American workers are becoming less productive. Nobody knows why.


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Suspension

Employers across the country worry that workers are getting too little done — and there is evidence that they are right to freak out.

In the first half of 2022, productivity – a measure of how much production in goods and services an employee can produce Within an hour – dropped by the most severe The recorded rate dates back to 1947, according to data from the Bureau of Labor Statistics.

Low productivity is baffling because Productivity moved to levels We haven’t seen it in decades when the coronavirus pandemic forced an overnight move to remote work, leading some economists to suggest that the pandemic could lead to long-term growth. It also raises new questions about switching to mixed scheduling and telecommuting, with employees explaining that flexibility has helped them work more efficiently. And it comes at a time when “quitting quietly” — doing only what is expected and nothing more — resonates, especially with younger workers.

Productivity is strong in manufacturing, but low elsewhere in the private sector, according to Diego Comin, professor of economics at Dartmouth College. He noted that measuring productivity is particularly difficult for knowledge workers, whose contributions are not easy to measure.

“It’s strange,” Komen said. “The data for the past two quarters is very strange in many ways. It is difficult even to tell a coherent story.”

Technology executives like Google Sundar Pichai and dead Mark Zuckerberg They have pledged to increase productivity, call in low performers and demand that their workers do more. Meanwhile, Microsoft CEO Satya Nadella said his company coined the term “Productivity paranoiaTo describe employers’ concerns about whether their employees are working hard enough.

Cathy Kutcher, founder of Career/Life Alliance Services, which advises corporate executives, said leaders are under intense pressure to boost employee performance as companies try to create a post-pandemic normal.

“Leaders don’t see what they want, and they’re starting to get worried,” Kasher said.

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Many employers have started using software to track employee activity. But Nadella argued that technology could have a detrimental effect on trust and employee engagement.

“Ultimately, for a business, these tools are really meant to help their employees thrive,” Nadella said. Bloomberg in September. “The only way to be successful and productive for a business is for employees to feel that sense of empowerment, that sense of energy and connection to the company’s mission and doing meaningful work.”

Eileen Richards, chief operating officer of software company Basecamp, said managers today “may feel particularly at gunpoint” to show that employees are lifting weight. But they should trust their employees to get the work done in ways that fit their lives.

“I promise you, no CEO has ever said they prefer activity over results,” Richards said. “The only thing productivity paranoia offers is a lot of vigor.”

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Productivity is also essential to a well-oiled economy, and it is also the ultimate driver of living standards: higher productivity ultimately leads to more goods and services available at lower cost, and higher wages for workers, which means Higher productivity also combats inflation.

When productivity slows, economic growth wanes. Especially low On economists and employers like the United States The economy is flirting with recession. It’s unfolding as employers struggle to find workers, amid a national tug of war around office future. Fatigue is high. Participation is low. People work more hours, but work with them less.

“No one knows or will ever know” what is causing lower productivity for some time, said an economist. Lawrence Summers, President Emeritus of Harvard University and former Secretary of the Treasury. It may have something to do with the fact that many employees “were working unsustainably hard” in 2020 and 2021, Summers said.

Some workers cut back on their efforts.

“There is a highly empowered workforce that has been involved in a certain amount of quietly quitting smoking,” Summers said. He said this creates “a certain amount of absenteeism on and off work” that may lower productivity.

There are many theories as to why productivity is declining. One has to do with tight Labor market.

Employees have gained so much influence amidst the labor shortage, many have exercised their power by participating in the “Great Resignation” or setting more limits at work through quiet quits.

Companies often Sinem Popper, chief economist at ZipRecruiter, said high performers who find jobs with higher wages and greater flexibility are losing out. Replacing them is difficult and training new employees is costly and time-consuming.

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Another theory is that all workers are in productive chaos.

Popper said that since the pandemic began, the link between hard work and reward “has been broken” for many workers, resulting in a “rein in ambition.” Perhaps workers face more leniency about producing fewer goods and services, because it is very difficult for employers to replace them.

“People lose their hours, they come in late for their shifts, but companies can’t do anything about it because they know it’s very difficult to replace these workers right now,” Popper said. “Back in 2019, politics was a one-hit and you’re out, I’m going to get someone better to do the job. Now 10 hits, you’ll probably get out.”

Signs of overwork were up 42 percent in employee ratings on recruitment site Glassdoor, said economist, Aaron Terrazas, compared to 2019 data. Signs of overwork were up 12 percent.

“You have to expect it to affect people’s productivity,” Terrazas said.

The drop in productivity this year comes after a strong 2021. In the first quarter of last year, worker productivity grew 4.3 percent, one of the highest in years, according to the Labor Department. That growth rate slowed the following quarter to 2.3 percent, which was still nearly double the weak productivity rate the nation experienced in the decade following the 2007-2008 financial crisis.

Much of that boost may have been the result of the coronavirus recession, said Gerald Cohen, chief economist at the Kennan Institute for Special Enterprise, a business policy think tank.

Cohen said that as performers are usually the first to be laid off, the output of remaining employees has risen as they pick up work that their former colleagues were previously doing. Technological innovations have also helped the shift to remote work.

Increasing productivity is a major lever against inflation, as workers produce more with fewer resources which allows for a mitigation of higher prices. Another factor in declining productivity could be a combination of inflation and the fallout from higher interest rates at the Federal Reserve, Cohen said.

“The question is to what extent does inflation affect the current production mix and business decisions about hiring, training and investment, which affects productivity,” Cohen said. “In general, inflation has a negative effect on short-term productivity, although the long-term is more ambiguous.”

Productivity tends to move in cycles of 10 to 20 years, Cohen said. Before the pandemic, the economy was just beginning to shake off the productivity slump that had prevailed since the Great Recession. The weak trend is now likely to continue through the first half of 2023.

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there There is no shortage of problems that may affect productivity: business dynamics continue to weigh on companies, as is the ongoing hiccups in the supply chain and the war in Ukraine. Then there’s the “very open question” about how remote work affects worker productivity, Cohen said.

“There’s a lot of productivity that comes from people interacting with each other, not just in a formal meeting but in the hallway, around the water cooler,” Cohen said. “This is very difficult to measure, but it is a really important factor.

Outside the United States, other countries, such as France, Germany and Canada, have experienced a slowdown in productivity, said Klaas de Vries, chief economist at the Conference Board. In a sense, the world is seeing a return to pre-pandemic levels, but it expects productivity to fall further in the coming months, with many economists predicting recession in 2023.

De Vries said that next year’s recession may not have the “purging” effect on productivity that generally accompanies a slump, because companies may be reluctant to resort to mass layoffs in such a tight labor market. This time around, there’s a risk that the recession will slow productivity even more.

Andrew Van Dam contributed to this report.

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