We’re Working Harder Than Ever, So Why Is Productivity Plummeting?

by Rana Foroohar,

Most of us feel more productive than ever. ­Between wi-fi and mobile data, smartphones and apps that let us do every­thing from hail a ride to order groceries, we can get more done, in more places, more of the time—­whether we want to or not. So why does the Bureau of Labor Statistics (BLS) keep telling us that’s an illusion? Not only is productivity in America declining, but it’s been falling for over a decade. Even during the booming mid-2000s, according to the government’s statisticians, productivity began to flatten and fall. Since economic growth is the product of productivity and demographics, the BLS numbers are a big deal. With birth­rates falling and immigration down, productivity needs to go up—or we’ll soon be worse off economically than our parents.

The slowdown in productivity is now widely seen as one of the big factors in America’s tepid economic recovery. (The U.S. is not alone here: the number of other countries growing by less than 2% a year has been steadily rising over the past few years, as productivity decreases.) Why is productivity down? Theories range from the retirement of highly skilled baby boomers to a lack of productivity-­enhancing investment by private companies to a failure to correctly measure productivity itself.

One of the most provocative reasons has been put forward by Northwestern University’s Robert Gordon in a new book, The Rise and Fall of American Growth. According to Gordon, the digital-­technology boom just isn’t all it’s been cracked up to be—­especially when compared with world-­beating shifts like indoor plumbing, electricity and the combustion engine.

But in a nutshell, Gordon argues that the Industrial Revolution at the turn of the 19th century had a much bigger effect on economic growth than the PC revolution in the 20th.

What we know for sure is that America’s biggest run-up in productivity happened from 1945 to 1973, when there were major public and private investments in education, infra­structure and worker training. Similar investments, which have been proposed by Democratic presidential candidate Hillary Clinton, could also have the effect (as they did then) of raising wages, which would bolster demand, giving companies more reason to ­invest—­creating a virtuous cycle of productivity growth, wage growth and economic growth.

There is one bit of good news: nobody is suggesting that productivity isn’t rising because individuals aren’t working hard enough. On the contrary, most economists believe that American blue and white collar workers alike are firing on all cylinders. What we need are new tools and training to make the work that we do count more.

More From TIME Magazine: