- Labor productivity reached 1.3% growth year-over-year for the second quarter of 2023 after declining for five consecutive quarters starting with the first quarter of 2022, according to the Bureau of Labor Statistics.
- The Biden administration has imposed costly regulations that have resulted in millions of extra hours spent on paperwork for American businesses, reducing productivity.
- “When the federal government enacts massive legislation and regulation that causes the private sector to focus on compliance and not on producing products and services, productivity necessarily declines,” Michael Faulkender, chief economist and senior advisor for the Center for American Prosperity, told the Daily Caller News Foundation. “The Biden administration has added hundreds of millions of hours of compliance paperwork to our economy.”
Labor productivity remains below COVID-19 pandemic levels after its first increase year-over-year was announced Thursday since 2021, with experts citing Biden administration regulations as one of the causes for the lackluster results.
Nonfarm business labor productivity reached 1.3% growth year-over-year for the second quarter of 2023 after declining for five straight quarters starting with the first quarter of 2022, according to the Bureau of Labor Statistics. The Biden administration has imposed a large amount of regulations that have hindered productivity, and the recent return to modest growth is in spite of these costly regulations , experts told the Daily Caller News Foundation. (RELATED: These Two Red Flags Could Spell Big Trouble For The Economy)
“When the federal government enacts massive legislation and regulation that causes the private sector to focus on compliance and not on producing products and services, productivity necessarily declines,” Michael Faulkender, chief economist and senior advisor for the Center for American Prosperity, told the DCNF. “The Biden administration has added hundreds of millions of hours of compliance paperwork to our economy. That does not cause production and therefore has negative productivity implications.”
U.S. productivity reached an all-time high of 115.405 index points in the second quarter of 2021 before declining to a two-year low of 112.530 index points in the second quarter of 2022, according to the BLS. The index number has yet to recover, reaching 114.017 for the second quarter of 2023.
The Biden administration has enacted 633 new regulatory rules as of Friday, costing a total of $398.5 billion and adding 232.2 million hours of paperwork, hindering productivity, according to the American Action Forum. While Trump at this point in his presidency had more regulatory rule changes at 710, the final cost was only $36.2 billion, adding 54.5 million paperwork hours.
The New Beneficial Ownership Information Reporting Requirements is a regulation that was adopted by the Treasury Department in September 2022 and costs $8.4 billion per year and 53,309,209 paperwork hours over five years, according to the American Action Forum. Another regulation, Requirements Related To Surprise Billing; Part I, was adopted July 2021 and costs $2.3 billion annually, requiring 5,903,311 paperwork hours.
“In 2022 the US had two quarters of contracting [Gross Domestic Product]—what would ordinarily be considered a recession,” Peter Earle, economist at the American Institute for Economic Research, told the DCNF. “We’ve had the highest inflation seen in forty years since 2021, and the lowest labor force participation rate in decades. There have also been severe dislocations in production owing to supply chain problems and an explosion of demand caused by stimulus payments and lockdowns. It’s not surprising that productivity in the United States fell steeply for over a year.”
Jul #JobsReport 🧵:
Economy is slowing and in precisely the sectors previously indicated by numerous survey data; quick glance under the hood shows labor market has all but stalled out below pre-pandemic trend:
(source for all charts=BLS) pic.twitter.com/NfIJcZHnuu— EJ Antoni (@RealEJAntoni) August 4, 2023
Gross Domestic Product (GDP) in the first quarter of 2022 shrank by 1.6% and fell further by 0.6% in the second quarter of 2022, indicating two consecutive quarters of contraction for the U.S. economy, which many market watchers use as a marker to determine if the economy has entered a recession, according to data from the Bureau of Economic Analysis.
“The recent resumption of rising productivity has essentially nothing to do with Bidenomics, more highly skilled labor, or enhanced manufacturing capabilities,” Earle told the DCNF. “It’s simply a product of the ongoing recovery from ruinous pandemic policies and the disinflationary effects of the Fed’s rate hiking campaign.”
The Federal Reserve raised the federal funds rate for the eleventh time since March 2022 in July, bringing the target between 5.25% and 5.50% in an effort to combat inflation.
Inflation in June fell to 3.0% from 4.0% in May but remains well above the 2% target rate set by the Fed. Fed Chairman Jerome Powell said in a press conference following the rate hike in July that even with the high-interest rates, inflation will not return to the 2% target until 2025.
The White House did not immediately respond to a request to comment from the DCNF.
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