Department of Labor Logo United States Department of Labor
Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Productivity
Bureau of Labor Statistics > Productivity > Publications > Productivity Highlights

State Labor Productivity: disruption and resilience under COVID-19?

This webpage takes a closer look at trends in the latest state-level labor productivity and cost measures through 2021. The emphasis for this year’s review is on change during the first two years of the COVID-19 pandemic (2019-21).

The Bureau of Labor Statistics (BLS) released updates to the state-level data for the private nonfarm sector on May 26, 2022. Data series in the release include labor productivity, output, hours worked, unit labor costs, hourly compensation, and real hourly compensation. The data cover 50 states and the District of Columbia, and four Census regions, from 2007-21. By analyzing state-level labor productivity measures, data users can learn more about regional business cycles, the persistence of regional income inequality, and which states are driving national productivity trends.

On This Page:

Analysis
Frequently asked questions

Additional Resources:

Press Release:
Download Data:
  • Private nonfarm productivity and costs by state and region (XLSX)
MLR Article:
  • BLS Publishes Experimental State-level Labor Productivity Measures (HTML) (PDF)
Inquiries and Feedback:

BLS state productivity press releases highlight rates of change in labor productivity and cost statistics in two ways: the latest annual data and growth rates averaged over longer time periods. However, focusing on average growth rates for periods can obscure the twists and turns of these statistical indexes over time.

The next two sections of this webpage examine two other recurring patterns of growth in state productivity: states that recorded a notable uptick in productivity growth rates during the pandemic and states where productivity growth rates have been trending upward for a while. (For ease of reading, statements referring to groups that include states and the District of Columbia will be shortened in some cases to “states,” despite the unique status of the District of Columbia as a federal district.)

 

States where productivity spiked during the pandemic

Chart 1 shows productivity indexes for six states that did not generally have high growth rates until recently. To be fair, most states saw productivity stall or retract in the wake of the 2007-09 Great Recession. (The national average annual growth rate of private nonfarm productivity was only 1.2 percent per year from 2007-17. Therefore, the analysis on this page mostly focuses on comparing the last two biannual periods.) However, the long-term trends on the chart tended to be flat to modest growth in productivity until 2019. The period from 2019-21 is a break in the trend for each of the states on the chart.

Line chart of productivity indexes, 2007 to 2021, of six states that had notable increases in the productivity growth rates from 2019 to 2021.
Chart 1 data. Productivity of selected sudden surge states, 2007-21

 

Work hours down, productivity up

These six states were not necessarily the fastest in productivity growth over the last two years. Rather, the distinction is that growth was fast relative to the preceding years. From 2017-19, productivity grew slower than the national average in all six states. (It actually decreased in Pennsylvania and was flat in Mississippi, as revealed in table 1 below.) Yet from 2019-21, productivity rose at a faster rate than the national average in all six states.[1]

Table 1. Average annual rates of change for selected states, time periods, and measures compared to the national private nonfarm sector
Geography Productivity Output Hours worked
2017-19 2019-21 2017-19 2019-21 2017-19 2019-21

National (private nonfarm)

1.7% 2.5% 3.0% 1.1% 1.3% -1.3%

District of Columbia

1.0% 5.2% 2.4% -0.2% 1.4% -5.2%

Iowa

0.5% 3.1% 0.9% 1.1% 0.4% -2.0%

Michigan

1.0% 3.5% 1.2% 0.5% 0.2% -2.9%

Mississippi

0.0% 3.0% 0.5% 1.3% 0.5% -1.7%

Pennsylvania

-0.2% 3.2% 2.0% 0.1% 2.1% -3.0%

Vermont

1.2% 3.5% 1.2% -0.5% 0.0% -3.9%

One might think that strong productivity growth implies more output growth. Looking at the 2017-19 period, it is true that output growth was weaker in all six states than the national average. However, from 2019-21, only Mississippi exceeded the national average of output growth. In the District of Columbia and Vermont, output shrank. What enabled all six states to outpace the national average rate of productivity growth in the last two years was a steeper decline in hours worked.

 

Private sector hours receded in the Capital

The District of Columbia was tied (with Washington state) as the “state” with the largest increase in private nonfarm productivity during the pandemic period (2019-21). The difference between the District of Columbia’s productivity increase in that period and the preceding 2017-19 period, 4.2 percentage points, was larger than for any state.

Chart of average annual rates of change for 2007-17, 2017-19, and 2019-21 periods, and 2020 and 2021 annual rates, of selected data series for the District of Columbia. Productivity, output, and hours worked are represented.
Chart 2 data. Average annual rates of change for selected series and periods, District of Columbia

 

The District of Columbia contains one city, the national capital of Washington. No rural or suburban hinterland is included within the territory’s boundaries. It is important to clarify that the private nonfarm sector excludes many of the District of Columbia’s largest employers, notably in the government and the nonprofit sector. (Only nonprofit establishments serving households are included in the productivity measures.)

Despite the spike in productivity during the pandemic years, the District of Columbia’s output fell during the 2019-21 period (-0.2 percent annually). That rate was below the national average of a moderate increase (1.1 percent). Similar to most states, output plunged in 2020 (-3.9 percent), but recovered most of the loss in 2021 (up 3.5 percent).

On the other side of the productivity equation, the District of Columbia was the most extreme example, among the sudden surge states, in how decreasing hours worked drove the increase in productivity. Hours worked fell at the second steepest rate in the country from 2019-21 (after Hawaii), dropping by an average rate of 5.2 percent per year. While most of the loss occurred in 2020 (-9.2 percent), hours worked continued to decline in 2021 (-1.0 percent). The District of Columbia is the only state that did not experience a rebound in hours worked in 2021.

 

States with generally increasing productivity growth rates

Chart 3 depicts productivity indexes of six selected states with strong growth rates throughout the BLS reference period. The rates increased over time; the 2019-21 period was a continuation of an ongoing trend, not a break.

Line chart of productivity indexes, 2007 to 2021, of six states that had increasing rates of productivity growth throughout the reference period.
Chart 3 data. Productivity of selected accelerators, 2007-21

 

Similar to the sudden surge states in chart 1, the accelerators depicted in chart 3 varied in the swiftness and intensity of their recovery from the Great Recession. However, by the 2017-19 period, all six states outpaced the national average rate of annual productivity growth. (See table 2 below.) Three states were within one percentage point of the national figure, so the gaps weren’t all dramatic. But from 2019-21, annual productivity increases in all six states were more than a percentage point above the national average. For Washington and California, the rates were far above the national average.

Table 2. Average annual rates of change for selected states, time periods, and measures compared to the national private nonfarm sector
Geography Productivity Output Hours worked
2017-19 2019-21 2017-19 2019-21 2017-19 2019-21

National (private nonfarm)

1.7% 2.5% 3.0% 1.1% 1.3% -1.3%

California

3.3% 5.1% 4.5% 3.1% 1.1% -1.9%

Massachusetts

2.8% 4.0% 3.8% 1.7% 0.9% -2.2%

New Hampshire

2.6% 4.4% 3.0% 2.8% 0.4% -1.5%

New York

2.3% 3.9% 2.7% 0.2% 0.4% -3.6%

Oregon

1.9% 3.6% 3.6% 1.1% 1.6% -2.4%

Washington

4.3% 5.2% 6.2% 3.5% 1.8% -1.6%

Unlike the sudden surge states, most of the accelerators exceeded the national average rate of output growth in the two short periods of comparison. New York increased output more slowly in each period. New Hampshire matched the national rate between 2017 and 2019 while Oregon matched the national rate since 2019. The other three states (Washington, California, Massachusetts) consistently grew faster than the national average of output growth over the last four years.

Hours worked, the denominator of the productivity ratio, grew faster than the national average in two of the accelerator states (Washington and Oregon) from 2017-19. In the 2019-21 period, all six states lost hours worked faster than the national average, boosting their productivity growth rates. However, none of the accelerators saw hours worked decline as sharply from 2019-21 as in the District of Columbia or Vermont (two of the sudden surge states).

 

Productivity and output both grew in Washington state

Chart of average annual rates of change for 2007-17, 2017-19, 2019-21 periods of selected data series, and 2020 and 2021 annual rates, for the state of Washington. Productivity, output, and hours worked are represented.
Chart 4 data. Average annual rates of change for selected series and periods, Washington

 

In the state of Washington, continuing growth in output from 2019-21 drove the fastest rate of pandemic productivity growth (5.2 percent annually)—tied with the District of Columbia. Unlike the District of Columbia, productivity growth from 2019-21 in Washington state did not represent a break in the trend relative to the 2017-19 period. Washington’s productivity growth from 2017-19 (4.3 percent per year) was already notably faster than in the preceding decade. During the pandemic, the rate of increase rose further. The increase in 2021 (6.4 percent) was an improvement over the strong growth of 4.0 percent in 2020.

Washington posted the third highest growth rate in output among all states from 2019-21 (after Utah and Idaho), at 3.5 percent per year. After a modest decline in 2020, output more than recovered in 2021. The 2019-21 average rate of increase was lower than the rate during the 2017-19 period (6.2 percent), but higher than the 2007-17 period average (2.9 percent). Hours worked rose a little faster than the national average in the 2017-19 period (1.8 percent per year) but fell a little faster from 2019-21 (-1.6 percent). Most of the work hours lost in 2020 (-4.8 percent) were not recovered in 2021 (a 1.8 percent gain).

 

Frequently asked questions

1. How is output measured for states?

BLS state-level measures of output for the private nonfarm sector are created using GDP by state and industry data published by the Bureau of Economic Analysis (BEA). BEA does not produce a private nonfarm sector measure of real output by state. To create the necessary output series, BLS subtracts several industry components — the farm sector, private households, and owner-occupied housing — from GDP by state using a Fisher ideal index formula. See the output subsection of the Monthly Labor Review (MLR) article, "BLS Publishes Experimental State-level Labor Productivity Measures", for more information on BEA's methods for nominal and real measures of GDP by state.

Back to TopBack to Top

2. How are work hours measured for states?

Hours worked are the number of hours worked by all employed persons, including wage and salary workers, self-employed persons, and unpaid family workers. Hours for wage and salary workers are primarily from BLS Current Employment Statistics (CES) and hours for self-employed and unpaid family workers are from the BLS Current Population Survey (CPS). The hours are adjusted from an hours paid basis to an hours worked basis using data from the BLS National Compensation Survey (NCS). See the hours subsection of the MLR article for more information.

Back to Top Back to Top

3. What are the differences between the way BLS constructs state-level and national labor productivity measures?

First, the state-level measures cover the private nonfarm sector which adjusts the nonfarm business sector used in national productivity measurement by adding nonprofit institutions serving households and removing government enterprises. Second, the methods used for calculating the average weekly hours worked for wage and salary workers are different. At the state-level, BLS uses the average weekly hours paid for all wage and salary workers data published by the BLS Current Employment Statistics (CES) directly. At the national-level, BLS estimates the average weekly hours paid for wage and salary production and nonproduction workers separately. At both the state and national level, BLS adjusts hours from a paid basis to a worked basis using data from the BLS National Compensation Survey (NCS). See the differences between state and national productivity measures subsection of MLR article for more information.

Back to Top Back to Top

4. Does BLS have data on industry productivity by state?

At this time, BLS does not have measures of industry productivity by state. However, it is possible to construct measures of output and hours worked, respectively, by state and industry using the data sources provided in the MLR article.

Back to Top Back to Top

 

Notes

[1] Note that the national figure here is for the private nonfarm sector which differs in some important ways from BLS’s national productivity statistics for the nonfarm business sector and business sector.