If you're feeling drained and underappreciated at work, you're likely not alone. Recently released data suggests already dismal conditions for the American worker might be worse off than we thought.
According to recently revised first-quarter economic data from the U.S. Bureau of Labor Statistics, the average American worker is toiling away for 2.2 percent more hours than they did in the previous fiscal quarter.
And while wages have statistically gone up due to higher labor prices, high levels of inflation have largely invalidated those gains.
According to the BLS, the average American's real hourly compensation—an earnings metric that takes consumer prices into account—actually decreased 1.7 percent in the first quarter of 2023, tacking on to an already troubling 2.6 percent slide over the past year.
And worker productivity—in freefall since its initial nosedive in BLS survey data in the middle of 2022—has continued to collapse from the historic highs the nation saw prior to the COVID-19 pandemic.
In the manufacturing sector, labor productivity decreased 2.5 percent in the first quarter of 2023 even as the number of hours worked increased 1.6 percent.
In the durable manufacturing sector, productivity decreased 5.6 percent, more than twice the rate of increase in the number of hours worked. Historically, the current business cycle—which began in 2019—has seen some of the lowest rates of worker productivity since the BLS began recording data, signaling a lingering sense of stagnation in the U.S. labor market.
Some blame the lingering effects of the pandemic for the trend. A March 2023 survey by the Pew Research Center found only about half of U.S. workers say they are either extremely or very satisfied with their job overall, with a larger share of lower-wage earners bearing the weight of that discontent.
Another study from MetLife one year prior found Americans' job satisfaction had hit a 20-year low in the history of their survey driven by what they described as a "change in expectations driven by younger employees during the pandemic."
The dip in morale, one economist told Newsweek, was more or less inevitable.
"While economists disagree about recent discouraging U.S. productivity trends, there's little question that worker morale—a key factor behind productivity—is being hurt when their real wages fall," Gregory DeFreitas, a Hofstra University economist, told Newsweek via email. "So why are nominal wages still rising slower than consumer prices for most [not all] workers in a tight job market?"
Most of the blame, he argued, lies with large employers with concentrated industry power he said have been both driving much of the price inflation and minimizing employee pay gains: a profit-raking scheme some have begun to refer to as "greedflation."
"The more they crush union organizing efforts and demand non-compete and non-disclosure agreements when hiring, the stronger their leverage over earnings," he argued, pegging legislative initiatives like aggressive antitrust efforts and legislation like the Protecting the Right to Organize Act as measures that could bring lower inflation, higher real wages, and healthier productivity growth.
Others see the stall in productivity as a sign of inequitable investment and recovery across the country, rather than mere labor dissatisfaction.
A May 2023 evaluation of labor trends by consulting firm McKinsey found while some states have been growing in productivity over the last several decades, others have begun falling behind, driven by disparities in production in growing sectors like information technology and lagging ones, like healthcare and food service.
The main driver of U.S. productivity: the lagging numbers of skilled laborers at a time the country needs them most, alongside a lack of investment by employers necessary to capitalize on their potential.
"It starts with people," Asutosh Padhi, a senior partner with McKinsey, said in a May 25 roundtable discussing the findings. "Hiring is actually one of the biggest unlocks that we have in front of us."
Other facets of reversing the trend include analyzing how companies capture value from technology and digitization as well as how much companies invest in intangible facets of their businesses, ranging from everything from research and development and intellectual property to the money they put into their employees.
"These are capabilities that compound and get better and better over time," he said.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Nick Reynolds is a senior politics reporter at Newsweek. A native of Central New York, he previously worked as a ... Read more
