After a decade of decline, the productivity of American workers could rebound thanks to the pandemic, which has pushed America to adopt innovations that can boost economic growth and wages while stemming inflationary pressures.
Forced to reduce contact between customers and employees, companies have invested heavily in technology, automation and video conferencing. For their part, forced to convert to electronic commerce and telemedicine, many consumers finally appreciate these solutions.
“The pandemic has forced older people to use technology and forced the economy more broadly to adopt technology,” said Constance Hunter, chief economist at KPMG. Investments in technologies that increase productivity will continue because the pandemic has shown that this digital foundation is essential. “
While GDP fell 2.4% year-on-year in the fourth quarter, companies spent 17% more on IT equipment, 6% more on software and 1% more on R&D. Automation and technology investments grew 7% year-on-year in the third quarter of 2020, up from 5% in the same period a year earlier, according to a McKinsey Global Institute analysis of 4,000 financial data. American companies. And the momentum could continue. Some 75% of North American and European companies polled by McKinsey in December said they expect spending on new technologies to increase between 2020 and 2024, compared to only 55% anticipating for 2014. -2019.
These efforts help companies increase their productivity, which is output per hour worked. Raising productivity is essential for the long-term health of the economy, because growth depends on the number of workers and the amount of goods and services they can produce. If productivity does not increase, growth relies on increasing the number of workers, which is far from evident in an aging country where millions of people have been pushed out of the labor market by the pandemic.
Improving productivity is also good news for employees since wages are linked to the amount of goods or services they can produce, and therefore would allow companies to raise wages without driving up prices, and thus to avoid inflationary pressures. Salaries grew very little in the years following the financial crisis, with their increase only exceeding 3% in 2018.
Productivity growth is part of underlying trends and reflects a structural change in the economy. Excluding agriculture and public services, productivity increased by 2.8% per year between 1949 and the oil shock of 1973, then by 1.4% per year from 1974 to 1995, before rebounding to 3% between 1996 and 2005 thanks to the generalization of computers and the Internet. Then it slowed down again to 1.4% between 2006 and 2019. Last year, it accelerated, reaching 2.4% in the fourth quarter compared to the same quarter a year earlier, even if this rebound is explained in part by the fact that the pandemic has caused job destruction in low-paying, often less productive sectors.
Robert Gordon, professor at Northwestern University, has studied productivity and living standards in the last century. For him, productivity slowed after 2005 because the impact that computers had had wore off and inventions (smartphones and tablets in particular) did not upset the way businesses operate. In 2015, he estimated that productivity would increase by only 1.5% per year over the next 25 years. But recent developments have made him more optimistic: he now expects annual growth of around 1.8% over the next ten years.
The move to e-commerce could boost productivity by cutting jobs in physical stores, he explains. Video conferencing could also play a positive role, although the public transport sector could wipe out some of the gains as bus and train traffic drops.
For some economists, the infrastructure investments announced by President Biden last week could also boost productivity.
When the Covid-19 disappears, health should also see its productivity skyrocket. At the Stanford Health Care CardioClick clinic in California, virtual consultations have multiplied during the pandemic. Patients could log in to talk about their diet, sleep cycle or exercise with an expert.
With the adoption of Zoom and Microsoft Team, video conferencing could replace part of work meetings, preventing workers from wasting hours in transport when they could have been productive
Video calls lasted about 22 minutes, three times less than on-site appointments. Video consultations are more likely to end on time and make it easy for doctors, nurses and nutritionists to switch between patients, says Chris O’Dell, administrative manager in charge of digital health from Stanford Health Care.
“These are all indicators that show that professionals are more productive when they work in video,” he summarizes.
Within the group’s establishments, virtual visits by doctors now represent around 30% of outpatient activity, against 1% to 2% before the pandemic. “We have seen a sustained boom in remote care delivery due to the pandemic,” says Chris O’Dell. And I think that will be confirmed afterwards. “
With the adoption of Zoom and Microsoft Team, video conferencing could replace part of work meetings, preventing workers from wasting hours in transport when they could have been productive. Freed from exhausting commuting, they will also have more energy to devote to their work. Teleworking could generate a non-recurring 4.7% productivity gain after the pandemic, even if most of the progress will come from the shortening of transport time that public statistics will not fully reflect, according to a study by Nicholas Bloom and his colleagues at Stanford.
The reduced stress generated by commuting has other advantages: “Happier people are more productive employees,” says Bart van Ark, director of the Productivity Institute. People who have more energy and are less tired are also more productive. “
(Translated from the original English version by Marion Issard)
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