The Great Stagnation and Goofing Off

by Josh Barro

You’re probably familiar with Tyler Cowen’s discussion of the Great Stagnation (Reihan reviewed Tyler’s e-book on the matter here) but the short version is that technological advances in recent decades are not driving the sorts of radical changes in society, and rapid economic growth, that we saw roughly from the late 1800s through the mid-20th century. Particularly, Tyler is down on the Internet and other advances in information technology, which have improved peoples lives in many important ways but do not appear to be game changers for the economy in the way that, for example, the automobile was.

But the thought occurs to me: perhaps recent advances in technology are actually increasing per-hour productivity by much more than we realize. But then workers are absorbing those gains by goofing off more at their desks, spending their time on Facebook and surfing the web, and completing their tasks only marginally faster than they used to despite much greater productivity. Admit it: the typical white collar office worker under 35 is spending at least a quarter of his or her day on social networking, reading blogs and chatting with friends. Hours worked are shrinking much faster than hours “worked,” and we’re enjoying a lot more leisure time than is reflected in the data.

This may or may not be a bad thing. Workers are goofing off more because they have better options for goofing off than they did fifteen years ago—Facebooking is both more fun and less obvious than gossiping around the water cooler. Maybe employees would rather be compensated in cash, but employers can’t offer a more-cash-for-more-productivity deal because they don’t have good mechanisms to stop workers from goofing off electronically. Or maybe better goof-off options have led workers to prefer at-desk leisure time as a larger part of their compensation packages.

A boom in goofing off can’t be the source of all our economic woes (after all, the stagnation Tyler identifies started before the Web came along) and it’s not the reason for the cyclical downturn we are currently recovering from. But I do think it could be a substantial contributor to a secular reduction in GDP growth.