The pandemic has boosted productivity. The post-pandemic will stimulate her further.
The COVID-19 pandemic appears to be ending almost as abruptly as it started. States across the United States are releasing restrictions on doing business and people are resuming normal lives.
Throughout the pandemic, remote working has been proven to increase the productivity of some workers and businesses. It is therefore natural to wonder if a massive return to the office will lead to drops in productivity.
I doubt. Productivity is likely to be volatile over the next year or so, with some aspects of post-pandemic life leading to gains and others pushing in the opposite direction. But once the economy settles this year into a new post-pandemic normal, the likelihood of an improvement over the next few years is high.
Output per hour of work – productivity – soared in the second quarter of 2020. Normally that would have been great news. But the reason for the surge was negative: the pandemic was crushing the economy and companies were laying off their less productive workers. The resulting increase in output per hour was a sign of economic weakness rather than strength.
Expect something similar over the next few months, but in reverse. By my calculations, there are about 10.8 million fewer jobs in the economy than there would have been without a pandemic. Most will return over the next two years. Many of the jobs lost are in low productivity sectors like retail and travel. So, as workers return to these jobs, another loophole in economic statistics will emerge: the healing process of the labor market will put downward pressure on measured productivity.
Adapting to post-pandemic life will be another temporary factor that will slow productivity growth. On Monday I tried to work a full day at the office for the first time since March 13, 2020. My commute was difficult. I wasn’t sure what the traffic patterns would be and didn’t know where to park. When I got to my office, I realized that I couldn’t easily attend Zoom meetings for lack of a digital camera. I burned half an hour just to figure out what to do for lunch.
Of course, I have less work. My productivity must have hit an all-time high. Millions of workers will experience similar adjustment issues that will take weeks or months to resolve.
While much of the debate has centered on how remote working has increased productivity, let us remember that the pandemic has made many workers less productive, not more.
Particularly in recent months, people have complained about how difficult it is for them to do their work remotely as major business decisions need to be made, new employees need to be trained and acculturated, and the lack of interactions. spontaneous with coworkers took a growing toll.
Once the economy settles into a new post-pandemic normal, however, I expect productivity growth to be stronger than the lukewarm annual rate of around 1% that the United States has. known for most of the last decade.
Workers will once again understand how to work from the desk, and the trail of readjustment will disappear. After 14 months of working remotely, businesses should know better than ever how to strike the right balance between the pros and cons of a anywhere work culture. It could lead to the best of all worlds, with businesses that have suffered due to COVID-19 restrictions capable of getting employees back to the office and those that thrive with remote working continuing the practice.
Businesses that continue to work remotely will continue to reduce office space and save on related expenses. This will allow these resources to be used for other purposes – consider converting them into private residences in places plagued by housing shortages – increasing economic efficiency and productivity.
Another reason to expect strong productivity growth after the pandemic is that companies often use economic downturns to change the way they do business, including restructuring their workforce to increase production. per hour. The pressure to do so has been intense over the past year.
Some of the more productive aspects of pandemic life are likely to remain present, at least to some extent. The market share of e-commerce companies will not return to pre-COVID levels. Since online retailers need fewer workers and less square footage, this change will increase output per hour in the retail industry.
And count on less business travel. For some people, the frequency of travel will return to normal. But many have learned that the reason they travel so much is simply the lack of an alternative that is widely accepted by the corporate culture at large. Virtual meetings are now not only acceptable, but in many cases preferable. Businesses expect virtual meetings to triple their share before the pandemic, according to a survey. This would save time and money and improve productivity.
There are other reasons to be optimistic about productivity over the next decade that have little to do with the pandemic. But that’s another column. Suffice it to say that workers and businesses will get far more out of each week than they did in the previous decade. As normal life resumes, this is another welcome change.
Michael R. Strain is a Bloomberg opinion columnist. He is Director of Economic Policy Studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He is the author of “The American Dream Is Not Dead: (But Populism Could Kill It).”