Why productivity growth slowed—and how we could turn things around
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:
This story is only available to subscribers.
Don’t settle for half the story.
Get paywall-free access to technology news for the here and now.
Subscribe now
Already a subscriber?
Sign in
You’ve read all your free stories.
MIT Technology Review provides an
intelligent and independent filter for the
flood of information about technology.
Subscribe now
Already a subscriber?
Sign in
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!