Americans are keeping their smartphones and laptops longer than ever, but this seemingly frugal choice is extracting a heavy, hidden toll on the national economy. New research from the Federal Reserve reveals that this “tech hoarding” is costing the U.S. billions in annual productivity losses. As workers struggle with aging devices that can’t keep pace, this collective decision creates a massive economic drag, disproportionately impacting small businesses and actively stifling workplace innovation across the country.
Story Highlights
- Americans now keep smartphones for 29 months versus 22 months in 2016—a 32% increase that’s costing the economy billions annually.
- Federal Reserve research shows each additional year of delayed tech upgrades reduces productivity by one-third of a percent.
- 88% of workers report outdated technology stifles innovation while 24% work overtime due to tech problems.
- Small businesses bear the heaviest burden, spending countless hours on maintenance instead of growth.
Economic Drag Hidden in Plain Sight
Federal Reserve economists have documented a troubling trend: American workers and businesses are keeping their technological devices far longer than economically optimal, creating a hidden tax on national productivity. The average smartphone is now retained for 29 months compared to just 22 months in 2016, representing a 32% extension that multiplies across millions of devices nationwide. This seemingly prudent individual choice creates cumulative economic damage measured in billions of dollars annually.
The productivity decline isn’t theoretical—it’s measurable and accelerating. Research indicates that for every additional year companies and individuals delay technology upgrades, overall economic productivity drops by approximately one-third of a percent. When applied across the entire U.S. economy, this represents a massive drag on competitiveness precisely when America needs maximum economic efficiency to compete globally.
Americans are holding onto devices longer than ever and it's costing the economy https://t.co/cjjssqEAhi
— Lon Seidman (@lonseidman) November 26, 2025
Small Business Burden Intensifies
Small and medium-sized enterprises face disproportionate impacts from extended device lifecycles, lacking the capital resources of larger corporations to maintain modern technology infrastructure. Najiba Benabess, Dean of Business at Neumann University, warns that these businesses are “sinking hours into maintenance and repairs, all while productivity quietly erodes.” Unlike large corporations with dedicated IT departments, small businesses often rely on aging devices that become operational bottlenecks.
The maintenance trap proves particularly costly for entrepreneurs and small business owners who find themselves allocating precious time and resources to keeping old equipment functional rather than investing in growth opportunities. Cassandra Cummings, CEO of Thomas Instrumentation, emphasizes the fundamental mismatch: “Think about how much internet speeds have changed in the past decade,” highlighting how devices designed for previous technological environments cannot leverage modern infrastructure capabilities.
Workplace Innovation Crisis
Survey data reveals the extent to which technological stagnation undermines American workplace performance. An overwhelming 88% of employees report that inadequate technology actively stifles innovation, while 24% are forced to work overtime specifically due to technology-related issues. These statistics represent not just individual frustration but systemic economic inefficiency that compounds across industries and regions.
Workers attempting to run modern software applications on aging hardware face daily productivity obstacles including slower processing speeds, frequent crashes, incompatibility issues, and reduced multitasking capabilities. The cumulative effect creates a workforce operating below optimal capacity, undermining America’s competitive advantage in knowledge-based industries where technological efficiency directly translates to economic output.
The innovation deficit extends beyond individual productivity to collaborative capacity, as teams struggle to coordinate using devices with varying capabilities and software compatibility. This technological fragmentation impedes the seamless workflow essential for modern business operations and creative problem-solving.
Watch the report: AI Is Holding Up the U.S. Economy — What If It Crashes?
Sources:
- Americans are holding onto devices longer than ever and it’s costing the economy
- Is device hoarding costing the American economy? | LinkedIn
- Americans are keeping phones and tech longer, reducing upgrade cycles | Cryptopolitan on Binance Square
- 7 Adverse Effects of Longer Cell Phone Ownership on the US Economy – New Data Reveals This! – Pintu News
