Efficiency Drops With Distance

Spend fifteen minutes on social media and you are likely to see someone post a complaint about inflation, usually something along the lines that inflation is caused by the Federal Reserve printing too much money.

Well, not really.  Inflation is caused by too many dollars chasing too few goods.  Picture a room full of hungry people, but there aren’t enough burgers for everyone.  If you auction off the hamburgers, they will sell for ridiculous prices:  That’s inflation.  And while too much money is half the equation, the other half is a matter of supply or the shortage of hamburgers, if you will.  All too often, when people talk about inflation, they forget that the supply of goods for sale is also a component of inflation.  (And the Federal Reserve doesn’t print money, the Treasury Department does, but that’s a different story.)

While the monetary supply is a major cause of inflation (And for the last two years our government has absolutely pumped an enormous amount of money into the economy to keep the economy churning during the depression), there is no question that part of the reason we have inflation is that we experienced a problem with bringing enough products to market.  Remember, as the number of hamburgers goes down, the price of each available burger goes up.

As Covid shut down the factories in Asia and cargo ships began backing up in our ports, our supply lines were severely disrupted.  Americans stayed home, stopped purchasing, and saved all those stimulus checks until the pandemic was over.   When the pandemic was lifted, we filled our hands with cash and ran into that room and started bidding up the price of the few hamburgers available.  Bingo!  Inflation!

There is, however, another source of inflation that gets almost no press.  The productivity of the American workforce has suddenly dropped.  While the productivity rate generally rises and falls annually by a small amount every year, for the last two years, the rate has fallen by the largest amount since the end of World War II.  The level of productivity has a direct influence on the rate of inflation since as labor efficiency drops, the cost of production goes up.

The entire reason for the drop in productivity of the American workforce is uncertain, but most likely results from a combination of several factors.  One of the more popular reasons is the phenomenon of “quiet quitting”, in which workers experience so much burnout from being overworked that they simply stop working while still showing up for their paychecks.  Employers, desperate for employees, don’t terminate these employees for fear of not being able to replace them.  While this is a popular topic in newspapers, to what extent this contributes to lower productivity is impossible to calculate.

There is one factor that is directly and demonstrably related to the drop in productivity:  Because of Covid, employers suddenly allowed a large percentage of employees to work from home.  While blue collar workers were declared “indispensable” and continued to show up at work daily, white collar workers turned their spare bedrooms into home offices and spent long dreary hours driving up the stock price of Zoom.  

Employees absolutely loved working remotely and routinely claimed that they were at least as productive at home as they had been at the office—a claim that might very well have been true in some cases.  No longer tied to living within driving distance of their employment, many employees relocated to remote areas, frequently taking advantage of locations with lower taxes.

Large numbers of the upper administration of Enema U, for example, promptly moved out of state and have continued to do the high level of nothing whatsoever that they had been doing before.  Strangely, these administrators—all of them hired from out of state—claim to love New Mexico when they arrive at Harvard on the Rio Grande but seem to leave as fast as possible whenever they can.  Even today, after the pandemic has ended, a whole raft of these academic slurpers are still “working” from out of state.  I doubt any student (and damn few faculty) have noticed their absence.

Today, corporate management of numerous large businesses are increasingly dictating that their employees return to the workplace, which has proven to be a highly unpopular decision with their employees.  Despite the claims of those who really enjoyed working in sweatpants with their pet cats in their laps, working from home was not as productive as working in the office.  Perhaps it is the collaborative spirit, or the ability of employees to bounce ideas off one another, or simply because there are fewer distractions, working from home significantly lowers efficiency, which inflates the price of the goods or services that businesses deliver.

Nor should we be surprised that working from home is less efficient:  Meetings at the office are simply hell.  (At most faculty meetings, I used to pass the time while deciding—in case we were ever stranded on a desert island—who I would kill and eat first.)  Yet, as bad as face-to-face meetings are, any meeting on Zoom is infinitely worse.  

I suspect that, for the next year or two, we will continue to see employee resistance to returning to work at the office, but these efforts are doomed to failure.  Just as levels of productivity fell with employees working remotely, as more employees return to the office, productivity will increase, motivating more companies to require more employees to return to the office.

In the last three years, we have definitely learned that work at a distance—whether it be in education, in relationships, or in business—is not as effective as the traditional methods are.  Even if the technology improves significantly, I doubt it ever will be as effective….And don’t blame it on the cat.