The American worker is on a productivity tear and it may have more to do with a surge in working from home than the effects of AI, according to a Stanford economist.
For the past five years, the output for non-farm businesses has increased by a sizable 2% per year, The Economist reported citing statistics from the Bureau of Labor Statistics. This is a marked increase from the 1% productivity growth per year that defined most of the 2010s, and a trend that has taken even Federal Reserve Chairman Jerome Powell by surprise.
Yet, while the hype around AI over the past several years makes it a logical candidate for the main driver behind the productivity boom, Nicholas Bloom, a Stanford economics professor who is known for explaining the Great Resignation of the early 2020s, says it’s more likely work-from-home policies since the pandemic are fueling the trend.
The increase in productivity is likely due to WFH, but it will be interesting to see the why part get analyzed and I don’t know if it is because of “worker happiness”.
First, there was a lot of work done in those few years digitizing a lot of workflows which were previously done via paper because they were forced to, including digital signing across companies.
Second, it felt like a lot of siloes of data were opened up because companies were adopting new digital tools which allowed for greater cross collaboration.
Third, companies could hire outside of their geographic area. This allowed them to find talent faster and easier since they had a larger pool of candidates, even if the office had a hybrid schedule.
Fourth, a lot of people near retirement decided to retire then, accelerating Boomers leaving management positions. Combined with a external force to push new technologies to be adopted, this could have lead to more efficient work flows actually getting adopted.