7 ms·

These things always really need a giant flashing neon note that "productivity" doesn't mean how much workers get done but how much money is made off of what wor

These things always really need a giant flashing neon note that "productivity" doesn't mean how much workers get done but how much money is made off of what workers get done. They're only loosely connected, and most productivity gains have come from workers having to "do less" to "make more".

qeternity 4y ago
This is not how productivity is defined or measured.
- wing-_-nuts 4y ago
  Then perhaps you'd like to enlighten us?
  - NovemberWhiskey 4y ago
    Workforce productivity at the national level is typically defined by some measure of output, the amount of goods or services produced (typically GDP), over some measure of input, the number of hours worked/workforce participation.
    - mcguire 4y ago
      So, how much money is made off of how much workers work?
      - NovemberWhiskey 4y ago
        No, not at all: for example, you can be a non-profit and still contribute to GDP, since you're still creating economic activity. Heck, even what the government does contributes to GDP, and that's not making money for anyone.
        BobbyJo 4y ago
        I think this is exactly what parent meant. "How much is made" doesn't strictly mean "profit" in terms of a for-profit institution. The net output of a non-profit is directed somewhere, either internal or external to the entity, and that can loosely be considered "making money", or at least in the sense I believe parent meant.
        NovemberWhiskey 4y ago
        GDP is denominated in dollars, so this seems to be a somewhat vacuous position - yes, that's how we measure economic activity, but it doesn't have to involve money changing hands. Productivity is based on the value of the work done, not any profitability assessment. The original post which set off this chain asserted it was about not how much workers get done but how much money is made off of what workers get done ... which is unambiguously wrong.
        BobbyJo 4y ago
        > The original post which set off this chain asserted it was about not how much workers get done but how much money is made off of what workers get done... which is unambiguously wrong I don't believe the difference is consequential here, since the originating point still holds even using your definition. I wouldn't say it's "wrong" so much as imprecise, as the way I interpreted the statement would encompass your more detailed description. It's like when I ask people "how much money" they make, I intend them to include non-cash compensation in the number (in dollar equivalent), and pretty much all do without additional prompting.
        stormbrew 4y ago
        Yes. My point was that when people read these articles they think of a much more casual definition of productivity that has more to do with a sense of "getting things done," but the word is jargon for something that has little to do with that. I was playing loose with the jargon meaning for sure, but I'm pulling out to what articles in the Washington Post or other economics-focused media really care about: the impact to corporate bottom line.
- stormbrew 4y ago
  I'm really curious how you think it's defined or measured then. I'm obviously abstracting a bit, but a lot of people in the replies here seem to think it's related to how much time you spend watching cat videos on company time and it's definitely not that.
  - qeternity 4y ago
    It has nothing to do with what I think. Another commenter has already posted the definition from the Fed (FRED). Productivity is not a measure of prices, profitability or anything similar. It’s a measure of output per unit of input. Classic HN downvote fest because people incorrectly disagree with a factual post.
    - bloodyplonker22 4y ago
      You were probably downvoted because you made a curt statement with no backing arguments like in this follow-up post.
    - deleted 4y ago
      [deleted]
- habnds 4y ago
  from FRED: "The efficiency at which labor hours are utilized in producing output of goods and services, measured as output per hour of labor." The solow residual is technically total factor productivity but is generally accepted as labor productivity. it's just an accounting identity that is estimated along with GDP and other vaguely useful but not very accurate measurements like the unemployement numbers.
nine_zeros 4y ago
> "productivity" doesn't mean how much workers get done but how much money is made off of what workers get done This is so true. The amount of bureaucracy has actually increased. This makes every worker work more. But this bureaucracy is unproductive work, thus does not lead to a rise in income (for the company). E.g. my healthcare provider uses fax machines (yes that FAX) to communicate with insurance providers. Fax is asynchronous and without confirmation/tracking of work done. Often, the fax is sent but the other side simply files it in a random place or forgets to process the work. So, I (the patient) now needs to follow up for weeks with insurance and healthcare provider to check on the status of that FAX. This is unproductive work and yet, it is taking a toll on every individual involved in this process.
- mcguire 4y ago
  But it increases GDP! Yay!
  - astrange 4y ago
    It doesn't increase GDP if they get less productive.
    - gridspy 4y ago
      Many things increase GDP without being good. For instance Oil spills increase GDP as suddenly a bunch more (cleanup) work is being done and paid for.
      - mcguire 4y ago
        There's an old joke about an "economic hero" being a wealthy man going through an ugly divorce while dying of cancer.
      - hackeraccount 4y ago
        see https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
mcguire 4y ago
Weird story: From the mid-1970s to the mid-1990s, as-measured productivity significantly declined and then stayed at a lower level. This was during the initial few generations of technological impact on industry, including "just-in-time" inventory which kind of requires computerization. Yet, at this same time, "bosses and economists" were seen in public wondering if computers weren't a net negative on industrial production. In addition to being weirdly defined, productivity is, as the graph demonstrates, very unstable over the short term. If you want a longer version of the graph in the article, see "The 1990s Acceleration in Labor Productivity: Causes and Measurement" from 2006 (https://files.stlouisfed.org/files/htdocs/publications/review/06/05/Anderson.pdf https://files.stlouisfed.org/files/htdocs/publications/revie...), page 190 (10 of 22).
- moffkalast 4y ago
  > "just-in-time" inventory That really was a net negative eventually. Covid managed to completely wreck the worldwide supply chains because of that idiotic approach. God forbid anyone keep any buffer in case anything happens.
  - mochomocha 4y ago
    It's definitely not an idiotic approach, and companies do keep buffers. In the most advanced cases, probabilistic models are devised to estimate how big these buffers should be. Asking for companies to keep buffers for unpredictable "once in a century"-type events is unrealistic.
    - moffkalast 4y ago
      Yeah that's the problem, those estimates are usually arounds zero it seems. I mean sure on paper it checks out to be most profitable and most of the time it also works in real life. But you end up with this rube goldberg supply chain machine that can't be stopped or you apparently end up with a cyclic dependency problem and you cannot restart your production. We build structures to take a one in a ten thousand year flood or earthquake, but it's too much to expect corporations to keep more than 2 weeks of stock? Sure.
blululu 4y ago
It's even stupider than that: it divides this figure by a largely fabricated estimate of how many hours people actually worked. This is a SWAG metric that is largely made up. The commentary is most likely irrelevant.
- deleted 4y ago
  [deleted]

qeternity 4y ago

This is not how productivity is defined or measured.

wing-_-nuts 4y ago
Then perhaps you'd like to enlighten us?
- NovemberWhiskey 4y ago
  Workforce productivity at the national level is typically defined by some measure of output, the amount of goods or services produced (typically GDP), over some measure of input, the number of hours worked/workforce participation.
  - mcguire 4y ago
    So, how much money is made off of how much workers work?
    - NovemberWhiskey 4y ago
      No, not at all: for example, you can be a non-profit and still contribute to GDP, since you're still creating economic activity. Heck, even what the government does contributes to GDP, and that's not making money for anyone.
      - BobbyJo 4y ago
        I think this is exactly what parent meant. "How much is made" doesn't strictly mean "profit" in terms of a for-profit institution. The net output of a non-profit is directed somewhere, either internal or external to the entity, and that can loosely be considered "making money", or at least in the sense I believe parent meant.
        NovemberWhiskey 4y ago
        GDP is denominated in dollars, so this seems to be a somewhat vacuous position - yes, that's how we measure economic activity, but it doesn't have to involve money changing hands. Productivity is based on the value of the work done, not any profitability assessment. The original post which set off this chain asserted it was about not how much workers get done but how much money is made off of what workers get done ... which is unambiguously wrong.
        BobbyJo 4y ago
        > The original post which set off this chain asserted it was about not how much workers get done but how much money is made off of what workers get done... which is unambiguously wrong I don't believe the difference is consequential here, since the originating point still holds even using your definition. I wouldn't say it's "wrong" so much as imprecise, as the way I interpreted the statement would encompass your more detailed description. It's like when I ask people "how much money" they make, I intend them to include non-cash compensation in the number (in dollar equivalent), and pretty much all do without additional prompting.
        stormbrew 4y ago
        Yes. My point was that when people read these articles they think of a much more casual definition of productivity that has more to do with a sense of "getting things done," but the word is jargon for something that has little to do with that. I was playing loose with the jargon meaning for sure, but I'm pulling out to what articles in the Washington Post or other economics-focused media really care about: the impact to corporate bottom line.
stormbrew 4y ago
I'm really curious how you think it's defined or measured then. I'm obviously abstracting a bit, but a lot of people in the replies here seem to think it's related to how much time you spend watching cat videos on company time and it's definitely not that.
- qeternity 4y ago
  It has nothing to do with what I think. Another commenter has already posted the definition from the Fed (FRED). Productivity is not a measure of prices, profitability or anything similar. It’s a measure of output per unit of input. Classic HN downvote fest because people incorrectly disagree with a factual post.
  - bloodyplonker22 4y ago
    You were probably downvoted because you made a curt statement with no backing arguments like in this follow-up post.
  - deleted 4y ago
    [deleted]
habnds 4y ago
from FRED: "The efficiency at which labor hours are utilized in producing output of goods and services, measured as output per hour of labor." The solow residual is technically total factor productivity but is generally accepted as labor productivity. it's just an accounting identity that is estimated along with GDP and other vaguely useful but not very accurate measurements like the unemployement numbers.

nine_zeros 4y ago

> "productivity" doesn't mean how much workers get done but how much money is made off of what workers get done This is so true. The amount of bureaucracy has actually increased. This makes every worker work more. But this bureaucracy is unproductive work, thus does not lead to a rise in income (for the company). E.g. my healthcare provider uses fax machines (yes that FAX) to communicate with insurance providers. Fax is asynchronous and without confirmation/tracking of work done. Often, the fax is sent but the other side simply files it in a random place or forgets to process the work. So, I (the patient) now needs to follow up for weeks with insurance and healthcare provider to check on the status of that FAX. This is unproductive work and yet, it is taking a toll on every individual involved in this process.

mcguire 4y ago
But it increases GDP! Yay!
- astrange 4y ago
  It doesn't increase GDP if they get less productive.
  - gridspy 4y ago
    Many things increase GDP without being good. For instance Oil spills increase GDP as suddenly a bunch more (cleanup) work is being done and paid for.
    - mcguire 4y ago
      There's an old joke about an "economic hero" being a wealthy man going through an ugly divorce while dying of cancer.
    - hackeraccount 4y ago
      see https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window

mcguire 4y ago

Weird story: From the mid-1970s to the mid-1990s, as-measured productivity significantly declined and then stayed at a lower level. This was during the initial few generations of technological impact on industry, including "just-in-time" inventory which kind of requires computerization. Yet, at this same time, "bosses and economists" were seen in public wondering if computers weren't a net negative on industrial production. In addition to being weirdly defined, productivity is, as the graph demonstrates, very unstable over the short term. If you want a longer version of the graph in the article, see "The 1990s Acceleration in Labor Productivity: Causes and Measurement" from 2006 (https://files.stlouisfed.org/files/htdocs/publications/review/06/05/Anderson.pdf https://files.stlouisfed.org/files/htdocs/publications/revie...), page 190 (10 of 22).

moffkalast 4y ago
> "just-in-time" inventory That really was a net negative eventually. Covid managed to completely wreck the worldwide supply chains because of that idiotic approach. God forbid anyone keep any buffer in case anything happens.
- mochomocha 4y ago
  It's definitely not an idiotic approach, and companies do keep buffers. In the most advanced cases, probabilistic models are devised to estimate how big these buffers should be. Asking for companies to keep buffers for unpredictable "once in a century"-type events is unrealistic.
  - moffkalast 4y ago
    Yeah that's the problem, those estimates are usually arounds zero it seems. I mean sure on paper it checks out to be most profitable and most of the time it also works in real life. But you end up with this rube goldberg supply chain machine that can't be stopped or you apparently end up with a cyclic dependency problem and you cannot restart your production. We build structures to take a one in a ten thousand year flood or earthquake, but it's too much to expect corporations to keep more than 2 weeks of stock? Sure.

blululu 4y ago

It's even stupider than that: it divides this figure by a largely fabricated estimate of how many hours people actually worked. This is a SWAG metric that is largely made up. The commentary is most likely irrelevant.

deleted 4y ago
[deleted]