Workers entering a pay discussion have reason to ask what a productivity comparison actually measures. For the February 20, 2017 retrospective, BLS reported only 0.2 percent growth in annual-average nonfarm-business productivity during 2016. That figure describes output per hour across a sector, not how hard the people at a particular workplace worked. [prod2_02022017]
The underlying annual averages matter: output rose 1.7 percent and hours rose 1.5 percent. Productivity divides the real-output index by hours worked, including employees, proprietors and unpaid family workers. Our bargaining reading is to request workplace evidence about output, hours and available tools before accepting a national aggregate as an explanation for restraining pay. [prod2_02022017]
Compensation has its own evidence. The January 31 Employment Cost Index release showed private-industry compensation costs rising 2.2 percent over the twelve months ending December 2016, with wages and salaries up 2.3 percent and benefits up 1.8 percent, without seasonal adjustment. These fixed-job-mix cost indexes describe a different population and measure from nonfarm-business productivity; their percentages cannot establish a workplace wage entitlement. [prod2_02022017][eci_01312017]
A useful negotiation would put the proposed pay package beside the evidence for improving output per hour. BLS defines unit labor costs as hourly compensation divided by productivity, leaving room to examine investment rather than wages alone. That is a question for bargaining, not a finding that investment paid off. The productivity document used here is the February 8 reissue of the February 2 release. Together with the ECI, it supplies two BLS documents, not independent corroboration. [prod2_02022017][eci_01312017]
Source documents
- Productivity and Costs, fourth quarter 2016 preliminary; February 8 reissuehttps://www.bls.gov/news.release/archives/prod2_02022017.htm
- Employment Cost Index – December 2016https://www.bls.gov/news.release/archives/eci_01312017.htm