This destroys incentive to invest in productivity improvements, because the gains are eaten by wages. Most productivity gains in the economic sense don't come from people working smarter/harder, they come from investment in better machines and technology (capital). If you took the most productive worker today back two thousand years, their productivity would be massively reduced without access to any modern tools or equipment.
An increase in aggregate worker productivity isn't necessarily an increase in the ability of workers; most productivity gains are attributable to capital investment. If you took a productive modern worker back 500 years, they wouldn't be much more productive than the locals of that time, as they'd lack the tooling, machinery, resources, equipment and factories that magnify human productivity today. It hence makes sense that the gains from rises in productivity wouldn't all accrue to workers, as the gains result from the actions of business owners investing in better means of production, not from action on the workers' part.
This is so horribly flawed. Productivity improvements have been concentrated at the high end, and those that have occurred in low skilled jobs have been almost entirely due to technology, not to labor efficiency. Technology gains have always disproportionately been captured by the providers of capital over the providers of labor (given they are the ones who invest in said technology).
I think there's a bad assumption in here, which is that pay should keep pace with productivity gains in the first place.
I'd argue the whole point of productivity gains is that they do outpace pay. The idea is the same work generates more value. Some of that extra value can be passed back to the employee, but if all of it is passed back to the employee, then the goods produced don't actually get cheaper. If nothing gets cheaper, there's no incentive for a business to invest in tech that makes employees more productive.
The data in the piece has a lot of problems with it too, but I think the core assumption is fundamentally off-base.
So you don’t believe that worker productivity can increase? History disagrees. Do you invest your money or do you view that as somehow getting free lunch?
Current capitalist society is not structured around reducing work for everyone. Productivity can increase with new tools and technology but we don’t really seem set up to actually make that better for anyone.
Improvements in productivity are only benefitting people who own a critical mass of capital and can therefore dictate where the return on productivity gains go.
Productivity is ultimately the measure of the efficiency of human labor. The more productive workers are, the more free time they’ll have to do whatever it is they want to do to make themselves happy.
In the short term, lagging productivity can be masked by debt spending and other measures, but in the long run, the only thing that increases human wealth and material abundance is labor productivity. Everything else is illusionary.
All human societies have sought to increase labor productivity. The first stone tools, agriculture, and nuclear reactors are all productivity-enhancing inventions. Any society that opts out of seeking labor productivity will eventually see their wealth, living standards, and ultimately happiness decline. There is no way out of that trap.
And to be clear, there’s absolutely nothing good about low productivity for workers. All that means is that you’re spending more time working for lower wages, to produce things of lower value.
The reward for increased productivity is more work!
The problem for the capitalist is having to pay all those pesky people to do the work. Eats into profits. Now we can burn out 2 people and do the work that used to take 10!
In this particular case it does, though. It's very obvious when you contrast worker productivity with quality of life gains - it's clear that workers today are left with substantially less of the wealth that they produce in the economy than they did, say, 50 years ago. In absolute terms, that smaller proportion translates to some gains, but that's little consolation. If you used to earn $100, but someone stole $40 of it every time, and now you earn $200, but someone steals $120 of it every time, you're technically better off... but the guy who steals money from you is clearly reaping more benefits at your expense even so.
Why should productivity be tied to compensation? If I hire myself out to dig foundations for a living, I will be more productive if I'm provided with a backhoe versus provided with a shovel. But isn't it the business investing in productivity enhancing measures that is responsible for my increased productivity, not anything intrinsic in myself?
Productivity gains by and large do not translate into real wage gains and an improved quality of life for laborers. We have more than a century's worth of data suggesting they usually do the opposite. Yet somehow this fairytale that productivity gains are a boon for laborers persists.
Yes - this whole article and people who talk about lower productivity are missing the point.
Productivity per worker has been going up for decades. Real wages have been stagnant and we still work the same amount of hours even though we're a lot more productive now per hour worked than we used to be.
It's fine to lower productivity a bit in exchange for higher quality of life - it's been going up dramatically forever, but what's the point if we still all toil away just the same?
The increase in productivity would have to compensate the laborers for their time. This was traditionally accomplished by using laborers whose time was of very little value. The richer society is, the more difficult this is to do.
my suggestion is that productivity growth is in the hands of the people who must be productive. As they lost incentives they became less productive, but because the companies provided productivity boosters they were able to stay at the same level of productivity. In order for capital to increase productivity if this were correct they would have to give the shares of the rewards to the labor.
on edit: it seems weird to say we gave them all these tools to increase productivity, and they didn't increase productivity, but not note at the same time we removed rewards for increased productivity.
Once upon a time, a rising tide of economic progress would lift all boats in all communities all around the country.
Nowadays, we're in a bizarre reality where a 200% productivity gain among the average worker nationwide means a 1500% productivity gain in the top 10% of counties, coupled with a 55% productivity loss in the bottom 90% of counties. (Numbers generated randomly for illustrative purposes).
One would expect that productivity-boosting technology such as computers, robots, cell phones, and various forms of automation would increase productivity for nearly every person on every square inch of this planet. That is no longer the case, and it is something I plan to study in depth at a later date.
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