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Could your Facebook habit or online shopping be holding back the American economy? Some economists think they could be contributing factors to a larger problem. In the past decade, the productivity of U.S. workers has stagnated. And over the past 12 months, it's actually declined. As NPR's John Ydstie tells us, that's a big deal.
JOHN YDSTIE, BYLINE: OK, Audie - just a minute. I'm right in the middle of buying some window blinds online - sun keeps shining on my TV. OK - just entering my credit card data now. Done.
Where were we? Oh, right - is shopping and socializing online while at work cutting into the productivity of U.S. workers? We will get to that issue in a minute.
But first, I asked Princeton economist, Alan Blinder, what he thinks is holding back productivity. He says, it's not totally clear, but productivity is really important.
ALAN BLINDER: That is the well from which wages come, and wages are, for most people, the well from which their standard of living comes.
YDSTIE: Blinder says, the ability of U.S. workers to increase their output per hour has been a pillar of U.S. economic growth. Innovations, like these power textile looms - preserved at a national park in Lowell, Mass., boosted the productivity of workers in the 1800s.
Blinder, a former vice chair of the Federal Reserve, says during much of the last century, U.S. workers increased their hourly output by about 2.3 percent a year. Doesn't sound like much, but at that pace, he says, wages and standards of living rise rapidly.
BLINDER: It takes about a generation or so to double your income.
YDSTIE: So for much of the last century, each new generation of Americans had a standard of living roughly double what their parents did. But for the last 10 years, productivity growth has been disappointing. And in the past five years, it's grown at a record-slow pace, less than half a percent a year.
BLINDER: If this doesn't change, our standard of living is going to barely grow over the next 30 years. That's a horrible prospect.
YDSTIE: Blinder says one big reason productivity hasn't been increasing recently is because businesses aren't investing enough in things that make workers more efficient, like new tools in buildings. You'd think companies would be doing that, he says. After all, in recent years, U.S. firms have made record profits. They've just been slow to reinvest them.
BLINDER: I'm kind of baffled. I've been scratching my head a lot to try to figure out what's going on, and I haven't succeeded.
YDSTIE: But economist Robert J. Gordon of Northwestern University thinks he knows the answer. He says companies are not investing because there are no new game-changing innovations like the ones that spread through the economy 100 years ago.
ROBERT J. GORDON: Electricity, the internal combustion engine, chemicals, the conquest of infectious diseases.
YDSTIE: And let's not forget air travel.
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UNIDENTIFIED MAN: You are now free to move about the country.
YDSTIE: Just think about it. The speed of air travel hasn't increased in over half a century. Business investment in these great innovations raised the productivity of American workers in the last century up until about 1970.
But you might ask, what about computers and the internet? Gordon says, absolutely, they boosted U.S. productivity from about 1995 to 2005. But he says...
GORDON: ...The main benefits of the IT Revolution have already occurred. There just are not as many fruitful ways to invest.
YDSTIE: As evidence, Gordon points out that since the late 1990s, investment in computer equipment has fallen by about half.
GORDON: My diagnosis is that people have the computers they need.
YDSTIE: It's not that Silicon Valley isn't busy creating new things, he says.
GORDON: I'm not saying there's no innovation. I'm talking about the impact of it.
YDSTIE: So innovations, like apps for your smartphone, may be making life easier or more fun, says Gordon. But they're not making workers more productive.
And Alan Blinder says that they may be eroding productivity.
BLINDER: I'm thinking of things like Facebooking when on the job and other things like that.
YDSTIE: Actually, Professor Gordon argues there's no definitive evidence that personal internet activity on the job is undercutting productivity. He says it's just as likely people are working more because of the web. For instance...
GORDON: People are constantly exposed to work-related email away from the office.
YDSTIE: But that doesn't change Gordon's basic belief that a dearth of breakthrough technologies will drag down productivity growth for at least the next 25 years. He says there are some promising advances like artificial intelligence or self-driving vehicles. But, he says, they are decades away from making a big economy-wide impact.
John Ydstie, NPR News, Washington.
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