American Productivity Hasn’t Been This Bad Since Obama Was Smoking Crack

According to a Thursday report released from the Department of Labor, worker productivity plummeted far below expected levels for the third quarter of the year.

The July to September period saw a mere 7% increase in total hours worked with seasonal adjustments, and a total output decrease of 1.7%.

The report marks the worst decline in productivity since 1981’s second quarter, which saw a 5.1% decline. Economists had predicted a milder 1.5% loss and the latest report dampens spirits that economic recovery will ever happen during Biden’s tenure.

According to data from this year, the first quarter saw an output increase of 8.1% followed by 8.5% in the second quarter as COVID-19 restrictions eased. The total productive output far outpaced growth in terms of hours worked.

Compared to last year, output is still up 6.1% and hours worked improved by 6.7% though there’s still a 0.5% productivity loss, the largest annual decline seen in over a decade.

The productivity slump is likely reflective of the supply shortages that have ravaged businesses and prevented them from running at peak capacity. Labor scarcity is contributing to the issue as well, with existing workers forced to endure longer hours to compensate for a general lack of hands. The consequences are twofold: tired, overburdened workers lose productive output and labor scarcity results in less productive workers getting hired anyway.

Manufacturing labor dropped by 1% in the latest report despite a 5.7% output increase and 6.7% hours increase. For durable manufacturing, the numbers are even more exaggerated, with 9.9% increased output and 8.4% hours worked. Nondurable manufacturing saw just the opposite, however, with a 2.6% productivity decline.

Compared with last year’s third quarter, manufacturing still managed to improve by 2.4% overall, with 3.8% increase in hours and a total output improvement of 6.3%. Divided, durable productivity increased 3.2% on the whole, with 6.8% output gain accompanied by 3.5% increased hours. Nondurable productivity managed to improve by a slim 1.3%, with output of 5.8% and hours increased by 4.4%.

The long term figures show a picture of the way in which the pandemic affected the economy. Hours worked are still behind their pre-pandemic levels, with output improved but far below target. Total manufacturing hours are dramatically below their pre-pandemic figures despite output managing to improve by 4.6%.

Author: Steve Price