Although there are many reasons for the productivity rut, one of the primary ones is that businesses aren’t investing in their workers. Business investment fell almost 25 percent during the recession and hasn’t come back the way many economists had expected, especially given that low interest rates make borrowing less expensive. Growth of capital spending during this recovery is about 30 percent below the average of the prior five recoveries, according to Bank of America Merrill Lynch. That’s left many workers without the equipment, software, and structures—which economists call “capital”—that they need to be more productive. Whether it’s a computer or a forklift, workers are stuck using outdated machines. The average age of equipment in the U.S. is 7.4 years, the highest in 20 years, according to the Bureau of Economic Analysis.
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