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Worker Productivity: Introduction of New Technologies to Spur Breakout Growth
It may not seem like it when headlines span problems of chip shortages, delayed car production, no end in sight to remote work, and massive resignations, but the US is in the middle of a productivity surge. US annual productivity is growing at a rate of 3.8 percent.
Productivity measures how much a person produces in an hour. The pandemic has caused employers to increase their use of technology to assist when there are fewer workers. Robots, automation, and artificial intelligence are all factoring into higher productivity.
Erik Brynjolfsson, director of Stanford University’s Digital Economy Lab, said that “America used to do a lot more public investment and it used to grow faster. I don’t think that’s a coincidence. It seems like we are reentering an era of public investment. The result could well be a productivity surge that will match or surpass the boom times of the 1990s.”
Brynjolfsson is predicting a “J Curve” of upwards productivity. As seen by the graph above, productivity was low in 2016, but then started climbing rapidly in subsequent years. Brynjolfsson explained that typically there is a period of slowed productivity during which new technology is rolled out, but once the technology becomes part of the new process, productivity grows rapidly.
Brynjolfsson said that because the technology breakthroughs recently have been significant, especially in AI and in the areas of biomedical and energy. Because of that, he said that “the productivity J-curve will be bigger and faster than in the past.”
Jan Mischke of the McKinsey Global Institute, agrees and said that “we see a significant chance of a productivity acceleration in the next five to 10 years to come. Sustained acceleration would be a welcome change from weak growth over the last decade or so.”
