Productivity is the measure of how many goods can be produced by a single person in a standardized unit of time. Productivity is one of two inputs into aggregate economic output (along with total population growth).
Productivity is typically measured using total factor productivity, which measures how much can be produced with a fixed amount of labor and capital. The BLS measures productivity under two measures: multifactor productivity and labor productivity (which is just output per hour of labor, without holding capital fixed). To illustrate the difference: consider a worker who can produce ten widgets in an hour using one machine. They then get a second machine, allowing them to produce twenty widgets per hour. In that case, their labor productivity has doubled, but their total factor productivity has gone up by less than 2x, since capital also increased.
TFP growth slowed substantially from the early 20th century to the 2000s, and then slowed again from the mid-2000s to today. Economists and historians greatly disagree over the cause of this decline. One body of thought, associated with Robert Gordon and Tyler Cowen, is that the “low hanging fruit of growth” has been plucked. Gordon cites the fact that the inventions of the late 19th and early 20th centuries–electricity, the automobile, widespread indoor sanitation–are far more transformative than the kinds of inventions that are possible today. While lone individuals or small teams could come up with transformative insights in days past, today one requires massive teams of scientists in expensive labs to generate the same effect. Others emphasize the role in policy changes over this time period, citing examples like stiff regulations on energy development and biotech research as making it too expensive to develop new technologies. Entire academic disciplines such as meta-science attempt to come up with policy solutions to spur greater innovation.
Productivity improvements can come from several sources, such as capital deepening (greater capital per workers, such as in the example of one worker using two machines instead of one, or a worker gaining more human capital through improved human capital) and innovation (which can come from superior technology, or soft capital such as superior methods of measurement and organization).