Decline of Productivity and GDP Growth
There is a strong sense in America today that something is seriously wrong in our economy, particularly for citizens with only a high school diploma. It is based on fear and anger and has resulted in populism, nationalism, and conspiracy theories being on the rise. Most people don’t realize that their economic struggles are connected to the reduction in productivity and GDP growth, and the 40-year acceptance of increasing trade deficits and the commitment to cheap imports.
Labor productivity, defined as output per labor hour, has grown at below the average rate since 2005. Figure 15.1 shows productivity growth since 1994. But since 2005, the average annual productivity growth rate is 1.3 percent—well ...
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