Listening to one-way cell phone conversations has now replaced people watching as my favorite NYC activity. This is not really by choice. It is more a necessity, because there is no escape from it. I marvel at how animated people can become and how long they can engage in conversation, especially when they know everyone around them can hear. It is like my own personal barometer of narcissism in the city.
Cell phones have altered our world. So I wasn’t surprised to read a stat included in a working paper on productivity by the Economic Cycle Research Institute:
Americans check their phones an average of 46 times a day.
The authors of the paper included this bit of data to bring home the unassailable point that IT advances have not made Americans more productive. Rather they use it as a supporting point for our productivity slowdown.
I like to be productive. Nothing pleases me more than a morning run and putting in a hard day at work. America likes to be productive too. But recently we seem to be having a tough time of it. Economists and pundits have fingers-crossed on reaching a sustained rate of 2% growth. Let’s just call it lowered expectations or the new abnormal.
Why is it happening?
Tanner Daniel and David Brown offer some fresh thinking on productivity. They have five, plausible explanations for it:
- Misallocation of labor
- Decline in business start-ups
- Government misspending
- Tech innovations not captured using traditional measurements of productivity
- Concentration of wealth by the 1%
Number five speaks to my gut feeling that something is really imbalanced in the way the 1% exercises economic and political power, to the detriment of everyone else. This was also Joseph Stiglitz’s feeling which he documented in his 2012 book, “The Price of Inequality.” When people already at the top of the food chain amass gains, they hoard it, thus contributing to slowdowns in growth and productivity. Case in point, companies buy back stock, instead of reinvesting in labor. Labor sees no wage gains, so they cut back personal spending.
But there are ways of fixing this productivity pickle we have gotten ourselves into:
- Retrain workforces so they are more skilled and can negotiate higher wages
- Encourage capital investment by companies to spur long-term growth
- Increase total factor productivity through new software or organizational structures that add efficiencies to company operations
So the question is when will the pain of slow productivity be sharp enough to compel business and policy leaders to act? The slow crawl forward of our economy is hurting workers and families. Eventually when they cut back on personal spending, things will get worse. Last I checked, companies need consumers to buy stuff. Wage stagnation, job insecurity, and the demoralizing CEO-to-worker pay gap does not put people in a shopping mood. This has broad implications for the economy. The Millenials have been delaying household formation and other adult-ish activities that beget big purchases like houses, cars, and baby carriages. They can still afford cell phones though which may be making everything worse.