Wages, Labor, and Productivity: Looking for a Rebound

November 09, 2017

This week’s chart examines the average annual growth rates for wage gap, labor productivity, and real hourly compensation in the nonfarm business sector during various business cycles. Due to the cyclical nature of productivity data, business cycles are employed to allow for a standardized comparison through time.

The average labor productivity growth for the cycles examined is 2.3%, average compensation growth is 1.7%, and wage gap growth is 0.5%. The last business cycle saw dips for all of these averages: labor productivity growth came in at 1.1%, compensation growth is 0.7%, and the wage gap is 0.4%. These data points further reinforce the notion that U.S. growth is sub-par, despite the length of time for which the economy has been expanding. A lack of productivity growth may be a reason why wages have remained stagnant as the economy has continued to grow. Going forward, positive developments for all these metrics should be accretive to U.S. economic growth.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.