Many people fear that productivity threatens employment, yet in the United States both have risen in every ten-year rolling period but one since 1929. Productivity is a job generator rather than a job killer because it not only increases efficiency but can also expand output through innovations that improve the performance, quality, or value of goods and services.
Even productivity that stems solely from efficiency gains can raise employment if companies pass the cost savings on to their customers in the form of lower prices—leaving households and businesses with more money to spend elsewhere—or use their savings from leaner operations to set up new job-creating ones. To learn more, read “Why US productivity can grow without killing jobs” and “Five misconceptions about productivity.”
McKinsey Quarterly March 2011.