The compensation-productivity gap
February 24, 2011
The gap between real hourly compensation and labor productivity is a "wage gap" that indicates whether workers' compensation is keeping up with productivity. Since the 1970s, growth in inflation-adjusted, or real, hourly compensation—a measure of workers' purchasing power—has lagged behind labor productivity growth.
Growth of productivity and real hourly compensation in the nonfarm business sector (which accounts for three-fourths of output and employment in the total U.S. economy) was robust until 1973, at which time growth slowed in both measures. During the 1947–73 period, the annual change in productivity averaged 2.8 percent, while real hourly compensation growth averaged 2.6 percent. Over the 1973–79 period, the averages were 1.1 and 0.9 percent, respectively.
Real hourly compensation growth failed to keep pace with accelerating productivity growth over the past three decades, and the gap between productivity growth and compensation growth widened. Over the 2000–09 period, growth in productivity averaged 2.5 percent; growth in real compensation averaged 1.1 percent over the same period.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, The compensation-productivity gap on the Internet at https://www.bls.gov/opub/ted/2011/ted_20110224.htm (visited March 22, 2019).
Recent editions of Spotlight on Statistics
- 25 years of Worker Injury, Illness, and Fatality Case Data
Examines detailed historical data on work-related injuries, illnesses, and fatal injuries.
- Occupational employment projections through the perspective of education and training
Examines employment, projected employment growth, and wages for occupations with different education and training requirements.
- Workers in Alternative Employment Arrangements
A look at independent contractors, on-call workers, temporary help agency workers, and workers provided by contract firms.
- Labor force characteristics of people with a disability
Examines the labor force characteristics of people with a disability and compares them with the characteristics of people with no disability.