What frustrates me about articles like this (even professional ones -- this simplifies for a general audience) is that they only look at one side of the equation. Low inflation is the opposite side, and it's interesting.
Yes, GDP$ per unit hour has not gone up much, but the flip side is that the economic value of the output has gone down. If you look in terms of PPP, workers are doing better: fewer labor hours go into buying dinner.
The corollary is that fewer hours are required to produce PPP equivalent product (e.g. a car) so fewer workers are needed (since the $ are not going up at the same rate it looks like productivity is not). That's why the LFPR is sinking.
A victorian era "smokestack" model isn't useful when looking at this world. This is why automation really is likely to cut employment this time (in fact it already is) and that's the real economic problem to be worrying about. Which some are (e.g. the small UBI experiments under way) but it's still not mainstream.
Completely agree: automation is already changing the employment landscape. The number of people who tell me how the unemployed truck driver or factory worker can become a robot designer boggles my mind. It's a total break-down in the ability to see quantities vividly for what they are. I grew up in a field where orders of magnitude were the first class citizen and it's clear that order of magnitudes more people do mundane automate-able work than will be able to contribute on the design side of the next era's production systems.
To your point: the way to fix these problems is to make sure that everyone, irrespective of their ability to make money selling their labor, is able to consume a fair amount. Hence the need for a basic income for all: the higher the better. The quicker we break from the moralistic perspective that everyone should "work" in a world where not everyone can, the quicker we can create a world that is about "the pursuit if happiness" again.
Automation has always increased employment in the long term. And maybe it will this time as well: the truck drivers will not become robot designers but their kids could, instead of becoming truck drivers as well.
The fact is that we don't live in the long term so although truck driving and coal mining are shitty jobs (and absolutely should be automated or eliminated) we have to take care of the current practitioners (both financially and finding a way for them to preserve their dignity) as their employment goes away.
Separately I don't think we'll need all that many robot designers either.
I could not disagree more. We are probably working the least hours as a total number of waking hours of the total population than we ever have as a species. Automation has always decreased the amount of work that needed to be done. Now admittedly "work needing to be done" is different from "employment" but I would argue that the less work that needs to be done, the less easy it is to create paying jobs to pay people to do those non-things. Yes many of the "workers" of the 1800s were domestic and not counted on wage payrolls... and we had a lot of them shift into the "work force" and begin getting wages in the 1900s. But that's not to say there is a net trend away from work and pay rolls. If we don't wake up and see this problem the inequality situation will continue to get worse.
Not while there is work to do. So long as there is a need for more housing, bridges to be repaired and roads to be maintained and anything else that can't be automated and can be trained for then government should employ people to do those jobs and quit with the nonsense that only the private sector can add value.
If there is shortage of skilled workers to do those jobs then they should train them too. The lack of long term job security has lead to the end of loyalty which means private companies have no incentive to train people which means the unemployed have to take on debt to study courses which aren't necessarily giving the skills they need. That and companies need to start sponsoring and training and accept that some will end up at a competitor.
You can examine the whole issue of productivity growth and wage growth in real terms (that is, taking inflation out of the picture by deflating using some inflation measure, either a GDP deflator or consumer price index or so) instead of in nominal terms.
While the article doesn't explicitly mention it, I'd assume that they're looking at productivity in real, not nominal figures, precisely to disentangle the effects of inflation.
Meaningful comparison across countries requires purchase power parity (PPP) exchange rates, rather than market exchange rates. However, this article doesn't really talk about other countries at all, so I don't understand why you bring up PPP here. If fewer hours of labour are required to buy dinner, that's just real wages, nothing to do with PPP...
And how does lower labour force participation enter? (If we assume that less productive workers drop out first, that should increase productivity, btw - which we don't see...)
Sorry I meant using PPP baskets (same economy but over time) to nominalize hourly production since this is a productivity discussion. The difficulty of coming up with CPI inflators (a very hard job!) is that the basket of goods people purchase changes. But you can see that the labor hours required to manufacture a car has plummeted (forget that today's car is so much better than a car of 1950) -- and forget the fall in maintenance costs too.
I think a lot of the productivity mystery lies is due to artifacts in the shitty tools we have. For example, GDP is like the Dow Jones indices: designed to be easy to calculate with pencil and paper, plagued by necessary changes in their own baselines over time (mostly: what is counted and what is not), not terribly reflective of what we really want to know, and yet it would be stupid to discard them because we'd lose any time series. Everybody knows they are broken but nobody has any idea yet what would be better.
It's not like I have a great idea of what we should be using instead ettither. But I fell it's foolish to say "we have strong qualitative signals but since we can't find them in our model they are bogus". Especially since we all know our current theories are woefully incomplete and perhaps even inaccurate.
Those who don't see the productivity advance aren't idiots: those who, like me, believe in those signals justifiably have a large hurdle to leap.
Seems to me certain goods, such as food and living costs have been inflating rather rapidly, but others such as technology and services have not. I have also seen certain geographic markets more affected by this than others. Mind sharing your reasoning behind a flat no?
Because the numbers don't tell that story. There are plenty of numbers online you can look at from the commerce dept bureau of statistics, and if you don' trust them there are various third parties with axes to grind (on both sides) who can give you other numbers. Having lived through high inflation (though thankfully never hyperinflation, which is insane) I can tell you it's really no fun and very obvious.
Clearly there is geographical variation! But low inflation is considered a trap by many mainstream economists (I disagree but appreciate their reasoning).
Just look at the number of hours of typical labor required to buy many goods (TVs, meals, etc) and compare it to your parents' time and you can see the low inflation in action.
Yes, GDP$ per unit hour has not gone up much, but the flip side is that the economic value of the output has gone down. If you look in terms of PPP, workers are doing better: fewer labor hours go into buying dinner.
The corollary is that fewer hours are required to produce PPP equivalent product (e.g. a car) so fewer workers are needed (since the $ are not going up at the same rate it looks like productivity is not). That's why the LFPR is sinking.
A victorian era "smokestack" model isn't useful when looking at this world. This is why automation really is likely to cut employment this time (in fact it already is) and that's the real economic problem to be worrying about. Which some are (e.g. the small UBI experiments under way) but it's still not mainstream.