California rated biggest contributor to America’s productivity growth

California rated biggest contributor to America’s productivity growth

June 14, 2019

 

California, with a productivity growth rate of +1.7 percent from 2000 to 2017 was the biggest contributor to America’s productivity growth, according to the Bureau of Labor Statistics.

 

The nonpartisan Bureau of Labor Statistics (BLS) as a branch of the of the U.S. Department of Labor has been calculating productivity measures for the U.S. economy since 1884 by measuring labor market activity, working conditions, and price changes in the economy. The BLS has regularly reported that the U.S. productivity annual gains have fallen relentlessly from a +2.7 percent in 1966 to just a +0.5 percent recently. 

 

But in a new study of U.S. state-level productivity study, including state-level output per hour, output, hours, unit labor costs, and after-inflation hourly compensation for the period of 2000-2017, found productivity growth varied from a high of +3.1 percent in North Dakota to a low of ?0.7 percent in Louisiana. When accounting for population size and economic output, California was found the clear winner over almost two decades.

 

Most media-hyped economic reports about California have focused on negatives such as the publicly announced 2,183 California disinvestment events between 2008 to 2016 by larger firms leaving California for Texas, Florida, and other business-friendly environments. A recent study found that with 62 percent of residents feeling the state’s best days are behind it, 53 percent of all residents and 63 percent of millennials are considering moving out of California due to the state’s high cost of living.

 

But the BLS found positive compounded annual gains for all input measures for California productivity including: 1) +4 percent output; 2) +1.8 percent labor productivity; 3) +2 percent output per worker; 4) +2.2 percent employment; 4) +1.7 percent real (after-inflation) hourly compensation; and 5) +2.2 percent unit labor costs.

 

The BLS also found that California’s 2000 through 2017 gains outperformed all other large population states for productivity with Texas falling by -0.2 percent; New York up +0.7 percent; Florida eking-out a +0.6 percent; and Illinois suffering a -0.5 percent.

 

The BLS previously highlighted a growing national wage gap from 2008 to 2017 with labor productivity rising by +1.3 percent, versus labor compensation growth of just +0.5 percent. The new state-level reporting found that only “32 states saw labor productivity increase faster than real hourly compensation.” The biggest losers were New York, North Dakota, Oregon, and Pennsylvania, where the difference was 1 percent or more.

 

When measuring on a regional basis for annual labor productivity growth from 2000 to 2017, the West led the nation with +1.1 percent growth; the Northeast followed with +0.9 percent gains; the South grew at +.02 percent; and the Midwest dragged down the nation for 18 year with no growth.  

 

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