Declining economic productivity relates to a loss of motivation for workers : The Indicator from Planet Money Labor productivity, historically the engine of American economic supremacy, is faltering. And even in a tight labor market, some workers are feeling less valued by their employers than ever before.

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Productivity and workforce whiplash

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC'S "WAKING UP TO THE FIRE")

WAILIN WONG, HOST:

This is THE INDICATOR FROM PLANET MONEY. I'm Wailin Wong, and I am here with an OG indicator making a triumphant return to the program, Stacey Vanek Smith. Hello, Stacey.

STACEY VANEK SMITH, BYLINE: Hi, Wailin. How's it going?

WONG: It's going great. We miss you.

VANEK SMITH: Well, thank you. It's really, really nice to be back. And of course, I want you to know I did not come empty handed. I would never do that. I come bearing indicator.

WONG: And a fruit basket?

VANEK SMITH: Next time - who can afford a fruit basket with this inflation?

WONG: In this economy?

VANEK SMITH: But no. In fact, the indicator that I brought, I think is one of the biggest stories happening in our economy right now - not just an indicator but the indicator, like, the indicator of indicators, which is the relationship between workers and employers. This has been playing out in a bunch of different ways all year. There was the great resignation, the rise of unions. There was Striketober (ph), the working-from-home standoff, quiet quitting, of course.

WONG: Wait a minute. Is your indicator of indicators quiet quitting?

VANEK SMITH: No, it's not quiet quitting. I would not do that to you, Wailin.

WONG: (Laughter).

VANEK SMITH: Although, you know, it's not not quiet quitting. I will say that. So the indicator I'm thinking of is productivity. So economists are obsessed with productivity, and recently we have seen the biggest drop on record for U.S. productivity. And if that keeps going, it could really mean a world of hurt.

WONG: So today on the show - productivity - what it is, why it's so important and what will happen if it keeps going down.

(SOUNDBITE OF MUSIC)

VANEK SMITH: Productivity - we should talk about what it is.

WONG: Yes. Let's jump in.

VANEK SMITH: So productivity - I feel like it sounds like it means hard work, you know? Like, Wailin, you're so productive. That is not what economists mean when they say productivity. Productivity is a measure of how much stuff companies produce for each hour we work. And this year that number has seen the biggest drop on record.

WONG: Now, they've been tracking productivity since the '40s, and it's been basically increasing for all of those decades. Julia Pollak is an economist with ZipRecruiter. She spends all day talking to companies and workers, and she thinks what's going on is this.

JULIA POLLAK: Basically, the connection between effort and reward got broken during the pandemic.

WONG: Julia says to understand what's going on in the workforce, it's helpful to go back to the beginning of the pandemic when companies laid off nearly 20 million people in a matter of weeks.

POLLAK: So I think many people have responded to that experience by saying, I'm never going to care as much about a job again because they don't care about me, and they'll just drop me if economic winds change.

VANEK SMITH: So I talked to Brian Bouser. He is 22, and he was one of the millions of people who lost his job in the beginning of the pandemic. At the time, he was a student at the University of Louisville, and he says, you know, that experience of lockdown and the mass layoffs and all that, it really changed the way he thought about his professional life.

BRIAN BOUSER: I used to believe that, you know, I could get a job and be secure that way. But the pandemic especially, like, they shut down the whole country for a year. So it's like, you know, I no longer believe that a job is going to make me secure.

WONG: But then the job market came roaring back. Companies started hiring as fast as they could. They couldn't fill the jobs they had. So they started jacking up wages to lure in workers. Brian got lured in by a rental car company. It had flexible hours that worked with his class schedule.

BOUSER: And I really liked it. It paid pretty well, and I was making, like, $25 an hour.

VANEK SMITH: Brian would drive the cars to get cleaned and back to get rented once they were cleaned. It was enjoyable for him. He really liked the people, did well at the job. But one day in the middle of art history, he got this text from his boss.

BOUSER: I was sitting in class, actually. I got that text, just being like, hey, the pay is going down to 13.50 an hour.

VANEK SMITH: Not a text you want to get, right? I mean, his pay was basically getting cut in half with no explanation. And he immediately started texting all of his coworkers, and they had all gotten the same text.

BOUSER: So I was like, what the heck, you know? Two minutes ago, I had a nice, secure job, and everything was all right. It felt like an insult.

WONG: This does feel really weird, though, because wages have been rising, right? So this is very out of the ordinary.

VANEK SMITH: You're absolutely right. Companies have had a really hard time finding workers. So that's been pushing wages up. It didn't make sense at all. But when I talked to Brian about this, he said, you know, it made as much sense as anything he'd experienced in the job market. You know, companies, he said, you know, they just do whatever suits them in the moment. And workers just, you know, they kind of have to go along with it. They're just the casualties of that.

WONG: And economist Julia Pollak says this job market whiplash of the last couple of years has created a kind of cynicism among workers. One day, millions of workers are losing their jobs. The next, there are more jobs than available workers. Employees are asked to cover for multiple open positions. Companies are desperate for warm bodies. That part came with its own issues, Julia says.

POLLAK: The leader of a major restaurant company recently told me that before COVID, their restaurants had a one-strike-and-you're-out policy when it came to staff missing work without notice. Now, it's more like a 10-strikes-you're-out policy.

VANEK SMITH: Ten strike?

POLLAK: Yeah.

WONG: Julia points out that layoffs and firings have been near record lows.

VANEK SMITH: Exactly. And the message to workers in all of this, you know, it's, like, work your heart out for your company, why would you do that? Nothing is going to happen if you coast, right? I mean, if you work your heart out, you will end up covering for a bunch of unfilled jobs and training a bunch of newbies. Newbies, by the way, who are probably hired at a higher wage than you are making. Also, if the economy goes south like it did in 2020, you're just going to get sacked along with everybody else no matter how diligent you are or how much hard work you put in.

WONG: That is really bleak.

VANEK SMITH: I know. I know it is bleak, but it is a message that's really been resonating with people.

(SOUNDBITE OF TIKTOK VIDEO)

AARON KNIGHTLEY: Be the last one in and the first one out and do as little as you can for maximum pay. That's honestly what I would do, and that's controversial. A lot of people would say...

VANEK SMITH: This is a TikTok from business and finance blogger Aaron Knightley. And we learn it has been watched by more than 20 million people.

(SOUNDBITE OF TIKTOK VIDEO)

KNIGHTLEY: The fact is, no matter how much people say, but I'm really passionate, and I love my job, believe me, the CEO is not bothered by you. You're just a number. But when...

VANEK SMITH: You're just a number. I mean, like you said, Wailin, bleak. And economist Julia Pollak thinks this sort of bleakness, this kind of mindset has created a kind of economic ennui among workers, an ennui that has started showing up in the numbers.

WONG: And specifically showing up in the productivity numbers - they are down more than 4% this year. And productivity had been growing pretty steadily since the '40s. That's when they first started keeping track. And economists pretty universally agree that falling productivity, it is really not good.

POLLAK: Productivity is extremely crucial to improving living standards and well-being because it means that our children and children's children may, you know - may not have the richer world with better medications and better technologies that they could have.

WONG: When productivity falls in a country, Julia says, the economy shrinks. Quality of life goes down. Opportunity dries up, and ideas go elsewhere. It is a bad cycle. Julia is quick to point out that a lot of things could be affecting productivity numbers. And when it comes to services, it can be tricky to measure. Still, Julia thinks this ennui, this emotional pullback from workers, it's in there, and she worries that it is a very hard mindset to change.

POLLAK: Once you've had that sort of Ecclesiastes moment of thinking that everything's futile and pointless...

VANEK SMITH: Oh, she just went biblical.

WONG: We are getting biblical.

VANEK SMITH: I know (laughter).

WONG: Ecclesiastes is this book in the Old Testament that begins - meaningless, meaningless, everything is meaningless.

POLLAK: ...How do you get them back to feeling that, if they work hard, it'll pay off?

WONG: Twenty-two-year-old Brian Bouser doesn't feel like he will get back there. The more he thought about all of the time and energy he'd spent working at the rental car company, the more meaningless it felt.

BOUSER: Like the job was, basically, you drive for six hours a day in a circle. And at the end of it, you've just gotten nowhere.

WONG: All right. Roll the credits. We can't say it any better than Brian did here.

(LAUGHTER)

VANEK SMITH: Brian Bouser's mic drop.

WONG: Brian says his conclusion is that loyalty has become a liability in the modern workplace.

BOUSER: You know, you used to be able to go to a company, and you work 40 or 50 years. And at the end, they give you your pension and a gold watch. And these days, if you stay at a job longer than two years, you're underpaid compared to your peers. You can look it up.

VANEK SMITH: You can, and it's true. Brian, though, he did find a light in the darkness. He did find a workaround. He got his real estate license and has gone to work for himself. You know, he can buy his own gold watch.

(SOUNDBITE OF MUSIC)

WONG: This episode was produced by senior producer Viet Le. It was engineered by Gilly Moon. Dylan Sloan checked the facts. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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