Wednesday, October 13, 2010

Employment, Productivity, and Economic Growth

The economy can grow one of two ways... an increase in the number of people working (i.e. employment) or getting more out of these workers (i.e. productivity). Over the last few years the employment side has been horrendous, but has been (partially) offset by a jump in productivity (i.e. getting more out of the existing workforce).

The issue (as I see it) is the longer trend that can be seen above. Employment has been on a 30 year slowdown in terms of growth, while productivity has just recently slowed following a 20+ year period from a consistent rise from the early 80's through early 00's (lack of investment?).

Source: BLS / BEA