Will new technologies end the slowdown?
The growth rate in productivity, a key driver of economic expansion and rising living standards, has been declining in the United States and around the globe for more than a decade, and economists are uncertain about the cause. In the past, technological advances, such as the rise of the automobile, have been crucial in increasing productivity. The question now is whether new technologies, such as artificial intelligence (AI) and robotics, can provide a similar boost. While some experts believe the digital revolution will result in greater productivity, others argue that deep structural problems in the economy, such as low business investment and stagnant wages, must first be addressed.
Key takeaways include:
Annual U.S. productivity growth has slowed to just over 1 percent, down from nearly 3 percent in the decades following World War II. Europe, Japan, China and India have also experienced slowing productivity.
The productivity slowdown has cost the United States $3 trillion in lost economic output over the past decade, according to one recent study.
The rise of AI could be crucial for improving worker productivity and the overall quality of life, but it also has the potential to displace millions of workers.
Resources for Further Study
Brynjolfsson, Erik, and Andrew McAfee, “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies,” W. W. Norton & Company, 2014. Two Massachusetts Institute of Technology professors argue that recent breakthroughs in digital technology and artificial intelligence are preparing the country for another technological revolution and examine what it will mean for workers and others.
Gordon, Robert J., “The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War,” Princeton University Press, 2016. An economist and social sciences professor at Northwestern University offers a detailed examination of the factors that led to the productivity boom of the 20th century and argues that similar growth cannot occur again.
Levinson, Marc, “An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy,” Basic Books, 2016. An economist, historian and journalist recounts economic history after World War II and explains why growth since 1973 has been slower than in previous decades.
Feldstein, Martin, “The U.S. Underestimates Growth,” The Wall Street Journal, May 18, 2015, https://tinyurl.com/
Irwin, Neil, “Maybe We’ve Been Thinking About the Productivity Slump All Wrong,” The New York Times, July 25, 2017, https://tinyurl.com/
Irwin, Neil, “The Question Isn’t Why Wage Growth Is So Low. It’s Why It’s So High,” The New York Times, May 26, 2017, https://tinyurl.com/
Klein, Ezra, “Technology is changing how we live, but it needs to change how we work,” Vox, undated, https://tinyurl.com/
Lohr, Steve, “A.I. Is Doing Legal Work. But It Won’t Replace Lawyers, Yet,” The New York Times, March 19, 2017, https://tinyurl.com/
Mukherjee, Siddhartha, “A.I. versus M.D.,” The New Yorker, April 3, 2017, https://tinyurl.com/
Thompson, Derek, “So, Where Are All Those Robots?” The Atlantic, May 31, 2017, https://tinyurl.com/
Reports and Studies
“AI to drive GDP gains of $15.7 trillion with productivity, personalisation improvements,” PwC, June 27, 2017, https://tinyurl.com/
Manyika, James, et al., “The Productivity Puzzle: A Closer Look At The United States,” McKinsey Global Institute, March 2017, www.mckinsey.com/
McGowan, et. al., “The Walking Dead? Zombie Firms and Productivity Performance in OECD Countries,” Organisation for Economic Co-operation and Development, Jan. 10, 2017, https://tinyurl.com/
Parilla, Joseph, and Mark Muro, “Understanding US productivity trends from the bottom-up,” Brookings Institution, March 15, 2017, https://tinyurl.com/
Purdy, Mark, and Paul Daugherty, “Why Artificial Intelligence Is The Future of Growth,” Accenture, Sept. 28, 2016, https://tinyurl.com/
The Next Step
Karabell, Zachary, “The Real Problem With Productivity Is Measuring It,” Bloomberg View, May 22, 2017, https://tinyurl.com/
Molla, Rani, “Tech companies spend more on R&D than any other companies in the U.S.,” Recode, Sept. 1, 2017, https://tinyurl.com/
Tie, Tony, “More Coffee? Working 52 Minutes? Why You Should Ignore Most of Those Productivity Studies,” Entrepreneur, Sept. 6, 2017, https://tinyurl.com/
“3 Major Trends Shaping The Global Labor Market,” Economics Wire, Aug. 20, 2017, https://tinyurl.com/
Evans-Pritchard, Ambrose, “The big task for Merkel’s fourth term is managing the ‘Japanization’ of Germany’s economy,” Financial Post, Sept. 25, 2017, https://tinyurl.com/
Smialek, Jeanna, “How Financial Vulnerability Helped to Curb Global Productivity,” Bloomberg Pursuits, Benchmark, June 6, 2017, https://tinyurl.com/
Chandler, Simon, “The AI Chatbot Will Hire You Now,” Wired, Sept. 13, 2017, https://tinyurl.com/
Murgia, Madhumita, “Twitter takes down 300,000 terror accounts as AI tools improve,” Financial Times, Sept. 19, 2017, https://tinyurl.com/
Perez, Sarah, “Microsoft’s AI camera app Pix is now a business productivity tool,” Tech Crunch, Sept. 14, 2017, https://tinyurl.com/
Baghdjian, Alice, and Albertina Torsoli, “Robots Rule at Swiss Factories as Strong Franc and Wages Bite,” Bloomberg Markets, Feb. 16, 2017, https://tinyurl.com/
Heath, Thomas, “A six-hour workday could make you happier, healthier and more productive,” The Washington Post, April 21, 2017, https://tinyurl.com/
Orlik, Tom, “China’s Future, Reshaped by Robots,” Bloomberg View, Aug. 23, 2017, https://tinyurl.com/
American Enterprise Institute
1789 Massachusetts Ave., N.W., Washington, DC 20036
A conservative think tank that focuses on a wide range of policy matters.
The Brookings Institution
1775 Massachusetts Ave., N.W., Washington, DC 20036
A center-left think tank focused on public policy.
Economic Policy Institute
1225 I St., N.W., Suite 600, Washington, DC 20005
A left-of-center think tank that produces economic research focused on low- and middle-income workers.
McKinsey & Company
55 East 52nd St., 21st Floor, New York, NY 10022
A global consultancy that researches issues related to productivity and economic growth.
Organisation for Economic Co-operation and Development
2 Rue André Pascal, 75775 Paris Cedex 16, France
A forum for world governments to study productivity trends and work together to improve global economic conditions.
U.S. Bureau of Economic Analysis
4600 Silver Hill Rd., Suitland, MD 20746
A Commerce Department agency that produces statistics on gross domestic product and other aspects of the economy.
U.S. Bureau of Labor Statistics
Postal Square Building, 2 Massachusetts Ave, N.E., Washington, DC 20212-0001
A Labor Department agency that tracks productivity and employment levels.
U.S. Chamber of Commerce
1615 H Street, N.W., Washington, DC 20062-2000
The world’s largest business organization, lobbying for pro-business policies in Washington and around the country.
U.S. Treasury Department
1500 Pennsylvania Ave., N.W., Washington, DC 20220
Government agency charged with overseeing U.S. economic growth and financial stability.