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Figure 5-2
15-Year Centered Moving Average of Annual Growth Rates for
Labor and Multifactor Productivity, 1956–2005
Percent
3.5
3.0
2.5
Labor Productivity
2005
2.0
1.5
1.0
0.5
Multifactor Productivity
0.0
1950 1960 1970 1980 1990 2000 2010
Source: Bureau of Labor Statistics, Productivity and Costs, Multifactor Productivity;
CEA Calculations.
Another explanation is due to rapid changes in the labor force in the
1970s, primarily shifting the workforce to newer, less-experienced workers.
The Baby Boom generation (the cohort born between 1946 and 1964) came
of age in the 1970s and 1980s, lowering the overall work experience of the
economy. This was a period of rapid entry of women into the workforce for
the first time, a shift that also temporarily reduced the overall level of workforce
experience in the economy (Feyrer 2007, 2011). Moreover, the rapid
entry of these new workers into the workforce outpaced investment, slowing
the growth of the capital-labor ratio.
Another possible part of the story is that productivity growth in the
1950s and 1960s was temporarily spurred by large public investments such
as the interstate highway system and the commercialization of military innovations
from World War II like the jet engine and synthetic rubber.
The productivity rebound of the 1990s and 2000s is widely attributable
to the information technology (IT) revolution. For the nine years from
1996 to 2005, MFP grew at 1.6 percent per year, a rate not seen in a nine-year
period since the mid-1960s. Although many of the basic technologies that
facilitated this growth, like the personal computer and the software to run
it, were invented in the 1970s and 1980s; improvements in speed, breadth
of applications, and the ability of firms to exploit this technology stretched
through the ensuing decades. The BLS MFP measure suggests that much
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