Susan Houseman and I have a new essay, “Not all productivity gains are the same: Here’s why” on the McKinsey “What Matters” website. Here’s the conclusion:
in a global economy, we need to be thinking more about the sources of apparent productivity growth. It matters greatly for wages and employment whether rising value-added per worker is being driven by domestic production improvements, supply chain efficiencies, or by productivity gains abroad.
Industries with the same measured productivity growth may generate those gains from very different sources. One industry may benefit mainly from internally generated productivity improvements, another industry may actively search out supply chain improvements, and a third industry may shift sourcing mainly in response to productivity gains and price drops overseas. These different sources of measured productivity growth yield very different wage and employment outcomes for workers…..
Take a look,