Economists measure “productivity”, which is a study of the relationship between labor and value. It usually goes up. But it’s been flat for ages. Why?
You might blame the meager growth in productivity on the recession. But that’s been over for a while, and the numbers are still pretty poor. So what’s going on?
First, a quick review. The economic definition of productivity is the relationship between improvements in inputs and outputs. As explained in this cute video from the BLS, if you get more done in less time without spending any more resources, productivity goes up.
The measurement process is complicated, but it certainly doesn’t seem like we’re less productive. As a TIME magazine article explains:
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.
There are lots of theories about this, and many of them are political. In past eras of significant productivity increases, large firms did not tend to hoard cash as is done more commonly today. Likewise, more government spending occurred on infrastructure and training. More manufacturing was done in the United States back then as well, where there’s more apparent opportunity for research and development than in the service sector where most Americans work today. These could all be factors.
And furthermore, maybe the tools that the experts use are out of date. After all, we don’t really work and live the same way as people did a generation ago. So perhaps that’s the main reason: we’re just measuring productivity poorly.
But to me, there’s a more subtle and more powerful reason that productivity isn’t really growing, and that has to do with the distribution of opportunities for enhancements. I’ll explain.
In the 19th century, people started moving out of the fields and into the factories. The workers were making more money, but what really produced more was the machines that these workers were operating.
It didn’t matter all that much which worker you were and which machine you were using. A weaving machine or a stamp press or anything else on the assembly line is fast mostly because the overall system is fast. That meant more value produced with less labor, which meant more productivity.
In the 20th century, productivity improved in part due to the automobile. While some people were certainly better drivers than others, basically everyone had the same productivity improvements from owning or having the ability to operate a vehicle. You could get places faster, but so could everybody else.
But in the 21st century, the situation is different. Sure, modern professionals all have access to basically the same technology: computers, smartphones, and the Internet. But what’s important to note is how dramatically more productive some people are than others.
This hasn’t been true in the past. You wouldn’t see one worker running a sewing machine in a factory at five times the rate of the people next to them. The very best truck drivers, taxi drivers, and commuters are still limited by the speed limits and the capacities of their cars. A skilled computer user, however, is unbelievably more effective.
The research on computer programmers is especially compelling. According to noted software engineer Steve McConnell:
As I reviewed these citations once again in writing this article, I concluded again that they support the general finding that there are 10x productivity differences among programmers. The studies have collectively involved hundreds of professional programmers across a spectrum of programming activities. Specific differences range from about 5:1 to about 25:1, and in my judgment that collectively supports the 10x claim. Moreover, the research finding is consistent with my experience, in which I have personally observed 10x differences (or more) between different programmers. I think one reason the 10x claim resonates with many people is that many other software professionals have observed 10x differences among programmers too.
Great computer programmers are ten times more productive than their least-productive-but-still-employed colleagues. And these people know quite a bit about how computers work. It stands to reason that non-programmers who sit in front a screen every day have an even greater range than just 10x.
If you don’t believe that the person in the next cubicle might be ten times more productive than you, ask them if you can watch them work.
And then once you see what they can do, ask them to teach you something.