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Fact of the Week: US Manufacturing Labor Productivity Fell by 2.8 Percent Between 2011 and 2021

Fact of the Week: US Manufacturing Labor Productivity Fell by 2.8 Percent Between 2011 and 2021

January 30, 2023

Source: United States Bureau of Labor Statistics, Manufacturing Sector: Labor Productivity for All Employed Persons (Output per Hour, retrieved from FRED, Federal Reserve Bank of St. Louis; accessed January 27, 2023).

Commentary: U.S. manufacturing labor productivity (measured in output per hour of labor) increased 43 percent between 2001 and 2011. However, over the next ten years, productivity fell by 2.8 percent.

Manufacturing labor productivity fell in six of the ten years between 2011 and 2021. In contrast, it fell only once in the period 1987–2011 (from 2007 to 2008). Though recent legislation—such as the CHIPS and Sciences Act—will provide some much-needed support for the faltering sector, other developments—namely, the phasing out of first-year full expensing for machinery and equipment—will only exacerbate this problem.

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