Productivity is the most important factor in the creation of new high value and high-paying jobs in America. When productivity rises, the cost of American goods and services become less expensive than those of other countries. As a result, exports grow and the standard of living rises because people can afford to buy better goods and services. This then results in an increase of employment, derived from the initial increase in productivity.
As a concept, the impact of productivity on jobs may be hard to visualize, yet it can be applied to nearly any type of job or business. For example, a landscaping business begins with a simple push mower and a customer. As sales grow, you replace the push mower with a riding lawn mower and are able to take on additional jobs. You also invest in other machinery, like a hedge trimmer and weed whacker, so that you can provide more services and earn more money in the same amount of time it took you to cut the lawn with your push mower.
As your landscaping business continues to grow, you purchase a backhoe and larger equipment. These investments bring about the need to hire more skilled labor, like a person with training in heavy machinery, to ensure your equipment is used properly and safely. As the business grows, you need to hire additional staff members to ensure other tasks are completed properly, including bookkeeping, legal, and hiring. These positions demand a pay increase, typically a larger amount than those pushing the lawn mowers.
Productivity's Ripple Effect
The need for high-skilled workers results in a ripple effect of high-skilled job creation, because there is now a higher demand to fill these positions with the best candidates. This results in a higher need for teachers and educational institutions to provide the education needed for candidates looking to fill these positions. A simple lawn-care business that multiplies can have a domino effect, requiring more productive engineers, better-educated mechanics at the equipment manufacturers, and skilled office workers. The end result is a virtuous cycle that creates jobs with better wages.
The effect of productivity on job creation goes far beyond the simple example of a lawn care business. Improved productivity has a positive effect on both quality and value. For example, in the late 1980s, the ATM dramatically improved banking. Nowadays, many of us cannot remember the last time we actually set foot in a bank. The ATM offered unlimited accessibility, faster processing, greater security, and fewer errors. It created numerous high-skilled jobs in technology, telecommunication and data-analytics. It also transformed the role of bank teller from high-speed cashier to relationship-builder and customer service manager. Today, a bank teller's job involves less quota-driven frenetic work; instead, the focus of bank tellers can be on engaging customers and providing a more personal interaction.
The future of productivity in the U.S. holds great promise in creating new jobs. In the same way the Internet dramatically changed the current job market, productivity is changing the future job market. New jobs encompass hard-skilled positions, such as data-informatics as well as soft-skilled positions, like social media consultants. It is important to understand your core skills and competencies and learn how to adapt them to the new labor market. With productivity impacting the job market, workers need to put an emphasis on their ability to adapt to these changes.
Thriving On Innovation
Future breakthrough innovations will continue to reshape job opportunities. Remote workforces are becoming the standard as both products and services become virtualized. The music and bookstore industry has moved into the virtual sector. Even banking and ATM capabilities are offered online, allowing the bank teller to act as an online associate who can work remotely and provide concierge-style services for any banking need.
Without question, change can create significant uncertainty and anxiety, particularly when changes affect an individual's job and their means of income. In addition, many invest a significant amount of time, energy and passion to become an expert in their current field. The need for highly specialized workers equates to workers adapting and re-purposing themselves multiple times throughout a career. Often, workers will gain familiarity with a new skill and then be forced to master a slightly different specialty once the change affects their position.
In today's market, the rate of change has accelerated, and staying relevant requires continuous improvement. The U.S. is a country thriving on innovation and productivity to fuel economic growth and create wealth. From Henry Ford to Apple, the ability to innovate faster and better than any other country serves as the source of our success. Change is essential to productivity; therefore, embracing the change is more important than ever. The light at the end of the tunnel is a more fulfilling, rewarding and higher paying job.
Stories from AARP