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The very important context is that productivity sharply rose in 2020, in the middle of the Covid recession. The recent drop in productivity is mostly just a ret

The very important context is that productivity sharply rose in 2020, in the middle of the Covid recession. The recent drop in productivity is mostly just a return to pre-pandemic baseline. The simplest explanation is probably just that the workers who were laid off during Covid were the least productive, and so average worker output went up, then fell as they re-entered the labor force. Or maybe even just there was some sort of abberation with how the complex statistic or productivity was calculated (e.g. inflation was actually here earlier than measured by CPI, and output was deflated incorrectly). Either way, this is much more likely a pandemic related disruption and return to normalcy, rather than an indication that anything fundamental is "broken"

nradov 4y ago
There is a similar effect in some countries with strict labor laws which make it difficult to fire employees. Unemployment rates end up being high, but productivity is also high because companies are only willing to hire the most productive workers and won't take a chance on anyone else.
aeternum 4y ago
I'd argue it was also due to lack of alternative options for leisure time. When everyone was stuck at home there's only so much Netflix the avg person can watch. People likely spent some extra time on work because it was something to do. Now with everything reopened there are many more options.
chasd00 4y ago
hours worked went way down but dollars made stayed the same because of the handouts. The productivity metric had nowhere to go but up.
fintechjock 4y ago
Maybe an even simpler explanation is that productively is roughly calculated as GDP / employed workers. Productivity almost always goes up in a recession, especially one accompanied with massive layoffs (like early COVID). Productivity is going down right now compared to 2020 because we are pretty much at full employment. These productivity measurements aren’t really tracking individual productivity at all.
- svnt 4y ago
  I’m not sure if this is your point, or just that it’s population level, but there is certain to be lag in the measure. I.e. if I contribute $10B to GDP in Q3, and lay off 10% of the workforce, my productivity looks great, but a large portion of that contribution will stem from work done by a larger workforce in Q2, Q1, and before, perhaps well before. So the measurement during periods of recession or expansion will always be artificially elevated or suppressed.
- zepppotemkin 4y ago
  Are you sure it isn't the design of the GUIs in tools HNers have vague insights into?
postalrat 4y ago
Did you even bother to click on the article before typing your opinion of what happened? Their chart shows we are far below any sort of pre-pandemic baseline.
- cashsterling 4y ago
  it reads "annual percentage change in labor output"... which I take to mean "rate of change of per capita productivity" over time, not actual measured productivity. So that graph does not say we've dropped below pre-pandemic levels.... according to this report (https://www.bls.gov/news.release/prod2.nr0.htm https://www.bls.gov/news.release/prod2.nr0.htm): "Output and hours worked in the nonfarm business sector are now 3.1 percent and 1.5 percent above their fourth-quarter 2019 levels, respectively."
- zeroonetwothree 4y ago
  The chart only shows change, not the actual value. If you look at a chart of the values you'll see that it's true we've just returned to ~2019 values: https://tradingeconomics.com/united-states/productivity https://tradingeconomics.com/united-states/productivity
- moufestaphio 4y ago
  Not OP, but your reply comes off as pretty rude, especially as I think its pretty off base. The chart is showing "annual percentage change in labor output", not "gross productivity" which I think supports the OPs point. If it went up 10% in 2020, and 6.3% in 2021 (or whatever the graph is showing), just because there is a -7.4% drop in 2022 doesn't mean its "far below any pre-pandemic baseline". In fact it's probably ABOVE pre-pandemic levels, even with the drop. I can't be certain from graph.
nemo44x 4y ago
Similar things happened during the Great Depression. Many things made in that era before the war are highly sought after since the craftsmen who had jobs at the time were often among the best in their field. Musical instruments from the 30’s are legendary.
- acdha 4y ago
  Yale’s new employee tour was like that, too. They walked us around campus and one of the things they highlighted was how much nicer the Depression-era stuff was than the decades before or after because the amount planned suddenly bought a lot more and they apparently had a windfall in the form of top-notch Italian stone workers who’d immigrated because the job market was even worse back home.
jldugger 4y ago
Note that this is like, how every recession works -- we lay off people, and productivity spikes. The fact that we did the same thing during a government imposed recession shouldn't be surprising at all.

nradov 4y ago

There is a similar effect in some countries with strict labor laws which make it difficult to fire employees. Unemployment rates end up being high, but productivity is also high because companies are only willing to hire the most productive workers and won't take a chance on anyone else.

aeternum 4y ago

I'd argue it was also due to lack of alternative options for leisure time. When everyone was stuck at home there's only so much Netflix the avg person can watch. People likely spent some extra time on work because it was something to do. Now with everything reopened there are many more options.

chasd00 4y ago

hours worked went way down but dollars made stayed the same because of the handouts. The productivity metric had nowhere to go but up.

fintechjock 4y ago

Maybe an even simpler explanation is that productively is roughly calculated as GDP / employed workers. Productivity almost always goes up in a recession, especially one accompanied with massive layoffs (like early COVID). Productivity is going down right now compared to 2020 because we are pretty much at full employment. These productivity measurements aren’t really tracking individual productivity at all.

svnt 4y ago
I’m not sure if this is your point, or just that it’s population level, but there is certain to be lag in the measure. I.e. if I contribute $10B to GDP in Q3, and lay off 10% of the workforce, my productivity looks great, but a large portion of that contribution will stem from work done by a larger workforce in Q2, Q1, and before, perhaps well before. So the measurement during periods of recession or expansion will always be artificially elevated or suppressed.
zepppotemkin 4y ago
Are you sure it isn't the design of the GUIs in tools HNers have vague insights into?

postalrat 4y ago

Did you even bother to click on the article before typing your opinion of what happened? Their chart shows we are far below any sort of pre-pandemic baseline.

cashsterling 4y ago
it reads "annual percentage change in labor output"... which I take to mean "rate of change of per capita productivity" over time, not actual measured productivity. So that graph does not say we've dropped below pre-pandemic levels.... according to this report (https://www.bls.gov/news.release/prod2.nr0.htm https://www.bls.gov/news.release/prod2.nr0.htm): "Output and hours worked in the nonfarm business sector are now 3.1 percent and 1.5 percent above their fourth-quarter 2019 levels, respectively."
zeroonetwothree 4y ago
The chart only shows change, not the actual value. If you look at a chart of the values you'll see that it's true we've just returned to ~2019 values: https://tradingeconomics.com/united-states/productivity https://tradingeconomics.com/united-states/productivity
moufestaphio 4y ago
Not OP, but your reply comes off as pretty rude, especially as I think its pretty off base. The chart is showing "annual percentage change in labor output", not "gross productivity" which I think supports the OPs point. If it went up 10% in 2020, and 6.3% in 2021 (or whatever the graph is showing), just because there is a -7.4% drop in 2022 doesn't mean its "far below any pre-pandemic baseline". In fact it's probably ABOVE pre-pandemic levels, even with the drop. I can't be certain from graph.

nemo44x 4y ago

Similar things happened during the Great Depression. Many things made in that era before the war are highly sought after since the craftsmen who had jobs at the time were often among the best in their field. Musical instruments from the 30’s are legendary.

acdha 4y ago
Yale’s new employee tour was like that, too. They walked us around campus and one of the things they highlighted was how much nicer the Depression-era stuff was than the decades before or after because the amount planned suddenly bought a lot more and they apparently had a windfall in the form of top-notch Italian stone workers who’d immigrated because the job market was even worse back home.

jldugger 4y ago

Note that this is like, how every recession works -- we lay off people, and productivity spikes. The fact that we did the same thing during a government imposed recession shouldn't be surprising at all.