Labor productivity in the United States, which measures the value of goods and services produced by one hour of labor (adjusted for inflation), has been on an upswing since the financial crisis. In the third quarter of 2015, for example, labor productivity in the nonfarm sector hit a new post-World War II record. Another measure of the health of an economy is real GDP per capita. It measures the total economic output of a country divided by the number of people (adjusted for inflation). Real GDP per capita in the United States hit a new all-time high of $51,473 in Q3 2016.
Despite these gains, there has been a decoupling of productivity from employment. Starting early in the last decade, growth in employment and wages lagged growth in productivity. Pundits and politicians have seized on this gap, frequently citing computer-aided automation, industrial robots, and machine learning as culprits behind slow employment growth. Many have catastrophized the role of technology and its likely future impact on jobs and wages.
For a more balanced and nuanced perspective on what is going on, watch a short talk by Erik Brynjolfsson, Director of the MIT Initiative on the Digital Economy and Professor at the MIT Sloan School of Business. He is the co-author of the New York Times best-seller The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologies. In less than 12 minutes, he does a great job of framing the issues.
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