A leap in productivity, and perhaps in what inspires it
A surprise jump in the output of American workers might nudge Washington to make good on promises of better infrastructure.
In a burst of political productivity, President Donald Trump and top Democrats in Congress actually agreed on something last Tuesday. They struck an agreement to spend $2 trillion on roads, bridges, ports, and other infrastructure. Partisan disagreement over how to pay for such a federal investment could still derail this rare consensus. But to nudge the leaders along, they should take note of welcome news about American ingenuity and efficiency – driven in part by better infrastructure.
On Wednesday, the Labor Department announced that nonfarm business productivity has accelerated at an annualized rate of 3.6% in the first quarter, a surprise jump to many economists. It surpasses the average 1.3% rate of the previous decade. It also beats the 2.7% rate of the boom years from 2000 to 2007.
The high pace of economic productivity (or growth in output per worker) could be a fluke. Yet it is backed up by an economy growing at more than 3% and by two recent surveys. Last year, the United States became the most competitive economy for the first time in a decade, according to the World Economic Forum. And in a ranking of the most innovative countries by Bloomberg, the U.S. moved from 11th to 8th place. In addition, state spending on infrastructure has risen for nearly two years.
Innovation has many fathers but among them is better transport of goods and people as well as faster digital networks for the flow of ideas and services. The Business Roundtable estimates that an additional $737 billion investment in infrastructure over 10 years would raise annual labor productivity by 0.56%.
The ability to do things better and faster, however, is not just a matter of new physical structures or capital investment. Creativity in research and a fearless adaptation of new ideas are also necessary. These arise from any number of sources, such as improved education or, in the case of workers displaced by automation, reeducation. British researcher Ben Ramalingam says a country’s “innovation movements” come less from technology solutions than from improved qualities of thought, such as trust, humility, and patience in the workplace.
Ah, if only Washington could adopt these traits and raise its productivity. Such a moment occurred last Tuesday in a meeting in the White House with top leader. If they follow the cue from the rest of America, they might get along enough to pay for their infrastructure goals.