america's dynamic workforce: 2008 |
Both expanding population and rising productivity boost economic growth,
but only the latter raises the standard of living. Productivity growth
paves the way for increased real compensation (i.e., wages and benefits)
for American workers. Labor productivity is defined as the ratio of real
output to the number of labor hours required as input, and indexes of
labor productivity measure its change over time.
Multiple factors can raise workers’ productivity. Two factors—workers’ skills
and efforts—are a direct reflection of the workers themselves. Other important
factors include the effects of research and development and capital investment
(in other words, the development and incorporation of technological change), the
organization of production, and changes in managerial skills. Resource
allocation also can affect overall productivity growth. If, for example,
resources are shifted away from low-productivity industries to high-productivity
ones, a nation’s overall productivity level will rise.
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