Gross DomesticProduct Consumer PriceIndex Unemployment rate. These are a few of the financial indications that policymakers such as the Federal Reserve focus on in order to assess the health of the U.S. economy.
But there’s another secret, if typically ignored, metric that financial experts and authorities utilize to assist financial and financial policy choices– one that determines how well the typical employee is at, well, working.
Enter the labor efficiency metric.
“It’s an attempt to figure out how efficient workers are,” stated Jason Furman, Harvard Kennedy School teacher and previous chairman of the Council of Economic Advisers under President BarackObama “If you can produce a lot of output with an hour of work, you’re very productive. If you can’t produce very much, it’s quite low.”
But labor efficiency in the U.S. has actually been falling. Prior to the information from the most current quarter, the nation had actually seen 5 successive quarters of year-over-year decreases in employee efficiency.
According to EY-Parthenon primary financial expert Greg Daco, this extended efficiency depression is the very first such circumstances considering that the Bureau of Labor Statistics started tracking the information in1948 And while the factors behind the decrease might be up for argument, the financial effects are comprehensive and can be felt throughout the board.
“Sluggish productivity means sluggish growth. It means sluggish wage growth and increase in living standards,” statedFurman “It matters for just about everything in the economy.”
Watch the video above to learn more about how labor efficiency is determined, how efficient a metric it is for financial experts, the factors behind the downturn in efficiency and the effect it has on the U.S. economy.
