What Productivity Trends Say About the Future of Growth

What We Are Reading: What Productivity Trends Say About the Future of Growth

The article referenced can be found here from the Brookings Institute.

A recent article from the Brookings Institute discusses productivity in the US by region. Productivity measures the amount of goods or services a worker produces in an hour of work, and high productivity is a key to improving workers’ value in the labor market and increasing wages. Essentially, higher productivity leads an increased quality of life and lower poverty rates.

The article examines productivity trends by region because the US is very economically diverse. This way, we can better understand which local economies and industries are advancing and what steps must be taken to help all regions improve.

Regions with the Most Productivity Growth

The regions with the most growth in productivity were coastal California and the Northeast. However, metropolitan areas in the “energy belt” are highly productive as well. Overall, this shows that regions which participated in energy or tech booms or housed major research universities saw the most growth.

Improving Productivity

The findings in this article suggest that there are barriers to high-productivity regions and industries for many Americans. First, most jobs in increasingly productive regions are now “skill biased,” meaning that workers need to be technically educated before they can participate in these industries. The article notes that “skill lags are now a major driver of productivity gaps…”

Additionally, high housing costs keep many workers from accessing areas with high productivity and the increased wages and quality of life from jobs in those regions. Zoning and land use reforms could encourage more housing developments in fast-growing cities to allow more people to affordably access these opportunities.

Regardless, not everyone can move to these regions at all, so boosting the productivity of more regions is key. To achieve this, the article calls for efforts to invest in technologies to upgrade industries. Upgrading management and technology processes can help small and medium-sized businesses become more productive. Automation and technology will play a large role in the future of productivity. 

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