Why is Worker Productivity Falling Off? We Are Asking the Wrong Question

"Productivity" is a word that gets thrown around often, but what does it really mean?

It's a term that economists, business leaders, and politicians use to describe how much work gets done in an hour. The problem is they are asking the wrong question to judge productivity—and getting the wrong answers.

The way we measure productivity helps explain why it fell in 2022

Productivity fell by the most since 1947, according to data released by the U.S. Bureau of Labor Statistics (BLS). Productivity, which measures real output per hour worked.

There are several ways to measure productivity, but at its most basic level, the amount of output produced by a worker is based on two factors: how much they actually produce and how much time they spend working.

Productivity in this case was measured by dividing the output of goods and services by the total hours worked on them (so if more people work harder or faster then their output per hour rises). In other words, you can have 100% productivity if you produce more than normal—or you can have 100% productivity if you work longer hours than usual.

Despite the current plummet, productivity shot up during the beginning of the pandemic.

Productivity actually surged during the pandemic, rising at a rate of 10% in spite of widespread absenteeism, illness, death, loss, fear, and grief.

In fact, there are many reasons why productivity can increase during a pandemic.

However, this temporary boost in productivity is not evidence that employees were unproductive before (or fall after) the pandemic. It’s more likely due to people working faster than usual when they were able to work.

Economists have several theories about why we're seeing a drop in productivity this year.

In the near term, we have been trained to think that productivity is a straightforward measure of how much value is created by each hour worked. This metric includes the number of tasks completed, how efficiently those tasks were completed, and any other improvements in performance. There is still no consensus about why productivity is falling.

But economists have several theories about why productivity might be falling off:

• More working hours mean less time for people to work smarter--it’s harder to focus when you’re tired, overworked, or burned out. In other words, we may be spending too much time on less-important tasks because there are so many urgent ones that need doing right now.
• If you believe that workers are working harder (but perhaps not smarter), then it stands to reason they could be doing more with fewer resources--which would raise productivity levels overall but not necessarily across individual workers' jobs (at least in terms of efficiency).
• A third theory is that there are more workers doing less valuable tasks. If a company hires someone to do tasks that don’t add value, then the sum total of productivity across all jobs will be lower than it could be. This is a problem for businesses because it makes them less competitive than rivals who focus on improving their processes and removing unnecessary work.

Productivity is falling because of low employee engagement and disengagement, which are both caused by presenteeism (people coming into work sick or sleep-deprived). The best way to improve productivity is not by cracking down on people who are performing poorly (which will only drive more employees away), but by looking at what you can do as an organization to improve engagement and performance overall.

Employees may have slowed down, knew they wouldn't be fired, or quit for more relaxed jobs due to labor shortage.

Sinem Buber, an expert on motivation and productivity management, developed two theories about why workers slow down. In her book "The Cube of Ambition: How to Engage Your Employees," Buber suggests that workers are more motivated when there's a clear reason for them to work harder. But when an employee doesn't feel like there's much reward in working extra hours, or when they feel like there won't be any repercussions for slacking off (like getting fired), then there will be no incentive for them to do more.

Buber also talks about a phenomenon called "cubed ambition." When you're faced with multiple goals at once—or when you have multiple bosses telling you what needs to get done—it can be hard enough just keeping track of everything on your plate without worrying about whether or not anyone is going to notice if you don't finish everything today (or ever).

You can see how this leads to burnout (and slowing down). It can be hard to feel like you're making progress, and this can lead to a feeling of hopelessness about ever getting anything done. And that's when you start saying things like, 'I don't care if this gets done; it's not my problem.'

The New York Times and The Atlantic also talk about how too much choice can lead to paralysis. When there are so many options in front of you, it can be hard to decide which one will be the best one for your needs right now.

People's values have changed due to the pandemic.

Due to the pandemic, people's values have changed. People are more focused on family, friends, time, and work that fits with their values. They are less focused on work itself and less likely to stay in jobs that do not align with their values. There has been a realignment in the work-life balance equation.

People have always had an inherent desire for a greater purpose in life, but it has become more important now because of the pandemic. People want to be able to make a difference in others' lives as well as their own. They're making more time for volunteering and hobbies.

People have also become more aware of the importance of health and wellness, as well as their own mortality. They are now focusing on eating better, exercising more often, and taking care of themselves so they can live longer. This is especially true for people who work in professions that are likely to be affected by the pandemic such as teachers, doctors, nurses, and first responders.

Is this measure of productivity even the right way to talk about productivity?

While these economists raise thoughtful points, I'm not convinced we're talking about productivity the right way, especially post-pandemic.

This may sound ridiculous to some economists, but there's a strong case to be made that we've been measuring worker productivity all wrong.

We're so focused on how hard people are working that we've lost sight of whether they're working smartly or effectively. And when you look at it this way—when you measure productivity in terms of output per hour worked—you see that worker output has actually been declining since 2006.

Companies should focus less on outputs and more on outcomes. With more autonomy and fewer restrictions on how they go about getting their work done, employees will be able to create better products or services because they understand how to do their job better than anyone else. Empowering your workforce makes them feel valued and increases the likelihood that they’ll be loyal to you—and that can only benefit everyone involved.

Presenteeism, disengagement, and "quiet quitting" have increased recently, while "productivity" has decreased.

In recent years there has been a marked increase in what economists call “presenteeism” and “disengagement” (i.e., workers who come to work but don't perform well).

According to research from Gallup:

• Presenteeism is when people come into their workplace but do not perform well because they are unengaged or distracted by non-work-related issues such as family problems or financial hardship;
• Disengagement refers to employees who may not show up for work at all without informing anyone; and

What does this have to do with productivity?

Gallup estimates that this disengagement costs U.S. companies $450 billion per year! So why focus on worker productivity (outputs) or being present in an office from 9 to 5, when we could be focusing on employee engagement and achievements (outcomes)?

It's high time to reframe productivity.

As a manager, you may be feeling pressure from your company to increase productivity. But here's the thing: there's no reason to obsess about some arbitrary measure of "productivity." Instead, we should reframe that question and ask if we're doing everything, we can do to maximize performance in our organizations.

While many see this as a problem with the workforce, it's really more of a management issue. The most productive workers aren't necessarily those who work hard; they're those who are given an opportunity to succeed by managers and leaders who value their contributions and put them in roles where they can grow their skillset - and so on. Of course, we can’t ignore productivity, but obsessing about measuring it to the point of destroying culture and purpose is also pointless.

Managers and decision-makers should tackle the real issues, not employees.

Instead of framing the issue as a problem to be solved, focus on what you want to achieve. This reframing will help you get out of your own way and make it easier for you to overcome your fear of failure.

The second step is making sure that all employees have key roles in contributing to their organization's success. Employees can't be effective if they are not involved in decisions that affect them (and therefore not feeling valued).

The third step is focusing on what we need from our leaders: honest feedback, effective communication, clear direction, and empowerment.

Lastly, managers must model how they'd like their teams or employees to behave -- whether it's following through with commitments or offering constructive criticism when needed -- so that people know what kind of behavior is expected from them as well.

Post-pandemic productivity: A complex problem with a human solution.

The question of worker productivity is a complex one. The answer lies in how we think about human beings and the way they work. We need to look beyond what can be measured by a stopwatch or an hourly wage and ask why people work at all.

Workers are not just cogs in a machine. They have brains and hearts, and their productivity is not only about how many widgets they can crank out in an hour. It's about how well they work together with others to create something that is both useful and consequential.

If we want employees to be productive, give them something meaningful and challenging to work on.

If we want employees to feel valued and appreciated, let them know how their work impacts the company's success.

If we want employees to feel motivated, take time to talk with them about what's going on in their lives outside of work and show interest in those things.

And if we want people to be happy at work, make sure they're getting what they need from their jobs (such as financial security) while providing opportunities for growth within their roles.

edited: an earlier version of this post included a bullet point about quiet quitting that had an incorrect definition (and was a holdover from an earlier draft).