Whichever way you measure national productivity, it’s growing at a snail’s pace both in absolute terms and compared to past growth rates. (See Sidebar.) And that’s not a good thing as increases in productivity improve our standard of living.
SIDEBAR: Measures of Productivity
Labor productivity, the measure most often cited, captures the amount of goods and services produced (output) with the number of hours worked to produce those goods and services.
Multi-factor productivity compares output to the amount of combined inputs (labor, capital, energy, materials, and purchased services) used to produce that output. Economists argue this measure better captures the impact of technology advances.
Not all experts agree productivity is an issue. Bloomberg blogger and investment expert Barry Ritholtz argues that productivity is higher than we think because our current measures fail to capture innovations in the digital world that have changed how we conduct business. He points to Slack (a business collaboration tool), Soundcloud (software for capturing interviews with experts and sharing them broadly) and free Google docs as examples of productivity-increasing tools whose output isn’t captured by traditional productivity metrics. The solution, he and others say, is to develop new ways to measure productivity.
We certainly need new measures of many kinds of economic statistics, but productivity? Existing approaches have proven useful despite major changes in how business is conducted. The light bulb enabled shift workers, leveraging physical capital. The national highway system lowered shipping costs. FedEx, UPS and digital communications allowed supply chains and industries to become national then global—which captured economies of scale and enabled workers to shift to more high-value activities. Before software tools, we worked at a slower pace. Just consider Excel and its effect on finance professionals’ productivity, allowing companies to create more output with fewer financial workers.
So if today’s Web 3.0 technology advances are not increasing productivity, what’s up? I would argue that too many of the new digital technologies are making us less productive. Here are my top 5 productivity sinkholes.
E-mail. Ask any executive what the most frustrating part of his or her day is (not including commuting), and the answer usually points to e-mail.
Executives and professionals engaged in secretarial work. I wish I had the money to document thinking time lost from replacing secretaries and word processing pools with a “do-it-yourself” workplace. Why are executives or their direct reports doing their own PowerPoint decks? Take a video of white-collar workers at their desks before C-Suite team or Board meetings. You’ll see hours and hours of work creating and fine-tuning presentations with limited value-add to the company’s marketplace performance.
Exhaustion and its inherent impact on creativity. Productivity gains were supposed to lead us to work fewer hours for the same or greater income. Instead, the digital world has made us work much longer days, including weekends and email checks before bedtime. Creativity requires spaciousness for the mind to wander and make connections previously not made. Workplace calendars and our personal lives have too little white space thanks to the digital world.
Social media. Walk around retail stores, public park maintenance workers, office cubicles and the like. There’s a whole lot of social media going on.
Too many workers in high income, low value-add industries. At a certain level, the work of lawyers and financial experts create a robust economy. But we are well past this point, with an excess of our workforce merely shifting the income distribution around versus enhancing our productivity. Imagine some percent of these workers focused on innovations that make health care or education more productive.
Ritholtz is concerned that some output is left unmeasured in productivity measures, pointing to the shared economy in particular. But UBER, Lyft and Airbnb income does contribute to the output measure captured by traditional productivity measures. Facebook and Google contribute through their advertising earnings.
We have a huge issue before us: incomes are not rising as fast as they did in the past. Furthermore, income distribution is increasingly unequal. And a declining share of income is flowing to labor. Squabbles over productivity metrics tend to distract economists from this far more important issue. We need to name the problem, not try to blow it off with a discussion of a “new way of working requiring a new measure.”
We’ve been changing how we work since the Pilgrims arrived. We need our ancestors’ drive and creativity to make our nation more productive. And we need their political collaboration skills to find a enhance everyone’s well-being without hurting the growth of our economy.
What are your examples of unproductive work?