Earlier this morning I wrote about the jump in US labor productivity at the start of the pandemic. The odd thing wasn't the jump itself, but the fact that the new higher level was permanent.
I've finally tracked down quarterly figures for hours worked, so here is labor productivity since the end of the Great Recession:
The "new normal" isn't quite as dramatic as I thought it was. Productivity did stagnate for a couple of years after the jump in 2020 before it started to climb again. Nonetheless, productivity really does seem to be at a permanently higher level. It's currently about 4% higher than the pre-pandemic trendline.
POSTSCRIPT: On the other hand, productivity growth was weak during the aughts, so maybe 2020 mostly represented catch-up growth? If you look at the trend in productivity for the past few decades, the jump in 2020 only got us back to the long-term trendline. So . . .
It was me.
Thanks, jv! I've been goofing off a lot, so I appreciate you picking up the (national) slack.
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In addition to variations in hiring and firing, which obviously had a huge impact in the pandemic as there were massive layoffs of "low-productivity" service workers, in the long term there must also be variations in the "basket" of things that are used in the CPI. The prices of these things are dependent on the efficiency of automation. The prices of electronic goods, for example, have plummeted (or the capabilities have increased), as manufacturing has been automated. The meaning of increases in "real" GDP is not really straightforward - many arbitrary judgements are involved.
Productivity calculations are too complicated to allow easy conclusions.
Permanent transfer of workers from low-productivity parts of the economy to high isn't some trick or statistical artifact, it's exactly what economic growth is! Moving farmers to cities without reducing crop quantity is productivity growth, as was making more cars with fewer workers, etc. Even the '90s revolution (which I don't think "dot-com boom" describes well at all), which had a ton to do with logistics, still involved a lot of low productivity stockers moving on with their life's work.
Obviously this kind of growth can also mean terrible disruption & loss to the lives of workers, but that's clearly not what we've seen these last 4 years: workers still in service make more money, and those who aren't have been able to move to better jobs.
If corporations increase profits by price gouging, but employ the same number of people, does that translate to increased productivity?
And yes, I think the alternative hypothesis is also likely--It was jv.
If prices go up for the same items, this gets into the inflation correction, so in principle this may not affect productivity. In practice there are so many things of this sort going on that productivity calculations are very approximate.
I think your PS is off-track. Your line of fit includes the data since the sharp change 16 quarters ago, but if you'd drawn a line over the data from 1990 through 2019, it wouldn't be this one.
My point isn't that you're wrong that this represents something more like getting back on trend; it's that we spent a decade off-trend, with absolutely no sign that we were ever getting back. Look at the data from 2010 on: you've got jump in productivity from layoffs during the Great Recession, then a distinctly lower trend that lasted a full decade. There's some indication that things were returning to the pre-2009 trend, but *at a lower level*, in the last few years pre-pandemic (as we were getting closer to full employment), but no hint of actually catching up to the trend line from 1990-2009. But now we pretty much have. That's a pretty big deal IMO.
Careful - you're falling into the vortex of Kevin's world of trend lines.
Overlay with income numbers?