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Table 5–2
Nonfarm Private Business Productivity Growth
10–year Average annual rates of change
Period Multifactor Productivity Labor Productivity Difference
1953–1962 1.5 2.6 1.1
1963–1972 1.9 2.8 1.0
1973–1982 –0.1 1.1 1.2
1983–1992 1.1 2.2 1.1
1993–2002 1.1 2.4 1.3
2003–2012 0.9 1.9 1.0
20–year Average annual rates of change
Period Multifactor Productivity Labor Productivity Difference
1953–1972 1.7 2.7 1.0
1973–1992 0.5 1.6 1.1
1993–2012 1.0 2.1 1.1
60–year Average annual rates of change
1953–2012 1.1 2.2 1.1
Source: Bureau of Labor Statistics, Productivity and Costs, Multifactor Productivity.
measures underscores the role of broad technological change—as measured
by MFP—as a key driver of long-term growth of output per worker.
Second, over the past 60 years the long-term mean growth rates of
labor productivity and MFP have varied substantially, in what appear to be
three episodes. The first episode, the 1950s through early 1970s, experienced
high growth of MFP (and of labor productivity), with MFP growth averaging
1.7 percent per year from 1953 through 1972. The second episode, the late
1970s through early 1990s, experienced much lower MFP growth, averaging
0.5 percent per year. The third episode, from the mid-1990s through the
present, experienced an intermediate level of MFP growth of 1.0 percent per
year.
Because productivity is the key to raising output per person, a great
deal of academic research has focused on understanding why productivity
growth varies over time. Research points to several factors that contributed
to the productivity slowdown of the 1970s. A major culprit seems to be the
sharp rise in energy prices during the 1970s that made less energy-intensive
technologies more attractive, thus changing the optimal way to combine
inputs and reducing MFP growth (Jorgenson 1988, Nordhaus 2004). One
lesson learned from this period is how important energy cost fluctuations
are in determining the growth of potential output.
186 | Chapter 5