Why/how are the workers the key to unlocking the productivity growth? I imagined productivity growth came through mechanization/electrification/computerization, not from the workers themselves being more skilled. IE if warehouse box-stackers productivity has tripled since 1950, it is because companies have invested in forklifts for the workers to use, not because the box-stackers are just way better at stacking boxes than their 1950s counterparts.
- WaxProlix 5y ago
  Strange that we're talking about a shortage of workers to unlock productivity then, and not a shortage of box-stacking machines or forklifts.
  - oh_sigh 5y ago
    Obviously someone needs to operate the forklift. But the point is the productivity gains aren't coming from the person driving the forklift, they are coming from the capital investment in the forklift. Because if the forklift wasn't there, the person driving it would instead be stacking boxes by hand. If the driver was going to capture all of the upside of the productivity gains of the forklift, the business would never invest in a forklift in the first place.
    - deleted 5y ago
      [deleted]
    - pseudo0 5y ago
      Most capital investments do require a more skilled workforce to get the expected return on investment. In your example, a box stacker requires virtually no training, while a forklift operator has to take a training course and be skilled enough to operate the vehicle without costing the employer thousands or millions in liability claims. And no one is arguing that the employee should capture 100%, just more than roughly 0%.
      - Leherenn 5y ago
jollybean 5y ago
This is a worthy idea, but not it's not necessarily substantiated. FYI 'Productivity' is not 'How Hard We Work' - it's a measure of profit/hour. If profits go down for any reason, including more leverage by consumers due to increased competition, productivity will go down. 'Low Productivity' does not mean the economy is doing poorly. One other theory, is that consumers have more power then ever, consumer surpluses are greater than ever (through lower prices) and that the money is not going into the companies and therefore not recorded as productivity. Facebook, Google, Web Browsers, News, email. So much free content. My favourite Video Game is free to play. You can buy at Wallmart today what would have cost a lot of money in the 1960s. Travel is cheaper than ever, more people are travelling, Airlines are always teetering on bankruptcy. All of that means the productivity numbers are going to be lower than otherwise all things being equal.
- oblio 5y ago
  > FYI 'Productivity' is not 'How Hard We Work' - it's a measure of profit/hour. Productivity is revenue/unit of time (generally hour).
  - jollybean 5y ago
    Yes, I stand corrected. Or more like 'How much stuff/value is created with what amount of money per hour'
deleted 5y ago
[deleted]
Spooky23 5y ago
Productivity is based on labor hours not cost. In my labor intensive business processes, I’ve used technolgy to control cost. My CFO doesn’t give a rats ass about headcount, just dollars. The people we hire or contract are dumber and cheaper today than they were in 2005. Whole industries run like this. Hotels, government, manufacturing, etc. You might have a company with 3,000 people where key decisions are made by 5. Smartphones and services replaced supervisors and dispatchers with text messages. Many of those labor hours are inefficient as a result, but very cheap.
- Terry_Roll 5y ago
  >Productivity is based on labor hours not cost. Exactly, a distribution warehouse is a fixed size, it has a maximum capacity (floor space & racking), so despite being able to bring in more boxes and also hire more (agency) staff Hours to process the Units in and out, at some point that warehouse will grind to a halt and become like a traffic jam caused by too many people and too many Units much like we see with too many vehicles on the road at peak times. Automated distribution warehouses (computer controlled conveyor belt systems) also have this problem, as do theme park rides, rail networks and airlines as other common examples. In the 90's automated warehouses in one company I was familiar with would also crash at peak times, namely Xmas because it couldnt handle the increased volume. When it crashed work was distributed to other warehouses in the network to balance the workload amongst the remaining operational warehouses. However with automated warehouses, management/board know its maximum handling capacity and just accept it, unlike human manned warehouses where management keep pushing for more until workers revolt! This is why the Reddit AntiWork subreddit is interesting right now, we are seeing a country wide revolt which could spread to neighbouring Western countries. The spooks will be watching this like hawks. During a UK fuel protest in the UK, a protestor who was also a small business in the run up to his attendance at a second protest had a visit from 4 big burly guys in a new expensive Black Range Rover, one of the guys got out and told this small businessman, if you go to the next fuel protest, you wont have a business to come back to. Thats how the security services and others operate here in the UK! Its the security services job to protect the country which includes the economy and other things, thats also why the illusion of privacy and tech security is just an illusion! So other factors that can affect productivity in a country is poor transport networks, if people are spending more time travelling to and from work, then that country will be facing problems in years to come unless changes are made. Look at commute times dropping during covid lockdowns. It was like getting to work 20 or 30 years ago, less traffic on the road yada yada yada. Now changes in legislation can offset some of this which is in the hands of a Govt, like sunday trading (being open on Sundays) and also 24hr trading (being open 24hrs a day), internet shopping can also offset some or redistribute the demand on infrastructure but even the internet retailers have their problems and inefficiencies but these are now offloaded to the consumer, so legislation has created a cost saving for internet retailers in some countries. I do agree that management are largely detached from the situation on the ground and you can see this in many ways with the problems that exist, but either they dont care or they dont know, some really are detached from the reality on the ground. Its also cheaper to address these on an ad hoc basis when intelligent consumers complain, management rely on stupidity and laziness to get away with poor goods or services. Remember inflation only measures the cheapest price of a good or service, it does not take into account the decline in quality or life span of a good or service.
wpietri 5y ago
Definitely. Another factor I think about a lot is what I call "managerial diversion". As a simple example, imagine one of those meetings where a boss calls it to feel important. E.g., a "progress report" meeting where each person tells the boss what is going on while everybody else just tries to look alert. To me this is a diversion of resources from productive use. Managers get to feel powerful, important, smart. But neither investors nor customers benefit. At the team level, it's often just wasted hours here and there. But as you scale up, it gets worse. I've plenty of expensive corporate projects that were really just resume-builders for some executive. How much more productive would each of us be if the management chain was reasonably effective and reasonably selfless?
- Tempest1981 5y ago
  I'll sometimes just give a 10-second status update: "Working on feature X, it's coming along nicely", or "Fixed a dozen pesky bugs". Eventually, others start to do the same. Granted, there will still be a couple of "long talkers".
- rp1 5y ago
  This opinion feels to much like a cliche. Management needs to know what’s going on, even in well run companies. You might not like giving progress reports, because you feel like it takes time away from your job, but it’s possible that management is using the progress reports to better the company as a whole. For instance, if you’re behind schedule they can allocate more resources to your project, etc. I’m sure you have many anecdotes where management wasted peoples time. That happens often too.
  - bendbro 5y ago
    > For instance, if you’re behind schedule they can allocate more resources to your project, etc I have never seen this happen in my entire life, nor would it be useful
  - solatic 5y ago
    > For instance, if you’re behind schedule they can allocate more resources to your project, etc See: The Mythical Man-Month I agree that making sure that your work is observable is important, and usually Management's attention needs to be called to where the observed changes are being made. This is not the same as holding you hostage in a meeting culture where you need to sit through everyone else's reports on their progress. Instead of people taking five minutes to write out their progress report to their manager, who can then skim the progress reports and the work for a full team in fifteen to twenty minutes, instead we hold everybody hostage for thirty to sixty minutes. Typically this is a syndrome of a culture where labor is not expected to document their work, and nothing will scale without pulling senior engineers off their IC work to synchronously bring people up to speed. This necessarily reduces engineering velocity to a crawl. Nobody can speak as fast as a progress report can be read. Verbal meetings cannot be indexed or searched. All meetings should have a product - a decision, language that is agreed upon, written out, saved to a knowledge base. If you call too many meetings, it's a sign that you're not delegating authority enough.
wyager 5y ago
> the workers who are the key to unlocking the productivity growth What makes you say that? > Why increase productivity when your pay doesn’t increase? You're conflating two things - industry-wide pay changes (which any individual worker's productivity-related decisions have ~zero influence on) and individual pay changes, which are in fact determined (partially) by individual productivity.
- mikeg8 5y ago
  The title of the article omits the word "labor" but the article is obviously focused on labor productivity so lets starts with a simple definition from Investopedia: Labor productivity, also known as workforce productivity, is defined as real economic output per labor hour. Growth in labor productivity is measured by the change in economic output per labor hour over a defined period. I believe (through observation/experience) that workers are the key because without their buy-in and support, none of the business strategies or technological innovations management can introduce will matter. Individual workers have a lot of control over the economic output they choose to contribute. This is, IMO, very much about motivation. RE your second point, I'm not sure if I'm conflating the two vs using a micro example to extrapolate a macro trend.
  - wyager 5y ago
    Do you think that ~any of the productivity growth over the last 200 years has to do with increasing laborer motivation rather than increasing technology? There is scant evidence for the former and plenty for the latter.
    - NineStarPoint 5y ago
      Worker motivation to take advantage of new technology is extremely important. The more you pay for workers to learn a given skill, the more likely they are to learn it. No amount of extremely efficient technology can help if your employees are incompetent at using it.
      - 5y ago
arcbyte 5y ago
Wild thought here: how does changing demographics influence this? Retiring people in many cases literally can't be productive anymore, but demand capital returns. But because they, in aggregate, didn't have enough kids, there isn't enough productivity to service that demand.
- JanisL 5y ago
  There's definitely some very big problems with people demanding fixed interest returns when demographics aren't good: https://realinvestmentadvice.com/the-unavoidable-pension-crisis/ https://realinvestmentadvice.com/the-unavoidable-pension-cri...
- irrational 5y ago
  I’ve wondered this myself. Boomers are 25+% of the population. That large of a percentage dropping out of the workforce is going to leave huge areas for younger people to move up and fill in, leaving tons of the bottommost jobs (most service jobs) unfilled. At some point the Republicans will have to come to grips with their xenophobia, since immigration seems like the only solution.
  - toomuchtodo 5y ago
    Japan never came to terms with their xenophobia and opened up to immigration, so I would be careful about assuming it’s a foregone conclusion.
  - chii 5y ago
    > bottom most jobs (most service jobs) unfilled which would encourage even more automation - filling those jobs with immigrants aren't the only option. I would garner that using immigrants for cheap labour is a form of exploitation which should be discouraged too (tho i dont think it's likely).
dsugarman 5y ago
I'm having trouble following your logic, if productivity is defined as revenue per labor hour, and you're saying this is due to the anti-work movement and labor shortage, that's decreasing the denominator. Or are you saying workers have become less engaged and less productive at work but maintain they're jobs? That might be plausible
- bopbeepboop 5y ago
  I took it to mean that workers did what was asked and no more — so productivity stayed constant. Which was contrasted with engaged employees, who sharing in more of the profits, have an incentive to increase productivity — eg, by inventing a tooling improvement for the assembly line. I think the overall point was employers are “penny wise, pound foolish” in that small productivity “gains” caused employees to disengage which is causing long-term slowdowns in improvements — improvements typically driven by employees stepping up and doing more.
  - supertrope 5y ago
    Toyota empowers workers to stop production to fix quality issues. But they earn less than unionized workers. Empowering line workers makes sense when there's growth and healthy margins to pursue. If the industry is mature or even shrinking then there's a heavier focus on cost cutting and metrics/Taylorism to maximize free cash flow and pay it out as dividends and stock buybacks.
    - bopbeepboop 5y ago
      Yes, your second paragraph is what people are saying is bad. You can’t eat your seed corn in a bad year — that’s madness! Similarly, I don’t think you’ll find industries which are stagnant on the decade scale… which is where the harms being called out up thread manifest. That choice to “Taylorize” in support of buybacks critically weakens your staff at precisely the time you need their engagement to pivot your organization in response to new market conditions. See Boeing and the 737 MAX for a case study.
- mikeg8 5y ago
wolverine876 5y ago
This isn't economics, but I will say that, in much of the past, Americans had a belief in being productive, contributing members of society, in anyone achieving anything ('you could be President some day!'), and in an obligation to maximize your potential. As wealth has become concentrated and the wealthy have openly and arrogantly adopted a philosophy of taking as much as they can - that it's what capitalism is about - rather than producing and contributing and thereby earning, it's no surprise that workers might not feel they should do more than the minimum.

by mikeg8 5y ago

fanzhang 5y ago

Is there any evidence of this in the data above (or elsewhere)? Labor productivity is a low degree-of-freedom datapoint and your explanation is indirect and has a lot of degrees of freedom.

mikeg8 5y ago
My opinion was anecdotal. But I think it could be argued the entire field of economics has a lot of degrees of freedom - which is why they do not have firm conclusions as to the causes of productivity loss in the article. Edit: also see: https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/
- webmaven 5y ago
  It is possible that the drop in productivity growth, if it goes on long enough, will have the effect of closing the gap.

neilparikh 5y ago

> My belief is that as the profits and shareholder compensation have risen disproportionately to wages It's not that simple: https://www.brookings.edu/wp-content/uploads/2015/03/finalincomeviz.png https://www.brookings.edu/wp-content/uploads/2015/03/finalin... (From https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/ https://www.brookings.edu/bpea-articles/deciphering-the-fall...) The takeaway is that these additional gains in productivity are being captured by land (as expected based on the law of rent). The problem is that this is popular when the majority of voters (or at least, the ones active in politics and making their opinion heard) are homeowners.

gremloni 5y ago

I believe it’s a mix of an explosion of recreation and entertainment options that people can’t wait to get back to and it getting increasingly hard to maintain the paradigm of work being a virtue.

ddingus 5y ago

The promise was it was going to get much cheaper to live. That didn't happen, and here we are.

le-mark 5y ago
Some make the case that cheap goods from China via Walmart was precisely that.
- ddingus 5y ago
  Was not enough. On family wage income, yes. However, moving that stuff offshore also reduced wages as service jobs became the norm. For many, buying power dropped.

yobbo 5y ago

The metric in question might be "labour share of income" and it has indeed been decreasing for a long time. But it's not obvious that incentives in individual jobs are affecting overall productivity (can one factory worker really make the conveyor belt move faster?). A plausible explanation could be that it's becoming easier (and profitable) to hire more low-wage workers than systematically increasing productivity.

le-mark 5y ago
My understanding is that cheap labor (China) is why there was nearly a complete stop of factory automation. Instead of increasing automation, low cost labor was utilized instead. Now that wages are rising around the globe, there should be increased innovation around automation. Explicitly that would be factory robots.

neilwilson 5y ago

"Why increase productivity when your pay doesn’t increase?" Because the neoliberal belief is that pay should remain largely fixed and the productivity bonus comes through as reduction in prices or increase in function. So this season's iPhone does more than last at roughly the same price. Which then leads to the paradox of productivity - since profits cannot then grow either unless there is ever greater leverage from banks.

ajross 5y ago

I agree with the moral principle of what you're saying. But, meh. My belief is that this is just measurement error. The linked article is a bunch of yelling about a perceived drop in what amounts to the second derivative of per capita GDP. It's just not a well-characterized "problem" to be solved.

lottospm 5y ago
> The figure—$10.9 trillion—represents the cumulative loss in output in the U.S. nonfarm business sector due to the labor productivity slowdown since 2005, also corresponding to a loss of $95,000 in output per worker. Exactly that. This is characterized as a loss but productivity has actually grown every single year except 2011 (which had zero growth, so not a "loss" either). Maybe 1998-2004 were just exceptional. My guess is that's when computers started to take over larger swaths of the most productive industries. > above-average growth of the late 1990s and early 2000s On top of that, the article (at least to me) reads like there was about a decade of above-average growth whereas it was really more like 6 years. Edit: This reads a lot like this: https://xkcd.com/605/ https://xkcd.com/605/
- jfoutz 5y ago
  aside from the massive adoption of a global distributed communication network enabling communication between almost everyone on the planet, coupled with a vast repository of saved knowledge, I can't really think of anything that might have improved productivity in that timeframe.
- Nasrudith 5y ago
  Growth as a norm in industrial sections should be expected even given "fixed" levels of experience from industrial learninh curves as processes grow more optimized and efficient and features move from revolutionary to old hat. Of course there is a matter of growth in what too - product count and quality (utility value) in some combination or profit. It is a known irony paradox that sectors which grow more efficient become less paid relative to what is produced. Part of the general economic trend of diminishing returns via saturation.
5y ago

maxerickson 5y ago

The labor shortage is plenty real and is going to be for a long time. We could massively expand immigration, but we won't.

dillondoyle 5y ago
Which would also massively help with our population growth and funding entitlements problem. We celebrate quickly giving citizenship to pro bball players (Enes Freedom, who btw I think he's awesome and congrats). But it's inaccessible for so many that would be net contributors to our country! I firmly believe it's rooted in racism & the electoral benefits of Republicans rather than an actual policy/economic debate. Doesn't help when one political party and their news media empire catastrophize and fear monger dangerous, gun toting, drug muling, cartel infested, caravans of chain migration invasions every October on the dot. But perhaps now I'm the one politicking ;)
- throwaway1777 5y ago
  Expanding an underclass of poor migrant workers does not help anyone. How would population growth help us when we also supposedly have a housing shortage in almost every city? Of course we should try to get elite athletes and academics to come to America, but the picture is much less clear for other types of immigration.
  - coliveira 5y ago
    Your thinking goes against the entire history of the US. The goal of having immigrants is that they will come to work and improve their and everyone else's lives, not that they will come rich to support the country.
  - josuepeq 5y ago
    Strongly disagree. Especially in tech, many of our success stories are from people who themselves are first generation Americans with parents that arrived here with literally nothing. American poet Emma Lazarus wrote “The New Colossus,” which now hangs in bronze in the Statue of Liberty’s base. The end of the sonnet goes: “Give me your tired, your poor, Your huddled masses yearning to breathe free…” America remains competitive by keeping the door open. If we slam the door shut, we could be missing out on the next Steve Jobs.

willcipriano 5y ago

Ive reached the same conclusion, with some additional ideas to why. In recent decades the availability of capital has increased dramatically. Low interest rates, spray and pray venture capitalists, creation of new dollars at a rapid rate. The idea behind capitals returns were that it took great risk as capital is rare and hard to get. If capital becomes easier to get, that alters the risk/reward ratio. I think we are just watching the reward part shift to where it belongs in contrast to the lower risk.

mschuster91 5y ago
> In recent decades the availability of capital has increased dramatically. Yeah, if the receiver of the capital is already rich and/or well-connected. If you're not in the top 10%, all you get is 10%+ APR credit cards, payday loans and other usurious crap.
- b9a2cab5 5y ago
  You don't need to be in the top 10%, you just need to be likely to be able to repay your loans. Government subsidizes home loans, student loans, and small business loans to the tune of hundreds of billions of dollars a year through the Fed's asset purchase program. The reason broke people can't get anything better than a 10%+ APR credit card is because they're so unlikely to repay the loan that the issuer has to charge that much interest to break even. I actually took a look at my banking app and I'm offered "personal loans" up to $20k at under 6%, which is actually incredible considering this is an unsecured loan to a random person.
  - lovich 5y ago
    Do loan providers typically break even? Even with the federal loan systems you mentioned, they’re making a profit each year.
    - b9a2cab5 5y ago
      You make fat profits in normal years and potentially lose out catastrophically during Great Recesssion-like events. Lots of lenders straight up went bankrupt due to defaults. Of course since the government made it so you can't discharge student loans in bankruptcy that market isn't functioning anymore.

becuz99h 5y ago

I mean, yeah. Money effectively == agency in our society. Have piles of food, will eat. Don’t have piles of food, will starve. So long as unnecessary industrial development to validate the “us v them” meme is the status quo, politically corrupt industrial development is what you’ll get. Enjoy.

oh_sigh 5y ago

Why/how are the workers the key to unlocking the productivity growth? I imagined productivity growth came through mechanization/electrification/computerization, not from the workers themselves being more skilled. IE if warehouse box-stackers productivity has tripled since 1950, it is because companies have invested in forklifts for the workers to use, not because the box-stackers are just way better at stacking boxes than their 1950s counterparts.

WaxProlix 5y ago
Strange that we're talking about a shortage of workers to unlock productivity then, and not a shortage of box-stacking machines or forklifts.
- oh_sigh 5y ago
  Obviously someone needs to operate the forklift. But the point is the productivity gains aren't coming from the person driving the forklift, they are coming from the capital investment in the forklift. Because if the forklift wasn't there, the person driving it would instead be stacking boxes by hand. If the driver was going to capture all of the upside of the productivity gains of the forklift, the business would never invest in a forklift in the first place.
  - deleted 5y ago
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  - pseudo0 5y ago
    Most capital investments do require a more skilled workforce to get the expected return on investment. In your example, a box stacker requires virtually no training, while a forklift operator has to take a training course and be skilled enough to operate the vehicle without costing the employer thousands or millions in liability claims. And no one is arguing that the employee should capture 100%, just more than roughly 0%.
    - Leherenn 5y ago

jollybean 5y ago

This is a worthy idea, but not it's not necessarily substantiated. FYI 'Productivity' is not 'How Hard We Work' - it's a measure of profit/hour. If profits go down for any reason, including more leverage by consumers due to increased competition, productivity will go down. 'Low Productivity' does not mean the economy is doing poorly. One other theory, is that consumers have more power then ever, consumer surpluses are greater than ever (through lower prices) and that the money is not going into the companies and therefore not recorded as productivity. Facebook, Google, Web Browsers, News, email. So much free content. My favourite Video Game is free to play. You can buy at Wallmart today what would have cost a lot of money in the 1960s. Travel is cheaper than ever, more people are travelling, Airlines are always teetering on bankruptcy. All of that means the productivity numbers are going to be lower than otherwise all things being equal.

oblio 5y ago
> FYI 'Productivity' is not 'How Hard We Work' - it's a measure of profit/hour. Productivity is revenue/unit of time (generally hour).
- jollybean 5y ago
  Yes, I stand corrected. Or more like 'How much stuff/value is created with what amount of money per hour'

deleted 5y ago

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Spooky23 5y ago

Productivity is based on labor hours not cost. In my labor intensive business processes, I’ve used technolgy to control cost. My CFO doesn’t give a rats ass about headcount, just dollars. The people we hire or contract are dumber and cheaper today than they were in 2005. Whole industries run like this. Hotels, government, manufacturing, etc. You might have a company with 3,000 people where key decisions are made by 5. Smartphones and services replaced supervisors and dispatchers with text messages. Many of those labor hours are inefficient as a result, but very cheap.

Terry_Roll 5y ago
>Productivity is based on labor hours not cost. Exactly, a distribution warehouse is a fixed size, it has a maximum capacity (floor space & racking), so despite being able to bring in more boxes and also hire more (agency) staff Hours to process the Units in and out, at some point that warehouse will grind to a halt and become like a traffic jam caused by too many people and too many Units much like we see with too many vehicles on the road at peak times. Automated distribution warehouses (computer controlled conveyor belt systems) also have this problem, as do theme park rides, rail networks and airlines as other common examples. In the 90's automated warehouses in one company I was familiar with would also crash at peak times, namely Xmas because it couldnt handle the increased volume. When it crashed work was distributed to other warehouses in the network to balance the workload amongst the remaining operational warehouses. However with automated warehouses, management/board know its maximum handling capacity and just accept it, unlike human manned warehouses where management keep pushing for more until workers revolt! This is why the Reddit AntiWork subreddit is interesting right now, we are seeing a country wide revolt which could spread to neighbouring Western countries. The spooks will be watching this like hawks. During a UK fuel protest in the UK, a protestor who was also a small business in the run up to his attendance at a second protest had a visit from 4 big burly guys in a new expensive Black Range Rover, one of the guys got out and told this small businessman, if you go to the next fuel protest, you wont have a business to come back to. Thats how the security services and others operate here in the UK! Its the security services job to protect the country which includes the economy and other things, thats also why the illusion of privacy and tech security is just an illusion! So other factors that can affect productivity in a country is poor transport networks, if people are spending more time travelling to and from work, then that country will be facing problems in years to come unless changes are made. Look at commute times dropping during covid lockdowns. It was like getting to work 20 or 30 years ago, less traffic on the road yada yada yada. Now changes in legislation can offset some of this which is in the hands of a Govt, like sunday trading (being open on Sundays) and also 24hr trading (being open 24hrs a day), internet shopping can also offset some or redistribute the demand on infrastructure but even the internet retailers have their problems and inefficiencies but these are now offloaded to the consumer, so legislation has created a cost saving for internet retailers in some countries. I do agree that management are largely detached from the situation on the ground and you can see this in many ways with the problems that exist, but either they dont care or they dont know, some really are detached from the reality on the ground. Its also cheaper to address these on an ad hoc basis when intelligent consumers complain, management rely on stupidity and laziness to get away with poor goods or services. Remember inflation only measures the cheapest price of a good or service, it does not take into account the decline in quality or life span of a good or service.

wpietri 5y ago

Definitely. Another factor I think about a lot is what I call "managerial diversion". As a simple example, imagine one of those meetings where a boss calls it to feel important. E.g., a "progress report" meeting where each person tells the boss what is going on while everybody else just tries to look alert. To me this is a diversion of resources from productive use. Managers get to feel powerful, important, smart. But neither investors nor customers benefit. At the team level, it's often just wasted hours here and there. But as you scale up, it gets worse. I've plenty of expensive corporate projects that were really just resume-builders for some executive. How much more productive would each of us be if the management chain was reasonably effective and reasonably selfless?

Tempest1981 5y ago
I'll sometimes just give a 10-second status update: "Working on feature X, it's coming along nicely", or "Fixed a dozen pesky bugs". Eventually, others start to do the same. Granted, there will still be a couple of "long talkers".
rp1 5y ago
This opinion feels to much like a cliche. Management needs to know what’s going on, even in well run companies. You might not like giving progress reports, because you feel like it takes time away from your job, but it’s possible that management is using the progress reports to better the company as a whole. For instance, if you’re behind schedule they can allocate more resources to your project, etc. I’m sure you have many anecdotes where management wasted peoples time. That happens often too.
- bendbro 5y ago
  > For instance, if you’re behind schedule they can allocate more resources to your project, etc I have never seen this happen in my entire life, nor would it be useful
- solatic 5y ago
  > For instance, if you’re behind schedule they can allocate more resources to your project, etc See: The Mythical Man-Month I agree that making sure that your work is observable is important, and usually Management's attention needs to be called to where the observed changes are being made. This is not the same as holding you hostage in a meeting culture where you need to sit through everyone else's reports on their progress. Instead of people taking five minutes to write out their progress report to their manager, who can then skim the progress reports and the work for a full team in fifteen to twenty minutes, instead we hold everybody hostage for thirty to sixty minutes. Typically this is a syndrome of a culture where labor is not expected to document their work, and nothing will scale without pulling senior engineers off their IC work to synchronously bring people up to speed. This necessarily reduces engineering velocity to a crawl. Nobody can speak as fast as a progress report can be read. Verbal meetings cannot be indexed or searched. All meetings should have a product - a decision, language that is agreed upon, written out, saved to a knowledge base. If you call too many meetings, it's a sign that you're not delegating authority enough.

wyager 5y ago

> the workers who are the key to unlocking the productivity growth What makes you say that? > Why increase productivity when your pay doesn’t increase? You're conflating two things - industry-wide pay changes (which any individual worker's productivity-related decisions have ~zero influence on) and individual pay changes, which are in fact determined (partially) by individual productivity.

mikeg8 5y ago
The title of the article omits the word "labor" but the article is obviously focused on labor productivity so lets starts with a simple definition from Investopedia: Labor productivity, also known as workforce productivity, is defined as real economic output per labor hour. Growth in labor productivity is measured by the change in economic output per labor hour over a defined period. I believe (through observation/experience) that workers are the key because without their buy-in and support, none of the business strategies or technological innovations management can introduce will matter. Individual workers have a lot of control over the economic output they choose to contribute. This is, IMO, very much about motivation. RE your second point, I'm not sure if I'm conflating the two vs using a micro example to extrapolate a macro trend.
- wyager 5y ago
  Do you think that ~any of the productivity growth over the last 200 years has to do with increasing laborer motivation rather than increasing technology? There is scant evidence for the former and plenty for the latter.
  - NineStarPoint 5y ago
    Worker motivation to take advantage of new technology is extremely important. The more you pay for workers to learn a given skill, the more likely they are to learn it. No amount of extremely efficient technology can help if your employees are incompetent at using it.
    - 5y ago

arcbyte 5y ago

Wild thought here: how does changing demographics influence this? Retiring people in many cases literally can't be productive anymore, but demand capital returns. But because they, in aggregate, didn't have enough kids, there isn't enough productivity to service that demand.

JanisL 5y ago
There's definitely some very big problems with people demanding fixed interest returns when demographics aren't good: https://realinvestmentadvice.com/the-unavoidable-pension-crisis/ https://realinvestmentadvice.com/the-unavoidable-pension-cri...
irrational 5y ago
I’ve wondered this myself. Boomers are 25+% of the population. That large of a percentage dropping out of the workforce is going to leave huge areas for younger people to move up and fill in, leaving tons of the bottommost jobs (most service jobs) unfilled. At some point the Republicans will have to come to grips with their xenophobia, since immigration seems like the only solution.
- toomuchtodo 5y ago
  Japan never came to terms with their xenophobia and opened up to immigration, so I would be careful about assuming it’s a foregone conclusion.
- chii 5y ago
  > bottom most jobs (most service jobs) unfilled which would encourage even more automation - filling those jobs with immigrants aren't the only option. I would garner that using immigrants for cheap labour is a form of exploitation which should be discouraged too (tho i dont think it's likely).

dsugarman 5y ago

I'm having trouble following your logic, if productivity is defined as revenue per labor hour, and you're saying this is due to the anti-work movement and labor shortage, that's decreasing the denominator. Or are you saying workers have become less engaged and less productive at work but maintain they're jobs? That might be plausible

bopbeepboop 5y ago
I took it to mean that workers did what was asked and no more — so productivity stayed constant. Which was contrasted with engaged employees, who sharing in more of the profits, have an incentive to increase productivity — eg, by inventing a tooling improvement for the assembly line. I think the overall point was employers are “penny wise, pound foolish” in that small productivity “gains” caused employees to disengage which is causing long-term slowdowns in improvements — improvements typically driven by employees stepping up and doing more.
- supertrope 5y ago
  Toyota empowers workers to stop production to fix quality issues. But they earn less than unionized workers. Empowering line workers makes sense when there's growth and healthy margins to pursue. If the industry is mature or even shrinking then there's a heavier focus on cost cutting and metrics/Taylorism to maximize free cash flow and pay it out as dividends and stock buybacks.
  - bopbeepboop 5y ago
    Yes, your second paragraph is what people are saying is bad. You can’t eat your seed corn in a bad year — that’s madness! Similarly, I don’t think you’ll find industries which are stagnant on the decade scale… which is where the harms being called out up thread manifest. That choice to “Taylorize” in support of buybacks critically weakens your staff at precisely the time you need their engagement to pivot your organization in response to new market conditions. See Boeing and the 737 MAX for a case study.
mikeg8 5y ago

wolverine876 5y ago

This isn't economics, but I will say that, in much of the past, Americans had a belief in being productive, contributing members of society, in anyone achieving anything ('you could be President some day!'), and in an obligation to maximize your potential. As wealth has become concentrated and the wealthy have openly and arrogantly adopted a philosophy of taking as much as they can - that it's what capitalism is about - rather than producing and contributing and thereby earning, it's no surprise that workers might not feel they should do more than the minimum.