America's Productivity Plunge Explained

For the first time since the financial crisis, US multifactor productivity growth turned negative last year, mystifying economists who have struggled to find something to blame for the fact that worker productivity is declining despite a technology boom that should make them more efficient – at least in theory.

To be sure, economists have struggled to find explanations for the exasperating trend, with some arguing that the US hasn’t figured out how to properly measure productivity growth correctly now that service-sector jobs proliferate while manufacturing shrinks.

But what if there’s a more straightforward explanation? What if the decline in US productivity measured since the 1970s isn’t happening in spite of technology, but because of it?

To wit, Facebook has just released user-engagement data for its popular Instagram photo-sharing app. Unsurprisingly, the data show that the average user below the age of 25 now spends more than 32 minutes a day on the app, while the average user aged 25 and older. The last time Facebook released this data, in October 2014, its users averaged 21 minutes a day on the app.

According to Bloomberg, “time spent is an important metric for advertisers, which like to hear that users are browsing an app beyond quick checks for updates, making them more likely to run into some marketing.”

Maybe they should matter more to economists, too.

Aside from short-lived booms in the 1990s and 2000s, US productivity growth has averaged just 1.2% from 1975 up to today after peaking above 3% in 1972.

As we detailed previously, adjusting for the WWII anomaly (which tells us that GDP is not a good measure of a country’s prosperity) US productivity growth peaked in 1972 – incidentally the year after Nixon took the US off gold.

The productivity decline witnessed ever since is unprecedented. Despite the short lived boom of the 1990s US productivity growth only average 1.2 per cent from 1975 up to today. If we isolate the last 15 years US productivity growth is on par with what an agrarian slave economy was able to achieve 200 years ago.


As we reported last year, users spent 51% of their total internet time on mobile devices, for a total of 5.6 hours per day snapchatting, face-booking, insta-graming and taking selfies.

Maybe in their next wide-ranging study, economists could include a test group of workers who leave their phones in a locker at the beginning of the work day, and try to measure how much their “productivity” improves.

So, while every effort can be made by Ivory Tower academics to solve the problem of American worker productivity, perhaps it can be summed up simply as "Put The Smart-Phone Down!"


Cognitive Dissonance Wed, 08/02/2017 - 22:05 Permalink

Oh look...a new app. And 6 new emails. Plus FaceTime and the Interwebby. Joy joy!I gave up motorcycles several years ago because of balance problems. Distracted drivers in cages were a problem then. I cannot image what it is like now.

Croesus Clock Crasher Wed, 08/02/2017 - 22:20 Permalink

The short answer:

'Murica's productivity has dropped, because we're busy #WINNING, and doing American stuff that non-Americans wouldn't understand. "American stuff" may include, but is not limited to: beer drinkin', takin the family on a trip in our WagonQueen Family Trucksters, gun shootin', eatin lots of barbecue, and wearin our colors, you know, those colors that don't run.

'Murica, fuck yeah.

In reply to by Clock Crasher

OpenThePodBayDoorHAL Croesus Wed, 08/02/2017 - 22:44 Permalink

Nope.Think about it, and look where the decline starts: 1971.GDP is measured in dollars. In 1971 the USD defaulted against gold.So the USD, which is the "yardstick" GDP is measured in, has been devaluing.No matter how much productivity we add, the dog can't catch up with it's tail. If we had stuck with sound money we'd all be living a life of leisure like George Jetson by now.You're welcome.

In reply to by Croesus

Save_America1st OpenThePodBayDoorHAL Wed, 08/02/2017 - 23:00 Permalink

stupid article...getting real fucking sick of the fake Tylers.... hmmm....what if during the Clinton rape administration they gave all technology patents to China and outsourced everything to the Chicoms in the name of the NWO and the destruction of America's dominance in manufacturing and technology?  Hmmmm...what if that's how it really happened?Ever wonder how China got so far so fast after the 90's, bitchez?  NWO treason by way of the Clinton rape regime.  raping America, raping bitchez, importing cocaine...oh...and by the way...all funded before by and after the Bush regime...and again by O-Scumbag.Remember...the scumbag Clinton's are the children of the scumbag Bush's.  Both sides...fake sides...both the same...both perpetrating the false right/left paradign for the sheeple.All discusgting, sick and twisted, sociopathic, psychopathic, treasonous criminals.  

In reply to by OpenThePodBayDoorHAL

Retired Guy Save_America1st Thu, 08/03/2017 - 00:57 Permalink

People leaving agriculture was a productivity boost. Discoveries in chemistry and electronics helped the fifties and sixties. The boomers started work in the 70's. So many trainees reduced productivity. Eventually the lawyers, banksters and politicians really got going messing up productive people. Now we have OSHA, EPA, SNAP, Obama care, national forest management by the Sierra club, money printing and a whole host of other productivity killers. We also have more government purchases. If there is a wasteful way they will always choose the worst one.All the wasteful programs came with  great stories  but it all adds up to stagnation and decline.

In reply to by Save_America1st

garypaul Retired Guy Thu, 08/03/2017 - 10:26 Permalink

Retired Guy, your comment makes good points, unlike the blatherer above yours.I think a lot of this is simply due to the law of diminishing returns. There just doesn't seem to be any great inventions lately. I mean, all this fuss over Elon Musk's Space X. I watch films from the 1940's of rocket launches. Not much has really changed since then, just some marginal improvements in materials, new electronics, now filmed in color digital, etc., but the basic function is the same (e.g. the range of a rocket today is not much greater than one from 50 years ago). No magical fuels have been invented. Not to mention the "electric car" which has been around since the 1800's.Also, I haven't seen EVEN ONE stem cell company with a legitimate approved product that actually cures a disease, despite hoopla for the past 20 years.I could go on but I think I made my point.  

In reply to by Retired Guy

Jack's Raging … OpenThePodBayDoorHAL Wed, 08/02/2017 - 23:07 Permalink

Agreed. Nobody seems to want to acknowledge that money is literally the root of nearly every modern problem. It's not hard to understand that, once you recognize that money is in between nearly every activity that matters. Without addressing this issue first, nothing can be solved--and attempting to will only make it worse. Garbage in, garbage out.

In reply to by OpenThePodBayDoorHAL

EmeraldWI Croesus Wed, 08/02/2017 - 23:00 Permalink

Fake news. Reagan got us winning by driving down wages (which shows up as an increase in productivity) when in the 1980's we tipped over to 51% service sector and 49% manufacturing jobs and we've never recovered. Productivity in the service sector always lagged and never duplicated the huge gains in manufacturing productivity. The stats in the article are skewed.

In reply to by Croesus

junction Cognitive Dissonance Wed, 08/02/2017 - 22:17 Permalink

Look at the comments here to know why productivity has declined.  Almost no one can now write literate English.  There is an epidemic of people undergoing triple bypass heart operations, which leaves most people with a loss of cognitive ability.  The most highly paid people in America are tax dodging hedge fund operators who loot corporations so these guys can afford their yachts and big houses.  And the drugs the Bush Crime Cartel started importing by the ton into the USA on CIA and Air Force cargo planes have wrecked the productivity of the millions of new drug addicts.  This country is doomed.  

In reply to by Cognitive Dissonance

Stuck on Zero Wed, 08/02/2017 - 22:04 Permalink

How can productivity go up when each productive worker is saddled with 14 bureaucrats, 27 levels of management, 390,000 pages of legislation, and the requirement to attend 220 hours of sexual harassment, racism, and LGBT indoctrination yearly?

pitz Wed, 08/02/2017 - 22:04 Permalink

Are you sure the productivity plunge isn't coming from the over-financialization of the economy?  So many people unproductively employed as accountants, managers, tax collectors, etc., not enough producers?  

thevekja Wed, 08/02/2017 - 22:10 Permalink

Modern technology allows the average white collar worker to be several times more productive than his 1970's counterpart... yet people are working longer hours than ever in the face of huge inflation and stagnant wages. Proof that our corporate masters have no intention of ever shortening the 40 hour work week. Last company I worked for, I was able to finish my work in half the time of my elder colleagues. And yet I still had to be in the office from 9 - 5 because '"those are the rules". No thanks

Taking away workers' free time is the best way to keep them plugged in and docile. Smartphones are the ultimate consumption devices, spending money has never been easier.

NeedleDickTheB… Wed, 08/02/2017 - 22:06 Permalink

This article hits the nail on the head.  Technology developed in the 80s & 90s were actual productivity tools.  Technology since 2000 are productivity destroyers i.e. time wasters like Facebook, Twitter, Snap Chat, Instagram, etc.

Twee Surgeon NeedleDickTheB… Wed, 08/02/2017 - 23:55 Permalink

No it doesn't. the formative introductory question is.... has Americas productivity dropped "in Spite of technology" or " Because of Technology" It's not really a question and at best is a Bullshit question. It's a Space Waste. In Spite of or Because of, is not Exactly a Razor Sharp definition of a Proposition.In other news, Bat boy previously thought dead in Afghanistan has returned after escaping from Moslem hell cave prison. The CIA have been trying to out the truth for at least a year.…

In reply to by NeedleDickTheB… Wed, 08/02/2017 - 22:08 Permalink

On the way to work today I noticed a guy who was part of a crew cutting/trimming the grass along the highway pretending to work on his weed eater, but was actually messing w/ his smart phone.  While in a clothing store w/ my wife this past weekend I caught several clerks hiding so they could check their 'smart' phone.  You see this shit all the time now.

EmeraldWI Thu, 08/03/2017 - 00:11 Permalink

Please turn the slackers in to the proper authorities and speaking of sh*t when you get to work, take a dump in your pants and clean it out on your own time and show them your dedication to the fast food industry. How are those clerks ever going to own their own Walmart store; don't they know that they need to make head clerk and get a dime raise first? Please take a pic when looking in the Walmart dressing rooms for slackers, I'd like to see that. May Ayn Rand bless you and weed whip you.

In reply to by

vulcanraven Clock Crasher Thu, 08/03/2017 - 01:51 Permalink

I busted my balls for every single business I worked for since starting my former career at 19 years old. Out of the 10 or so companies I held a job at in the last 20 years, only 3 hired me full time and those jobs lasted anywhere from 1-3 years. Every other place had me working as a contractor on-site (with no benefits) and cut me loose after my contract expired. Made absolutely zero difference how hard I worked, they would always hire a lower wage person for me to train as my replacement before they kicked me out the door once my contract was up. The last and final place I worked 9-5, I totally phoned it in. Fuck corporate America, I started my own business last year and sink or swim I will never go back to one of those shitholes again.

In reply to by Clock Crasher

Bunga Bunga Wed, 08/02/2017 - 22:20 Permalink

Why to invest into real operations with all the risks, when it is a no brainer to make more money risk free with free central bank money by inflating asset prices? Selling the very same rotten wood aka real estate for a higher price every time isn't very productive. The credit bubbles and now the central bank bubbles clearly explain why credit becomes less and less productive.

flyonmywall Wed, 08/02/2017 - 22:20 Permalink

In the old Soviet Union there was a saying."They pretend to pay us, we pretend to work"  Fuck'em. I can't tell you the number of times I went to some restaurant while on vacation (only real time I go to them), and the person that was supposed to take the order, or serve us didn't seem to give a rat's ass about anything.Nice. 

I Write Code Wed, 08/02/2017 - 22:23 Permalink

Stupid chart, you can't expect the third derivative to keep increasing.I think you can blame 95% of it on immigration, legal and illegal, but also on a new culture that sort of hates productivity, and I'm talking managers who would rather have a big, sloppy staff rather than a small, productive one.And on the other side, how the heck do you measure productivity in the gig economy?  What is the output of an Uber driver?

GooseShtepping Moron Wed, 08/02/2017 - 22:29 Permalink

This isn't really surprising. People like Neil Postman and E. F. Schumaker (remember them?) used to write about this decades ago.It seems even when I was growing up in the '80s, respectable opinion reserved a wink and a sigh for the so-called promises of technology. It was still felt by many back then that the older ways of doing things (e.g. writing things out and calculating numbers by hand, preferring theater to television, and in general high culture to low culture) were also the objectively better ways. They humanized you; it wasn't just about the utilitarian task of getting something done. Doing things a certain way, at a certain pace, with a certain style, also added depth and beauty to life.That all changed in the mid '90s with the growing popularity of the internet. It was then that the cultural gatekeepers (by whom I mean public intellectuals, newspaper editors, old-money business leaders, etc.), the very ones who should have been warning about indulging in the excesses of technology, suddenly went all in for it.I thought this was very strange. Ever since then I've felt like I've been living in the Twilight Zone. The tech era has been a huge and particularly pernicious anomaly wherein history has shifted off the Main Sequence. I don't think it will last much longer, though. The diminishing returns of technology along with the crying need for more humanity in every field of endeavor will force a rediscovery of culture. It has to happen, or we will perish.