Economists Perplexed by Plunge in Worker Productivity

There's no shortage of possible explanations, but nobody knows what comes next
By Mike L. Ford,  Newser Staff
Posted Nov 1, 2022 6:28 PM CDT
Economists Perplexed by Plunge in Worker Productivity
   (Getty - reflexnaja)

Perplexing, strange, very odd: Those are a few of the terms economists are using to try to explain this year’s record-setting plunge in worker productivity, according to the Washington Post. Productivity fell more than 4% in the first half of 2022, the largest drop since 1947, when the BLS began tracking what many economists view as a vital indicator. As the Post explains, productivity isn’t just important for a business’s bottom line; it’s also "critical to a well-oiled economy," as higher productivity generally means higher availability of goods and services and higher wages, all of which increase a society's standard of living.

Analysts point to several possible factors, but they all emphasize that nobody really knows for sure what's happening. For starters, the labor market has been exceptionally tight, leaving many employees feeling empowered to engage in so-called "quiet quitting," i.e., doing the bare minimum to get by, knowing their boss can’t afford to lose another warm body. "Back in 2019, the policy was one strike and you're out," a ZipRecruiter economist told the Post. "Right now it’s 10 strikes, maybe you’ll be out." An increase in remote work is another factor, but not necessarily for the reason many employers might assume. For instance, informal, person-to-person "water cooler" conversations once brought hard-to-measure benefits to many businesses, but many workers no longer experience such interactions.

As for whether unsupervised remote work hurts productivity, that’s still an open question. Some employers have been tempted to use tracking software to monitor employees' keystrokes and screen time, but as the Harvard Business Review notes, such tools are likely to hurt morale while promoting mere "activity" over actual "productivity." Business Insider points to less cynical reason behind the drop: Churn and burn in recent years means there are simply lots of new workers still learning their jobs, creating what Delta Airlines' CEO refers to as a "training and experience bubble." Many economists predict a recession for 2023, which would ordinarily cause layoffs and boost productivity; however, this time around, productivity may fall further as employers continue to cling to employees they don't really need. (More productivity stories.)

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