How productive are we? It depends on how you look at it.

Productivity

Over the past year, productivity rose a modest 1.1 percent. Gains in productivity mean workers can be paid more.

This is not your father’s productivity rate.

Back before the recession, the Labor Department reported worker productivity increases of 2 to 3 percent a year. We’ve been stuck at around 1 percent for the past few years.  

“One percent today is not the 1 percent of 2006 before we went into the recession,” says Christopher Rupkey, chief economist of MUFG Union Bank.

Rupkey says, before the recession, a 1 percent productivity-rate increase would have been awful, because we were in that crazy housing bubble. It skewed productivity up. After the bubble burst, productivity skewed down.  

So, if you think about it, 1 percent isn’t so bad, says James Craft, a business administration professor at the University of Pittsburgh.

“Given what we’ve experienced in terms of some of the problems in the economy and its recovery and so forth, I think that is reasonable at this point in time,” he says.

And here’s another thing to think about: It’s harder to measure productivity now. It was easier when technologies like Microsoft Word first came along, and the cause-and-effect was clearer. 

“The big benefit was, of course, secretaries don’t have to retype memos here after taking advantage of word processing,” says Doug Handler, chief U.S. economist at IHS Global Insight.

Now, Handler says, we have so many new technologies it's hard to tell what's responsible for productivity improvements. The cloud? That new app on your phone? Both?

Still, Handler says, some things haven’t changed. Companies need to hire good people and spring for the latest technology, even if they’re not sure how it will affect productivity.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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