Will Generative AI Boost Worker Productivity or Just Be Another Light Bulb?
A recent Federal Reserve Board paper examines whether generative artificial intelligence (gen AI) will drive significant gains in U.S. labor productivity or if it will resemble past inventions like the light bulb—offering a one-time boost but little sustained growth.
The paper, titled “Generative AI at the Crossroads: Light Bulb, Dynamo, or Microscope?”, weighs gen AI’s potential as a general-purpose technology (GPT) and its impact on the economy. The authors highlight that much depends on how quickly and widely businesses adopt this technology.
Gen AI: Between a Tool and a Catalyst
Generative AI shares traits with GPTs—technologies that trigger waves of innovation across industries and improve over time. It also resembles “inventions of methods of invention” (IMIs), which accelerate research and development.
The paper suggests gen AI might become like the electric dynamo, which continuously fueled new business models, or like the compound microscope, which transformed scientific discovery. Since ChatGPT’s launch in late 2022, gen AI has shown abilities ranging from complex problem-solving to transforming jobs in writing, coding, and customer service.
However, the report points out that despite these capabilities, actual usage by many companies remains limited.
Adoption Is Growing but Still Limited
Most productivity gains so far are concentrated among large corporations and tech-focused industries. Surveys show high gen AI adoption in big firms, while small businesses and other sectors lag behind.
Data also indicate only modest growth in demand for AI skills since 2017, suggesting cautious uptake by businesses. The authors note that historically, major productivity gains from GPTs like electricity and computers took decades as firms restructured, invested, and created complementary innovations.
The key challenge is diffusion—the process of integrating gen AI widely into daily business operations. Some individuals use AI tools independently, possibly without their employers’ knowledge, which might make future AI usage common but unnoticed.
Complementary Innovations and Knock-On Effects
Generative AI is already driving product and process innovations across sectors:
- Healthcare providers use AI to draft medical notes and assist with radiology.
- Finance firms apply gen AI for compliance, underwriting, and portfolio management.
- Energy companies optimize grid operations using AI.
- Programmers employing tools like GitHub Copilot complete coding tasks about 56% faster.
- Call centers using conversational AI report productivity boosts around 14%.
Advances in hardware, especially graphics processing units (GPUs), continue to accelerate gen AI’s capabilities. Patent filings related to AI have surged since 2018, reflecting rapid innovation in the underlying technologies.
Gen AI as a Research and Development Aid
The paper also highlights gen AI’s role in enhancing scientific research. AI tools help analyze data, draft papers, and automate parts of the discovery process. References to AI in patents and corporate statements indicate growing integration into R&D, though concerns about the originality and quality of AI-generated work remain.
Cautious Optimism—and Open Questions
While gen AI holds promise for boosting productivity, the transformation won’t happen overnight. Significant investments, organizational changes, and reliable infrastructure are needed for widespread adoption.
The authors warn against rushing into speculative investments, recalling lessons from past technology booms. They conclude that gen AI’s long-term impact will depend on the speed and scale of its integration into business operations.
In the end, gen AI could either be a transformative force driving sustained growth or a powerful but one-time productivity boost like the light bulb. The coming years will reveal which path it takes.
For professionals interested in deepening their AI knowledge and skills, exploring targeted courses can provide a practical edge. Platforms like Complete AI Training offer up-to-date courses on generative AI and its applications across industries.
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