The past 15 years have been difficult times for many Americans, but now there are encouraging signs of improvement.
Productivity growth is a key driver of improving living standards, which has averaged only 1.3% since 2006, less than half of the previous decade.But on June 3, the U.S. Bureau of Labor Statistics reported that U.S. labor productivity Increase by 5.4% In the first quarter of 2021. Even better, there is reason to believe that this is not just a flash in the pan, but a harbinger of a good time in the future: the surge in productivity will catch up with or exceed the boom of the 1990s.
Annual growth rate of labor productivity from 2001 to the first quarter of 2021
Our optimism is based on our research, which shows that most OECD countries have just passed the nadir Productivity J curve. Driven by advances in digital technologies such as artificial intelligence, productivity growth is now rising.
The productivity J curve describes the historical pattern of initial slow growth in productivity after the introduction of breakthrough technologies, followed by a sharp take-off in the following years. Our research and others have found that technology alone rarely creates significant benefits. Rather, technology investment must be combined with greater investment in new business processes, skills, and other types of intangible capital to achieve breakthroughs such as steam engines or computers that ultimately increase productivity. For example, after the American factory was powered on, productivity stagnated for more than two decades. Only after managers used distributed machinery (the technology that made it possible with electricity) to transform their production lines did productivity skyrocket.
This time, the productivity J curve will be larger and faster than in the past, for the following three reasons.
The first is technology: the past decade has brought about a series of amazing technological breakthroughs. The most important thing is artificial intelligence: the development of machine learning algorithms, coupled with the sharp drop in the price of data storage and the increase in computing power, enables companies to deal with challenges ranging from vision and voice to prediction and diagnosis. The rapidly growing cloud computing market allows small companies to use these innovations.