Productivity Boom Drives Economic Resilience and Potential for Higher Wages
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Many companies invested in automation and technology to increase productivity and offset worker shortages. This helped spur an economic "productivity boom."
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Higher productivity allows for faster wage growth without necessarily increasing inflation. This explains how the economy has remained resilient despite high interest rates.
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Productivity growth shifted from around 1.5% pre-pandemic to 3-5% in the last year. This gives companies more leeway to raise wages without raising prices.
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Companies like Reata Engineering adopted more technology and efficiency out of necessity during the tight job market. This productivity growth may be sustained through AI and other innovations.
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Some workers have switched jobs to ones that make them happier and more productive. The tight labor market allowed this job mobility toward more value-adding roles.