Many things could help bolster our weak recovery, support growth and create jobs — more exports of American products and services, fewer onerous regulations and greater certainty, to name a few. One factor often overlooked is increased productivity.
Greater productivity means higher median income for workers, enabling them to buy and invest more, which leads to job growth. It means that U.S. companies are better able to compete in a tough global economy. It means lower inflation and more available capital to invest. And it means a rising standard of living for everyone.
We have several opportunities to propel productivity. The energy sector is a perfect example. Natural gas was once one of our costliest supplies. Thanks in large part to technology, we now have the ability to more affordably extract and develop natural gas at record rates. The result is lower prices, a stable supply, more jobs and a surge in revenues. The United States is now poised to be a net exporter of natural gas. Driving energy productivity also gives energy-intensive manufacturers reason to stay put, rather than relocate overseas where fuel might be cheaper.
We could also increase productivity by modernizing our infrastructure system and keeping our supply chain seamless and efficient. According to the U.S. Chamber of Commerce’s Transportation Performance Index, failure to maintain our infrastructure will cost us $1 trillion in GDP by 2020. But removing infrastructure inefficiencies and choke points in the supply chain could drive down consumer prices by reducing transportation costs.
Small reforms can make a difference. Virtually everything we buy is transported on trucks, and we can make them more productive by letting the same engine pull two slightly longer trailers. Allowing trucks to pull two 33-foot trailers, instead of two 28-foot trailers, would increase productivity 16 percent, without compromising safety, impacting the condition of our roads or decreasing fuel efficiency.
But doesn’t increased productivity mean fewer jobs? That could happen for some workers in some cases. In advanced manufacturing, for example, automation has displaced some assembly line workers. But new jobs will be created in technology industries that enable this automation. Moreover, when companies translate efficiency gains into cost savings and pass them on to their customers, consumers will, in turn, spend their money in other parts of the economy. And that creates jobs. Businesses may also opt to direct the money saved in one area into new job-creating ventures.
One of the driving forces of productivity gains is innovation. Next week I’ll discuss the elements of the Chamber of Commerce’s innovation agenda and how they can drive growth and jobs in our economy.
— Tom Donohue is president and CEO of the U.S. Chamber of Commerce.
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