Question

We are undergoing a period of rapid technology change with cloud computing, artificial intelligence, robotics, mobile devices, wireless networks, and increasingly powerful computers; yet, U.S. labor productivity growth 2007 and 2016 has been estimated to be an anemic 1 percent. What factors could help explain this low level of productivity?

Answer 1

If we look at the advancements that are happening in the technology sector,it seems that this humongous amount of technological developments should help in the increased labour productivity.But the actual scenario is completely opposite.This can be thought of as a paradox.Even though we are achieving a lot of breakthroughs in artificial intelligence,data mining,data computations and better logistical capabalities we are not able to convert it into higher levels of productivity.Here are the few reasons why levels of productivity have remained almost stagnant.

• The first biggest disaster is the 2008 US Economic crisis.The economic crisis of 2008 led to a huge global meltdown of all the stock markets around the world.This led to a lower investments in the upcoming years which led to lower levels of productivity.
• Even though there might have been a lot of advancements in the technology but it takes a lot of time to transfer this knowledge to the actual industries who have to implement it in their processes.
• The median working age is also a problem.It is completely increasing.This means that the number of young workforce is comparatively less compared to the older people.So it will take a lot of time for this generation to adopt the new skills and also their levels of productivity will surely be less as compared to the younger generation
• The demand for everything post the 2008 crisis fell very rapidly which led to less consumption which in turn led to less production
• Not all sectors use technology extensively.So the growth of technology does not have to mean an overall boost.There has been a steep decline in the sectors like agriculture and manufacturing which were the top contributors prior to 2006
• The regulations and policy changes post the 2008 economic meltdown were very random and frequent.If the rules are not stable then investors will back down from investing which will again lead to lower levels of productivity
• The economy has shifted from manufacturing sector to service sector.The gains out of the manufacturing sector are higher as compared to the service sector
• Lot of production has been taking place outside US leading to less production in the country
• Mismatch of skill sets.The technology might have been imporved.But the industries are still not ready to embrace the change and they need a lot of time to acclamatise to this change

These are the some of the reasons why the levels of productivity in USA has remained stagnant even when there have been a lot of technological advancement.