Friday, April 2, 2010

Labor Productivity

1. Labor productivity is a statistic with far-reaching importance. It would be very important to economists, politicians, businesses, and foreign governments. However, its impact goes beyond these professions and establishments because growth in labor productivity means that workers are able to produce more output, and this occurs through an increase in the capital utilized throughout the production process. This increase can occur through the means of human or physical capital. Increasing labor productivity shows that a firm, franchisee, nation, etc. is increasing the quantity and/or quality of its goods – which means that capital is being utilized effectively and economically which can, in turn, raise quality of living, participation, etc.

2. The statistic is gathered by The Bureau of Labor Statistics (BLS), wherein they define productivity as a “measure of economic efficiency which shows how effectively economic inputs are converted into output”. There are two BLS programs that “produce labor productivity and costs (LPC) measures for sectors of the U.S. economy”. The Major Sector Productivity is published quarterly and is the most commonly cited statistic, while the Industry Productivity program publishes annual measures. (

3. The BLS reported that the “nonfarm business sector labor productivity increased at a 6.9 percent annual rate during the fourth quarter of 2009”. It further expands on this statistic by stating “From the fourth quarter of 2008 to the fourth quarter of 2009, productivity increased 5.8 percent as output declined 0.2 percent and hours fell 5.7 percent”. This resulted in the annual measure of productivity increasing 3.8 percent from 2008 to 2009. ( Furthermore, a chart posted on the website shows changes in productivity in the nonfarm business sector from 1947-2009. This bar chart shows that after a dip from 1947-73 to 1973-79, the average annual percent change in productivity has been steadily increasing. (

Labor productivity and costs (lpc). (n.d.). Retrieved from

Productivity and costs, fourth quarter and annual averages 2009, revised. (2010, March 4). Retrieved from

Productivity growth by major sector, 1947-2008. bar chart. (2010, March 5). Retrieved from

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