Looking at the Growing Productivity of American Workers for Labor Day

Thursday, August 31, 2023

Labor Day celebrates the dedication, achievements, and hard work of the American workforce. Here at the Bureau of Labor Statistics, we have a lot to say about workers and how worker productivity contributes to the health of the U.S. economy. In fact, gains in worker productivity are a known ingredient in raising a nation’s standard of living.

Since 2000, labor productivity has increased 1.5 percent per year. This is because output—the amount of goods and services the economy produces—grew faster than total hours worked. With productivity glasses on, that is positive news! From 2000 to 2022, U.S. workers produced about 60 percent more “stuff” and only increased their hours worked by 10 percent. This efficiency in production means more time for fun activities like an afternoon baseball game with friends (reminiscing on what baseball and productivity statistics have in common).

Editor’s note: Data for this chart are available in the table below.

The increase in labor productivity is not just workers trying harder. Today’s workers use more advanced machines in production, and workers are more highly skilled than ever before. The increase in workers’ skills and their ability to adapt to new technology means they can produce the same amount of output in fewer hours. The BLS Total Factor Productivity statistics account for changes in capital and changing labor skills and worker experience, recognizing that all hours worked are not equally productive. The BLS labor composition index measures the changes in worker experience and skills. When the labor composition index increases, it means the skill level of the workforce is rising.

Editor’s note: Data for this chart are available in the table below.

Chart 2 shows that labor input (labor hours adjusted for labor composition) follows the same pattern as hours worked but grows at a faster rate because workers are becoming more skilled. The increase in the labor composition index—the red line—in 2020 was not due to upskilling of workers, but rather driven by the significant pandemic-related job losses experienced by workers in low-wage, low-skill industries. As these workers were rehired, the labor composition index returned to its more gradual upward trend.

Another piece of productivity involves the capital that workers use to make goods and services. Labor and capital go hand in hand. As improvements are made in the tools we use and new technologies are introduced, workers must continuously learn new skills. We can see that workers are, in fact, upskilling as evidenced in the labor composition measure. We can also look at a few types of capital to see how technology has grown since 2000.

Editor’s note: Data for this chart are available in the table below.

The amount of computers, software, communication equipment, and research and development used in the production process have increased at least twofold in just 2 decades. Using these improvements, workers have stepped up and helped the productivity of the economy improve.

At a more detailed level, we can see that industry productivity growth varies across the economy. Looking at the top 5 expanding industries with growth in both hours and output, annual growth in labor productivity over the 2000—22 period ranged from 9.6 percent in electronic shopping and mail-order houses to 3.5 percent in general merchandise stores. Curious about productivity growth in your industry or other industries? See our data tables on labor productivity and cost data for detailed industries.

Editor’s note: Data for this chart are available in the table below.

Throughout the decades, the U.S. workforce has propelled our economy forward. When workers and capital unite, innovation finds a way to make more with less. Productivity growth in the economy celebrates the American spirit, effort, and the hard work of our workers. And over time, productivity growth will increase time saved that can be directed toward new and innovative ideas of tomorrow.

To learn more about productivity and do your own investigation of the pieces of the productivity puzzle, visit our productivity page, check out our educational resources, glossary, and questions and answers, and explore our data.