American Productivity on the Decline, Thanks to Bad Weather
American worker productivity saw a decline in the first quarter of 2014. Workers were producing less per hour while on the job. Weather was a big factor in this decline, with the Polar Vortex and all-around bad winter weather causing havoc through the U.S., but a lack of capital is also to blame.
According to CNBC, productivity (measured by output/hour of each worker) declined at a 1.7 percent annual rate in the first quarter of 2014, after increasing by 2.3 percent in the fourth quarter of 2013. From January to March, we saw much more snow and cold temperatures than usual, which led to reduced hours in some cases. This coincides with the weakened economy during this period.
However, it seems capital also played its part in this productivity decline. According to Businessweek, many workers are lacking equipment, such as machinery and software, which would allow them to boost productivity levels.
“Persistently depressed levels of business investment … have led to an unprecedented period of stagnation in the level of capital per worker,” Morgan Stanley economist Ted Wieseman wrote in a note to clients. “We are likely in an unprecedented fifth year of no growth in capital per worker... Hollowing out of the capital stock from years of persistent underinvestment is damaging potential GDP growth.”
The last decade as seen a average productivity growth of 1.6 percent a year. This is a decline from the previous 10 years, which saw an average of 2.7 percent growth each year.