Slow Growth of Labor Productivity

The Bureau of Labor Statistics has published a report finding that labor productivity has grown more slowly after the last recession–in other words, during the Obama administration–than during any other recovery period in recent history. Normally, the response to a recession is for private companies to clean out all of their least productive programs, and the people who worked in those programs find more productive jobs elsewhere. The result is a growth in labor productivity during the recovery period.

Much of Obama’s “stimulus” program, however, was aimed at protecting jobs during the recession, so many less-productive programs managed to survive and the people working in those programs didn’t have the (admittedly stressful) opportunity to find more productive work. Other parts of the stimulus program involved funding of less productive projects that normally wouldn’t have been funded. The result was a slow growth in productivity.

We can see the difference between government and private productivity by comparing the private rail industry with Amtrak and the transit industry. As shown in the table below, transit employees have more than doubled while ridership has grown by just 50 percent, so employee productivity has declined by more than 30 percent.


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Transit19802014Change
Employees187,000402,977115%
Pass. Miles (millions039,85459,64450%
PM/Worker213,123148,008-31%
Amtrak
Employees21,41619,300-10%
Pass. Miles (millions04,5036,65448%
PM/Worker210,263344,76664%
Class 1 RRs
Employees458,994166,209-64%
Ton miles (millions)572,3091,851,000223%
TM/worker1,246,87711,136,581793%

Amtrak has done better, with a 10 percent decline in employees serving a 48 percent increase in passenger miles, for a net 64 percent growth in employee productivity. However, this is dwarfed by the major freight railroads, which have more than tripled ton-miles while reducing employees by nearly two thirds, resulting in employee productivity growing by nearly nine times.

There are a variety of reasons for these differences, but one of the most important ones is that the private railroads were able to overcome union pressures to keep people on the payroll whose jobs were obsolete. Amtrak has less flexibility and the transit industry has even less. If the Trump administration wants to increase America’s productivity, it needs to rely on the private sector more and the public sector less.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

2 Responses to Slow Growth of Labor Productivity

  1. paul says:

    I agree with the Antiplanner that the Obama productivity lagged. However I did not see a coherent strategy from the Republican party except to oppose all Obama’s policies. A good example of this is the Affordable Care Act (ACA, also known as Obamacare) . Republicans had six years to introduce replacement legislation and instead wasted taxpayers money introducing repeal legislation knowing full well Obama would veto that legislation. Now Republicans have the power to replace the ACA we find they have no coherent plan.

    The same for greenhouse gas emissions. Rather than continuing to question all major science organizations conclusions that greenhouse gas production is a long term problem for the Earth, Republicans should concentrate on requiring any claims of green house gas decrease to have a cost per tonne listed. No cost per tonne listed for a project claimed to lower greenhouse gases? No funding.

    We should also require that higher productivity should result in higher wages for those increasing their productivity. The reason Trump and Sanders were so popular is that they spoke to the many Americans who find themselves having to work harder for a dropping standard or living even as upper management pays themselves a higher wage. It is time for both parties to support higher productivity with reasonable higher wages as a result.

    In transit a reasonable response may be to experiment with independent Uber drivers to be paid to run transit service when demand is low. I attend a music session on Sunday nights and was surprised to discover that the last bus on a Sunday night passes at 12:15am. Some low income people attending take this bus, but it is largely empty. Why not start paying a Uber (or similar) driver to run this service, for the same rate of pay as the bus driver now gets? The smaller car would save the cost of running the bus, the driver would make good money, the social benefit would still be there. Everyone wins. That is the type of policy the US should be pursuing.

  2. CapitalistRoader says:

    Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.

    In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

    Today, the solitary inventor, tinkering in his shop, has been over shadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

    The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

    Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.
    President Dwight Eisenhower, 1961

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