Disruptions to global supply chains have made it harder for businesses to get critical inputs, limiting the productivity of labour and capital. Public health restrictions have necessitated more people and space to do the same work. And rapidly changing circumstances have made it hard to plan and operate efficiently. As the pandemic fades, these forces should dissipate, creating the opportunity to increase productivity.
There are two fundamental sources of growth in gross domestic product—more workers and more output per worker. We call output per worker productivity.2 We measure workers by total hours worked, which is the product of employment and average hours worked. We call this labour input. And we measure productivity as output divided by labour input.