They say productivity (output per worker hour) is once again peaking in the US.  The question is it robotics and automation (and artificial intelligence) that’s been replacing the lack of employees during the pandemic?   Or the fact that, during the pandemic, many folks are working longer hours (since they aren’t commuting) or happier working at home (and happier employees are far more productive)?

During the first quarter of 2022, productivity improved by some 4% (about the highest rate in years).  Interestingly, labor costs only increased by 1.7%, so business is not sharing its gains with their employees.

However, productivity was lower, at 2.3%, during the second quarter of this year.   Even so, it was  still double the rate of the past few years.

(NOTE: The big boon in productivity from 1996 to 2004 was due to the changes effected by the personal computing revolution.)

Here’s another wrinkle to throw into the productivity analysis.  Many of the jobs that were terminated during the pandemic were low productivity positions.  Manufacturing jobs- typically productive with all sorts of automation- is barely down.  But food service (restaurants, hospitality)- where productivity gains [without automation] are difficult to achieve- lost some 8% of their census of jobs.   So, it’s possible that these productivity improvements may not last as our economy becomes more “normal”.  Moreover, even with its new automation, those food services jobs where workers are doing more with less may not be sustainable in the long term (especially as more staff quit, never to return).

So, we’ve seen that a great many productivity improvements are directly related to the pandemic.   After all, all of a sudden we order our food (through DoorDash, UberEats, and others), which means the need for cashiers and/or servers in restaurants is greatly diminished (per unit of sales). Plus, as I mentioned above, teleworking is a big productivity gain.  (At the very least, we save the time not commuting to and from the office.)  And, of course, it doesn’t hurt that the Government has been and will be spending big money (the initial economic infusion from the pandemic, plus the new $1.2 trillion on infrastructure) on the economy.

And, let us not forget that since the pandemic, the lower wage threshold has increased dramatically from minimum wage level to $ 15.   All of a sudden, spending money on automation can be better justified when one is now replacing a $ 32400 expense compared to the $ 16125 heretofore cost for that employee.

Now, it becomes clearer that we measure productivity as output per worker hour- not output per worker dollar.

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