The New York Times, October 4, 2016
While we hear endless tales of driverless cars and robots displacing human workers, in the real world we are seeing the exact opposite. The last decade has been a period of extraordinarily low productivity growth. Productivity growth has averaged less than 1.1 percent annually from 2006 to 2016. This compares to almost 3.0 percent in the decade from 1995 to 2005 and also in the quarter century boom from 1947 to 1973.
Many people discussing the technologies of the future fail to recognize that these are in fact productivity enhancing innovations, just like the ones that we have seen in the past. From a worker’s standpoint it doesn’t matter if they lose their job because a robot can do it better and cheaper or because a new assembly line only needs half as many workers to produce the same number of cars. In both cases they have lost their job, the specific cause doesn’t affect their economic circumstances.
In spite of the great developments in technology in many areas, thus far they have not had a major impact on the workplace. While the productivity data from the Bureau of Labor Statistics is not perfect, it is not off by 2-3 percentage points. In other words, we can be pretty certain that our problem in recent years has been slow productivity growth, not growth that is too fast and causing job loss.
We do have a problem of a weak labor market, with employment rates for prime age workers (ages 25-54) still well below their pre-recession levels, but this is a problem of inadequate demand in the economy. There is little reason to believe that if we generated more demand through larger government deficits or smaller trade deficits we would not have more jobs.
This also brings up the point that when we did have strong productivity growth, most notably in the post-World War II golden age, we had low unemployment and strong wage growth. In principle we should look to strong productivity growth, like what we had in past decades, as helping workers and increasing prosperity. If does not turn out that way it will be the result of serious economic mismanagement. But in any case, that is not the problem we face today since productivity growth continues to lag, in spite of the stories of wondrous technology.