U.S. Has The Worst Drop In Worker Productivity Since 1947

 The following is from The Washington Post:

In the first half of 2022, productivity — the measure of how much output in goods and services an employee can produce in an hour — plunged by the sharpest rate on record going back to 1947, according to data from the Bureau of Labor Statistics.

The productivity plunge is perplexing, because productivity took off to levels not seen in decades when the coronavirus forced an overnight switch to remote work, leading some economists to suggest that the pandemic might spark longer-term growth. It also raises new questions about the shift to hybrid schedules and remote work, as employees have made the case that flexibility helped them work more efficiently. And it comes at a time when “quiet quitting” — doing only what’s expected and no more — is resonating, especially with younger workers.

Productivity is strong in manufacturing, but it’s down elsewhere in the private sector, according to Diego Comin, professor of economics at Dartmouth College. He noted that productivity is particularly tricky to gauge for knowledge workers, whose contributions aren’t as easy to measure. . . .

Critical to a well-oiled economy, productivity is also the ultimate driver of standards of living: Higher productivity eventually translates to more goods and services available at a lower cost, and increased wages for workers, meaning higher productivity also combats inflation.

When productivity slows, economic growth dwindles. The drop-off is particularly concerning to economists and employers as the U.S.economy flirts with recession. It’s unfolding as employers struggle to find workers, amid a national tug-of-war over the future of offices. Burnout is high. Engagement is low. People are working more hours, but they’re doing less with them.

“No one knows or will know” what is causing the drop-off in productivity for some time, said economist Lawrence H. Summers, president emeritus of Harvard University and former treasury secretary. But it could have something to do with the fact that many employees “were working unsustainably hard” in 2020 and 2021, Summers said. . . .

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

A Profound Change In Labor Force Is Happening

 

The following thought-provoking article is from former Labor Secretary Robert Reich:

Across America, hospitals are pushed to the limit because so many health care workers have quit just as Omicron is surging. 

But hospitals aren’t alone, and Omicron isn’t the only culprit. We’re witnessing one of the most profound changes in the American labor force in a half century, at least since middle-class women entered paid work in large numbers during the 1970s. Only this time, women and men aren’t entering work. Many are leaving it (or at least, the way work has been organized). 

For decades, work has had a total grip on most people's lives because there have been so few alternatives to either working full time (often 50 or 60 hours a week, sometimes at two or more jobs), or not working at all and worrying about making ends meet. Instead of working to live, most of us have been living to work.

Yet in recent months there’s been something of a sea change. The so-called “quit rate” of workers voluntarily leaving their jobs has reached record levels. The labor-force participation rate (the percent of people of working age who are in the workforce) is remarkably low for this point in a recovery. More workers are on strike than at any comparable period in the last thirty years.

The pandemic has surfaced many issues that have been smoldering for years -- mandatory overtime, stagnant wages, dangerous working conditions, insecure employment, employment discrimination, and lack of paid sick leave or paid family leave. 

It has also forced -- or allowed -- many people to reconsider what they want from work and from their lives.

Donald Sull, Charles Sull, and Ben Zweig recently conducted a massive study of workplace data for the MIT Sloan Management Review, including more than a million Glassdoor reviews. What are employees complaining about at companies losing the most workers in this tsunami of resignations? Interestingly, not mainly pay. Complaints about pay ranked 16th of the issues that predict quits. The biggest predictor is a toxic culture – workplaces that fail to promote diversity, equity, and inclusion; that don’t make workers feel respected and valued; and make them to feel insecure. No one likes to be underpaid. But it turns out people like disrespect and insecurity even less. 

When Australian researchers recently reviewed data on more than 1,000 workers, they discovered that working for a companies that “fail to reward or acknowledge their employees for hard work, impose unreasonable demands on workers, and do not give them autonomy” triples the odds that workers will suffer major depression. 

I’m no soothsayer, but as I look ahead I’m fairly certain we’re going to see companies and nonprofits moving toward more flexible work, autonomous work, and mandatory limits on work hours. They have no choice if they want to recruit and retain reliable employees. 

We’re also going to see far more self-employment, more people moving to locales around the country where housing is cheaper, and, in general, more of us seeking to simplify our lives.

I also expect increasing demands for public policies that reduce the amount of time we have to spend working and give us more control of our own labor – such as a universal basic income, a ban on mandatory overtime, a shorter workweek, paid sick leave and paid family leave, and more tax incentives for profit sharing and self-employment. 

We’re not facing the end of work, but we are facing the end of work as we know it. It’s about time.

The United States Has A Critical Child Care Problem

 

The charts above are from The Center for American Progress. It shows the cost of child care in each state for various ages of children in licensed child care centers, and for a family home-based child care that meets licensing requirements. 

Republicans would have you believe that many Americans are refusing to go back to work because they are lazy, or want to milk the unemployment system. I think that's ridiculous. Workers want to work, because it gives them self-satisfaction and dignity. But they must be able to afford to take a job. And the cost of child care is one thing that prevents that.

The sad fact is that a single person with a child making minimum wage just cannot afford to do that. The national minimum wage is only $7.25 an hour. That's about $15,080 a year. Note that the average cost of child care for an infant in the U.S. is $15,900, for a toddler is $13.200, and for a pre-schooler is $10,700. Once the child care is paid (for only one child), there is not enough left of a minimum wage paycheck to support the family! And this is the cost for basic child care. High quality child care costs significantly more -- $28,800 for an infant, $22,400 for a toddler, and $17,200 for a pre-schooler.

Raising the minimum wage would help. A $15.00 an hour minimum wage would translate to about $31,200 a year. That would allow a family to struggle by while paying for basic child care, but still falls far short of allowing them to take advantage of high-quality child care. Doesn't every child deserve high-quality child care? Other developed countries provide high-quality child care for their citizens, and the United States (the richest nation of Earth) could do that, if our politicians cared as much about working families as they do rich families.

Looking at those figures, it should be obvious to everyone that something must be done to help workers afford childcare. President Biden's American Families Plan would do that. Under his plan, no working class or middle class family would have to pay more than 7% of their income for high-quality child care. That would be about $1,056 a year for someone making $7.25 and hour, or $2,184 a year for someone making $15.00 an hour. That would allow them to actually support a family -- especially on the $15.00 an hour wage.

Passing the American Families Plan would enrich the lives of millions of Americans by allowing them to work their way out of poverty, or maintain their middle class lifestyle. It would be a sound investment in the people of this country, and one that would pay dividends for the country in the future.

Unfortunately, the Republicans oppose the plan. The only entities they care about helping are corporations and rich families. The Democrats are going to try to pas the American Families Plan by using the reconciliation process (to avoid a GOP filibuster in the Senate). I hope they can succeed, but it will be close -- and it will require the Senate votes of all 48 Democrats and both Independents. There is not margin for error.

The children of this country deserve high-quality child care. And our federal government should help American working families be able to afford that high-quality child care.

A Huge Increase In Corporate Power Has Hurt U.S. Workers

 

The following perceptive op-ed is from former Labor Secretary Robert Reich:

The most dramatic change in the system over the last half-century has been the emergence of corporate giants like Amazon and the shrinkage of labor unions.

The resulting power imbalance has spawned near-record inequalities of income and wealth, corruption of democracy by big money, and the abandonment of the working class.

Fifty years ago, General Motors was the largest employer in America. The typical GM worker earned $35 an hour in today’s dollars and had a major say over working conditions. 

Today’s largest employers are Amazon and Walmart, each paying far less per hour and routinely exploiting their workers, who have little recourse.

The typical GM worker wasn’t “worth” so much more than today’s Amazon or Walmart worker and didn’t have more valuable insights about working conditions. 

The difference is those GM workers had a strong union. They were backed by the collective bargaining power of more than a third of the entire American workforce. 

Today, most workers are on their own. Only 6.4% of America’s private-sector workers are unionized, providing little collective pressure on Amazon, Walmart, or other major employers to treat their workers any better.

Fifty years ago, the labor movement had enough political clout to ensure labor laws were enforced and that the government pushed giant firms like GM to sustain the middle class.

Today, organized labor’s political clout is minuscule by comparison. 

The biggest political players are giant corporations like Amazon. They’ve used that political muscle to back “right-to-work” laws, whittle down federal labor protections, and keep the National Labor Relations Board understaffed and overburdened, allowing them to get away with egregious union-busting tactics.

They’ve also impelled government to lower their taxes; extorted states to provide them tax breaks as a condition for locating facilities there; bullied cities where they’re headquartered; and wangled trade treaties allowing them to outsource so many jobs that blue-collar workers in America have little choice but to take low-paying, high-stress warehouse and delivery gigs. 

Oh, and they’ve neutered antitrust laws, which in an earlier era would have had companies like Amazon in their crosshairs.

This decades-long power shift – the ascent of corporate leviathans and the demise of labor unions – has resulted in a massive upward redistribution of income and wealth. The richest 0.1% of Americans now have almost as much wealth as the bottom 90% put together.

The power shift can be reversed – but only with stronger labor laws resulting in more unions, tougher trade deals, and a renewed commitment to antitrust.

The Biden administration and congressional Democrats appear willing. The House has just passed the toughest labor reforms in more than a generation. Biden’s new trade representative, promises trade deals will protect American workers rather than exporters. And Biden is putting trustbusters in critical positionsat the Federal Trade Commission and in the White House.

And across the country, labor activism has surged – from the Amazon union effort, to frontline workers walking out and striking to demand better pay, benefits, and safety protections.

I’d like to think America is at a tipping point similar to where it was some 120 years ago, when the ravages and excesses of the Gilded Age precipitated what became known as the Progressive Era. Then, reformers reined in the unfettered greed and inequalities of the day and made the system work for the many rather than the few.

It’s no exaggeration to say that we’re now living in a Second Gilded Age. And today’s progressive activists may be on the verge of ushering us into a Second Progressive Era. They need all the support we can give them.