Productivity and Profits Higher

Over the past five years, while the wages for most workers in Pennsylvania have lost ground against inflation, profits and productivity have continued to grow (Figure 2).

Previous KRC reports have relied on national data on productivity because state-level figures have not been as readily available. Comparing these national figures with either national or Pennsylvania wage data reveal the existence of a “broken link between wages and productivity growth.” This year, for the first time, we present Pennsylvania-specific estimates of productivity.

Between 2001–2005 in Pennsylvania, labor productivity as measured by the source displayed in Figure 2 increased by 6%. A second source estimates a 12% increase in Pennsylvania’s productivity between 2001 and 2004, more in line with recent U.S. labor productivity growth. (We show the more conservative source in Figure 2 because that source is available all the way through 2005.) Nationally, as well as in Pennsylvania, estimates show that productivity growth has leveled off in the last two years, following a period of the fastest productivity growth since the 1950s.

Turning to profits, U.S. inflation-adjusted corporate profits (as reported by the Bureau of Economic Analysis) rose 70% between 2001–2002 and 2006–2007.

This page is an on-line summary of a portion of the full State of Working Pennsylvania 2006 report available for download from www.stateofworkingpa.org. © 2006 Keystone Research Center - www.keystoneresearch.org.