Why the Decline in Labor Productivity?

Jane Thier reported last week for Fortune on the decline in labor productivity in the American economy.  She notes that the United States has experienced productivity declines for the past five quarters.  That hasn't happened since World War II.  Thier examines George Mason economist Tyler Cowen's commentary regarding the potential causes of this significant decline.   She notes that Cowen attributes much of the problem to "a serious crisis of morale" in the workplace.   I think there's no question that many employees are disengaged, and even disgruntled.  Organizations have been grappling with low engagement for years, but it does seem that the problem has become worse since the pandemic began.

Thier also writes that some experts have begun to question whether remote and hybrid work might be driving declines in labor productivity.   Cowen argues that more data are needed to draw definitive conclusions about the impact of remote work.   Fellow economist Gregory Daco of EY Parthenon argues that comments from various clients suggests that remote work might be causing a decline in productivity.  

Many companies reported high productivity of their employees during those early months of the pandemic.  I wonder, though, whether unique circumstances contributed to that efficiency boost, and if productivity might be falling as those conditions no longer hold.  Many employees and organizations rallied in those early days of the pandemic, working extremely hard to ensure that their firms would survive amidst a preciptious economic downturn.   Moreover, we all were stuck in our homes.  We had very little else to do, and so perhaps many were quite productive in those circumstances.  

Things have changed though.   Now, perhaps, we are seeing some of the limitations of remote work, and it may be having a deleterious impact.  It's not the popular thing to say these days.  People who try to argue for return to office often get pummeled by the press, and they potentially scare off talented employees who insist on working remotely.  Yet, the national productivity data should trouble us greatly.  We have to dig deeper into these data, and more rigorous empirical work must be done to understand the complete ramifications of remote/hybrid work.