According to the Federal Reserve Bank, President Trump’s administration should focus directly on measures that “lift the productive capacity of the U.S. economy,” both in the short and long-term. This type of fiscal stimulus is important “in terms of how you think about its impact on the economy and its potential impact on inflation over the medium term,” according to FRB president William Dudley.
Why is productivity so important you may be asking? Well, for starters, it lies at the heart of economic progress. It’s one of the most important indicators used to measure the health and trajectory of the U.S. economy.
A downturn in productivity growth in one year does not matter much because economies will go through ups and downs as technology changes, but a persistent decline is a much more serious prospect. Over time, persistently weak productivity would weigh on American living standards by restraining the economy’s ability to grow quickly and generate higher incomes. Again, kind of a big deal.
Although we’ve made tremendous productivity gains over the last three decades, especially during the internet-fueled boom of the early 90’s, productivity has hit a snag again. For for the first time since 1979, U.S. productivity has fallen for three consecutive quarters according to recently released data from the U.S. Labor Department.
So surely you’d expect a topic of this magnitude would be garnering national attention. Surely it was one of the issues brought up by our President or his Cabinet picks. Surely economists around the globe are convening to address an issue that has profound social and economic implications. Think again. Mostly crickets.
So, we took it upon ourselves to do something. It’s why we commissioned the “Workforce Productivity Report” in partnership with KRC Research to understand how leading senior executives from around the country are thinking about productivity. How are they measuring it? How are they managing it? How are they trying to improve it?
How does your company’s productivity level affect the broader global economy?
According to our research, 93% of business leaders surveyed said they believe their company’s productivity level has a significant impact on other companies in their industry and the general economy. There is near universal agreement that individual company productivity has a considerable impact on the company, industry and economy. Large companies are particularly mindful of their economic impact: 81% say their company’s productivity has an impact that most employees don’t consider.
Sluggish productivity and rising labor costs also have an impact on U.S. businesses. And, at a time when labor costs are by far the largest line item on any corporate income statement, progressive executives are beginning to realize that the next big competitive advantage in today’s economy is workforce productivity.
What measures are business leaders taking to increase productivity?
Almost all the companies in the survey (96%) said they hire contractors to supplement their full-time workforce and 72% believe that this increase in specialized labor-on-demand is increasing their productivity.
The study provides a fascinating look into the minds of today’s top execs and allows us to better understand how businesses are formulating modern strategies around workforce productivity, talent management and business transformation. Email me at [email protected] to take the first step toward creating a more efficient workforce through an on-demand model be sure to download the Workforce Productivity Report.
