Skip to Content
Uncategorized

Why productivity growth slowed—and how we could turn things around

February 23, 2018

A perfect storm of economic and technological factors has produced America’s historically low productivity gains. So says new research by the consultancy firm McKinsey, which also offers some ideas for getting things back on track.

Economics 101: When productivity—the amount of economic gain created per hour of labor—increases, so do wages and standards of living. Demand for goods and services also increases. Productivity is important, but its growth has slumped in the US recently.

What went wrong: McKinsey suggests that three main factors brought about America’s current productivity-weak but job-rich economy. They are:

     1. Waning of the productivity boom that began in the 1990s

     2. After-effects of the financial crisis

     3. Failure of digitalization to produce the benefits we hoped

What now? The report says productivity could grow by 2 percent per year—if we double down on stimulating competition, go heavy on reskilling, and invest in digital technologies. In reality, that means doing things like digitizing the public sector, investing in research, and getting small firms to adopt new technology. Easy, right?

Want to stay up to date on the future of work? Sign up for our newest newsletter, Clocking In!

Keep Reading

Most Popular

Here’s how a Twitter engineer says it will break in the coming weeks

One insider says the company’s current staffing isn’t able to sustain the platform.

Technology that lets us “speak” to our dead relatives has arrived. Are we ready?

Digital clones of the people we love could forever change how we grieve.

How to befriend a crow

I watched a bunch of crows on TikTok and now I'm trying to connect with some local birds.

Starlink signals can be reverse-engineered to work like GPS—whether SpaceX likes it or not

Elon said no thanks to using his mega-constellation for navigation. Researchers went ahead anyway.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.