Will new technologies end the slowdown?

Executive Summary

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/y8wd6t7g. A Harvard University economics professor and former chairman of the White House Council of Economic Advisers says government statistics charting supposedly sluggish growth in incomes and productivity fail to consider “remarkable innovations” in health care, internet services and other areas.

Irwin, Neil, “Maybe We’ve Been Thinking About the Productivity Slump All Wrong,” The New York Times, July 25, 2017, https://tinyurl.com/ybssznkf. A journalist analyzes arguments raised in recent think-tank reports that look at the relationship between productivity and growth.

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/y7reylxp. The apparently slow growth in wages is deceptive and wages actually are rising faster than normal, based on inflation and productivity, a journalist argues.

Klein, Ezra, “Technology is changing how we live, but it needs to change how we work,” Vox, undated, https://tinyurl.com/gvse82x. A journalist investigates possible reasons that technological progress has slowed in recent decades.

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/y8vs55w2. Artificial intelligence can handle routine legal tasks but has not progressed enough to replace lawyers doing more advanced work, such as advising clients and writing briefs.

Mukherjee, Siddhartha, “A.I. versus M.D.,” The New Yorker, April 3, 2017, https://tinyurl.com/lctlk62. A physician and Pulitzer Prize-winning author examines the future of medicine as artificial intelligence is developed to aid diagnostics.

Thompson, Derek, “So, Where Are All Those Robots?” The Atlantic, May 31, 2017, https://tinyurl.com/y8bhmnew. A journalist argues that workers have little reason to fear automation in the short term, saying the U.S. economy “suffers not from too much automation, but rather from too little investment in the sort of technology that would raise the country’s lackluster productivity.”

Reports and Studies

“AI to drive GDP gains of $15.7 trillion with productivity, personalisation improvements,” PwC, June 27, 2017, https://tinyurl.com/y986wg35. Researchers at the multinational professional services firm estimate the impact that artificial intelligence could have on global productivity and economic growth over the coming decade.

Manyika, James, et al., “The Productivity Puzzle: A Closer Look At The United States,” McKinsey Global Institute, March 2017, www.mckinsey.com/~/media/McKinsey/Global Themes/Employment and Growth/New insights into the slowdown in US productivitygrowth/MGI-The-productivity-puzzle-Discussion-paper.ashx. Researchers investigate the productivity slowdown and what could be causing it.

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/ybssgrfz. Economics experts with an international group that focuses on promoting global prosperity examine how “zombie firms” – struggling companies that have trouble paying off their debts – stifle the productivity of more profitable firms.

Parilla, Joseph, and Mark Muro, “Understanding US productivity trends from the bottom-up,” Brookings Institution, March 15, 2017, https://tinyurl.com/hy6vvbe. Two think-tank researchers look at productivity trends over time across major U.S. metropolitan regions.

Purdy, Mark, and Paul Daugherty, “Why Artificial Intelligence Is The Future of Growth,” Accenture, Sept. 28, 2016, https://tinyurl.com/ybvex5lt. Two researchers at a global management consulting company examine the ways that artificial intelligence could affect economic growth around the world.

The Next Step

Gauging Productivity

Karabell, Zachary, “The Real Problem With Productivity Is Measuring It,” Bloomberg View, May 22, 2017, https://tinyurl.com/y8p864tv. The inability to properly measure changes within the economic system might be a bigger problem than the stagnation of productivity, says a financial services strategist.

Molla, Rani, “Tech companies spend more on R&D than any other companies in the U.S.,” Recode, Sept. 1, 2017, https://tinyurl.com/y9qcxdh2. Spending on research and development is a factor in measuring productivity, and tech companies are the leading contributors, according to new data from Factset, a data analytics company.

Tie, Tony, “More Coffee? Working 52 Minutes? Why You Should Ignore Most of Those Productivity Studies,” Entrepreneur, Sept. 6, 2017, https://tinyurl.com/y8an2d7g. The majority of research on how to increase productivity should be taken with a grain of salt, because most criteria for measuring productivity are subjective, a marketer for Expedia says.

Global Factors

“3 Major Trends Shaping The Global Labor Market,” Economics Wire, Aug. 20, 2017, https://tinyurl.com/ybkubzwl. Technological innovation and automation are fueling changes in the global labor market, leading to an increase of digital jobs, shorter workweeks and the disappearance of middle-wage jobs, says a contributor to Economics Wire.

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/yb2jr479. An aging population is one of the many factors holding back economic growth in Germany, Europe’s largest economy, just as it has in Japan.

Smialek, Jeanna, “How Financial Vulnerability Helped to Curb Global Productivity,” Bloomberg Pursuits, Benchmark, June 6, 2017, https://tinyurl.com/y7g3eepx. The lagging global productivity rate can be partially attributed to the post-2008 trend of heavily indebted companies cutting investment in research and development and workforce training, according to the International Monetary Fund.


Chandler, Simon, “The AI Chatbot Will Hire You Now,” Wired, Sept. 13, 2017, https://tinyurl.com/ydym4xmh. Many job recruitment agencies, aiming to eliminate potential subconscious human biases, now use a chatbot – a computer program designed to simulate conversation – produced by Mya Systems for the initial evaluation of candidates.

Murgia, Madhumita, “Twitter takes down 300,000 terror accounts as AI tools improve,” Financial Times, Sept. 19, 2017, https://tinyurl.com/y76vdjjg. Twitter has successfully disabled thousands of terrorism-related accounts in the first six months of 2017, and 95 percent were identified by new spam-fighting artificial intelligence tools.

Perez, Sarah, “Microsoft’s AI camera app Pix is now a business productivity tool,” Tech Crunch, Sept. 14, 2017, https://tinyurl.com/y9f4vupt. Microsoft Pix is a camera app that uses artificial intelligence to take better photos, and with a new update has become a workplace tool for scanning business documents, whiteboards, Post-it notes and business cards.

Foreign Productivity

Baghdjian, Alice, and Albertina Torsoli, “Robots Rule at Swiss Factories as Strong Franc and Wages Bite,” Bloomberg Markets, Feb. 16, 2017, https://tinyurl.com/z8q2zd2. Swiss companies, burdened by labor costs that are among the world’s highest, are increasingly turning to automation.

Heath, Thomas, “A six-hour workday could make you happier, healthier and more productive,” The Washington Post, April 21, 2017, https://tinyurl.com/yccwlhhw. A study of nurses in Sweden’s second-largest city, Gothenburg, last year concluded that reduced workday hours increased overall productivity.

Orlik, Tom, “China’s Future, Reshaped by Robots,” Bloomberg View, Aug. 23, 2017, https://tinyurl.com/y82vcns7. China is increasing the automation of its factories to catch up to South Korea, where high robot use has improved the country’s productivity, an economist says.


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.

DOI: 10.1177/237455680329.n1