Home > Uncategorized > Where’s the productivity growth? The Bureau of Labor Statistics can’t find the robots!

Where’s the productivity growth? The Bureau of Labor Statistics can’t find the robots!

from Dean Baker

Manu prod

Source: Bureau of Labor Statistics.

We hear endless stories in the media about how the robots are taking all the jobs. There was a new rush of such stories after the release of a study by Daron Acemoglu and Pascual Restrepo, which found that robots were responsible for a substantial share of the job loss in manufacturing in the last decade. (For example, this Bloomberg piece by Mira Rojanasakul and Peter Coy.)

However, there remains a very basic problem in the robot story, it is not showing up in the productivity data. To step back a minute, robots are supposed to replace human labor. This means that for the same number of hours of human work, we should see much higher output of goods and services, since the robots are now adding to total output. This is what productivity growth means.

So if robots are having a large impact on jobs, then we should see productivity growth going through the roof. Instead, it is falling through the floor. It has averaged less than 1.0 percent annually in the last decade. This compares to an average growth rate of 3.0 percent in the decade from 1995 to 2005 and also in the long Golden Age from 1947 to 1973.

Strikingly, productivity growth has been especially bad in manufacturing, the place where we see the greatest use of robots. Here’s the picture since 1988, the period for which the Bureau of Labor Statistics (BLS) has a consistent series.

Over the last four years productivity growth in manufacturing averaged less than 0.2 percent annually. This compares to rates that often exceeded 4.0 percent in prior decades. This slowdown is especially striking since the rate of installation has increased sharply in recent years. According to data cited in the Bloomberg piece, we’ve added an average of 22,000 robots a year in the last three years. This compares to a peak of around 16,000 in the years before the Great Recession.

If robots are leading to massive job loss, then we should be seeing some serious gains in productivity. Instead the opposite has occurred. It’s awful to let a good story be ruined by evidence, but it just doesn’t seem that the use of robots will go far towards explaining the weakness of wage and job growth in the recovery.

  1. May 15, 2017 at 10:14 am

    In line with Boskin Commission, Martin Felstein (http://bit.ly/2pNEhw4) addressing the productivity question alleges overvaluation of prices and as a consequence, an undervaluation of output. [Boskin Commission recommend susbtracting the amount of cost atributed to the increased quality of products from the cost of living: price increases without that extra quality supplied – due to productivity improvement -, would be lower. In this way the existing real wage would be exactly the same as before a productivity increase (Though the real case is the preexisting goods and services with less quality does not exist anymore: now there are only new product with allegedly more quality that nobody asked for) Curiously, the same reasoning is not applied to profits!]
    The problem lies in measuring produced wealth through prices (or bv labour values!) which according to KM hs to be measured by the availability of goods and services.
    It is plainly a sraffian simple model the one that in a case of increase of productivity “allows” for a coincident: increase of wage, increase of profit, decrease of prices.
    Robots may produce more wealth but not necessarily more amount of volume of sales.

  2. Ralph Rosenberg
    May 15, 2017 at 3:31 pm

    Production measured by dollar value, right? Deflation would decrease numerator even if output grew.

  3. May 17, 2017 at 9:56 am

    Just for some alternatives to consider, these are some of the forecasts from the planners and futurists I work with daily.
    • 3 out of 4 vehicles will be autonomous by 2040.
    • In the years 2025 to 2030 will see a convergence of mobility service providers and the deployment of large fleets of autonomous vehicles replacing taxi, bus and trams drivers in cities across the globe.
    • Autonomous vehicles will save more than $1 trillion a year, much of that due to significantly reduced traffic accidents, and those savings will go directly into higher living standards for Americans.
    • When autonomous vehicles become commonplace, parking will no longer be required.
    • Autonomous vehicles will have disrupted a $100 billion industry — worldwide parking.
    • The residual stock of fossil-based vehicles will take time to clear but 95pc of the kilometres driven by 2030 in the US will be in autonomous EVs for reasons of costs, convenience, and efficiency.
    • Employment of accountants and auditors in the U.S. is expected to grow by 11 percent.
    • Nine million low-skilled US people could be chasing four million jobs by 2022.
    • Half of work activities could be automated by 2055.
    • New schooling will emerge in the next decade to successfully train workers for the future.

    These forecasters/planners work with governments, NGOs, and companies from around the world.

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