U.S. Productivity Index, 1964 = 100 (Productivity vs. Pay)

## What this measures

Labor productivity in the U.S. nonfarm business sector: real output per hour worked by all persons, quarterly. BLS publishes it as an index with 2017 = 100 (fred_ophnfb); Palanor divides by its 1964 average and multiplies by 100, so it starts on the same footing as the real-pay index (us.productivity_pay.real_pay_index), whose earnings data begin in 1964.

## Why it matters

Output per hour is what lets pay and living standards rise over time. Set beside the hourly pay of most private-sector workers, it shows how far the two have moved together since the mid-1960s.

## How to read it

An index: 200 means output per hour is twice its 1964 average. Read with the real-pay index; the gap between them is us.productivity_pay.gap. The re-basing changes the level only, not the growth from quarter to quarter.

## What it does not say

It compares earnings, not total compensation: benefits and employer payroll taxes are left out, and they have grown as a share of pay. The Economic Policy Institute's well-known version uses total compensation and a different productivity and price measure, so its gap is not the same number. The two indexes use different prices: earnings are deflated by consumer prices, while productivity is measured in the prices of what the nonfarm business sector produces. Production and nonsupervisory workers are about four in five private-sector employees; the pay of managers, the self-employed and owners is outside the earnings line but inside the output. None of these is a judgement about why the lines diverge.

## Source

U.S. Bureau of Labor Statistics: nonfarm business labor productivity (OPHNFB), average hourly earnings of production and nonsupervisory employees (AHETPI) and the CPI-U (CPIAUCSL), read from FRED. Public domain. Indexes calculated by Palanor.