Yet another sign of the sputtering economy---American worker productivity is on a steady decline. In fact, 2022 has seen a drop in U.S. worker productivity for the first three quarters of the year, the first time that has happened since 1982. That included the largest decline in 75 years during the first quarter, followed by the largest year-to-year drop ever in the second quarter.
Ray Perryman, economist with The Perryman Group, says these numbers are primarily a function of the state of the economy coming out of the pandemic. "Productivity is simply economic output divided by labor," he tells KTRH. "In the first two quarters we had declines in (Gross Domestic Product) and not much of a gain in the third quarter, while at the same time all of this rehiring was taking place in a very rapid way."
Most economists agree the fall in worker productivity has been coming down the pike for awhile, but the pandemic accelerated it. "There's about ten million job openings in the economy right now, and we're having a hard time filling those jobs," says Perryman. "And that has to do more with demographics than anything else...we're just simply not making as many people as we used to."
Indeed, the U.S. birth rate has fallen to historic lows, leaving fewer young people to enter the workforce. At the same time, many in the younger generations don't have the same work ethic as their parents and grandparents. As for those parents and grandparents, they are leaving the workforce at a rapid rate. "Baby Boomers are still in retirement mode, and a lot of people are entering the workforce later than they used to," says Perryman. "We've had probably about 500,000 to 600,000 people who have left the workforce."
With fewer people being born, entering the workforce, or being willing to work as hard, this trend is likely to continue. "In all probability we're going to be talking about a tight labor market for at least the next decade or so," says Perryman.
Photo: Getty Images/Hero Images