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February 28, 2011
BLS Reports on Compensation-Productivity Gap

The “wage gap” between real hourly compensation and labor productivity in the nonfarm business sector has grown, according to a recent report from the Bureau of Labor Statistics (BLS). The gap indicates whether workers' compensation is keeping up with productivity.

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Growth of productivity is output, adjusted for price changes, divided by hours worked at all jobs. Growth of real hourly compensation is the hourly cost to businesses, adjusted for price changes, of wages, salaries, and benefits paid to workers.

Productivity Growth and Real Hourly Compensation Growth, 1947-2009
Source: U.S. Bureau of Labor Statistics

 
Average Annual Percent Change
Time Period Productivity Real Hourly Compensation
1947-73
2.8
2.6
1973-79
1.1
0.9
1979-90
1.4
0.5
1990-2000
2.1
1.5
2000-09
2.5
1.1

The report highlights several trends:

  • In 1973, growth of productivity and real hourly compensation slowed.
  • Since 1947, real hourly compensation growth has lagged behind productivity growth.
  • The gap between productivity growth and compensation growth has widened. Over the 2000–09 period, growth in productivity averaged 2.5 percent, while growth in real compensation averaged 1.1 percent.

This data, along with additional information, was published in The compensation-productivity gap: a visual essay.

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