NCPA - National Center for Policy Analysis

Measuring Worker Output

February 27, 1997

High productivity is good. It means more money for workers without higher costs to consumers. Consequently, statistics showing that growth in worker output has slowed from almost 3 percent a year in the 1960s to just over 1 percent in the 1973-1994 period sound alarming. Moreover, in the past two years it's down to just 0.3 percent. But some economists say the government's figures are not adequately measuring productivity growth in the services sector.

The President's Council of Economic Advisers is now pointing to another glitch in the data.

  • Until recently, the Bureau of Labor Statistics based its productivity estimates on gross domestic income -- but changed to relying on gross domestic product figures.
  • While both figures should yield the same result, they often don't due to certain statistical differences, the CEA reports.
  • The official productivity number for the past two years -- 0.3 percent -- becomes a much less discouraging 1.6 percent annual growth rate when the income number is used.
  • And over the first six years of the present economic expansion, productivity has grown at a 0.9 percent annual rate -- but risen 1.2 percent annually using the income numbers.

While even the higher figure is nothing to cheer about, the CEA believes the earlier dramatic drop in worker output may be a statistical problem rather than an economic one.

Source: Perspective: "Is Worker Output Slipping?" Investor's Business Daily, February 27, 1997.


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