This is not good. At all. As New York Times reporter Neil Irwin notes today: “From 2011 through 2015, the government’s official labor productivity measure shows only 0.4 percent annual growth in output per hour of work. That’s the lowest for a five-year span since the 1977-to-1982 period, and far below the 2.3 percent average since the 1950s.”

So basically productivity growth has flatlined. And without fast rising productivity growth, you aren’t going to get fast rising living standards. So what’s happening? Irwin offers three possible explanations (these may be familiar to long-term readers):

First, the US is not as innovative as in the past, plus there’s been less business investment (which may be related to weak innovation). Irwin: “Moreover, if you believe the theory mentioned above about low-productivity workers being more likely to lose their jobs during the recession, the people returning to the labor force now may be less effective at boosting economic output for each hour they put in.”

Second, we are mismeasuring productivity in the tech economy,and things are better than they seem. (Written a lot about this.) But Irwin focuses on research suggesting this problem is no worse than ever. Irwin: “That said, the tools that statistics-keepers use to measure the economy are never perfect, so there could be problems not yet understood that are creating a false impression of a productivity drought.”

Third, be patient. Things are ready to improve as new innovations comes on line, and business figures out how to best use them. Again, Irwin has his doubts:

Business investment spending on equipment, intellectual property and structures is low relative to the size of the economy. You’d expect those numbers to be higher if this was just a productivity lull as the economy waits for big investments in the future to pay off. Still, there could be enough going on below the surface of those overall numbers that the optimistic case remains plausible. To use one example, engineers at several companies are hard at work trying to perfect driverless cars. At present, they are a sap on productivity — they put in many thousands of hours of work with no economic output to show for it. But if successful, their work could radically increase the nation’s productivity in the decades ahead.

Which is correct? I hope it’s #2 and #3, but policymakers should act like it’s #1 and start obsessing about innovation policy. What should government be doing more of/less off to create a better ecology for invention and innovation? By the way, the recent Economic Report of the President has a nice chapter on innovation.