[HN Gopher] The U.S. productivity slowdown: an economy-wide and ...
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The U.S. productivity slowdown: an economy-wide and industry-level
analysis
Author : rsj_hn
Score : 71 points
Date : 2021-12-03 19:27 UTC (3 hours ago)
(HTM) web link (www.bls.gov)
(TXT) w3m dump (www.bls.gov)
| istjohn wrote:
| Surprise, surprise, increasing concentration of market power in
| tech and other industries seems to explain much of the
| productivity slowdown:
|
| _Computer and electronic products incurred a massive slowdown,
| with a contribution to MFP growth of 0.45 ppt. from 1997 to 2005
| dwindling to 0.10 ppt. from 2005 to 2018....The MFP slowdown in
| computer and electronic products represents 66 percent of the
| slowdown in durable manufacturing and 31 percent of the slowdown
| in the private nonfarm business sector.
|
| ...
|
| Mordecai Kurz [...] finds growing market power in the IT sector,
| which may be stifling the entry and growth of young firms. Kurz
| reports that "declining or slow growing firms with broadly
| distributed ownership have been replaced by IT based firms with
| highly concentrated ownership," and that "IT innovations enable
| and accelerate the erection of barriers to entry and once
| erected, IT facilitates maintenance of restraints on
| competition."
|
| Foster, Grim, Haltiwanger, and Wolf also reference the
| concentration within high-tech industries, noting that, in
| contrast to the late 1990s, when "the productivity surge in the
| high-tech sectors [had] a high contribution of increased within-
| industry covariance between market share and productivity . . .
| the productivity slowdown in the post-2000 period in high tech is
| due to both a decrease in within-firm productivity growth but
| also a decrease in this covariance."
|
| Titan Alon, David Berger, Robert Dent, and Benjamin Pugsley offer
| further evidence to support this finding, noting that "over the
| last three decades, the U.S. business sector has experienced a
| collapse in the rate of new startups alongside an enormous
| reallocation of economic activity from entrants and young firms
| to older incumbents." Alon et al. clarify that this finding is
| not just particular to high-tech industries but is "widespread
| across industries and geographic markets," so that while this
| could be relevant in high-tech industries, it could also help
| explain the productivity slowdowns in other industries. And, more
| generally, Grullon et al. observe that "more than 75% of U.S.
| industries have experienced an increase in concentration levels
| over the last two decades."_
| ajross wrote:
| This is a bit oversold. Here's the FRED graph of nonfarm labor
| productivity over the last 80 years or so:
| https://fred.stlouisfed.org/series/OPHNFB
|
| In fact productivity has been going up at very roughly constant
| rate ever since it's been measured. And it's been growing since
| 2008 too. It's true there's an inflection around then, and that
| the growth rate has been lower than it was during the peak years
| of the late 90's. But (1) it's not that much lower and (2) it's
| not remotely outside historical norms. There were flat spots in
| the 70's and late 50's too.
|
| Basically: the free lunch from the heyday of VLSI scaling, that
| enabled the enormous automation economy, is probably over. Now
| we're waiting for another breakthrough.
| andrewmutz wrote:
| These statistics are scary. I believe that instead of worrying
| that "the robots will take all of our jobs" we should worry that
| the robots aren't taking our jobs quickly enough.
| literallyaduck wrote:
| Should robots appear tomorrow and replace 99.95% of the
| workforce do you really believe the robot owners will be
| altruistic enough to provide charity to the displaced
| workforce?
|
| The attractive people who are out of work will end up in the
| sex industry. The rest will go to protection zones, ghettos,
| and will be sterilized to prevent reproduction, and possibly
| starved depending on how things go.
|
| Society is not shock resistant and needs time to grow into
| things. Look at oligarchies and tell me socialism, capitalism,
| and communism are really any different beyond the rhetoric.
|
| How many dev shops said they are agile when they were clearly
| waterfall?
|
| No matter what you call it the ruling class will always call
| the tune and the poor and middle class will dance.
| pharmakom wrote:
| And who are the 0.1% going to sell the output of their robot
| labour to if everyone else is in ghettos?
|
| Anyway, I'd hope in such a scenario some smart underdogs
| would illegally repurpose some robotics to create their own
| abundance. Might make a good TV show.
| mrfusion wrote:
| Would robots always show up in productivity numbers or are
| there certain ways robots could be employed that don't show up?
| bluedino wrote:
| I was kind of expecting this to be blamed on three things:
|
| 1. Supply chain issues
|
| 2. Businesses that are still closed/reduced in size
|
| 3. People working from home
|
| But instead it's a long-term analysis from far before covid
| sailfast wrote:
| Huge productivity boom after the 2008 recession when everbody had
| to do the same thing with a ton fewer people, I would expect to
| see smaller growth as things normalized again over the following
| few years. That said, not a data scientist - just an armchair
| economist.
|
| Can't wait to see the numbers "per hour" when they normalize a
| full time job into 40 hours a week and try to figure out how
| remote workers perform and also have childcare duties (or work
| all the time) for two years from your house. It will be quite the
| challenge for them to normalize!
| kf6nux wrote:
| Since the title is a little misleading, here's how the article
| describes itself.
|
| > Labor productivity--defined as output per labor hour--has grown
| at a below-average rate since 2005, representing a dramatic
| reversal of the above-average growth of the late 1990s and early
| 2000s. The productivity slowdown during these years has left many
| economic observers wondering why this situation has occurred and
| what factors may have contributed. To clarify potential sources
| of the productivity slowdown, this article presents an analysis
| of labor productivity and its component series--multifactor
| productivity, contribution of capital intensity, and contribution
| of labor composition--at both the economy-wide and industry
| levels, complemented with a survey of the contemporary
| productivity literature.
| mrfusion wrote:
| My guess would be internet browsing and social media.
| VLM wrote:
| bureaucratic costs?
|
| If a small company can "handle" your medical insurance problems
| in one hour, and a "too big to care" megamerger company takes
| ten hours, and the economy encourages mergers to profit off the
| financial transaction, the resulting megacompanies will have
| everyone's productivity drop. That times hundreds of other
| business operations ranging from getting a toner cartridge from
| the supply closet to departmental meetings.
| deltree7 wrote:
| The problem with 'productivity' measurement is output is based on
| 'sale price'
|
| * Sell, 1,000,000 lottery tickets (or CDOs or Carcinogenic
| products) -- Boom, you are productive.
|
| * Cure Cancer (or Linux or Wikipedia or an ad-free Educational
| YouTube Channel) and open source it for free -- Nah, not
| productive.
|
| As we digitize, more things will be free and yet valuable and
| these things won't show up as productivity.
|
| It's time to come up with better measurements of productivity
| lumost wrote:
| If the everyone receives the cure for cancer, or benefits from
| wikipedia or linux, then you would expect to see this show up
| in productivity numbers elsewhere in the economy.
|
| If instead we invest in US productivity destroying activities
| such as dismantling factories, price gouging, speculation, mass
| diss-information and distraction machines, net loss
| corporations, and indefinite warfare. Then you would expect
| productivity to fall eventually.
| deltree7 wrote:
| Not necessarily.
|
| Today we produce 1,000,000x more videos/memes/gifs/content 50
| years ago and we also consume more of them.
|
| But, those numbers don't show up at all in our productivity
| measures.
|
| Why would watching "Gone with the Wind" 30 years ago more
| productive because we paid $10 than watching the same "Gone
| with the Wind" on a streaming service today (amortized at
| probably $0.05)
| nradov wrote:
| But memes have zero value. Or perhaps _negative_ value?
| throwaway1777 wrote:
| Obviously they have value to the people making and
| viewing them. Entertainment and content do have value.
| dougmwne wrote:
| The attention memes draw has value and the productivity
| should show up in ad sales and increased want creation.
| Rather than unproductive sleeping, if we all stay up an
| hour later looking at memes + ads, that should increase
| total productivity (assuming we buy an extra coffee the
| next morning to keep us perky at work ).
| throwaway0a5e wrote:
| <insert dank meme about teenagers with dank memes going
| toe to toe with professional propagandists>
|
| The ability to make sufficient for mass market
| consumption quality combinations of visual, audio and
| textual content has gone from being purview of real
| professionals who do this as their day jobs to something
| literally anyone with a smartphone, an option and 5min of
| free time can do.
|
| That is a change to human communication as revolutionary
| as the telegraph or the telephone. There is definitely
| some value there. Lord knows who'll capture that value.
| paganel wrote:
| > Today we produce 1,000,000x more videos/memes/gifs/conten
|
| Truth is nobody knows how to value those things in terms of
| money, to be honest I'm not even sure they can be valued
| the same way as we used to value physical things that got
| built during a physical production process.
|
| I've seen this problem partially addressed by slightly
| leftish-leaning economists such as Mariana Mazzucato in
| "The Value of Everything" [1] and I'm sure there may be
| others like her, but afaik mainstream economics is still
| ignoring the issue, I think mainstream economists don't
| even acknowledge this as being an issue.
|
| [1] https://marianamazzucato.com/books/the-value-of-
| everything
| missedthecue wrote:
| If you were to compare two individual people using that type of
| metric, I would agree. But if you are measuring multi-decade
| trends for the 161 million people in the US workforce, the
| measure they use seems adequate.
| nimbius wrote:
| We ostensibly have a "better" measure of productivity, called
| the GDP. Every time a carton of cigarettes gets sold, GDP goes
| up. every time a person is diagnosed with cancer, GDP goes up.
| for a capitalist, the GDP is generally a positive litmus.
|
| the concern I think is most evident is that a nearly theatrical
| number of short-term and long-term issues are becoming
| insurmountable obstacles to progress at all. having coasted on
| Quantitative Easing and bond buys since 2008, the market has
| cheated recession at all turns and subsequently created a
| corporate credit bubble that has turned the prime interest rate
| into a third-rail for anyone seeking to raise it to counter now
| rampant US inflation. many point to 2020 as a recession period,
| however bond prices and home prices remained high, and it only
| lasted a month at most as the fed simply injected more cash
| into the system to "correct" the uncomfortable decline.
|
| the minimum wage hasnt moved in a decade, and most service
| economy workers (those which make up the backbone of neoliberal
| capitalist society) faced with the near Sisyphean task of
| caring for COVID patients at home, educating their kids
| remotely, and working multiple jobs that offer no healthcare or
| medical leave reached its absolute breaking point when the
| government and corporations deputized most of them as mask
| police to be spit on and assaulted. paying people more isnt
| working.
|
| finally the fed and the gov arent helping. the looming threat
| of regular petulant government shutdowns coupled with states
| that refuse to in many cases even acknowledge their covid
| numbers, is butting against Federal reserve dogma that
| laughably insists somehow this is just "transient" inflation
| and its just going to go away, despite the first decline ever
| in cyber monday sales on record.
|
| the silver lining analysts all rally around is a trillion
| dollar stimulus bill just that wasnt even submitted to the
| house until nine months into the year that will arrive just in
| time for a 2022 meldown over what are widely anticipated to be
| poor christmas sales amid a driver shortage, shipping gridlock,
| and chip shortage.
|
| to see the BLS flog capital intensity platitudes and labor
| composition functions is just bad comedy. its the same sort of
| bureaucratic blinders we had right up to 2008.
| KingMachiavelli wrote:
| They won't show up directly but they should (hopefully) be
| observable via secondary effects. Linux itself doesn't have
| price but employees using Linux have salaries, Redhat support
| has a price. SaaS providers do this for countless open source
| projects.
|
| Linux and free software are also used for thousands of small
| commercial websites and projects that show up. If everyone had
| to use Windows Server and SQL Server for their .NET wordpress-
| style site there would be fewer sites and fewer businesses.
|
| Educational YouTube channels should lead to more educated and
| therefore more productive people. It could be argued that for
| better or worse the higher-ed and post-high school systems
| (degrees, credentials, etc.) have been very slow or even
| opposed at allowing this extra learning/knowledge to improve
| career/productivity outlooks.
|
| e.g. Youtube is free but text books have increased X% in price
| so the net effect is diminished. Learning is easier and cheaper
| than ever before but most colleges are not using the more
| efficient learning systems (online classes, MOACs(?)). The cost
| of college has increased so much that college itself has
| decreased in productivity, etc.
|
| Also a lot of the time spent on these free/non-profit projects
| are not counted as labor hours so if anything they should have
| zero or positive effect on the measured amount of productivity.
|
| (Personally I think HN is responsible. /jk)
| assbuttbuttass wrote:
| This looks like the falling rate of profit
| (https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...)
| by a different name.
| scottcodie wrote:
| Many economic models assume economic profit is zero, meaning
| the owners could not use their time or money better in any
| other business.
| mikeg8 wrote:
| > 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.
| ajross wrote:
| 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.
| rsj_hn wrote:
| > The linked article is a bunch of yelling about a perceived
| drop in what amounts to the second derivative of per capita
| GDP.
|
| The Bureau of Labor Statistics is not in the habit of doing a
| bunch of yelling. This is a scholarly report, and is
| commenting on a widely reported phenomena, namely the
| productivity slowdown. If you don't like this analysis, there
| are many others that draw similar conclusions. The reason why
| this analysis is interesting is that it breaks down the
| productivity decline into component factors and identifies
| which factors have slowed down (MFP).
| lottospm wrote:
| > 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/
| maxerickson wrote:
| 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 wrote:
| 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 wrote:
| 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.
| la6471 wrote:
| The sum is greater than parts
| maxerickson wrote:
| So can we let skilled tradesmen immigrate then?
| roenxi wrote:
| The US is going to get to a population of 333,333,333 people
| in short order. Is that not enough?
|
| While importing cheap labour and working them hard is a road
| to prosperity - probably quite a good one for all involved -
| it is hard to see how there can be a pure labour shortage
| with that many people, that much wealth and that much history
| of advanced manufacturing.
|
| There is probably an organisational problem here somewhere.
| xxpor wrote:
| The absolute number of people tells you nothing about the
| state of the labor market. Every additional person demands
| services, which creates jobs to fufill the demand, and then
| the employees of that job use their income to pay for goods
| and services they like, and the economy grows... that's the
| entire basis of capitalism and economics in general. The
| economy isn't a zero-sum game.
|
| For example, when Orlando had a sudden influx of people
| move there from PR after Hurricane Maria: "we find that
| employment in Orlando increased, especially in construction
| and retail, and find positive aggregate labor market
| effects for non-Hispanic and less-educated workers. While
| we find that earnings for these workers decreased slightly
| in construction, this was balanced by earnings growth in
| retail and hospitality. These results are consistent with
| small negative impacts on earnings in sectors exposed to a
| labor supply shock, offset by positive effects in sectors
| impacted by an associated positive consumer demand shock."
|
| https://www.nber.org/papers/w27718
|
| Instead what you have is a sudden _negative_ supply shock,
| due to the pandemic, while simultaneously having a demand
| shock for goods because of stimulus. Of course prices for
| the labor demanders will increase.
| throwaway1777 wrote:
| Much more likely is we increase automation in jobs that no
| one wants to do like burger flipper or artichoke picker. And
| this would be a huge productivity win. It also might be rough
| for society but for productivity it would be huge.
| maxerickson wrote:
| Automating crop picking might be profitable for the
| growers, but it isn't going to unlock much productivity,
| it's currently done in a few weeks by a (relatively) small
| number of people.
|
| Probably the same deal with quick serve. They already
| automate individual tasks as it makes sense, they aren't
| trying to automate the job.
| sg47 wrote:
| Not sure why you are being downvoted. The immigration policy
| especially for high-skilled workers is rooted in racism and
| is ignored because no party benefits from it. The only
| solution is for workers to form a PAC and raise funds to
| influence the political agenda.
| becuz99h wrote:
| 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.
| willcipriano wrote:
| 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 wrote:
| > 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.
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