U.S. worker productivity continues to increase

By Money Matters Editors

An experienced economist will tell you that for almost every economic statistic there’s an upside…and a downside.

And that’s perhaps no truer than with U.S. worker productivity. Another way of putting this is, to paraphrase the great writer Charles Dickens, ‘It is the best of times, and the worst of times for the American employee.’

The best of times: In Q2, the American worker, already the most productive in the developed world, became even more productive, with U.S. worker productivity increasing at a 6.6 percent annual rate – a six-year high, according to the U.S. Labor Department. During the quarter, hourly compensation rose just 0.2 percent, with unit labor costs – a key indicator of inflationary pressure, and one watched closely by the U.S. Federal Reserve – plunging 5.8 percent – its largest decline in nine years. In other words, American employees are more productive now – on an output per unit cost basis – that any time in the modern era.

What's more, in the past year, productivity is up 1.8 percent, while unit labor costs have dropped 0.6 percent.