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What's up with labor Productivity?
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Another graph discussed during the Lou Manchise Labor Management Conference NKU Haile College of Business last month was the decrease in Labor Productivity.
One of the attendees asked how is labor productivity measured. Here is a quick summary.
The Bureau of Labor Statistics (BLS) in the United States is responsible for measuring labor productivity. The BLS calculates labor productivity using a variety of methods and data sources. Here are the primary steps involved in measuring labor productivity:
1. Output Measurement: The BLS determines the output of goods or services produced by various industries or sectors of the economy. The measurement of output depends on the specific industry and can include physical quantities, such as the number of units produced, or value-based measures, such as sales or revenue.
2. Labor Input Measurement: The BLS collects data on the number of hours worked by employees in different industries or sectors. This information is obtained through surveys of establishments, payroll records, and other sources. The BLS also accounts for variations in labor quality by adjusting for factors like education, experience, and skill levels.
3. Deflation: To accurately compare output and labor input over time, the BLS adjusts for inflation. This involves deflating the output and labor input measures to remove the effects of price changes. The BLS uses price indices specific to each industry or sector to make these adjustments.
4. Productivity Calculation: The BLS divides the output measure by the labor input measure to calculate labor productivity. The result is typically expressed as a ratio or percentage change compared to a previous period. For example, if the output is $1,000 and the labor input is 100 hours, the labor productivity would be $10 per hour.
The BLS publishes labor productivity data at various levels, including industry, sector, and overall economy. These statistics provide insights into trends, comparisons, and changes in productivity over time. They are widely used by economists, policymakers, businesses, and researchers to analyze economic performance and inform decision-making.
I love sharing the topics that I study and teach. I am excited for the students in Principles of Macroeconomics in the fall for all that they will learn. James Blazinaand Rebecca Wilson took that class as second year students and this fall they get to sit in again, this time as TAs!