Recently, The Conference Board Total Economy Database reported that global productivity growth slowed. What gives? Aren’t we supposed to be in a jobless recovery? Isn’t software eating the world, and driving us toward a future where nobody needs to work? The reality is that this recovery is weaker than usual, but the macro trend is the same: technology makes us consistently more productive each and every year.
To understand any misperception, lets dig into how some of the terms being used.
First, what is labor productivity? Labor productivity is real GDP produced per hour of labor. Don’t confuse GDP with the stock market. The stock market can vary widely from GDP and GDP growth, as shown in the chart below:
Over the last few months, the stock market has grown tremendously at about 30%, GDP growth was a reasonably strong 4%, but labor productivity grew a more tepid 1.7%.
What is a jobless recovery? A jobless recovery in theory would be one where economic growth has recovered, but employment has not. Because productivity has gone up, definitionally this cannot be true. Statistically, the labor market recovery over the last few years has been consistent with Okun’s rule of thumb. This means it is not any more “jobless” relative to the growth rate than previous recoveries.
So why has this 2008 recession been perceived to be “jobless”? The major difference is that GDP growth has been slower. For reference, after the recession of ‘81 the GDP growth bounced to 5.9%, or roughly 50% faster than today’s recovery.
So the reality is that we are in a slower recovery, not a jobless one, in the middle of an era of continued, sustained, technology driven productivity growth. Since the 1950s, labor productivity has grown very consistently. Technology is constantly augmenting and replacing human labor to do more for less. This isn’t a trend that moves in large spurts, rather is a collective effort, much like Moore’s law. At a very consistent 2% labor productivity growth rate you can assume that we can provide roughly the same standard of living today, with effectively no human input, in about 36 years.
It is obvious to anyone in the technology business. The amount of work an individual can accomplish and the speed by which they can accomplish it is moving at a tremendous pace. You can work anywhere, anytime. Workforce automation tools save people time from menial tasks. The costs to deploy sophisticated IT infrastructures have been and continue to come down dramatically.
The real winners of this trend will be those who invest in technology. Companies that don’t make their employees a little more productive every year will be quickly outpaced.
So find something, automate it, and win.
Chris Hawkins was the founder of SignNow, an eSigning and workforce automation tool, and is now a GM at Barracuda Networks. Barracuda Networks is a leading technology company that focuses on making IT solutions easy and affordable for businesses of all sizes.