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Increasing US productivity could add trillions in GDP over the next decade. Here’s how.

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Revitalizing US productivity

In the news

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Missing workers. Economists’ predictions of a pending recession are at odds with one aspect of the US economy: the tight labor market. The US labor supply has reached prepandemic levels. Still, labor demand (especially in the service sector) has seen an increase of 3 million jobs. Much of the shortage stems from the number of older Americans who left the workforce during the pandemic. Illness may have also contributed to a current lack of workers. In 2022, 1.6 million employees were out sick at least one week each month, up from 1 million prepandemic. [Economist]

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A tech-based generation gap. Despite being digital natives, members of Gen Z entering the workforce report that they lack critical tech skills. More than half of Gen Zers say that they received very little (or no) instruction in digital skills, per a survey of about 15,000 adults. An existing education gap between lower-income and affluent students means many Gen Zers are falling behind. Even as companies invest in automation and other digital tools, they often lack the training resources necessary to get workers up to speed. This has left many Gen Zers suffering from “tech shame.” [Fortune]

Today, the most significant challenges to US productivity are insufficient skilled labor supply, uneven technology adoption, and stalling investment.

On McKinsey.com

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A $10 trillion opportunity. Despite technological advances, US labor productivity has fallen from a long-term trend of 2.2% annual growth to an average of 1.4%. At the same time, inequality among sectors is increasing. While some industries have benefited from tech adoption (such as finance and insurance), services-led sectors (such as healthcare) are badly lagging on productivity growth. Boosting US productivity to historical levels could add $10 trillion in cumulative GDP over the next ten years, finds research by McKinsey North America managing partner Asutosh Padhi and coauthors.

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Accelerating productivity. Cities, states, sectors, and individual companies can all play a role in addressing the labor participation rate, workforce shortages, and skills gaps. Improving potential barriers to interstate mobility, like the high difference in housing prices across regions or the growth in requirements for occupational licensing; scaling up talent reskilling programs; and adopting hybrid-work practices could increase labor participation. See five areas where business leaders and policy makers can take action to lift US productivity and deliver greater prosperity.

Jumpstart US productivity

— Edited by Gwyn Herbein, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 12:48 - 12 Apr 2023

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Increasing US productivity could add trillions in GDP over the next decade. Here’s how.

Revitalizing US productivity

In the news

Today, the most significant challenges to US productivity are insufficient skilled labor supply, uneven technology adoption, and stalling investment.

On McKinsey.com