THE LONG-RANGE ECONOMIC ASSUMPTIONS

FOR THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY

SOCIAL SECURITY ADMINISTRATION

April 22, 2020 
Page 2

PRINCIPAL ECONOMIC ASSUMPTIONS

OVERVIEW

Sections

1 PRODUCTIVITY

2 PRICE INFLATION

3 AVERAGE REAL WAGE DIFFERENTIAL

4 UNEMPLOYMENT RATE

5 ANNUAL TRUST FUND REAL INTEREST RATE

6 RATIO OF OASDI TAXABLE PAYROLL TO COVERED EARNINGS
Overview, Page 1

OVERVIEW

Each year, the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI) and 

Disability Insurance (DI) Trust Funds provides an annual report to the Congress on the financial 

and actuarial status of the program. For this report, the Office of the Chief Actuary (OCACT), on 

behalf of the Board of Trustees, projects future cost and income based on three separate sets of 

long-range (75-year) assumptions for key economic variables. The intermediate (alternative II) 

set of assumptions represents the Trustees’ best estimate for future experience, while the low 

cost (alternative I) and high cost (alternative III) sets of assumptions represent more and less 

favorable scenarios, respectively, from the perspective of program cost and income as a percent 

of taxable payroll. The intermediate assumptions are also used as the point of comparison for 

sensitivity analysis and the central tendency for the stochastic projections presented in the 

OASDI Trustees Report. This memorandum presents the long-range economic assumptions used 

in the 2020 Annual Report of the Board of Trustees. 

At the time assumptions were selected for the 2020 Trustees Report, it was too early to 

anticipate the potential effects of the COVID-19 pandemic. The magnitude and duration of 

effects on the population and the economy are still unclear. Therefore, the potential effects 

of the pandemic are not reflected in these assumptions.

The key economic variables include the average annual percentage changes in total-economy 

productivity, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), 

and the gross domestic product (GDP) deflator, as well as the average real wage differential, the 

unemployment rate, the annual trust fund real interest rate, and the taxable ratio. Total-economy 

productivity is the ratio of real GDP to total hours worked. The real wage differential is the rate 

of change in the average OASDI covered wage less the rate of change in the CPI-W. The OASDI 

taxable ratio is the share of OASDI covered earnings that is subject to the payroll tax. 

The following changes have been made to the long-range economic assumptions for the 2020 

report: 

(1) A 0.2 percentage point decrease in the assumed ultimate annual rates of change in CPI-W 

(from 2.6 to 2.4 percent) and the GDP deflator (from 2.25 to 2.05 percent); 

(2) A decrease in the long-range average real wage differential for 2030 through 2094 from 

1.21 percent in the 2019 report to 1.14 percent; 

(3) A decrease in the ultimate age-sex-adjusted unemployment rate from 5.5 percent to 5.0 

percent, with reductions in the labor force participation rates by age and sex that offset 

the effect on employment; and 

(4) A reduction in the ultimate real interest rate from 2.5 percent used in the 2019 report to 

2.3 percent. 

There are no changes in the other long-range economic assumptions. 

Table A.1, below, lists the assumed long-range future values for these key economic variables in 

the 2020 Trustees Report alternatives I, II, and III. 
Overview, Page 2

Table A.1: Key Economic Assumptions and Summary Measures for the Long-Range (75-year) Projection Period

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2019 Trustees Report

Long-Range Assumptions I II III I II III I II III

Average Percentage Change In:

Productivity 

(Total-Economy) 1.93 1.63 1.33 1.93 1.63 1.33 0.00 0.00 0.00

Prices (CPI-W) 3.00 2.40 1.80 3.20 2.60 2.00 -0.20 -0.20 -0.20

Prices (GDP Deflator) 2.75 2.05 1.35 2.95 2.25 1.55 -0.20 -0.20 -0.20

Price Differential

(GDP Deflator less CPI-W) -0.25 -0.35 -0.45 -0.25 -0.35 -0.45 0.00 0.00 0.00

Real Wage Differential 

(Percent) 1.76 1.14 0.52 1.84 1.21 0.60 -0.08 -0.07 -0.08

Unemployment Rate (Percent) 4.00 5.00 6.00 4.50 5.50 6.50 -0.50 -0.50 -0.50

Annual Trust Fund Real 

Interest Rate (Percent) 2.80 2.30 1.80 3.00 2.50 2.00 -0.20 -0.20 -0.20

OASDI Taxable Ratio 0.840 0.825 0.810 0.840 0.825 0.810 0.000 0.000 0.000

The remainder of this section provides brief descriptions and summary information for the key 

economic variables, as well as the assumed values for alternative II.

Productivity: The rate of growth in total-economy productivity is the fundamental component 

contributing to the real growth rate of average earnings. OCACT uses a weighted average of the

productivity growth rates in economic sectors, where the weights are the shares of each sector in 

total GDP. The economic sectors include the nonfarm business sector, the farm sector, the 

household sector, the nonprofit institutions sector, and the general government sector. In the 

long-range period, OCACT assumes that the sector weights are approximately fixed at recent 

levels. Based on an analysis of the data and future trends, the ultimate assumed growth rates for 

the sectors are as follows: 2.00 percent for the non-farm business sector, 2.00 percent for the 

farm sector, 1.63 percent for the household sector, 0.00 percent for the nonprofit sector, and 0.00 

percent for the government sector. The weighted average of the assumed sector productivity

growth rates is equal to the Trustees’ assumed ultimate average annual rate of growth in 

total-economy productivity of 1.63 percent, which is the same ultimate rate used in the 2019 

report.

Price Inflation: The rate of growth in the CPI-W is used to determine the cost of living 

adjustment (COLA). The average annual growth rate in the adjusted CPI-W was 4.22 percent 

over the last 5 complete economic cycles, from 1969 to 2007, and 2.51 percent over the last two 

complete economic cycles from 1990 to 2007.1 OCACT expects that monetary policy will

 1 Consecutive NBER defined peak years are used to define each economic cycle, except that OCACT uses 

the 1979 through 1990 period as an economic cycle. NBER identified January 1980 as a peak month, but 1979 is 

more representative of a peak on an annual basis. NBER also identified a peak in July of 1981. This brief 18-month 

economic cycle is merged to the 1981 to 1990 cycle to form the 1979 to 1990 cycle.
Overview, Page 3

continue to target relatively low inflation, but will not be able to prevent occasional bursts of 

inflation caused by demand and supply shocks. Accordingly, the ultimate average annual 

percentage change in the CPI-W is assumed to be 2.4 percent, which is 0.2 percentage point less 

than in the 2019 report.

The GDP deflator is another measure of price inflation. It is used in projecting the level of 

aggregate GDP and wages and, therefore, OASDI tax revenues. The ultimate assumed 

long-range average annual growth rate in the GDP deflator is 2.05 percent, or 0.35 percentage 

point below the 2.4 percent assumed ultimate average annual growth rate in the CPI-W. The 

price differential of -0.35 percentage point is the sum of -0.3 percentage point due to

computational difference and -0.05 percentage point due to coverage difference. The 

assumed -0.35 percentage point price differential is the same as that used in the 2019 report.

Average Real Wage Differential: Annual real wage differentials vary to a small degree over the 

last 65 years of the 75-year projection horizon (i.e., for 2030 through 2094), averaging 1.14

percentage points, or 0.07 percentage point lower than that in the 2019 report. Most of the 

change is due to the repeal of the excise tax on employer-sponsored group health insurance (ESI)

premiums. The remaining small change is due to the Centers for Medicare and Medicaid 

Services’ (CMS) projection of slightly faster average growth in the share of employee 

compensation that is provided as employer-sponsored group health insurance (ESI), apart from 

the effect of the repeal of the excise tax.

The Trustees assume the long-range average annual rate of change in the average OASDI 

covered wage to be approximately the same as for (1) average U.S. wages and (2) average U.S. 

earnings (which include the self-employed). The average annual real growth rate in average U.S. 

earnings is assumed to be 1.12 percent over the 65-year period. This reflects average annual 

changes of 1.63 percent for total-economy productivity, -0.35 percent for the price 

differential, -0.11 percent for the average earnings ratio, 0.00 percent for the compensation ratio,

and -0.05 percent for the average hours worked per week. 

Unemployment Rate and Labor Force: The aggregate civilian unemployment rate, adjusted for 

the 2011 age-sex distribution of the labor force, averaged about 5.2 percent over the last five 

complete economic cycles from 1969 to 2007. However, the unemployment rate averaged 5.6

percent over the first three of those cycles and 5.1 percent over the most recent two complete 

cycles. It is reasonable to expect that the rate will average closer to the two most recent cycles,

given the changing nature of employment. Therefore, the ultimate civilian age-sex adjusted 

unemployment rate is assumed to be 5.0 percent, which is 0.5 percentage point lower than the

ultimate age-sex adjusted unemployment rate used in the 2019 report. Because the Trustees’

projections of employment have been quite accurate in recent years, with lower unemployment 

rates essentially offsetting lower labor force participation rates (LFPRs), the age-sex-specific 

LFPRs are also lowered for this year’s report so as to result in no significant change in 

employment rates.

Annual Trust Fund Real Interest Rate: The real interest rate (real effective annual yield) on the 

special public debt obligations issuable to the trust funds for a given year is defined as the 

nominal effective annual yield adjusted for the increase in the CPI-W for the first year after 
Overview, Page 4

issue. Real ex-post (actual) interest rates on long-term Treasury securities averaged 3.30 percent 

over the last five economic cycles (from 1969 to 2007) and 3.49 percent over the last two 

complete cycles (1990-2007). However, real interest rates have been substantially lower recently, 

averaging 1.95 percent for the last complete cycle (2001-2007) and less than 1 percent since 

2007. The extreme low rates appear to be due in part to the weak economy in most of the 

developed world. Given a growing expectation that world economic growth is unlikely to return 

to the levels of the past, more weight should be placed on recent low interest rates.

The assumed ultimate real interest rate for new issues is 2.3 percent, which is 0.2 percentage 

point less than in the 2019 report, and 0.4 percentage point lower than assumed for the 2018 

report. This ultimate assumption is consistent with a sustainable domestic fiscal policy over the

long-range period and a gradual return to the sustainable rate of economic growth throughout the 

developed world.

OASDI Taxable Ratio: The OASDI taxable ratio is the share of OASDI covered earnings that is 

subject to the payroll tax. It is a fundamental component to projections of taxable payroll. This 

ratio declined substantially between 1983 and 2001, with the decline slowing substantially or 

ceasing since then. After reaching a low point of 82.6 percent for 2000, the ratio has been largely 

at or above that level, roughly stabilizing since 2012. The ratio is assumed to stabilize at about

82.5 percent in 2029 and thereafter, which is the same ratio assumed for the 2019 report. 
Productivity, Page 1

1. PRODUCTIVITY

THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

TABLE OF CONTENTS PAGE

1 PRODUCTIVITY................................................................................................................... 2

1.1 SUMMARY ............................................................................................................................................................. 2

1.2 RECENT BEA AND BLS DATA REVISIONS .......................................................................................................... 2

1.3 PRODUCTIVITY GROWTH RATES FOR MAJOR SECTORS AND OVER LONG TIME PERIODS AND ECONOMIC 

CYCLES .............................................................................................................................................................................. 3

1.3.1 Sector Productivity Growth Rates.................................................................................................................... 5

1.3.1.1 Nonfarm Business (NFB)............................................................................................................................ 5

1.3.1.2 Farm........................................................................................................................................................... 6

1.3.1.3 Nonprofit Institutions (NI) .......................................................................................................................... 6

1.3.1.4 General Government (GOV) ....................................................................................................................... 7

1.3.1.5 Households................................................................................................................................................. 8

1.3.2 Total-Economy Productivity Growth Rate.......................................................................................................10

1.4 FUTURE EXPECTATIONS ..................................................................................................................................... 10

1.5 PROJECTIONS FROM OTHER SOURCES ............................................................................................................... 12

1.6 APPENDIX............................................................................................................................................................ 17

TABLE OF TABLES PAGE

TABLE 1.1: ASSUMED ULTIMATE ANNUAL RATES OF INCREASE IN TOTAL-ECONOMY PRODUCTIVITY .......................... 2

TABLE 1.2: HISTORICAL AVERAGE ANNUAL RATES OF INCREASE IN TOTAL-ECONOMY PRODUCTIVITY AND ITS 

COMPONENTS (%)......................................................................................................................................................... 3

TABLE 1.3: ULTIMATE AVERAGE ANNUAL RATES OF INCREASE IN TOTAL-ECONOMY PRODUCTIVITY AND ITS 

COMPONENTS FOR THE 2020 TRUSTEES REPORT ........................................................................................................ 4

TABLE 1.4: TOTAL-ECONOMY PRODUCTIVITY: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 2012.... 13

TABLE 1.5: NONFARM BUSINESS PRODUCTIVITY: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 2012 15
Productivity, Page 2

1 Productivity

1.1 Summary

For the 2020 Trustees Report, the assumed ultimate annual rates of increase in total-economy 

productivity are 1.93 percent, 1.63 percent, and 1.33 percent for alternatives I, II, and III, 

respectively, as shown in Table 1.1. These rates of increase are unchanged from those used in the 

2019 Trustees Report. The assumed rates of increase for total-economy productivity are 

consistent with assumed ultimate annual rates of increase in nonfarm business productivity of 

2.36 percent, 2.00 percent, and 1.63 percent for alternatives I, II, and III, respectively.

Table 1.1: Assumed Ultimate Annual Rates of Increase in Total-Economy Productivity

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2019 Trustees Report

I II III I II III I II III

Total-Economy Productivity 1.93 1.63 1.33 1.93 1.63 1.33 0.00 0.00 0.00

Total-economy productivity is defined as the ratio of real gross domestic product (GDP) to total 

hours worked by all workers in the U.S. economy. The Bureau of Economic Analysis (BEA) 

estimates historical values for real GDP in its National Income and Product Accounts (NIPA). 

The Bureau of Labor Statistics (BLS) provides total hours worked based mostly on data from its 

Current Employment Statistics (CES) Survey.

This section is divided into four subsections. The first reviews recent BEA and BLS revisions to 

real GDP and total hours worked. The second decomposes total-economy productivity by major 

sector and analyzes differences in sector productivity growth over time. The third discusses 

various views in the economic literature on the possible future paths of productivity growth. A 

final subsection describes alternative long-run projections from private forecasters.

1.2 Recent BEA and BLS Data Revisions

BEA made a regular annual update of the NIPA data on July 26, 2019.

2 This update affected data 

back to 2014. Compared to the values published in October 2018, the nominal GDP estimate was 

revised up by less than 0.1 percent for 2014 through 2016 and by about 0.2 percent for 2017.

Real GDP was revised up by about 0.1 percent for 2014 and 2015, about 0.2 percent for 2016, 

and about 0.3 percent for 2017.

BLS also revised its estimates of total hours worked for years 1948-2017. Compared to last 

year’s estimates, hours worked are lower by about 0.1 percent for recent years (2008-2017), 

higher by about 0.1 percent for 1962-1971, and little changed for other years. The slightly lower 

average growth rate in total hours worked in the revised estimates, combined with a slightly 

 2 https://www.bea.gov/news/2019/gross-domestic-product-2nd-quarter-2019-advance-estimate-and-annualupdate. 
Productivity, Page 3

higher average growth rate in real GDP, implies a slightly higher average rate of productivity

growth for the period.

3

1.3 Productivity Growth Rates for Major Sectors and Over Long Time Periods and 

Economic Cycles4

Table 1.2: Historical Average Annual Rates of Increase in Total-Economy Productivity and Its Components (%)

Total

Economy

Nonfarm

Business

Farm Households Nonprofit

Institutions

General

Government

1953-2018 (65 years) 1.84 2.04 4.32 4.05 0.51 0.26

1968-2018 (50 years) 1.57 1.83 4.00 3.52 0.29 0.15

 1968-1993 (25 years) 1.54 1.69 4.87 3.95 0.53 0.32

 1993-2018 (25 years) 1.59 1.97 3.15 3.09 0.06 -0.03

2007 (peak) - 2018 1.06 1.31 2.01 1.45 0.36 0.10

By Complete Economic Cycle

 1969-1973 2.66 2.99 4.35 7.03 1.32 0.43

 1973-1979 1.07 1.24 3.91 3.06 0.36 -0.44

 1979-1990 1.41 1.50 6.03 3.23 0.32 0.69

 1990-2001 1.85 2.27 3.98 6.32 -0.26 -0.27

 2001-2007 2.19 2.67 3.52 0.21 0.41 0.25

Multiple Cycles

 Last Five - 1969-2007 (38 years) 1.74 2.02 4.52 4.00 0.28 0.14

 Last Four - 1973-2007 (34 years) 1.63 1.90 4.54 3.65 0.16 0.10

 Last Three - 1979-2007 (28 years) 1.75 2.05 4.68 3.77 0.11 0.22

 Last Two - 1990-2007 (17 years) 1.97 2.41 3.82 4.12 -0.02 -0.08

 3 The changes in hours worked are concentrated in two sectors and mainly consist of a small increase in 

nonfarm business hours and a significant decrease in nonprofit hours.

4 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles.
Productivity, Page 4

Table 1.3: Ultimate Average Annual Rates of Increase in Total-Economy Productivity and Its Components for the 

2020 Trustees Report

Total 

Economy

Nonfarm 

Business Farm Households Nonprofit 

Institutions

General 

Government

I 1.93 2.36 2.36 1.93 0.00 0.00

II 1.63 2.00 2.00 1.63 0.00 0.00

III 1.33 1.63 1.63 1.33 0.00 0.00

Table 1.2 lists the average annual rates of increase in productivity for the total economy and its 

major sectors over several different time periods and economic cycles.

5 The major sectors 

include nonfarm business, farm, households, nonprofit institutions, and general government. 

Listed in Table 1.3 are the assumed ultimate average annual rates of increase in productivity for 

the total economy and its major sectors. For these ultimate assumptions, the Trustees assume that 

the relative size of employment by sector will stabilize.

The annual growth rate in productivity can vary from its trend growth rate over an economic 

cycle, assuming employers are slow to adjust labor to changes in output. Going into a recession, 

the growth rate in productivity may drop below trend, as employers reduce output faster than 

labor. During an economic recovery, the growth rate in productivity may rise above trend, as 

employers increase output using their existing stock of labor. Productivity growth rates also 

exhibit periods of high or low growth not necessarily related to economic cycles. For example, 

the growth rate in total-economy productivity was 2.80 percent over the 25-year period from 

1948 to 1973, 1.30 percent over the 22-year period from 1973 to 1995, 2.49 percent over the 10-

year period from 1995 to 2005, and 1.05 percent over the 13-year period from 2005 to 2018. 

Hence, it seems reasonable to analyze productivity growth rates over longer periods spanning

several economic cycles, such as the latest 50-year period from 1968 to 2018 or a 65-year period 

from 1953 to 2018.

6

Data on productivity for earlier historical periods, beyond the latest 65 years, is less useful for 

several reasons. First, the NIPA data are less reliable in earlier periods.7 BEA began measuring 

income in the mid-1930s, and output in the early to mid-1940s.8 It then “backcasted” both 

measures to 1929. Based on conversations with BEA analysts, the agency did not introduce the 

 5 Historical productivity growth rates in this section are based on the published real GDP data from BEA, 

without adjustments to pre-1978 data used in Sections 2 and 3. While the adjusted data are more consistent with 

current inflation measurement methods (see Section 2.6 for the description of the adjustments), they are available 

only for the aggregate GDP and not by sector. Therefore, in this section unadjusted data is used for consistency 

between the aggregate rate of change and the rates of change in each sector. With the adjustments, the annual growth 

rates for years before 1978 would be about 0.1 percentage point higher.

6 Ferguson, Roger W. and William L. Wascher. “Distinguished Lecture on Economics in Government: 

Lessons from Past Productivity Booms,” Journal of Economic Perspectives. Volume 18, Number 2 (Spring 2004), 

pp. 3-28.

7 NIPA data for the most recent years are also less reliable, since they are subject to revisions.

8 BEA, “GDP: One of the Great Inventions of the 20th Century,” Survey of Current Business, January 

2000, p. 7.
Productivity, Page 5

more modern methods of sampling, collecting, and processing of data until 1948, and did not 

simultaneously collect and balance income and output data until the early 1950s. Consequently, 

it seems reasonable to limit the use of historical data to the last sixty-five years. Compound 

annual rates of growth for total-economy labor productivity for approximately the past five 

decades are shown in Table 1.4.

A second important consideration in the use of historical data on productivity is that a significant 

portion of the total historical average annual rate of increase in total-economy productivity 

occurred because of shifts in workers from relatively low- to high-productivity jobs. For 

example, over the 50-year period from 1968 to 2018, the ratio of agricultural to total-economy 

hours worked declined from about 0.045 to 0.016, and the ratio of agricultural to total nominal 

GDP declined from about 0.022 to 0.006. Furthermore, although farm productivity grew faster 

than total economy productivity over the last 50 years, the average level of productivity for 

agricultural workers in 2018 was about 66 percent of the average level of productivity for all 

workers. 

This shift complicates the consideration of historical experience. The assumed ultimate value for 

the annual rate of increase in total-economy productivity should be consistent with the average 

value over a long-range historical period with adjustment for differences between conditions of 

the past and conditions expected for the future. The average long-range historical value is 

inflated due to sectoral shifts in employment that are not expected to continue into the future.9

This problem can be resolved by removing the effects of sectoral shifts in employment from the 

historical record or, more simply, by setting the ultimate value for the annual rate of increase in 

total-economy productivity to a weighted average of the expected ultimate values for the annual 

rate of increase in productivity for each sector.

1.3.1 Sector Productivity Growth Rates

1.3.1.1 Nonfarm Business (NFB)

The average annual growth rate in NFB productivity was 2.67 percent over the last complete

economic cycle (i.e., a 6-year period from 2001 to 2007), and 2.41 percent over the last two 

economic cycles (17-year period from 1990 to 2007). These relatively high growth rates reflect 

the heavy influence of the 1995-2005 “new economy” period characterized by rapid 

improvements in computers and their assimilation into the economy.

Looking at longer periods, the average annual growth rate in NFB productivity was 2.05 percent 

over the last three economic cycles (28-year period from 1979 to 2007), 1.90 percent over the 

last four economic cycles (34-year period from 1973 to 2007), and 2.02 percent over the last five 

economic cycles (38-year period from 1969 to 2007). These productivity growth rates include 

the effects of a relatively low growth rate period from 1973 to 1995. The 1973-1995 slowdown 

has been attributed to a shift in employment from relatively high-productivity manufacturing 

 9 For example, the 0.029 decline (i.e., from 0.045 to 0.016) in the ratio of agriculture to total-economy 

hours worked over the last fifty years cannot be repeated in the future since the level of the ratio in 2018 is only

0.016 and it cannot become negative.
Productivity, Page 6

jobs to low-productivity service jobs, and to the influx of new unskilled baby-boomers into the 

workforce. Historical compound annual rates of growth in labor productivity for the nonfarm 

business sector are shown in Table 1.5.

The 2.02 percent average annual growth rate for NFB productivity over the last five economic 

cycles (1969 to 2007) is a reasonable starting point for estimating the ultimate growth rate. 

Although productivity growth since the last cycle has been slower (the growth rate in NFB 

productivity has averaged only 1.31 percent over the 11-year period from 2007 to 2018), the 

average over the longest available period of good data points to a somewhat higher long-range

rate of growth. (The growth rate in NFB productivity over the last 65 years was 2.04 percent and 

would be somewhat higher if pre-1978 inflation adjustments were consistent with today’s 

methodology.) Therefore, the Trustees assume an ultimate rate of increase in NFB productivity 

of 2.00 percent. 

1.3.1.2 Farm 

The average annual growth rate in farm productivity was about 4.00 percent from 1968 to 2018. 

A significant portion of the relatively high growth rate in farm productivity was due to a shift in 

farm operation and ownership from smaller farms run by the self-employed to larger, more 

efficient and capital-intensive farms run by corporations. For example, based on BLS’ Current 

Population Survey (CPS) data, the ratio of self-employed to all paid workers in the agricultural 

sector fell from about 0.61 in 1968 to 0.32 in 2018. For the long-range future, this shift is 

expected to slow and the difference in the productivity growth rates between the farm and 

nonfarm sectors is expected to decline to zero. Thus, the assumed ultimate rate of increase in 

farm productivity is 2.00 percent, equal to the assumed ultimate average annual growth rate in 

NFB productivity.

1.3.1.3 Nonprofit Institutions (NI) 

The average annual rate of change in NI productivity was 0.53 percent over the 25-year period 

from 1968 to 1993, 0.06 percent over the 25-year period from 1993 to 2018, and 0.29 percent 

over the combined 50-year period from 1968 to 2018. The pattern of growth rates in NI 

productivity, with periods of positive and negative values, is largely due to shifts in employment 

within the NI sector.

In the NIPA, NI labor compensation accounts for about 83 percent of NI nominal GDP. NI 

compensation is summed from five subsectors including education, health, social, religious, and 

business services. For each subsector, the level of real output is defined as the product of the 

level of average compensation per hour in a base year (currently 2012) and the level of hours 

worked. This means that the level of productivity in each subsector is a constant (i.e., the average 

compensation per hour in a base year), and that the growth rate in productivity in each sector is 

zero. However, this also means that the level of productivity for the total NI sector is a weighted 

average of the levels of productivity in the subsectors, and that the growth rate in total NI 

productivity may be positive (or negative), due to shifts in employment from sectors with 

relatively low (high) average compensation to sectors with relatively high (low) compensation.
Productivity, Page 7

In fact, BEA data indicate that the average annual compensation in health services has been

higher than the average annual compensation in other service sectors since the mid-1970s, and 

that the growth in employment in health services over the 25-year period from 1968 to 1993 was

higher than the growth in employment in other service sectors. The NIPA include data on 

compensation and full-time equivalent employment in health care, educational services, and 

social assistance.10 These three sectors are mostly composed of NI workers.11 The data show that 

the level of average annual compensation for full-time equivalent employment in 2018 was 

$76,200, $59,400, and $34,800 in health care, educational services, and social assistance, 

respectively. The data also show that the ratio of full-time equivalent employment in the health 

sector to the total for all three sectors rose from about 0.47 in 1968 to 0.61 in 1986, declined to 

0.57 in 2000, and remained relatively stable thereafter.12

Thus, the data indicate that the relative increase in employment in health services significantly 

contributed to the average annual rate of increase in NI productivity of 0.53 percent over the 

25-year period from 1968 to 1993. The data also indicate that the subsequent relative stability in 

the growth rates in employment across NI subsectors significantly contributed to the decline in 

the NI productivity growth rate to 0.06 percent over the 25-year period from 1993 to 2018. In the 

future, it seems reasonable to assume that the more recent historical trend in employment will 

continue, and that the ultimate growth rates in employment in the NI subsectors will be roughly 

equal.13 Thus, the assumed ultimate growth rate in NI productivity is zero.

1.3.1.4 General Government (GOV) 

The average annual rate of increase in GOV productivity was 0.32 percent over the 25-year 

period from 1968 to 1993 and -0.03 percent over the 25-year period from 1993 to 2018. These 

relatively small growth rates in GOV productivity are due to shifts in employment within the 

GOV sector.

GOV labor compensation accounts for about 79 percent of GOV nominal GDP.14 GOV 

compensation is the total of compensation from three primary subsectors: federal civilian, federal 

military, and state and local government. As with the NI subsector, the level of productivity in 

each subsector is a constant (i.e., the average compensation per hour in a base year), and the 

growth rate in productivity in each sector is zero. However, this also means that the level of 

productivity for the total GOV sector is a weighted average of the levels of productivity in the 

 10 BEA, NIPA, Tables 6.2B through 6.2D and Tables 6.5B through 6.5D.

11 BEA, “Income and Outlays of Households and of Nonprofit Institutions Serving Households,” Survey of 

Current Business, April 2003, p. 14, http://www.bea.gov/scb/pdf/2003/04april/0403household.pdf.

12 NIPA categories of services changed in 1998, so present ratios are not directly comparable with the old 

ratios. The ratio declined from 0.61 in 1982-1987 to 0.57 in 2000 (the data for 1998-2000 are available both under 

the old and the new categorization), and remained roughly constant between 0.71 and 0.72 under the new 

categorization from 2000 to 2011. However, it has since declined to 0.68 for 2018.

13Given that the overall assumptions reflect a continued growth in the health sector as a percent of GDP, 

this faster growth is assumed to occur in the for-profit sector of the economy.

14 BEA, NIPA, Table 3.10.5.
Productivity, Page 8

subsectors, and that the growth rate in total GOV productivity may be positive (negative), due to 

shifts in employment from sectors with relatively low (high) average compensation to sectors 

with relatively high (low) compensation.15

The relatively small, positive growth rate in GOV productivity over some historical periods is 

due to shifts in employment between subsectors. In the future, the growth rate in GOV 

productivity could be negative, reflecting a reversal of historical trends. For the future, however, 

it seems reasonable to assume that the ultimate growth rates in employment in the GOV 

subsectors will be about equal and that the assumed ultimate growth rate in GOV productivity 

will be zero.16

1.3.1.5 Households 

In the NIPA, nominal GDP in the household sector is the sum of the nominal compensation of 

private household workers and the nominal imputed output of owner-occupied housing (IOH). In 

2018, the nominal compensation of private household workers made up only about 1.5 percent of 

the total nominal GDP in the household sector. Though this component is relatively small, it is 

useful to analyze each component of GDP in the household sector.

Compensation of Household Workers - As with NI and GOV compensation sectors, BEA sets 

the real growth rate in GDP equal to the growth rate in hours worked. Hence, the growth rate in

productivity is, by definition, zero.

Imputed Output of Owner-Occupied Housing (IOH) - Renters of apartments and homes pay rent 

and receive streams of housing services. BEA includes these business transactions in the NIPA. 

Although the owners of homes pay no rent and have no business transactions, they receive 

similar streams of housing services. Hence, for consistency, BEA estimates the real and nominal 

values of housing services received by those who own their own homes (i.e., real and nominal 

IOH) and includes these amounts in the NIPA.

BEA’s inclusion of IOH in GDP creates a problem. Since IOH has no associated measure of 

labor hours worked, it is not clear how it should be included when estimating historical and 

projecting future growth rates in sector and total-economy productivity. There are two possible

approaches to handle IOH in projections of total-economy productivity for the long range.

First, total real GDP could be projected as the sum of projections for real IOH and real GDP less 

IOH. Real GDP less IOH would be the product of the total-economy-less-IOH productivity and 

total hours worked. The ultimate average annual growth rate in total-economy-less-IOH 

 15 BEA, “Government Transactions, Methodology Papers: U.S. National Income and Product Accounts,” 

September 2005, http://www.bea.gov/national/pdf/mp5.pdf.

16 Beginning with the 2017 report, OCACT estimates that the number of active military will remain 

constant rather than grow in proportion to civilian employment. This implies a gradual shift in the weights of 

civilian government and the military, and a resulting small decrease in average productivity of the government 

sector, but the effect is small.
Productivity, Page 9

productivity could be set to the weighted average of the assumed ultimate average annual growth 

rates in sector productivity.17 Real IOH could be projected as a fixed ratio to total real GDP less 

IOH. 18 Total real GDP could then be constructed as the sum of real IOH and real GDP less IOH. 

As a second and equivalent approach, household productivity could be defined as the ratio of the

sum of real IOH and real output of private household workers to the total hours worked of 

private household workers (as in Table 1.2). Using this definition, the average annual rate of 

increase in productivity for private household workers over the 50-year period from 1968 to 

2018 was about 3.52 percent. In the future, however, the average annual growth rate in 

productivity for private household workers is expected to be much lower. In fact, it is expected to 

equal the average annual growth rate of total-economy-less-IOH productivity, as described in the 

first approach.19 The ultimate average annual growth rate in total-economy productivity could be 

set to the weighted average of the assumed ultimate average annual growth rates in sector 

productivity.20 Finally, total real GDP would be the product of total-economy productivity and 

hours worked.

 17 Sector weights would be defined as the ratio of sector to total nominal GDP less IOH.

18 Over the 35-year period from 1984 through 2019, the ratio of real IOH to real GDP less IOH has been 

fairly constant and averaged 0.075.

19 If,

Pph = Real IOH / Hph

Pxph = Real GDP less IOH / Hxph

Then,

 . . .

Pph = Real IOH – Hph

 . . .

Pxph = Real GDP less IOH – Hxph

Assuming,

 . .

Real IOH = Real GDP less IOH

 . .

Hph = Hxph

Then,

 . .

Pph = Pxph

Where,

 Pph = Productivity, private household

 Pxph = Productivity, total economy less private household

 Hph = Hours worked, private household

 Hxph = Hours worked, total economy less private household

 .

 Y = Rate of change in Y

20 In this second approach, sector weights would be defined as the ratio of sector to total nominal GDP.
Productivity, Page 10

1.3.2 Total-Economy Productivity Growth Rate

The assumed ultimate growth rate in total-economy productivity is equal to a weighted average 

of the growth rates in sector productivity and employment (see Section 1.5 Appendix). This 

relationship is simplified by assuming that the ultimate growth rate in employment in all sectors 

of the economy will be about equal, and that the ultimate growth rates in productivity for the 

nonprofit institution and general government sectors will be zero. Given these assumptions, the 

ultimate growth rate in total-economy productivity is equal to the weighted average of the 

ultimate growth rates in productivity in the farm, nonfarm business, and household sectors of the 

economy.

Sector weights are defined as the ratio of sector to total nominal GDP. This “nominal output” 

weight for the farm sector declined from about 0.022 in 1968 to 0.006 in 2018, and it averaged 

about 0.008 over the last complete business cycle from 2001 to 2007. The nominal output weight 

for the nonfarm business sector was much more stable. It averaged 0.750 over the 25-year period 

from 1969 through 1993, 0.749 over the 25-year period from 1994 through 2018, and 0.750 over 

the last complete business cycle. For the future, the ultimate values for the nominal output 

weights are assumed to remain at 0.75 for the nonfarm business sector and 0.01 for the farm 

sector.

The nominal weight for the household sector rose from about 0.053 in 1977-1979 to the 

historically high value of 0.076 in 2009, largely because the GDP deflator for IOH grew faster 

than the GDP deflator for all other goods over the period. More recently, the weight has fallen to 

0.070 in 2012 and has remained at or close to that value since. In the future, OCACT expects the 

GDP deflator for IOH will grow at about the same rate as the GDP deflator for all other goods 

and that therefore the nominal weight for the household sector should stabilize at 0.07, close to

its recent historical average.

Sector weights can also be defined as the ratio of sector to total nominal GDP excluding IOH. In 

this case, the ultimate values for the nominal output weights will be 0.0108 (i.e., 0.01 / (1.0 –

0.07)) for the farm sector, and 0.8065 (i.e., 0.75 / (1.0 – 0.07)) for the nonfarm sector.

This analysis indicates that the long-range future growth rate in productivity for the total 

economy excluding IOH will be about 1.63 percent (i.e., 2.00 * (0.8065 + 0.0108)). It also 

indicates that the long-range future growth rate in productivity for the total economy including 

IOH will be about 1.63 percent (i.e., 2.00 * (0.75 + 0.01) + 1.63 * 0.07). Thus, for the 2020

Trustees Report, the assumed annual rates of increase in total-economy productivity are 1.93 

percent, 1.63 percent, and 1.33 percent for alternatives I, II, and III, respectively. These rates of 

increase are unchanged from those used in the 2019 Trustees Report.

1.4 Future Expectations

Growth in total economy labor productivity has been unusually slow since the last economic 

cycle peak. From 2007 to 2018, total economy productivity grew 1.06 percent per year on 

average, while nonfarm business productivity grew 1.31 percent per year on average. This is 

significantly slower than the historical average growth rate over the 65-year period (1953-2018) 
Productivity, Page 11

of 1.84 percent for total economy productivity and 2.04 percent for the nonfarm business 

productivity. 

The reasons for the recent productivity slowdown are currently being debated by the economic 

profession. One view, proposed by Borio et al. (2015) holds that recessions precipitated by credit 

booms followed by financial crises have persistent negative effects on productivity growth 

stemming from misallocation of labor to sectors with lower productivity growth.21 The recession 

of 2007-2009 was one such recession, and thus low productivity growth over roughly a decade in 

its aftermath was to be expected, but is not necessarily predictive of much longer periods such as 

75 years into the future. Considerations of more traditional factors also lead to a debate as to 

whether the productivity slowdown of recent years is a temporary phenomenon that will be 

reversed, or a more fundamental change that is likely to persist.

The position that future productivity growth is likely to be slower than the historical average 

observed prior to 2007 rests primarily on the argument that the pace of technological innovation 

has slowed. Its main proponent, Robert J. Gordon, argues that the unusually rapid pace of 

technological innovation observed in 1920-1970 period resulted from the invention of several 

general-purpose technologies, such as electricity and the internal combustion engine, that 

dramatically boosted productivity. He argues that similarly powerful general-purpose 

technologies have not been invented since the 1970s and are not likely to be invented in the near 

future. This explains the productivity slowdown in recent decades, and suggests slower 

productivity growth in the future. 22

Additionally, Robert J. Gordon, Dale W. Jorgenson, and others argue that some of the past 

productivity growth was driven by improvements in labor quality owning to the rising 

educational attainment of the labor force. However, as Jorgenson notes, “average levels of 

educational attainment remain high for people entering the labor force, but will no longer 

increase.” As a result, rising average educational attainment will gradually disappear as a source 

of productivity growth.23

The opposing view holds that productivity growth will rebound in the future owing to new 

technologies evolving at a pace at least as fast as in the past. Proponents of this view, primarily 

Erik Brynjolfsson and his co-authors, point to artificial intelligence and machine learning as the 

new general-purpose technology that will result in a return to faster productivity growth in the 

 21 See Borio, Claudio, Enisse Kharroubi, Christian Upper, and Fabrizio Zampolli, “Labour reallocation and 

productivity dynamics: financial causes, real consequences”, Bank for International Settlements Working Paper No. 

534, https://www.bis.org/publ/work534.pdf.

22 See Gordon, Robert J. 2016. The Rise and Fall of American Growth: The U.S. Standard of Living Since 

the Civil War. Princeton: Princeton University Press, and Gordon, Robert J. 2012 “Is U.S. Economic Growth Over? 

Faltering Innovation Confronts the Six Headwinds”, NBER working paper 18315, 

http://www.nber.org/papers/w18315.pdf.

23 Jorgenson, Dale W., Mun S. Ho, and Jon D. Samuels. “Educational Attainment and the Revival of U.S. 

Economic Growth.” In Education, Skills, and Technical Change: Implications for Future U.S. GDP Growth. 

Chicago: University of Chicago Press, 2017.
Productivity, Page 12

future. They argue that slow productivity growth in the recent past is not a predictor of future 

productivity growth. In fact, as new technology is being developed, new investments required to 

fully realize the transformative potential of the new technology are being made, and 

complementary innovations are being undertaken, one should expect productivity growth to be 

slow—until the effects of the new technology begin to spread across the economy.24

The future rate of technological innovations and their effects on productivity are extremely 

difficult to forecast. OCACT believes that it is reasonable to base the productivity assumption on 

the analysis of long historical trends, with adjustments for foreseeable differences between future 

and past conditions, such as a slower rate of change in educational attainment. 

1.5 Projections from Other Sources

IHS Markit (formerly Global Insight, Inc.) provides projections through 2049 in its latest 

long-run trend forecast (see The 30-Year Focus, Third Quarter, August 2019). For the 20-year 

period from 2029 to 2049, IHS Markit projects that the average annual rate of increase in 

productivity will be about 1.55 percent for the nonfarm business sector. Moody’s Analytics’ 

September 2019 forecast extends to 2049. For the 20-year period from 2029 to 2049, Moody’s 

Analytics projects the average annual growth rate in productivity will be about 1.62 percent for 

the nonfarm business sector. 

The Office of Management and Budget (OMB) Mid-Session Review of the Fiscal Year 2020

Budget includes projections through 2029. The OMB annual growth rate for the total-economy 

productivity was 2.31 percent for 2029. The Congressional Budget Office (CBO) June 2019

report, The 2019 Long-Term Budget Outlook, includes projections through 2049. CBO’s average 

annual growth rate for total-economy productivity was 1.46 percent over the entire 30-year 

period and 1.50 percent over the last 10 years, 2040 through 2049. The Social Security Advisory 

Board’s 2019 Technical Panel on Assumptions and Methods recommended an assumed ultimate 

annual rate of increase in total-economy productivity of 1.55 percent, compared to the 2019 

Trustees Report alternative II assumption of 1.63 percent. The prior technical panel, which met 

in 2015, recommended no changes to the ultimate annual rate of increase in total-economy 

productivity of 1.68 percent that had been assumed in the 2015 Trustees Report, alternative II.

 24 Brynjolfsson, Erik, Daniel Rock, and Chad Syverson. 2017 “Artificial Intelligence and the Modern 

Productivity Paradox: A Clash of Expectations and Statistics” NBER working paper No. 24001,

http://www.nber.org/papers/w24001.
Productivity, Page 13

Table 1.4: Total-Economy Productivity: Compound Annual Rates of Growth (%) Base Year = 2012

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

1961 39.12

1962 40.50 3.52

1963 41.94 3.53 3.54

1964 43.21 3.37 3.29 3.05

1965 44.50 3.27 3.18 3.01 2.97

1966 45.82 3.21 3.13 3.00 2.97 2.98

1967 46.56 2.94 2.83 2.65 2.52 2.29 1.61

1968 47.98 2.96 2.87 2.73 2.65 2.55 2.33 3.06

1969 48.31 2.67 2.55 2.39 2.26 2.08 1.78 1.87 0.68

1970 49.27 2.60 2.48 2.33 2.21 2.06 1.83 1.91 1.33 1.99

1971 51.13 2.71 2.62 2.51 2.43 2.34 2.22 2.37 2.14 2.87 3.77

1972 52.41 2.69 2.61 2.51 2.44 2.37 2.27 2.40 2.23 2.75 3.14 2.51

1973 53.66 2.67 2.59 2.50 2.44 2.37 2.28 2.39 2.26 2.66 2.88 2.45 2.38

1974 53.18 2.39 2.30 2.18 2.10 2.00 1.88 1.92 1.73 1.94 1.93 1.32 0.73 -0.90

1975 54.64 2.41 2.33 2.23 2.16 2.07 1.98 2.02 1.87 2.07 2.09 1.67 1.40 0.91 2.75

1976 55.94 2.41 2.33 2.24 2.17 2.10 2.02 2.06 1.94 2.12 2.14 1.82 1.64 1.40 2.57 2.38

1977 56.55 2.33 2.25 2.16 2.09 2.02 1.93 1.96 1.84 1.99 1.99 1.69 1.53 1.32 2.07 1.73 1.09

1978 57.06 2.24 2.17 2.07 2.01 1.93 1.85 1.87 1.75 1.87 1.85 1.58 1.43 1.24 1.78 1.46 1.00 0.91

1979 57.21 2.13 2.05 1.96 1.89 1.81 1.72 1.73 1.61 1.71 1.67 1.42 1.26 1.07 1.47 1.16 0.75 0.59 0.26

1980 57.29 2.03 1.95 1.85 1.78 1.70 1.61 1.61 1.49 1.56 1.52 1.27 1.12 0.94 1.25 0.95 0.60 0.43 0.20 0.14

1981 58.45 2.03 1.95 1.86 1.79 1.72 1.64 1.64 1.53 1.60 1.56 1.35 1.22 1.07 1.36 1.13 0.88 0.83 0.80 1.08 2.03

1982 58.46 1.93 1.85 1.76 1.69 1.62 1.53 1.53 1.42 1.48 1.44 1.23 1.10 0.96 1.19 0.97 0.74 0.67 0.61 0.72 1.02

1983 60.05 1.97 1.89 1.81 1.75 1.68 1.60 1.60 1.51 1.57 1.53 1.35 1.24 1.13 1.36 1.19 1.02 1.01 1.03 1.22 1.58

1984 61.34 1.97 1.90 1.83 1.77 1.70 1.63 1.64 1.55 1.60 1.58 1.41 1.32 1.22 1.44 1.29 1.16 1.17 1.21 1.40 1.72

1985 62.43 1.97 1.90 1.83 1.77 1.71 1.64 1.64 1.56 1.62 1.59 1.44 1.35 1.27 1.47 1.34 1.23 1.24 1.29 1.47 1.73

1986 63.89 1.98 1.92 1.85 1.79 1.74 1.68 1.68 1.60 1.66 1.64 1.50 1.42 1.35 1.54 1.43 1.34 1.37 1.42 1.59 1.83

1987 64.18 1.92 1.86 1.79 1.73 1.68 1.62 1.62 1.54 1.59 1.57 1.43 1.36 1.29 1.46 1.35 1.26 1.27 1.31 1.45 1.64

1988 65.09 1.90 1.84 1.77 1.72 1.67 1.61 1.61 1.54 1.58 1.56 1.43 1.36 1.30 1.45 1.36 1.27 1.29 1.32 1.44 1.61

1989 65.73 1.87 1.81 1.74 1.69 1.64 1.58 1.58 1.51 1.55 1.53 1.41 1.34 1.28 1.42 1.33 1.25 1.26 1.29 1.40 1.54

1990 66.74 1.86 1.80 1.74 1.69 1.63 1.58 1.58 1.51 1.55 1.53 1.41 1.35 1.29 1.43 1.34 1.27 1.28 1.31 1.41 1.54

1991 67.53 1.84 1.78 1.72 1.67 1.62 1.56 1.56 1.50 1.53 1.51 1.40 1.34 1.28 1.42 1.33 1.26 1.28 1.30 1.39 1.51

1992 69.96 1.89 1.84 1.78 1.74 1.69 1.64 1.64 1.58 1.62 1.61 1.50 1.45 1.41 1.54 1.46 1.41 1.43 1.47 1.56 1.68

1993 70.28 1.85 1.79 1.74 1.69 1.65 1.60 1.60 1.54 1.57 1.56 1.46 1.41 1.36 1.48 1.41 1.35 1.37 1.40 1.48 1.58

1994 70.77 1.81 1.76 1.70 1.66 1.61 1.56 1.56 1.51 1.54 1.52 1.42 1.37 1.33 1.44 1.37 1.32 1.33 1.35 1.43 1.52

1995 71.22 1.78 1.73 1.67 1.62 1.58 1.53 1.53 1.47 1.50 1.48 1.39 1.34 1.30 1.40 1.33 1.28 1.29 1.31 1.38 1.46

1996 72.60 1.78 1.73 1.68 1.63 1.59 1.55 1.54 1.49 1.52 1.50 1.41 1.37 1.32 1.43 1.36 1.31 1.32 1.35 1.41 1.49

1997 73.94 1.78 1.73 1.68 1.64 1.60 1.56 1.55 1.50 1.53 1.51 1.43 1.39 1.34 1.44 1.38 1.34 1.35 1.37 1.44 1.51

1998 75.66 1.80 1.75 1.70 1.66 1.62 1.58 1.58 1.53 1.56 1.54 1.46 1.42 1.38 1.48 1.43 1.38 1.40 1.42 1.48 1.56

1999 77.91 1.83 1.78 1.74 1.70 1.66 1.62 1.62 1.58 1.61 1.59 1.52 1.48 1.44 1.54 1.49 1.45 1.47 1.49 1.56 1.63

2000 79.89 1.85 1.80 1.76 1.72 1.69 1.65 1.65 1.61 1.64 1.62 1.55 1.52 1.48 1.58 1.53 1.50 1.51 1.54 1.60 1.68

2001 81.64 1.86 1.81 1.77 1.73 1.70 1.66 1.67 1.62 1.65 1.64 1.57 1.54 1.51 1.60 1.56 1.52 1.54 1.57 1.63 1.70

2002 84.15 1.89 1.84 1.80 1.77 1.74 1.70 1.71 1.67 1.70 1.69 1.62 1.59 1.56 1.65 1.61 1.58 1.60 1.63 1.69 1.76

2003 87.00 1.92 1.88 1.84 1.81 1.78 1.75 1.75 1.71 1.75 1.74 1.68 1.65 1.62 1.71 1.68 1.65 1.67 1.70 1.76 1.83

2004 89.30 1.94 1.90 1.86 1.83 1.80 1.77 1.78 1.74 1.77 1.76 1.70 1.68 1.66 1.74 1.71 1.68 1.71 1.74 1.80 1.87

2005 91.11 1.94 1.90 1.86 1.84 1.81 1.78 1.78 1.75 1.78 1.77 1.71 1.69 1.67 1.75 1.72 1.70 1.72 1.75 1.81 1.87

2006 91.99 1.92 1.88 1.84 1.82 1.79 1.76 1.76 1.73 1.76 1.75 1.69 1.67 1.65 1.73 1.69 1.67 1.69 1.72 1.77 1.84

2007 92.96 1.90 1.86 1.83 1.80 1.77 1.74 1.74 1.71 1.74 1.73 1.67 1.65 1.63 1.71 1.67 1.65 1.67 1.70 1.75 1.81

2008 94.00 1.88 1.85 1.81 1.78 1.75 1.73 1.73 1.70 1.72 1.71 1.66 1.64 1.61 1.69 1.66 1.64 1.65 1.68 1.73 1.78

2009 96.95 1.91 1.87 1.84 1.81 1.79 1.76 1.76 1.73 1.76 1.75 1.70 1.68 1.66 1.73 1.70 1.68 1.70 1.72 1.77 1.83

2010 99.48 1.92 1.89 1.85 1.83 1.80 1.78 1.78 1.75 1.78 1.77 1.72 1.70 1.68 1.75 1.73 1.71 1.73 1.75 1.80 1.86

2011 99.54 1.89 1.85 1.82 1.79 1.77 1.74 1.74 1.71 1.74 1.73 1.68 1.66 1.64 1.71 1.68 1.66 1.68 1.70 1.75 1.80

2012 100.00 1.86 1.82 1.79 1.76 1.74 1.71 1.71 1.68 1.71 1.70 1.65 1.63 1.61 1.68 1.65 1.63 1.64 1.66 1.71 1.76

2013 100.60 1.83 1.80 1.77 1.74 1.71 1.69 1.69 1.66 1.68 1.67 1.62 1.60 1.58 1.65 1.62 1.60 1.61 1.63 1.67 1.72

2014 101.23 1.81 1.78 1.74 1.72 1.69 1.67 1.67 1.64 1.66 1.65 1.60 1.58 1.56 1.62 1.59 1.57 1.59 1.61 1.64 1.69

2015 102.03 1.79 1.76 1.72 1.70 1.67 1.65 1.65 1.62 1.64 1.63 1.58 1.56 1.54 1.60 1.57 1.55 1.57 1.58 1.62 1.66

2016 102.39 1.76 1.73 1.70 1.67 1.65 1.62 1.62 1.59 1.61 1.60 1.56 1.53 1.51 1.57 1.54 1.52 1.53 1.55 1.59 1.63

2017 103.43 1.75 1.72 1.69 1.66 1.64 1.61 1.61 1.58 1.60 1.59 1.54 1.52 1.50 1.56 1.53 1.51 1.52 1.54 1.57 1.61

2018 104.33 1.74 1.70 1.67 1.65 1.62 1.60 1.59 1.57 1.58 1.58 1.53 1.51 1.49 1.54 1.52 1.50 1.51 1.52 1.55 1.59
Productivity, Page 14

Table 1.4 (continued): Total-Economy Productivity: Compound Annual Rates of Growth (%) Base Year = 2012 From

To Variable 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

1980 57.29

1981 58.45 2.03

1982 58.46 1.02 0.02

1983 60.05 1.58 1.36 2.71

1984 61.34 1.72 1.62 2.43 2.15

1985 62.43 1.73 1.66 2.21 1.96 1.78

1986 63.89 1.83 1.80 2.24 2.09 2.06 2.33

1987 64.18 1.64 1.57 1.88 1.68 1.52 1.39 0.45

1988 65.09 1.61 1.55 1.80 1.62 1.49 1.40 0.93 1.42

1989 65.73 1.54 1.48 1.69 1.52 1.39 1.29 0.95 1.20 0.98

1990 66.74 1.54 1.48 1.67 1.52 1.42 1.34 1.10 1.31 1.26 1.53

1991 67.53 1.51 1.45 1.61 1.48 1.38 1.32 1.11 1.28 1.23 1.36 1.18

1992 69.96 1.68 1.65 1.81 1.71 1.66 1.64 1.52 1.74 1.82 2.10 2.39 3.60

1993 70.28 1.58 1.55 1.69 1.58 1.52 1.49 1.37 1.52 1.55 1.69 1.74 2.02 0.45

1994 70.77 1.52 1.48 1.60 1.50 1.44 1.40 1.29 1.41 1.41 1.49 1.48 1.58 0.58 0.71

1995 71.22 1.46 1.42 1.53 1.43 1.37 1.33 1.21 1.31 1.29 1.35 1.31 1.34 0.60 0.67 0.64

1996 72.60 1.49 1.46 1.56 1.47 1.41 1.38 1.29 1.38 1.37 1.43 1.41 1.46 0.93 1.09 1.28 1.94

1997 73.94 1.51 1.48 1.58 1.50 1.45 1.42 1.34 1.43 1.43 1.48 1.48 1.52 1.11 1.28 1.47 1.89 1.85

1998 75.66 1.56 1.53 1.62 1.55 1.51 1.49 1.42 1.51 1.52 1.58 1.58 1.64 1.31 1.49 1.68 2.03 2.08 2.32

1999 77.91 1.63 1.61 1.70 1.64 1.61 1.59 1.54 1.63 1.65 1.71 1.73 1.80 1.55 1.73 1.94 2.27 2.38 2.65 2.98

2000 79.89 1.68 1.66 1.75 1.69 1.66 1.66 1.61 1.70 1.72 1.79 1.81 1.89 1.67 1.85 2.04 2.32 2.42 2.61 2.76 2.54

2001 81.64 1.70 1.68 1.77 1.72 1.70 1.69 1.65 1.73 1.76 1.82 1.85 1.92 1.73 1.89 2.06 2.30 2.38 2.51 2.57 2.37

2002 84.15 1.76 1.75 1.84 1.79 1.77 1.77 1.74 1.82 1.85 1.92 1.95 2.02 1.86 2.02 2.19 2.41 2.49 2.62 2.69 2.60

2003 87.00 1.83 1.82 1.91 1.87 1.86 1.86 1.83 1.92 1.95 2.02 2.06 2.13 2.00 2.16 2.32 2.53 2.62 2.75 2.83 2.80

2004 89.30 1.87 1.86 1.94 1.91 1.90 1.90 1.88 1.96 2.00 2.06 2.10 2.17 2.06 2.20 2.35 2.55 2.62 2.73 2.80 2.77

2005 91.11 1.87 1.87 1.95 1.91 1.90 1.91 1.89 1.97 2.00 2.06 2.10 2.16 2.05 2.19 2.32 2.49 2.56 2.64 2.69 2.64

2006 91.99 1.84 1.83 1.91 1.87 1.86 1.86 1.84 1.91 1.94 2.00 2.03 2.08 1.97 2.09 2.21 2.35 2.39 2.46 2.47 2.40

2007 92.96 1.81 1.80 1.87 1.84 1.82 1.83 1.80 1.87 1.89 1.94 1.97 2.02 1.91 2.02 2.12 2.24 2.27 2.31 2.31 2.23

2008 94.00 1.78 1.78 1.84 1.81 1.79 1.80 1.77 1.83 1.85 1.90 1.92 1.96 1.86 1.96 2.05 2.16 2.18 2.21 2.19 2.11

2009 96.95 1.83 1.82 1.89 1.86 1.85 1.85 1.83 1.89 1.92 1.96 1.98 2.03 1.94 2.03 2.12 2.23 2.25 2.28 2.28 2.21

2010 99.48 1.86 1.85 1.92 1.89 1.88 1.88 1.86 1.92 1.95 1.99 2.02 2.06 1.98 2.07 2.15 2.25 2.28 2.31 2.31 2.25

2011 99.54 1.80 1.79 1.85 1.82 1.81 1.81 1.79 1.85 1.86 1.90 1.92 1.96 1.87 1.95 2.03 2.11 2.13 2.15 2.13 2.06

2012 100.00 1.76 1.75 1.81 1.77 1.76 1.76 1.74 1.79 1.81 1.84 1.86 1.89 1.80 1.87 1.94 2.02 2.02 2.03 2.01 1.94

2013 100.60 1.72 1.71 1.77 1.73 1.72 1.72 1.70 1.74 1.76 1.79 1.80 1.83 1.74 1.81 1.87 1.94 1.94 1.94 1.92 1.84

2014 101.23 1.69 1.68 1.73 1.70 1.68 1.68 1.66 1.70 1.71 1.74 1.75 1.78 1.69 1.75 1.81 1.87 1.86 1.86 1.84 1.76

2015 102.03 1.66 1.65 1.70 1.67 1.66 1.65 1.63 1.67 1.68 1.71 1.71 1.73 1.65 1.71 1.76 1.81 1.81 1.81 1.77 1.70

2016 102.39 1.63 1.61 1.66 1.63 1.61 1.61 1.58 1.62 1.63 1.66 1.66 1.68 1.60 1.65 1.69 1.74 1.73 1.73 1.70 1.62

2017 103.43 1.61 1.60 1.64 1.61 1.60 1.59 1.57 1.60 1.61 1.63 1.64 1.65 1.58 1.62 1.66 1.71 1.70 1.69 1.66 1.59

2018 104.33 1.59 1.58 1.62 1.59 1.57 1.57 1.54 1.58 1.59 1.61 1.61 1.62 1.55 1.59 1.63 1.67 1.66 1.65 1.62 1.55

From

To Variable 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1999 77.91

2000 79.89 2.54

2001 81.64 2.37 2.20

2002 84.15 2.60 2.63 3.07

2003 87.00 2.80 2.88 3.23 3.39

2004 89.30 2.77 2.82 3.03 3.02 2.65

2005 91.11 2.64 2.66 2.78 2.68 2.33 2.02

2006 91.99 2.40 2.38 2.41 2.25 1.88 1.49 0.96

2007 92.96 2.23 2.19 2.19 2.01 1.67 1.35 1.01 1.05

2008 94.00 2.11 2.05 2.03 1.86 1.56 1.29 1.05 1.09 1.12

2009 96.95 2.21 2.17 2.17 2.04 1.82 1.66 1.57 1.77 2.12 3.14

2010 99.48 2.25 2.22 2.22 2.11 1.93 1.82 1.77 1.98 2.29 2.87 2.61

2011 99.54 2.06 2.02 2.00 1.88 1.70 1.56 1.49 1.59 1.72 1.93 1.33 0.06

2012 100.00 1.94 1.89 1.86 1.74 1.56 1.42 1.34 1.40 1.47 1.56 1.04 0.26 0.46

2013 100.60 1.84 1.79 1.75 1.64 1.46 1.33 1.25 1.29 1.33 1.37 0.93 0.37 0.53 0.60

2014 101.23 1.76 1.71 1.67 1.55 1.39 1.26 1.18 1.20 1.23 1.24 0.87 0.44 0.56 0.61 0.63

2015 102.03 1.70 1.64 1.61 1.49 1.34 1.22 1.14 1.16 1.17 1.18 0.86 0.51 0.62 0.67 0.71 0.79

2016 102.39 1.62 1.56 1.52 1.41 1.26 1.15 1.07 1.08 1.08 1.07 0.78 0.48 0.57 0.59 0.59 0.57 0.35

2017 103.43 1.59 1.53 1.49 1.39 1.24 1.14 1.06 1.07 1.07 1.07 0.81 0.56 0.64 0.68 0.70 0.72 0.68 1.02

2018 104.33 1.55 1.49 1.45 1.35 1.22 1.12 1.05 1.05 1.06 1.05 0.82 0.60 0.67 0.71 0.73 0.76 0.75 0.95 0.87
Productivity, Page 15

Table 1.5: Nonfarm Business Productivity: Compound Annual Rates of Growth (%) Base Year = 2012

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

1961 34.12

1962 35.67 4.54

1963 36.89 3.98 3.42

1964 37.93 3.59 3.12 2.82

1965 39.14 3.49 3.15 3.01 3.20

1966 40.55 3.51 3.26 3.21 3.40 3.60

1967 41.32 3.24 2.99 2.88 2.90 2.74 1.90

1968 42.77 3.28 3.07 3.00 3.05 3.00 2.70 3.50

1969 42.85 2.89 2.66 2.53 2.47 2.29 1.86 1.83 0.19

1970 43.48 2.73 2.51 2.38 2.30 2.13 1.76 1.72 0.83 1.48

1971 45.19 2.85 2.66 2.57 2.53 2.42 2.19 2.26 1.86 2.70 3.93

1972 46.77 2.91 2.75 2.67 2.65 2.58 2.41 2.51 2.26 2.96 3.71 3.49

1973 48.21 2.92 2.78 2.71 2.70 2.64 2.50 2.60 2.42 2.99 3.50 3.28 3.07

1974 47.41 2.56 2.40 2.31 2.26 2.15 1.97 1.98 1.73 2.05 2.19 1.61 0.69 -1.64

1975 48.72 2.58 2.43 2.35 2.30 2.21 2.06 2.08 1.88 2.16 2.30 1.90 1.38 0.54 2.76

1976 50.42 2.64 2.50 2.43 2.40 2.33 2.20 2.24 2.08 2.35 2.50 2.22 1.90 1.51 3.13 3.49

1977 51.29 2.58 2.45 2.38 2.35 2.28 2.16 2.19 2.04 2.27 2.39 2.13 1.86 1.56 2.66 2.60 1.72

1978 52.01 2.51 2.39 2.32 2.28 2.21 2.10 2.11 1.98 2.18 2.26 2.03 1.79 1.53 2.34 2.20 1.56 1.39

1979 51.89 2.36 2.23 2.16 2.11 2.03 1.92 1.92 1.77 1.93 1.98 1.74 1.50 1.24 1.82 1.59 0.96 0.58 -0.22

1980 51.88 2.23 2.10 2.03 1.98 1.90 1.78 1.77 1.62 1.75 1.78 1.55 1.31 1.06 1.51 1.26 0.72 0.38 -0.12 -0.02

1981 52.65 2.19 2.07 2.00 1.95 1.87 1.76 1.75 1.61 1.73 1.75 1.54 1.33 1.11 1.51 1.30 0.87 0.66 0.41 0.73 1.49

1982 52.25 2.05 1.93 1.85 1.80 1.71 1.60 1.58 1.44 1.54 1.54 1.33 1.11 0.90 1.22 1.00 0.59 0.37 0.11 0.23 0.35

1983 54.37 2.14 2.03 1.96 1.91 1.84 1.74 1.73 1.61 1.72 1.73 1.55 1.38 1.21 1.53 1.38 1.08 0.98 0.89 1.17 1.58

1984 55.59 2.14 2.04 1.97 1.93 1.86 1.77 1.76 1.65 1.75 1.77 1.61 1.45 1.30 1.60 1.47 1.23 1.16 1.12 1.38 1.74

1985 56.56 2.13 2.02 1.96 1.92 1.86 1.77 1.76 1.66 1.75 1.77 1.62 1.47 1.34 1.62 1.50 1.28 1.23 1.21 1.45 1.74

1986 58.25 2.16 2.07 2.01 1.97 1.91 1.83 1.82 1.73 1.82 1.84 1.71 1.58 1.47 1.73 1.64 1.45 1.42 1.43 1.67 1.95

1987 58.59 2.10 2.00 1.95 1.91 1.85 1.77 1.76 1.67 1.75 1.77 1.64 1.51 1.40 1.64 1.55 1.37 1.34 1.33 1.53 1.75

1988 59.55 2.08 1.99 1.93 1.90 1.84 1.76 1.76 1.67 1.75 1.76 1.64 1.52 1.42 1.64 1.55 1.40 1.37 1.36 1.54 1.74

1989 60.09 2.04 1.95 1.89 1.86 1.80 1.72 1.72 1.63 1.71 1.72 1.60 1.49 1.39 1.59 1.51 1.36 1.33 1.32 1.48 1.65

1990 61.11 2.03 1.94 1.89 1.85 1.80 1.72 1.72 1.64 1.71 1.72 1.60 1.50 1.41 1.60 1.52 1.38 1.36 1.35 1.50 1.65

1991 62.11 2.02 1.93 1.88 1.84 1.79 1.72 1.71 1.64 1.70 1.71 1.60 1.50 1.42 1.60 1.53 1.40 1.38 1.38 1.51 1.65

1992 64.90 2.10 2.02 1.97 1.94 1.89 1.83 1.82 1.75 1.82 1.84 1.74 1.65 1.58 1.76 1.70 1.59 1.58 1.59 1.73 1.88

1993 64.97 2.03 1.95 1.90 1.87 1.83 1.76 1.76 1.69 1.75 1.76 1.66 1.58 1.50 1.67 1.61 1.50 1.49 1.49 1.62 1.74

1994 65.43 1.99 1.91 1.87 1.83 1.79 1.72 1.72 1.65 1.71 1.72 1.62 1.54 1.47 1.62 1.56 1.46 1.44 1.45 1.56 1.67

1995 66.14 1.97 1.89 1.84 1.81 1.76 1.70 1.69 1.63 1.68 1.69 1.60 1.52 1.45 1.60 1.54 1.44 1.42 1.42 1.53 1.63

1996 67.54 1.97 1.90 1.85 1.82 1.78 1.72 1.71 1.65 1.70 1.71 1.62 1.54 1.48 1.62 1.57 1.47 1.46 1.46 1.56 1.66

1997 68.85 1.97 1.90 1.85 1.82 1.78 1.72 1.72 1.66 1.71 1.72 1.63 1.56 1.50 1.63 1.58 1.49 1.48 1.49 1.58 1.68

1998 70.96 2.00 1.93 1.89 1.86 1.82 1.76 1.76 1.70 1.75 1.76 1.69 1.62 1.56 1.69 1.65 1.57 1.56 1.57 1.66 1.75

1999 73.67 2.05 1.98 1.94 1.91 1.88 1.83 1.82 1.77 1.82 1.83 1.76 1.70 1.64 1.78 1.74 1.66 1.66 1.67 1.77 1.86

2000 76.11 2.08 2.01 1.98 1.95 1.92 1.87 1.87 1.82 1.87 1.88 1.81 1.75 1.71 1.84 1.80 1.73 1.73 1.75 1.84 1.93

2001 78.19 2.09 2.03 2.00 1.97 1.94 1.89 1.89 1.85 1.90 1.91 1.84 1.79 1.74 1.87 1.84 1.77 1.77 1.79 1.88 1.97

2002 81.57 2.15 2.09 2.06 2.04 2.00 1.96 1.96 1.92 1.97 1.99 1.92 1.87 1.83 1.96 1.93 1.87 1.87 1.89 1.99 2.08

2003 84.68 2.19 2.13 2.10 2.08 2.05 2.01 2.01 1.97 2.02 2.04 1.98 1.93 1.90 2.02 1.99 1.94 1.95 1.97 2.06 2.15

2004 87.11 2.20 2.15 2.12 2.10 2.07 2.03 2.04 2.00 2.05 2.06 2.01 1.96 1.93 2.05 2.02 1.97 1.98 2.00 2.09 2.18

2005 89.02 2.20 2.15 2.12 2.10 2.08 2.04 2.04 2.00 2.05 2.07 2.01 1.97 1.94 2.05 2.03 1.98 1.99 2.01 2.10 2.18

2006 90.00 2.18 2.13 2.10 2.08 2.05 2.01 2.02 1.98 2.03 2.04 1.99 1.94 1.91 2.02 2.00 1.95 1.96 1.98 2.06 2.14

2007 91.56 2.17 2.12 2.09 2.07 2.04 2.01 2.01 1.97 2.02 2.03 1.98 1.94 1.90 2.01 1.99 1.94 1.95 1.97 2.05 2.13

2008 92.60 2.15 2.10 2.07 2.05 2.02 1.99 1.99 1.95 2.00 2.01 1.96 1.92 1.88 1.99 1.96 1.92 1.92 1.94 2.02 2.09

2009 95.90 2.18 2.13 2.10 2.08 2.06 2.02 2.02 1.99 2.03 2.05 2.00 1.96 1.93 2.03 2.01 1.97 1.97 1.99 2.07 2.14

2010 99.16 2.20 2.15 2.13 2.11 2.09 2.05 2.06 2.02 2.07 2.08 2.04 2.00 1.97 2.07 2.05 2.01 2.02 2.04 2.11 2.18

2011 99.15 2.16 2.11 2.08 2.07 2.04 2.01 2.01 1.97 2.02 2.03 1.98 1.95 1.92 2.01 1.99 1.95 1.96 1.97 2.04 2.11

2012 100.00 2.13 2.08 2.06 2.04 2.02 1.98 1.98 1.95 1.99 2.00 1.96 1.92 1.89 1.98 1.96 1.92 1.93 1.94 2.01 2.07

2013 100.50 2.10 2.05 2.02 2.01 1.98 1.95 1.95 1.92 1.96 1.97 1.92 1.88 1.85 1.94 1.92 1.88 1.89 1.90 1.96 2.02

2014 101.36 2.08 2.03 2.00 1.99 1.96 1.93 1.93 1.89 1.93 1.94 1.90 1.86 1.83 1.92 1.90 1.85 1.86 1.87 1.93 1.99

2015 102.72 2.06 2.02 1.99 1.97 1.95 1.91 1.92 1.88 1.92 1.93 1.88 1.85 1.82 1.90 1.88 1.84 1.84 1.86 1.91 1.97

2016 103.01 2.03 1.98 1.96 1.94 1.92 1.88 1.88 1.85 1.88 1.89 1.85 1.81 1.78 1.86 1.84 1.80 1.80 1.81 1.87 1.92

2017 104.36 2.02 1.97 1.94 1.93 1.90 1.87 1.87 1.84 1.87 1.88 1.84 1.80 1.77 1.85 1.83 1.79 1.79 1.80 1.86 1.91

2018 105.71 2.00 1.96 1.93 1.92 1.89 1.86 1.86 1.83 1.86 1.87 1.82 1.79 1.76 1.84 1.82 1.78 1.78 1.79 1.84 1.89
Productivity, Page 16

Table 1.5 (continued): Nonfarm Business Productivity: Compound Annual Rates of Growth (%) Base Year = 2012

From

To Variable 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

1980 51.88

1981 52.65 1.49

1982 52.25 0.35 -0.77

1983 54.37 1.58 1.62 4.07

1984 55.59 1.74 1.82 3.15 2.23

1985 56.56 1.74 1.81 2.68 1.99 1.75

1986 58.25 1.95 2.04 2.76 2.32 2.37 2.99

1987 58.59 1.75 1.80 2.32 1.88 1.77 1.77 0.57

1988 59.55 1.74 1.77 2.20 1.83 1.73 1.73 1.10 1.64

1989 60.09 1.65 1.67 2.02 1.68 1.57 1.53 1.04 1.28 0.92

1990 61.11 1.65 1.67 1.98 1.68 1.59 1.56 1.21 1.42 1.31 1.70

1991 62.11 1.65 1.67 1.94 1.68 1.60 1.57 1.29 1.47 1.42 1.67 1.63

1992 64.90 1.88 1.92 2.19 1.99 1.95 1.98 1.82 2.07 2.17 2.60 3.05 4.48

1993 64.97 1.74 1.77 2.00 1.80 1.75 1.75 1.57 1.74 1.76 1.97 2.06 2.27 0.11

1994 65.43 1.67 1.68 1.89 1.70 1.64 1.63 1.46 1.59 1.58 1.72 1.72 1.75 0.41 0.71

1995 66.14 1.63 1.64 1.83 1.65 1.59 1.58 1.42 1.53 1.51 1.61 1.59 1.58 0.64 0.90 1.10

1996 67.54 1.66 1.67 1.85 1.68 1.64 1.63 1.49 1.59 1.59 1.68 1.68 1.69 1.00 1.30 1.60 2.11

1997 68.85 1.68 1.69 1.86 1.70 1.66 1.65 1.53 1.63 1.63 1.71 1.72 1.73 1.19 1.46 1.71 2.02 1.94

1998 70.96 1.75 1.77 1.93 1.79 1.76 1.76 1.66 1.76 1.77 1.86 1.88 1.92 1.50 1.78 2.05 2.37 2.50 3.07

1999 73.67 1.86 1.88 2.04 1.92 1.89 1.91 1.82 1.93 1.95 2.06 2.10 2.16 1.83 2.12 2.40 2.73 2.94 3.44 3.81

2000 76.11 1.93 1.96 2.11 2.00 1.98 2.00 1.93 2.03 2.07 2.17 2.22 2.28 2.01 2.29 2.55 2.85 3.03 3.40 3.56 3.32

2001 78.19 1.97 2.00 2.14 2.04 2.03 2.04 1.98 2.08 2.12 2.22 2.27 2.33 2.09 2.34 2.58 2.83 2.97 3.23 3.29 3.03

2002 81.57 2.08 2.11 2.25 2.16 2.15 2.18 2.13 2.23 2.27 2.38 2.43 2.51 2.31 2.56 2.79 3.04 3.20 3.45 3.54 3.45

2003 84.68 2.15 2.18 2.33 2.24 2.24 2.27 2.22 2.33 2.37 2.48 2.54 2.62 2.45 2.68 2.91 3.14 3.28 3.51 3.60 3.54

2004 87.11 2.18 2.21 2.35 2.27 2.27 2.30 2.26 2.36 2.41 2.51 2.56 2.64 2.48 2.70 2.90 3.11 3.23 3.42 3.48 3.41

2005 89.02 2.18 2.21 2.34 2.27 2.27 2.29 2.26 2.35 2.39 2.49 2.54 2.60 2.46 2.66 2.84 3.01 3.12 3.26 3.29 3.21

2006 90.00 2.14 2.17 2.29 2.22 2.21 2.24 2.20 2.29 2.32 2.40 2.45 2.50 2.36 2.54 2.69 2.84 2.91 3.02 3.02 2.90

2007 91.56 2.13 2.15 2.27 2.20 2.19 2.21 2.18 2.26 2.29 2.37 2.41 2.46 2.32 2.48 2.62 2.75 2.81 2.89 2.87 2.76

2008 92.60 2.09 2.11 2.23 2.15 2.15 2.17 2.13 2.20 2.23 2.30 2.34 2.38 2.25 2.39 2.51 2.62 2.67 2.73 2.70 2.57

2009 95.90 2.14 2.16 2.27 2.21 2.21 2.22 2.19 2.27 2.30 2.36 2.40 2.44 2.32 2.46 2.58 2.69 2.73 2.80 2.78 2.67

2010 99.16 2.18 2.21 2.31 2.25 2.25 2.27 2.24 2.31 2.35 2.41 2.45 2.49 2.38 2.52 2.63 2.74 2.78 2.85 2.83 2.74

2011 99.15 2.11 2.13 2.23 2.17 2.17 2.18 2.15 2.22 2.24 2.30 2.33 2.37 2.26 2.38 2.48 2.56 2.59 2.64 2.61 2.51

2012 100.00 2.07 2.09 2.19 2.12 2.12 2.13 2.10 2.16 2.18 2.24 2.26 2.29 2.19 2.30 2.38 2.46 2.48 2.52 2.48 2.38

2013 100.50 2.02 2.04 2.13 2.07 2.06 2.07 2.04 2.10 2.12 2.17 2.19 2.21 2.10 2.21 2.28 2.35 2.37 2.39 2.35 2.24

2014 101.36 1.99 2.00 2.09 2.03 2.02 2.03 2.00 2.05 2.07 2.11 2.13 2.15 2.05 2.14 2.21 2.27 2.28 2.30 2.25 2.15

2015 102.72 1.97 1.98 2.07 2.01 2.00 2.01 1.98 2.03 2.04 2.08 2.10 2.12 2.02 2.10 2.17 2.23 2.23 2.25 2.20 2.10

2016 103.01 1.92 1.94 2.02 1.95 1.95 1.95 1.92 1.96 1.98 2.02 2.03 2.04 1.94 2.02 2.08 2.13 2.13 2.14 2.09 1.99

2017 104.36 1.91 1.92 2.00 1.94 1.93 1.93 1.90 1.94 1.95 1.99 2.00 2.02 1.92 1.99 2.05 2.09 2.09 2.10 2.05 1.95

2018 105.71 1.89 1.90 1.98 1.92 1.91 1.91 1.88 1.92 1.93 1.97 1.98 1.99 1.89 1.97 2.02 2.06 2.06 2.06 2.01 1.92

From

To Variable 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1999 73.67

2000 76.11 3.32

2001 78.19 3.03 2.74

2002 81.57 3.45 3.52 4.32

2003 84.68 3.54 3.62 4.06 3.81

2004 87.11 3.41 3.43 3.67 3.34 2.88

2005 89.02 3.21 3.18 3.30 2.96 2.53 2.19

2006 90.00 2.90 2.83 2.85 2.49 2.05 1.65 1.10

2007 91.56 2.76 2.68 2.67 2.34 1.97 1.68 1.42 1.73

2008 92.60 2.57 2.48 2.45 2.14 1.81 1.54 1.32 1.44 1.14

2009 95.90 2.67 2.60 2.58 2.34 2.10 1.94 1.88 2.14 2.34 3.55

2010 99.16 2.74 2.68 2.68 2.47 2.28 2.18 2.18 2.45 2.69 3.48 3.41

2011 99.15 2.51 2.43 2.40 2.19 1.99 1.87 1.81 1.96 2.01 2.30 1.68 -0.01

2012 100.00 2.38 2.30 2.26 2.06 1.87 1.74 1.68 1.77 1.78 1.94 1.41 0.42 0.85

2013 100.50 2.24 2.16 2.11 1.92 1.73 1.60 1.53 1.59 1.56 1.65 1.18 0.45 0.68 0.50

2014 101.36 2.15 2.07 2.02 1.83 1.65 1.53 1.45 1.50 1.46 1.52 1.11 0.55 0.74 0.68 0.85

2015 102.72 2.10 2.02 1.97 1.79 1.62 1.51 1.44 1.48 1.45 1.49 1.15 0.71 0.89 0.90 1.10 1.34

2016 103.01 1.99 1.91 1.85 1.68 1.52 1.41 1.34 1.36 1.32 1.34 1.03 0.64 0.77 0.74 0.82 0.81 0.28

2017 104.36 1.95 1.87 1.82 1.66 1.50 1.40 1.33 1.35 1.32 1.34 1.06 0.73 0.86 0.86 0.95 0.98 0.80 1.31

2018 105.71 1.92 1.84 1.79 1.63 1.49 1.39 1.33 1.35 1.31 1.33 1.09 0.80 0.92 0.93 1.02 1.06 0.96 1.30 1.29
Productivity, Page 17

1.6 Appendix 

Nordhaus demonstrates how the growth rates in productivity in n sectors of the economy can be 

aggregated to the growth rate in total-economy productivity.25 Monaco adopts the formulation to 

aggregate the growth rates in productivity in the nonfarm business, farm, and “all other” 

sectors.26 Equation A1 is a similar adaptation to five sectors: nonfarm business (n), farm (f), 

households (h), nonprofit institutions (i), and general government (g).

H (wt wt ) H (wt wt )

H (wt wt ) H (wt wt ) H (wt wt )

(A1) P P wt P wt P wt P wt P wt

H

g

Q

g g

H

i

Q

i i

H

h

Q

h h

H

f

Q

f f

H

n

Q

n n

Q

g g

Q

i i

Q

h h

Q

f f

Q

t n n

− + −

− + − + − +

= + + + + +

• •

• • •

• • • • • •

Where,

 ▪

X = rate of change in x

P = productivity

H = hours worked

wtQf = nominal output weight for farm sector defined as the ratio of nominal GDP 

in the farm sector to nominal GDP for the total economy 

wtHf = hours worked weight for farm sector defined as the ratio of hours worked 

in the farm sector to hours worked in the total economy 

t = total economy

In the long-range, it is reasonable to assume that the growth rate in hours worked in all sectors 

will be equal. Thus, Equation A1 can be simplified to A2.

Q

g g

Q

i i

Q

h h

Q

f f

Q (A2) Pt Pn wt n P wt P wt P wt P wt • • • • • •

= + + + +

Furthermore, if the ultimate growth rates in productivity in the household, nonprofits, and 

general government sectors are zero, Equation A2 can be further simplified to A3.

Q

f f

Q (A3) Pt Pn wt n P wt • • •

= +

 25 Nordhaus, William D., “Productivity Growth and the New Economy.” Brookings Papers on Economic 

Activity, (Volume 2, 2002). pp.211-265.

26 Monaco, Ralph, “Issues in Projecting Productivity in the Very Long Term.” Sept. 28, 2005. Treasury 

Office of Economic Policy. Unpublished.
Price Inflation, Page 1

2. PRICE INFLATION

THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

TABLE OF CONTENTS PAGE

2 PRICE INFLATION.............................................................................................................. 2

2.1 SUMMARY ............................................................................................................................................................. 2

2.2 RECENT REVISIONS TO BLS AND BEA DATA..................................................................................................... 2

2.2.1 Recent and Expected Future Changes to Methods BLS Uses to Compute the CPI.............................................. 2

2.2.2 OCACT Adjustments to the Published CPI-W................................................................................................... 3

2.2.3 BEA Annual Update ........................................................................................................................................ 3

2.2.4 OCACT Adjustments to the Published PGDP................................................................................................... 3

2.3 CONSUMER PRICE INDEX FOR URBAN WAGE EARNERS AND CLERICAL WORKERS (CPI-W).......................... 4

2.3.1 Historical Growth in the Adjusted CPI-W ........................................................................................................ 4

2.3.2 Future Growth in the CPI-W ........................................................................................................................... 5

2.4 GROSS DOMESTIC PRODUCT IMPLICIT PRICE DEFLATOR (PGDP)..................................................................... 6

2.4.1 Historical Behavior of the Adjusted PGDP ...................................................................................................... 6

2.4.1.1 Adjusted Deflator for Personal Consumption Expenditures (PGDP_C)......................................................... 8

2.4.1.2 Deflator for Investment Expenditures (PGDP_I) .......................................................................................... 9

2.4.1.3 Deflator for Government Expenditures (PGDP_G)......................................................................................13

2.4.1.4 Ultimate Assumption for the GDP Deflator.................................................................................................14

2.5 PRICE DIFFERENTIAL .......................................................................................................................................... 15

2.6 PROJECTIONS FROM OTHER SOURCES ............................................................................................................... 15

2.7 APPENDIX............................................................................................................................................................ 20

TABLE OF TABLES PAGE

TABLE 2.1: ASSUMED ULTIMATE ANNUAL RATES OF INCREASE IN PRICE LEVEL MEASURES......................................... 2

TABLE 2.2: HISTORICAL GROWTH IN THE ADJUSTED CPI-W, THE GDP DEFLATOR, AND THE PRICE DIFFERENTIAL..... 5

TABLE 2.3: AVERAGE ANNUAL PERCENTAGE CHANGE IN THE GDP DEFLATOR, AND THE IMPLICIT PRICE DEFLATORS 

FOR CONSUMPTION EXPENDITURES (PGDP_C), INVESTMENT EXPENDITURES (PGDP_I) AND GOVERNMENT 

EXPENDITURES (PGDP_G)........................................................................................................................................... 7

TABLE 2.4: CPI-U VS. C-CPI-U GROWTH RATES................................................................................................................. 9

TABLE 2.5: ADJUSTED CPI-W: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 1982-1984 .................... 16

TABLE 2.6: ADJUSTED GDP DEFLATOR: COMPOUND ANNUAL RATES OF GROWTH (%) BASE YEAR = 2012............... 18
Price Inflation, Page 2

2 Price Inflation

2.1 Summary

For the 2020 Trustees Report, the assumed ultimate annual rates of increase in the CPI-W are

3.00 percent, 2.40 percent, and 1.80 percent for alternatives I, II, and III, respectively, as shown 

in Table 2.1. The Trustees also assume the ultimate annual rates of increase in the gross domestic 

product implicit price deflator (PGDP) to be 2.75 percent, 2.05 percent, and 1.35 percent for 

alternatives I, II, and III, respectively. Thus, the ultimate price differential, defined as the PGDP 

less CPI-W average annual rates of increase, is assumed to be -0.25, -0.35, -0.45 percentage 

point for alternatives I, II, and III, respectively.27 The assumed ultimate annual rates of increase 

for CPI-W and PGDP are 0.20 percentage point lower than those assumed for the 2019 Trustees 

Report.

Table 2.1: Assumed Ultimate Annual Rates of Increase in Price Level Measures

2.2 Recent Revisions to BLS and BEA Data

2.2.1 Recent and Expected Future Changes to Methods BLS Uses to Compute the CPI

The Bureau of Labor Statistics (BLS) collects and publishes data on the CPI. BLS updated the 

consumption expenditure weights in the CPI-W and in the CPI for all Urban Consumers (CPI-U) 

from the 2013-2014 to 2015-2016 period, effective January 2018.

28 Since 2000, BLS has been 

updating the weights every two years, and plans to continue on that schedule, instead of the 

pre-2000 historical average of about once per decade. BLS believes that more frequent updates 

of the consumption-expenditure weights will have little or no effect on the average future growth 

rate in the CPI over long periods.29

 27 The projected price differential is important because it affects the real rate of increase in the average 

OASDI covered wage (see Section 3.3.2.4) and, therefore, the long-range actuarial balance. 

28 For BLS’s CPI methodology, see https://www.bls.gov/opub/hom/pdf/cpihom.pdf. The new weights are in 

https://www.bls.gov/cpi/tables/relative-importance/2017.txt, and the weights they replaced are in 

https://www.bls.gov/cpi/tables/relative-importance/old-weights-2017.pdf.

29 Future Schedule for Expenditure Weight Updates in the Consumer Price Index, BLS, 

http://stats.bls.gov/cpi/cpiupdt.htm.

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2019 Trustees Report

I II III I II III I II III

 CPI-W 3.00 2.40 1.80 3.20 2.60 2.00 -0.20 -0.20 -0.20 

 PGDP 2.75 2.05 1.35 2.95 2.25 1.55 -0.20 -0.20 -0.20 

 Price Differential

 (PGDP less CPI-W) -0.25 -0.35 -0.45 -0.25 -0.35 -0.45 0.00 0.00 0.00 
Price Inflation, Page 3

2.2.2 OCACT Adjustments to the Published CPI-W

Over the years, BLS has introduced numerous improvements to the CPI-W. For example, 

beginning in January 1995 and July 1996, BLS introduced changes to correct methodological 

errors introduced into the index in January 1978 and January 1987. In addition, beginning in 

January 1999, BLS introduced a new geometric mean formula that assumes some lower-level 

substitution among items purchased by consumers within broad categories of goods and services 

due to changes in relative prices.

Because BLS has no plans to revise the historical CPI, these improvements present a 

comparability problem. The goal is to project future growth rates in the CPI, based, in part, on an 

analysis of historical growth rates. Any projected growth rate in the CPI will be affected by the 

BLS method improvements mentioned above. Thus, OCACT adjusted the historical CPI to 

reflect the estimated effects of these method changes, effectively reducing the measured growth 

rate in the CPI-W over the historical period.30 This adjustment is the same as in last year’s 

Trustees Report. Table 2.4 lists the adjusted CPI-W. (See Section 2.6 Appendix for details on 

OCACT’s adjustments to the actual published CPI-W annual growth rates.)

2.2.3 BEA Annual Update

On July 26, 2019, BEA released a regular annual update to the NIPA data, including GDP, 

PGDP, and their components for 2014 and later.

31

Compared to the values reported a year ago, the revised growth rate of PGDP is slightly lower in 

each year from 2014 to 2017. The changes are small—less than 0.1 percentage point in any given 

year, and the total change in PGDP level for 2017 is about -0.1 percent. 

2.2.4 OCACT Adjustments to the Published PGDP 

BEA’s estimate of the PGDP is based, in part, on the CPI. BLS has introduced numerous 

improvements to the CPI that have lowered its post-1995 growth rate. BEA “backcasted” these 

improvements in the NIPA, lowering the growth rate in the PGDP (and raising the real growth 

rate in GDP). However, because BEA only backcasted these effects to 1978, OCACT has 

lowered the pre-1978 growth rate in the PGDP for consistency (see Section 2.7 Appendix for 

further details on the adjustments to the actual published annual growth rates in PGDP and 

annual real growth rates in GDP). The adjusted PGDP is shown in Table 2.5.

 30 While historical values in this document are adjusted for consistency with assumptions about the future, 

the historical values shown in the Trustees Report are unadjusted published values.

31 BEA’s data release with the new GDP data reflecting the annual update can be found at 

https://www.bea.gov/news/2019/gross-domestic-product-2nd-quarter-2019-advance-estimate-and-annual-update. 
Price Inflation, Page 4

2.3 Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)

2.3.1 Historical Growth in the Adjusted CPI-W32

Over the last forty years (1978 to 2018), the adjusted CPI-W grew at an average annual rate of 

3.15 percent, or about 0.55 percentage point higher than the assumed ultimate rate of increase of 

2.6 percent in the 2019 Trustees Report alternative II. Over the last five complete economic 

cycles (1969 to 2007), the adjusted CPI-W grew at an average annual rate of 4.22 percent. The 

growth rates by cycle were 4.44, 7.59, 5.00, 2.44, and 2.64 percent for the 1969-1973, 

1973-1979, 1979-1990, 1990-2001, and 2001-2007 periods, respectively. The relatively higher 

inflation rates experienced from the late 1960s to the mid-1980s can be reasonably attributed to 

high capacity utilization associated with the Vietnam War, the two oil price shocks in the early 

and late 1970s, and the fiscal and monetary policy responses to those events.

The high inflation rate in the late 1970s led the Federal Reserve to place a greater emphasis on 

price stability as part of their mandate to pursue maximum employment and stable prices. In the 

early 1980s, the Federal Reserve raised the federal funds rate to reduce the double-digit inflation 

rates that occurred in 1979 and 1980. In the mid-1990s, the Federal Reserve made a judgment 

that inflation at the rate of 2 percent (as measured by the annual change in the price index for 

personal consumption expenditures, or PCE) is most consistent over the longer run with the 

Federal Reserve's statutory mandate. The Federal Reserve publicly announced their 2 percent 

goal in 2012, and in their May 2018 meeting clarified that the goal was meant to be symmetric 

and that “a temporary period of inflation modestly above 2 percent would be consistent with the 

Committee's symmetric inflation objective.”33

After 1981, various other factors also contributed to the slowdown in the inflation rate. Oil prices 

were mostly stable between 1980 and 2001, and the dependence of the US economy on oil has 

decreased. The economic output of developing nations with relatively low labor costs (for 

example, China and India) increased substantially, as did the share of US imports from those 

countries. The dollar appreciated relative to the trade-weighted average of other currencies 

between 1980 and 1985 and again between 1995 and 2002, further contributing to decreases in 

prices of imported goods. Between 2002 and 2008, some of those factors reversed: the price of 

oil and other commodities increased sharply and the dollar depreciated sharply, but there was 

relatively little corresponding increase in the inflation rate. Since 2008, the inflation rate has 

been even lower, due to a recession, a decrease in the price of oil and other commodities, and 

appreciation of the dollar.

34

Since the end of the last complete economic cycle (i.e., from 2007 to 2018), the CPI-W grew at 

an average annual rate of about 1.75 percent. This period has been characterized by unusually 

weak aggregate demand for goods and services. Trustees do not expect this weak demand to 

continue into the long-range future.

 32 See section 2.2.2 for a description of the adjusted CPI-W.

33 See https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20180502.pdf (page 9).

34 CPI-W grew at a 2.22 percent annual rate over the 7-year period 1995-2002, 3.08 percent over the 6-year 

period 2002-2008, and 1.53 percent over the 10-year period 2008-2018. The dollar has appreciated significantly 

relative to the euro and the British pound since 2008, and has not changed much relative to the yen and the yuan.
Price Inflation, Page 5

Table 2.2: Historical Growth in the Adjusted CPI-W, the GDP Deflator, and the Price Differential

Period

CPI-W Average 

Annual Rate of 

Growth (percent)

GDP Deflator 

Average Annual 

Rate of Growth

Price Differential 

= GDP Deflator 

less CPI-W

Historical:

1968-2018 (50 years) 3.67 3.49 -0.18

 1968-1993 (25 years) 5.22 5.11 -0.11

 1993-2018 (25 years) 2.15 1.90 -0.25

Since Most Recent Economic Cycle Peak

2007(peak)-2018 (11 years) 1.75 1.62 -0.13

By Complete Economic Cycle (Peak-to-Peak)

 Individual Cycle

 1969-1973 4.44 4.93 0.49

 1973-1979 7.59 7.45 -0.14

 1979-1990 5.00 4.61 -0.39

 1990-2001 2.44 2.08 -0.37

 2001-2007 2.64 2.49 -0.16

 Last Five Cycles

 1969-2007 4.22 4.01 -0.21

 Last Four Cycles

 1973-2007 4.20 3.90 -0.30

 Last Three Cycles

 1979-2007 3.48 3.15 -0.33

 Last Two Cycles

 1990-2007 2.51 2.22 -0.29

2.3.2 Future Growth in the CPI-W 

If only past inflation rates were used to determine the assumed ultimate rate for the future, then 

only the period (e.g., the most recent 40 or 20 years) and method (e.g., a simple, weighted or 

geometric average) would need to be chosen. The best historical period would be the one that is 

most representative of the conditions that are expected to prevail over the upcoming 75-year 

projection period. The 50-year historical record is filled with inflation-related events, some of 

which occurred in unique circumstances and have limited relevance for projecting the future. 

These include the Vietnam War, oil price shocks, and periods of price controls. Furthermore, 

after a historically unusual departure in the 1970s, monetary policy has returned to a strong 

emphasis on price stability. 
Price Inflation, Page 6

While these specific historical events will not recur in the future (at least not exactly as they have 

in the past), other inflation-related events may take their place. It is reasonable to expect some 

additional upward pressure on the future growth rate in the CPI due to changes in international 

trade. The ratio of net exports (i.e., exports less imports) to GDP averaged about -3.3 percent 

over the 11-year period from 2008 through 2018. Part of this imbalance is due to imports of 

relatively low-priced consumer goods from emerging markets, such as China. However, as these 

developing economies mature, their average wage and consumption levels are expected to rise 

relative to their output, and their currencies and price levels are expected to rise relative to those 

of the U.S. This may put further upward pressure on the prices of basic commodities and, 

therefore, the CPI. These trends are also expected to ultimately return the ratio of net exports to 

GDP to zero in the future. 

The 3.48 percent average annual growth rate for the adjusted CPI-W for the last three economic 

cycles from 1979 to 2007 is higher than the most reasonable assumption for the ultimate CPI-W 

annual rate of increase. OCACT believes that the 2.51 percent average annual growth rate for the 

adjusted CPI-W over the last two complete economic cycles (as measured over the 17-year 

period from 1990 to 2007), a period that reflects the current domestic monetary policy 

environment expected to exist in the future, is closer to an expected future trend. The low 

inflation rates since the end of the last complete cycle (averaging under 2 percent since 2007) 

have been heavily influenced by a deep recession, slower-than-usual recovery, and a 

continuation of a trend of inexpensive imported goods, and are not likely to be sustained in the 

long run. However, it is reasonable to give some weight to the 11-year period from 2007 to 2018 

insofar as it has represented a continuation of relatively stable approach to monetary policy.

Thus, the assumed ultimate rate of increase in the CPI-W for the 2020 Trustees Report is 2.40

percent for alternative II, and 3.00 and 1.80 percent for alternatives I and III, respectively, which 

is 0.20 percentage point lower than the rates assumed for the 2019 Trustees Report. 

2.4 Gross Domestic Product Implicit Price Deflator (PGDP)

2.4.1 Historical Behavior of the Adjusted PGDP 

Table 2.3 shows historical data for the average annual percentage change in PGDP and its key 

components. The PGDP can be viewed as a weighted average of its key components, which 

include the implicit price deflator for personal consumption expenditures (PGDP_C), the implicit 

price deflator for gross private domestic investment (PGDP_I), and the implicit price deflator for 

government consumption expenditures and gross investment (PGDP_G). While the implicit price 

deflators for imports and exports also contribute to PGDP over the historical period, the effect of 

net exports on the deflator is assumed to be zero on average over the 75-year projection period. 

The weights are the ratios of the components’ nominal expenditures to total nominal GDP. The 

weights have been relatively stable in the historical period. In 2018, the weights for personal 

consumption, investment, and government expenditures were about 0.68, 0.18, and 0.17, 

respectively. These weights summed to more than one because net exports were negative. 

Adjusting for the assumed effect of net exports on the PGDP, the weights for personal 

consumption, investment, and government expenditures are assumed to be 0.63, 0.18, and 0.19, 

respectively. These values are consistent with the average values observed in the historical 

period. 
Price Inflation, Page 7

Table 2.3: Average Annual Percentage Change in the GDP Deflator, and the Implicit Price Deflators for 

Consumption Expenditures (PGDP_C), Investment Expenditures (PGDP_I) and Government Expenditures

(PGDP_G)

Period GDP Deflator PGDP_C PGDP_I PGDP_G

Historical:

1968-2018 (50 years) 3.51 3.52 2.80 4.23

 1968-1993 (25 years) 5.15 5.25 4.61 5.75

 1993-2018 (25 years) 1.90 1.82 1.02 2.72

Since Most Recent Economic Cycle Peak

2007-2018 1.62 1.54 0.71 2.01

By Complete Economic Cycle (Peak-to-Peak)

 Individual Cycle

 1969-1973 4.93 4.43 4.72 7.57

 1973-1979 7.45 7.75 8.64 7.55

 1979-1990 4.61 4.95 3.42 4.88

 1990-2001 2.08 2.11 0.68 2.79

 2001-2007 2.49 2.31 2.18 4.04

 Last Five Cycles

 1969-2007 4.01 4.08 3.36 4.83

 Last Four Cycles

 1973-2007 3.90 4.04 3.20 4.52

 Last Three Cycles

 1979-2007 3.15 3.26 2.07 3.88

 Last Two Cycles

 1990-2007 2.22 2.18 1.21 3.23

PGDP tends to have a lower annual percentage change than the CPI-W, as shown in Table 2.2, 

primarily due to two factors. First, the computational weighting method for the PGDP allows for 

substitution between items over time, which contributes to a slower annual rate of change when 

compared to the CPI-W. Second, the PGDP covers investment and government expenditures in 

addition to consumer expenditures. The second factor generally contributes to slower growth in 

GDP due to the PGDP_I, with the exception of the 1969-1973 period and the 2001-2007 period 

where the average annual growth in PGDP_G was elevated due to the Vietnam war and the 

Afghanistan and Iraq wars, respectively. While there are other differences between the two 

measures, such differences are relatively less important in explaining the differences in the 

annual percentage change.

The long-run historical growth rate in PGDP is mostly explained by the separate historical 

growth rates in PGDP_C, PGDP_I, and PGDP_G. The historical and expected future growth 

rates for each component deflator are examined below.
Price Inflation, Page 8

2.4.1.1 Adjusted Deflator for Personal Consumption Expenditures (PGDP_C)

While both the PGDP_C and the CPI-W focus on changes in the prices of consumer goods, the 

PGDP_C differs from the CPI-W in terms of the formula used for the computation and the scope 

of items covered. The PGDP_C formula allows for substitution between items, which tends to 

result in a lower annual rate of change when compared to the CPI-W. The difference in the scope 

of items covered tends to contribute less to systematic differences over time than the difference 

in the formula. Thus, all else equal, the average annual change in the PGDP_C contributes to the 

annual percentage change in the PGDP being lower than the annual percentage change in the 

CPI-W. 

When examining the historical data on the PGDP_C and the CPI-W, the more recent complete 

economic cycles provide a good basis for assessing the future relationship between the two price 

measures because the BLS provides the information necessary to produce a good approximation 

of the current CPI-W computation method from 1978 to the present. Over the 28-year period 

from 1979 to 2007, the average annual growth rate for the adjusted PGDP_C was 3.26 percent, 

rounding to 0.23 percentage point below the CPI-W growth rate of 3.48. Over the 17-year period 

from 1990 to 2007, the average annual growth rate for the adjusted PGDP_C was 2.18 percent, 

or 0.33 percentage point below the CPI-W growth rate of 2.51. Over the most recently completed 

cycle from 2001 to 2007, the average annual growth rate for the adjusted PGDP_C was 2.31 

percent, rounding to 0.34 percentage point below the CPI-W growth rate of 2.64. 

From 2007 to 2018, the annual percentage change in PGDP_C was 1.54 percent, rounding to 

0.22 percentage point below the CPI-W growth rate of 1.75 percent. 

The historical difference in past complete economic cycles between the PGDP_C and the CPI-W 

of between 0.22 and 0.34 percentage point is very similar to the difference between the CPI-U 

and the chained-CPI-U (C-CPI-U), as shown in Table 2.4. Like the PGDP_C, the C-CPI-U 

allows for substitution between items over time and tends to grow at a slower rate than the CPIU. BLS has published monthly values for the C-CPI-U for each year beginning in January 2000. 

Final values are now available for 2017. The average annual growth rate in the C-CPI-U from 

the first quarter of 2000 to the fourth quarter of 2017 was 1.85 percent. Over the same period, the 

average annual growth rates in the PGDP_C, CPI-U, and CPI-W were approximately 1.81, 2.12, 

and 2.09 percent, respectively. The data suggest that over this period, the contribution of the 

difference in computational methods was about 0.27 percentage point (i.e., 2.12 – 1.85), and that 

the PGDP_C price differential (the difference between the growth rates of PGDP_C and CPI-W) 

was -0.28 percentage point (i.e., 1.81 – 2.09).35 OCACT believes that the difference of -0.28 may 

be somewhat low due to the unusually low inflation rate over the 2008-2017 period that may 

have limited the substitution between items over that time. 

 35 The data also suggest that from the first quarter of 2000 to the fourth quarter of 2017, the average annual 

growth rate in the C-CPI-U (1.85 percent) was a reasonable approximation of the average annual growth rate in the 

PGDP_C (1.81 percent). 
Price Inflation, Page 9

Table 2.4: CPI-U vs. C-CPI-U growth rates

CPI-U growth rate less C-CPI-U growth rate

(December-to-December, percentage points)

Year

All Items Less Food 

and Energy All Items

2000 0.7 0.8

2001 0.6 0.3

2002 0.3 0.4

2003 0.4 0.2

2004 -0.1 0.1

2005 0.3 0.5

2006 0.4 0.3

2007 0.5 0.4

2008 0.0 -0.1

2009 0.3 0.3

2010 0.2 0.2

2011 0.0 0.0

2012 0.3 0.3

2013 0.2 0.2

2014 0.4 0.2

2015 0.4 0.3

2016 0.3 0.3

2017 0.5 0.4

Average 2000-2017 0.32 0.28

Over the long-range period, it is reasonable to assume that the average annual growth rates in the 

CPI-W and CPI-U will be roughly equal. It also seems reasonable to assume that the difference 

in the long-range average annual growth rates (PGDP_C less CPI-W) will be -0.30 percentage 

point, and that this difference will be only due to the expected 0.30 percentage point effect from 

the different computational weighting methods. Stated differently, the expected growth-rate 

differential for the personal consumption deflator (PGDP_C less CPI-W) due to factors other 

than the computational weighting methods is assumed to be zero. Thus, the assumed ultimate 

annual growth rate for PGDP_C is 2.1 percent, equal to the assumed ultimate annual growth rate 

for CPI-W (i.e., 2.4 percent) less the 0.30 percentage point effect of the different computational 

weighting methods.

2.4.1.2 Deflator for Investment Expenditures (PGDP_I)

The PGDP_I can be viewed as a weighted average of deflators for its principal components: 

investment in equipment (PGDP_INE), investment in intellectual property (PGDP_INIP), 

residential investment (PGDP_IR), and investment in nonresidential structures (PGDP_INS).36

 36 This decomposition excludes the change in business inventories, which has averaged roughly 1.8 percent 

of total investment expenditures over the 39-year period from 1979 to 2018. 
Price Inflation, Page 10

The equipment and intellectual property components in their current form were first used in the 

2013 revisions to NIPA. The 2018 comprehensive revisions to NIPA further refined the 

definition, which resulted in revisions to historical data for investment in software and computer 

equipment.

Deflator for Equipment (PGDP_INE): Over the 39-year period from 1979 to 2018, the average 

annual growth rate was about -0.15 percent for the PGDP_INE, compared to 2.77 percent for the 

PGDP_C. The PGDP_INE growth rate has been depressed by the rise in nominal investment 

expenditures for computers and the sharp decline in their quality-adjusted prices. Over this 

period, the deflator for computers fell at an average annual rate of about 11.34 percent, and the 

ratio of nominal investment expenditures for computers to all investment expenditures for 

equipment rose from about 5 percent in 1979 to about 13 percent in the late 1990s, followed by a 

decline to about 9 percent in 2015-2016. The ratio rose slightly to about 10 percent in 2018.

It seems reasonable to assume that quality-adjusted computer prices will continue to decline in 

the future, but at a somewhat slower rate. The average annual rate of decline was about 12.9 

percent over the 1982 to 1994 period, 20.2 percent over the 1994 to 2001 period, 10.1 percent 

over the 2001 to 2009 period, and 1.4 percent over the 2009 to 2018 period. The large rate of 

decline in the late 1990s was probably due to a combination of technological advances and 

production volume increases that are unlikely to be sustained over a longer period. On the other 

hand, the recent slowdown has been dramatic, but it is unclear if it is permanent. It seems 

reasonable to assume that the future rate of price decline will be similar to that over the last 18

years; thus, the assumed rate of decline in quality-adjusted computer prices is 6 percent per year. 

Furthermore, it is expected that the ratio of nominal investment expenditures for computers to all 

investment expenditures for equipment will stabilize at the approximate average value of the 

ratio over the last decade (i.e., 10 percent).

Over the period from 1979 to 2018, the deflator for equipment other than computers grew on 

average at a 1.20 percent annual rate, or 1.57 percentage points less than the 2.77 percent annual 

growth rate for the PGDP_C. Similarly, over the last three complete economic cycles 

(1979-2007), the deflator for other equipment grew slower by 1.48 percentage points per year 

than PGDP_C. OCACT believes that the growth rate in the price deflator for other equipment 

will continue to be depressed relative to the PGDP_C, since the prices for at least some items in 

other equipment (e.g., printers, calculators, etc.) will be driven down by the same types of future 

technological advancements expected for computers. Thus, it is reasonable to expect that, in the 

future, the average annual growth rate in other equipment will be about 0.8 percent, or 1.3

percentage points less than the 2.1 percent assumed ultimate average annual growth rate in the 

PGDP_C. 

Using these average annual growth rates and weights, it is reasonable to set the assumed ultimate 

average annual rate of growth in PGDP_INE in the future to about 0.12 percent (i.e., -6.0 * 0.10 

+ 0.8 * 0.90).

Deflator for Intellectual Property (PGDP_INIP): Over the 39-year period from 1979 to 2018, the 

average annual growth rate was about 1.34 percent for the PGDP_INIP, compared to 2.77

percent for the PGDP_C. The PGDP_INIP growth rate has been depressed by the rise in nominal 

investment expenditures for software and a slow but steady decline in its quality-adjusted prices. 
Price Inflation, Page 11

Over this period, the deflator for software fell at an average annual rate of about 1.66 percent, 

and the ratio of nominal investment expenditures for software to all investment expenditures for 

intellectual property rose from about 17 percent to about 38 percent by 2000, and has slowly 

increased to about 41 percent since.

Software prices have been declining slowly, but steadily. They declined over four of the last five 

economic cycles (the only exception being the 1973-1979 cycle), and their rate of decline ranged 

from 0.16 percent in the 1969-1973 cycle to 2.41 percent in 2001-2007. Since the end of the last 

cycle (a 11-year period from 2007 to 2018), software prices declined at an average annual rate of 

1.46 percent. It seems reasonable to expect some future price decline, but at a somewhat slower 

rate than the average over the last 39 years. OCACT expects that software prices will decline at a 

rate of 1 percent per year. OCACT also expects that the ratio of nominal investment expenditures 

for software to all investment expenditures for intellectual property will stabilize at about 45 

percent.

Over the period from 1979 to 2018, the deflator for intellectual property other than software 

grew on average at a 2.62 percent annual rate, or 0.15 percentage point less than the 2.77 percent 

annual growth rate for the PGDP_C. Over the last three complete economic cycles (1979-2007), 

the deflator for other intellectual property grew at an annual rate of 3.04 percent, slower by 0.22

percentage point per year than the 3.26 percent growth rate in PGDP_C. OCACT believes that it 

is reasonable to expect that, in the future, the average annual growth rate in the price deflator for 

other intellectual property will continue to be somewhat lower than the PGDP_C. The assumed

growth rate in the deflator for other intellectual property is 1.9 percent, or 0.2 percentage point 

less than the 2.1 percent assumed ultimate average annual growth rate in the PGDP_C. 

Using these average annual growth rates and weights, it is reasonable to set the assumed ultimate 

average annual rate of growth in PGDP_INIP in the future to about 0.60 percent (i.e., -1 * 0.45 + 

1.9 * 0.55).

Deflator for Residential Investment (PGDP_IR): Residential investment is almost entirely 

composed of investment in fixed structures, which, in turn, is composed of single-family, 

multifamily, and other structures (e.g., manufactured homes, dormitories, etc.). Over the 22-year 

period from 1979 to 2001, the average annual growth rate was about 3.80 percent for the 

PGDP_IR, compared to 3.60 percent for the PGDP_C. Thus, the average annual growth rate for 

the PGDP_IR was about 0.20 percentage point (3.80 – 3.60) higher than the average annual 

growth rate in the PGDP_C over the period. However, over the next 6-year period, this 

differential increased substantially. From 2001 to 2007, the average annual growth rate was 

about 4.74 percent for the PGDP_IR and 2.25 percent for the PGDP_C. Thus, the average annual 

growth rate for the PGDP_IR was about 2.49 percentage points (4.74 – 2.25) higher than the 

average annual growth rate in the PGDP_C over the period.

OCACT believes that the 2.49 percent growth rate differential between the PGDP_IR and the 

PGDP_C over the 2001-2007 period was a temporary market phenomenon characterized by 

overheated demand for housing, house “flipping,” subprime mortgage lending, and unusually 

high profits and gains in stock prices for the builders of new homes. Since 2007, there has been a 

market correction: the housing bubble has collapsed, new and existing home sales have dropped 

nationally, prices of new homes in most markets have declined, and the profits and stock prices 
Price Inflation, Page 12

of new homebuilders have plummeted. Although the housing market has been recovering lately, 

home prices in 2018 are only slightly above the 2006 level, and the number of sales is well 

below the mid-2000s level. For the 2007 to 2018 period, the average annual growth in PGDP_IR 

and PGDP_C was 2.11 and 1.54 percent, respectively, indicating a 0.57 percent (2.11 – 1.54) 

differential between the two deflators. Over the 17-year period from 2001 to 2018, the average 

annual growth rate for the PGDP_IR was about 3.03 percent, or 1.22 percentage points higher 

than the 1.81 percent annual growth rate for the PGDP_C.

OCACT believes it is reasonable to disregard the post-2000 period and set the assumed ultimate 

average annual rate of increase in the PGDP_IR to 2.3 percent, or about 0.2 percentage point 

higher than the 2.1 percent assumed ultimate average annual rate of increase in the PGDP_C. 37

Deflator for Investment in Nonresidential Structures (PGDP_INS): Investment in nonresidential 

structures includes investment in structures used for drilling for petroleum and natural gas. Over 

the 22-year period from 1979 to 2001, the average annual growth rate for PGDP_INS was 3.69

percent, or slightly less than the 3.80 percent growth rate in PGDP_IR. However, over the 6-year 

period from 2001 to 2007, the average annual growth rates for PGDP_INS and PGDP_IR were 

7.49 and 4.74 percent, respectively. The relatively faster average annual growth rate for 

PGDP_INS occurred because the average annual growth rate in the deflator for investment in 

petroleum and natural gas was about 20.3 percent. Excluding the effects of petroleum and natural 

gas, the average annual growth rate for PGDP_INS was about 5.0 percent, closer to the 4.74

percent average annual growth rate in PGDP_IR over the period.

OCACT believes the relatively rapid growth rate in the deflator for investment in petroleum and 

natural gas is a temporary market phenomenon associated with a run-up in oil prices. The price 

of a barrel of oil rose from about $26 in 2001 to $72 in 2007, or at an average annual rate of 

about 19.0 percent. As the market price for oil rose, previously expensive technologies became 

economically profitable. 

OCACT believes that in the future the average annual growth rate in the price of a barrel of oil 

will not be significantly greater than the growth rate in the PGDP_C and that the average annual 

growth rates in the PGDP_INS and PGDP_IR will be approximately equal. Thus, the assumed 

ultimate average annual rate of increase in PGDP_INS is 2.3 percent, or 0.2 percentage point 

higher than the 2.1 percent assumed ultimate average annual growth rate in the PGDP_C, and 

equal to the assumed ultimate average annual rate of increase in the PGDP_IR.

The ratio of investment expenditures in equipment to total investment expenditures has averaged 

about 36 percent over the past 60 years. In the past 20 years, from 1998 to 2018, the average has 

decreased slightly to 35 percent. OCACT assumes that the share of investment expenditures in 

equipment to total investment expenditures will continue to hold at this level, i.e. 35 percent, in 

the future. Investment in intellectual property has been an increasing share of total investment.

Much of the increase, however, has been due to the sharp rise in investment in software from the 

1970s to the early 2000s. Since the share of software in the investment in intellectual property 

has stabilized recently, OCACT believes it is reasonable to assume that the ratio of investment in 

 37 In the future, the PGDP_IR may grow faster than the PGDP_C due to more rapid increases in the prices 

of scarce land and basic building commodities such as copper, lumber, and cement. 
Price Inflation, Page 13

intellectual property to total investment will be similar to its recent levels, or about 25 percent. 

OCACT also assumes that the investment expenditure weights for nonresidential investment for 

structures and residential investment will account for approximately equal shares of the rest of 

the investment expenditures, or 20 percent each. 

Thus, the assumed ultimate average annual rate of increase for PGDP_I is 1.11 percent (i.e., 0.12

* 0.35 + 0.60 * 0.25 + 2.3 * (0.20 + 0.20)).

2.4.1.3 Deflator for Government Expenditures (PGDP_G)

The PGDP_G can be viewed as a weighted average of deflators for government consumption 

expenditures (PGDP_GC) and government investment (PGDP_GI). 

Deflator for Government Consumption Expenditures (PGDP_GC): Government consumption 

expenditures can be separated into employee compensation and other (residual) government 

consumption expenditures. In the NIPA, the deflator for government consumption expenditures 

on employee compensation is defined as an index proportional to average employee 

compensation. From 1979 to 2001, a 22-year period covering two complete economic cycles, the 

average annual growth rate in the average government employee compensation and the adjusted 

CPI-W were about 5.35 and 3.72 percent, respectively. This indicates that over the period, the 

real annual growth rate in average employee compensation was 1.57 percent (i.e., 100 * (1.0535 /

1.0372 – 1)), slightly higher than the 1.23 percent assumed ultimate real annual growth rate in 

average compensation in the 2019 Trustees Report.38

From 2001 to 2007, a 6-year period covering the latest complete economic cycle, the average 

annual growth rate in the average government employee compensation and the adjusted CPI-W 

were about 4.78 and 2.64 percent, respectively. This indicates that over the period, the real 

annual growth rate in average employee compensation was 2.08 percent (i.e., 100 * (1.0478 /

1.026 – 1)), about 0.8 percentage point higher than the 1.23 percent ultimate real annual growth 

rate in average compensation assumed in the 2019 Trustees Report.

OCACT believes that the relatively high growth rate in the deflator for employee compensation 

over the 2001 to 2007 period is a temporary phenomenon mostly associated with military pay 

incentives related to the conflicts in Iraq and Afghanistan. Over this period, the average annual 

growth rates in the average compensation of state and local, federal civilian, and federal military 

employees were 4.10, 5.62, and 9.52 percent, respectively. By contrast, between 2007 and 2018, 

the average annual growth rates in the average compensation of state and local, federal civilian, 

and federal military employees were 2.45, 2.76, and 1.80 percent, respectively, and the average 

annual growth rate in the deflator for employee compensation was 2.43 percent, or just 0.68

percentage point higher than the 1.75 percent growth rate in CPI-W over the same period. It is 

reasonable to assume that in the future the average annual growth rate in the average 

compensation for all government employees will be equal to the rate assumed for the economywide average compensation. In turn, while the economy-wide real compensation growth is 

assumed to be unchanged from the 2019 Trustees Report, the CPI growth rate is assumed to be 

 38 For the 2019 Trustees Report alternative II, the Trustees assumed that the ultimate average annual rates 

of increase in the average compensation for all employees and in the CPI were 3.87 and 2.6 percent, respectively.
Price Inflation, Page 14

0.2 percentage point lower, so the growth rate in nominal compensation is assumed to be 3.66 

percent for the 2020 Trustees Report, or about 0.2 percentage point lower than in the 2019 

Trustees Report. Therefore, OCACT believes that the average annual growth rate in the deflator 

for government consumption expenditures on employee compensation will be 3.66 percent.

39

It is also reasonable and consistent to assume that the average annual growth rate in the deflator 

for other government consumption will be equal to the assumed ultimate average annual growth 

rate in the PGDP_C, or 2.1 percent.

Using rough averages over the 1979 to 2018 period, OCACT assumes that future government 

consumption expenditures for employee compensation will be about 70 percent of total 

government consumption expenditures. Thus, the assumed ultimate average annual growth rate 

for PGDP_GC is 3.19 percent (i.e., 3.66 * 0.70 + 2.1 * 0.30).

Deflator for Government Investment (PGDP_GI): Government investment can be separated into 

1) structures, 2) equipment, and 3) intellectual property. It is reasonable to assume that the future 

average annual growth rate in the deflator for each of these categories of government investment 

will be equal to the expected future average annual growth rate in the corresponding categories 

of private investment. Thus, OCACT also assumes the future average annual growth rates in the 

deflator for government investment will be 2.3 percent for investment in structures, 0.12 percent 

for investment in equipment, and 0.60 percent for investment in intellectual property.

Using rough averages over the 1979 to 2018 period, OCACT assumes the future ratio of 

government investment components to total government investment will be about 0.45 for 

structures, about 0.25 for equipment, and about 0.30 for intellectual property. Thus, the assumed 

ultimate average annual growth rate for PGDP_GI is 1.24 percent (i.e., 2.3 * 0.45 + 0.12 * 0.25 + 

0.60 * 0.30).

Finally, the historical proportions of government consumption and investment expenditures over 

the 39-year period from 1979 to 2018 averaged about 79 and 21 percent of total government 

expenditures, respectively. OCACT assumes that the future proportions of government 

consumption and investment expenditures will also be 79 and 21 percent of total government 

expenditures, respectively. Hence, the assumed ultimate average annual rate of increase in the 

PGDP_G is 2.78 percent (i.e., 3.19 * 0.79 + 1.24 * 0.21). 

2.4.1.4 Ultimate Assumption for the GDP Deflator

The assumed annual growth rates for the components of the GDP deflator, and corresponding 

weights, result in an assumed average annual growth rate of 2.05 percent for the intermediate 

assumption. The 2.05 percent is equal to the sum of the PGDP_C component of 2.1 percent times 

its weight of 0.63, the PGDP_I component of 1.11 percent times its weight of 0.18, and the 

PGDP_G component of 2.78 percent and its weight of 0.19. For alternatives I and III the 

assumptions are 2.75 and 1.35, respectively. 

 39 OCACT assumes the size of the active military remains constant throughout the projection period, rather 

than increasing proportionally with the civilian employment. This implies a gradual shift in weights between civilian 

government employment and the military and, since the average military compensation is higher, a slightly slower 

average growth in government compensation. However, the effect is small.
Price Inflation, Page 15

The assumed annual increase in the GDP deflator for the 2020 Trustees Report is 0.2 percentage 

point lower than that used in the 2019 Trustees Report. This change parallels the change in the 

assumed growth rate in the CPI, keeping the difference between the two growth rates unchanged.

2.5 Price Differential 

The price differential is defined as the annual growth rate in the PGDP less the annual growth 

rate in the CPI-W. For the 2020 Trustees Report, the assumed ultimate price differential 

is -0.25, -0.35, and -0.45 percentage point for alternative I, II, and III, respectively. 

For alternative II, the ultimate price differential of -0.35 percentage point is the sum of -0.30

percentage point due to the difference in computational methods and -0.05 percentage point due 

to coverage differences between the PGDP and CPI-W. These values are unchanged from those

used in the 2019 Trustees Report.

2.6 Projections from Other Sources

IHS Markit (formerly Global Insight, Inc.) provides projections through 2049 in its latest 

long-run trend forecast (see The 30-Year Focus, Third Quarter, August 2019). Over the 20-year 

period from 2029 to 2049, IHS Markit projects an average annual rate of increase of 2.21 percent 

for the CPI and 2.13 percent for the PGDP, with a resulting price differential of -0.08 percentage 

point (2.13 – 2.21). The Moody’s Analytics’ September 2019 forecast extends to 2049. Over the 

20-year period from 2029 to 2049, Moody’s Analytics projects an average annual growth rate of 

2.25 percent for the CPI-W and 1.79 percent for the PGDP, for a price differential of -0.46

percentage point (1.79 – 2.25).

The Office of Management and Budget (OMB) Mid-Session Review of the Fiscal Year 2020

Budget includes projections through 2029. OMB’s annual growth rates for the PGDP and CPI-W 

(and CPI-U) for 2029 were 2.01 and 2.27 percent, respectively. Thus, OMB projects a price 

differential of -0.26 percentage point (i.e., 2.01 – 2.27). The Congressional Budget Office (CBO) 

June 2019 report, The 2019 Long-Term Budget Outlook, includes projections through 2049. 

CBO’s annual growth rates for the PGDP and CPI-U for 2029-2049 were 2.00 and 2.39 percent, 

respectively. Thus, CBO projects an average annual price differential of -0.39 percentage point 

(i.e., 2.00 – 2.39) for the period. 

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended assuming an ultimate (i.e., long-range average) annual rate of increase in the 

CPI-W of 2.4 percent for alternative II, and a price differential of -0.35 percentage point. The 

prior technical panel, which met in 2015, recommended an ultimate annual rate of increase in the 

CPI-W of 2.5 percent for alternative II, and a price differential of -0.4 percentage point.
Price Inflation, Page 16

Table 2.5: Adjusted CPI-W: Compound Annual Rates of Growth (%) Base Year = 1982-1984

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

1961 35.34

1962 35.62 0.80

1963 36.02 0.96 1.12

1964 36.41 1.00 1.11 1.10

1965 36.92 1.10 1.21 1.25 1.40

1966 37.90 1.41 1.56 1.71 2.02 2.64

1967 38.98 1.65 1.82 2.00 2.30 2.75 2.87

1968 40.34 1.91 2.10 2.29 2.59 2.99 3.17 3.48

1969 42.05 2.20 2.40 2.61 2.92 3.30 3.53 3.86 4.24

1970 43.99 2.46 2.67 2.90 3.20 3.56 3.80 4.11 4.42 4.61

1971 45.78 2.62 2.83 3.04 3.33 3.65 3.85 4.10 4.31 4.34 4.08

1972 47.22 2.67 2.86 3.05 3.30 3.58 3.73 3.91 4.01 3.94 3.60 3.13

1973 50.04 2.94 3.14 3.34 3.59 3.87 4.05 4.25 4.40 4.44 4.39 4.54 5.98

1974 54.98 3.46 3.68 3.92 4.21 4.52 4.76 5.03 5.30 5.51 5.73 6.29 7.91 9.87

1975 59.32 3.77 4.00 4.25 4.54 4.86 5.10 5.39 5.66 5.90 6.16 6.69 7.91 8.88 7.90

1976 62.59 3.88 4.11 4.34 4.62 4.91 5.15 5.40 5.64 5.85 6.05 6.45 7.30 7.75 6.70 5.51

1977 66.42 4.02 4.24 4.47 4.73 5.02 5.23 5.47 5.70 5.88 6.06 6.40 7.07 7.34 6.51 5.82 6.13

1978 70.83 4.18 4.39 4.61 4.87 5.14 5.35 5.58 5.79 5.96 6.14 6.43 6.99 7.20 6.54 6.09 6.38 6.63

1979 77.60 4.47 4.69 4.91 5.17 5.45 5.67 5.91 6.13 6.32 6.51 6.82 7.36 7.59 7.14 6.95 7.43 8.09 9.57

1980 86.16 4.80 5.03 5.26 5.53 5.81 6.04 6.29 6.53 6.74 6.95 7.28 7.81 8.07 7.77 7.75 8.32 9.06 10.29 11.02

1981 94.38 5.03 5.26 5.50 5.76 6.04 6.27 6.52 6.76 6.97 7.19 7.50 8.00 8.25 8.03 8.05 8.56 9.18 10.04 10.28 9.54

1982 99.94 5.08 5.29 5.52 5.77 6.03 6.25 6.48 6.69 6.89 7.08 7.35 7.79 7.99 7.76 7.74 8.11 8.51 8.99 8.80 7.70

1983 104.04 5.03 5.24 5.45 5.68 5.92 6.12 6.33 6.52 6.68 6.85 7.08 7.45 7.59 7.34 7.27 7.53 7.76 7.99 7.60 6.49

1984 108.33 4.99 5.19 5.38 5.60 5.83 6.01 6.20 6.37 6.51 6.65 6.85 7.17 7.27 7.02 6.92 7.10 7.24 7.34 6.90 5.89

1985 111.90 4.92 5.10 5.29 5.49 5.70 5.86 6.03 6.19 6.31 6.42 6.59 6.86 6.94 6.67 6.55 6.67 6.74 6.75 6.29 5.37

1986 113.69 4.79 4.95 5.12 5.31 5.50 5.65 5.79 5.93 6.03 6.11 6.25 6.48 6.52 6.24 6.09 6.15 6.15 6.09 5.61 4.73

1987 117.39 4.73 4.89 5.05 5.22 5.40 5.53 5.67 5.78 5.87 5.94 6.06 6.26 6.28 6.01 5.85 5.88 5.86 5.77 5.31 4.52

1988 121.54 4.68 4.83 4.99 5.15 5.32 5.44 5.56 5.67 5.75 5.81 5.91 6.09 6.10 5.83 5.67 5.69 5.65 5.55 5.11 4.40

1989 126.75 4.67 4.81 4.96 5.12 5.27 5.39 5.51 5.60 5.67 5.73 5.82 5.98 5.98 5.73 5.57 5.58 5.53 5.43 5.03 4.38

1990 132.76 4.67 4.81 4.95 5.10 5.25 5.36 5.47 5.56 5.63 5.68 5.76 5.91 5.91 5.66 5.52 5.52 5.47 5.38 5.00 4.42

1991 137.46 4.63 4.77 4.90 5.04 5.19 5.29 5.39 5.48 5.53 5.58 5.65 5.79 5.77 5.54 5.39 5.39 5.33 5.23 4.88 4.34

1992 140.73 4.56 4.69 4.81 4.95 5.08 5.18 5.27 5.34 5.39 5.43 5.49 5.61 5.59 5.36 5.21 5.19 5.13 5.03 4.69 4.17

1993 144.04 4.49 4.61 4.73 4.86 4.98 5.07 5.16 5.22 5.26 5.29 5.35 5.45 5.43 5.20 5.05 5.03 4.96 4.85 4.52 4.03

1994 146.91 4.41 4.53 4.64 4.76 4.88 4.96 5.04 5.10 5.13 5.15 5.20 5.29 5.26 5.04 4.89 4.85 4.78 4.67 4.35 3.89

1995 150.52 4.35 4.46 4.57 4.68 4.80 4.87 4.94 5.00 5.03 5.04 5.08 5.17 5.13 4.91 4.77 4.73 4.65 4.53 4.23 3.79

1996 154.41 4.30 4.41 4.51 4.62 4.72 4.79 4.86 4.91 4.94 4.95 4.98 5.06 5.02 4.81 4.66 4.62 4.54 4.42 4.13 3.71

1997 157.71 4.24 4.34 4.44 4.54 4.64 4.71 4.77 4.81 4.83 4.84 4.87 4.94 4.90 4.69 4.54 4.50 4.42 4.30 4.02 3.62

1998 159.56 4.16 4.25 4.34 4.44 4.53 4.59 4.65 4.69 4.71 4.71 4.73 4.79 4.75 4.54 4.40 4.35 4.26 4.14 3.87 3.48

1999 162.86 4.10 4.19 4.28 4.37 4.46 4.52 4.57 4.60 4.62 4.62 4.64 4.69 4.64 4.44 4.30 4.25 4.16 4.04 3.78 3.41

2000 168.60 4.09 4.18 4.26 4.35 4.43 4.49 4.54 4.57 4.58 4.58 4.60 4.65 4.60 4.40 4.27 4.22 4.13 4.02 3.76 3.41

2001 173.13 4.05 4.14 4.22 4.30 4.39 4.44 4.48 4.51 4.52 4.52 4.53 4.58 4.53 4.34 4.21 4.15 4.07 3.96 3.71 3.38

2002 175.58 3.99 4.07 4.15 4.23 4.30 4.35 4.39 4.42 4.43 4.42 4.43 4.48 4.42 4.23 4.10 4.05 3.96 3.86 3.61 3.29

2003 179.53 3.95 4.02 4.10 4.18 4.25 4.29 4.33 4.36 4.36 4.35 4.36 4.40 4.35 4.17 4.03 3.98 3.90 3.79 3.56 3.24

2004 184.22 3.91 3.99 4.06 4.14 4.21 4.25 4.29 4.31 4.31 4.30 4.31 4.35 4.29 4.11 3.98 3.93 3.85 3.74 3.52 3.22

2005 190.71 3.91 3.98 4.05 4.12 4.19 4.23 4.27 4.29 4.29 4.28 4.29 4.32 4.27 4.09 3.97 3.92 3.84 3.74 3.52 3.23

2006 196.76 3.89 3.96 4.03 4.10 4.17 4.20 4.24 4.26 4.26 4.25 4.25 4.29 4.24 4.07 3.94 3.89 3.82 3.72 3.51 3.23

2007 202.46 3.87 3.94 4.00 4.07 4.13 4.17 4.20 4.22 4.22 4.21 4.22 4.25 4.20 4.03 3.91 3.86 3.78 3.69 3.48 3.22

2008 210.68 3.87 3.94 4.00 4.07 4.13 4.17 4.20 4.22 4.22 4.21 4.21 4.24 4.19 4.03 3.92 3.87 3.79 3.70 3.50 3.24

2009 209.34 3.78 3.84 3.90 3.96 4.02 4.05 4.08 4.10 4.09 4.08 4.08 4.11 4.06 3.89 3.78 3.73 3.65 3.56 3.36 3.11

2010 213.69 3.74 3.80 3.86 3.92 3.98 4.01 4.04 4.05 4.04 4.03 4.03 4.05 4.00 3.84 3.73 3.68 3.60 3.51 3.32 3.07

2011 221.28 3.74 3.80 3.85 3.91 3.97 4.00 4.02 4.04 4.03 4.02 4.02 4.04 3.99 3.84 3.72 3.67 3.60 3.51 3.33 3.09

2012 225.97 3.71 3.76 3.82 3.88 3.93 3.96 3.98 3.99 3.99 3.97 3.97 3.99 3.94 3.79 3.68 3.63 3.56 3.47 3.29 3.06

2013 229.16 3.66 3.72 3.77 3.83 3.88 3.90 3.93 3.94 3.93 3.91 3.91 3.93 3.88 3.73 3.62 3.57 3.50 3.41 3.24 3.01

2014 232.77 3.62 3.68 3.73 3.78 3.83 3.85 3.88 3.88 3.88 3.86 3.85 3.87 3.82 3.67 3.57 3.52 3.45 3.36 3.19 2.97

2015 231.81 3.54 3.60 3.65 3.70 3.74 3.77 3.78 3.79 3.78 3.76 3.76 3.77 3.72 3.57 3.47 3.41 3.34 3.26 3.09 2.87

2016 234.08 3.50 3.55 3.59 3.64 3.69 3.71 3.73 3.73 3.72 3.70 3.69 3.71 3.65 3.51 3.40 3.35 3.28 3.20 3.03 2.82

2017 239.05 3.47 3.52 3.57 3.61 3.66 3.68 3.69 3.70 3.69 3.67 3.66 3.67 3.62 3.48 3.37 3.32 3.25 3.17 3.00 2.80

2018 245.15 3.46 3.50 3.55 3.59 3.64 3.66 3.67 3.67 3.66 3.64 3.63 3.65 3.59 3.46 3.35 3.30 3.24 3.15 2.99 2.79
Price Inflation, Page 17

Table 2.5 (continued): Adjusted CPI-W: Compound Annual Rates of Growth (%) Base Year = 1982-1984 From

To Variable 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

1980 86.16

1981 94.38 9.54

1982 99.94 7.70 5.89

1983 104.04 6.49 4.99 4.10

1984 108.33 5.89 4.70 4.11 4.13

1985 111.90 5.37 4.35 3.84 3.71 3.29

1986 113.69 4.73 3.79 3.28 3.00 2.44 1.60

1987 117.39 4.52 3.70 3.27 3.07 2.71 2.43 3.26

1988 121.54 4.40 3.68 3.32 3.16 2.92 2.79 3.40 3.53

1989 126.75 4.38 3.75 3.45 3.35 3.19 3.16 3.69 3.91 4.28

1990 132.76 4.42 3.86 3.61 3.54 3.45 3.48 3.95 4.19 4.51 4.75

1991 137.46 4.34 3.83 3.61 3.54 3.46 3.49 3.87 4.02 4.19 4.14 3.54

1992 140.73 4.17 3.70 3.48 3.41 3.33 3.33 3.62 3.69 3.73 3.55 2.96 2.38

1993 144.04 4.03 3.59 3.38 3.31 3.22 3.21 3.44 3.47 3.46 3.25 2.75 2.37 2.35

1994 146.91 3.89 3.46 3.26 3.19 3.09 3.07 3.26 3.26 3.21 3.00 2.56 2.24 2.17 1.99

1995 150.52 3.79 3.39 3.20 3.13 3.04 3.01 3.17 3.16 3.10 2.91 2.54 2.29 2.27 2.22 2.46

1996 154.41 3.71 3.34 3.16 3.08 3.00 2.97 3.11 3.09 3.04 2.86 2.55 2.35 2.35 2.34 2.52 2.58

1997 157.71 3.62 3.26 3.09 3.02 2.93 2.90 3.02 3.00 2.94 2.77 2.49 2.32 2.30 2.29 2.39 2.36 2.14

1998 159.56 3.48 3.14 2.97 2.89 2.80 2.77 2.86 2.83 2.76 2.59 2.32 2.15 2.11 2.07 2.09 1.96 1.65 1.17

1999 162.86 3.41 3.08 2.91 2.84 2.76 2.72 2.80 2.77 2.70 2.54 2.30 2.14 2.11 2.07 2.08 1.99 1.79 1.62 2.07

2000 168.60 3.41 3.10 2.95 2.88 2.80 2.77 2.85 2.82 2.76 2.63 2.42 2.29 2.28 2.27 2.32 2.29 2.22 2.25 2.79 3.52

2001 173.13 3.38 3.08 2.93 2.87 2.80 2.77 2.84 2.81 2.76 2.63 2.44 2.33 2.33 2.33 2.37 2.36 2.32 2.36 2.76 3.10

2002 175.58 3.29 3.00 2.86 2.79 2.72 2.69 2.75 2.72 2.66 2.54 2.36 2.25 2.24 2.22 2.25 2.22 2.16 2.17 2.42 2.54

2003 179.53 3.24 2.97 2.83 2.77 2.69 2.66 2.72 2.69 2.63 2.52 2.35 2.25 2.24 2.23 2.25 2.23 2.18 2.18 2.39 2.47

2004 184.22 3.22 2.95 2.82 2.76 2.69 2.66 2.72 2.69 2.63 2.52 2.37 2.28 2.27 2.26 2.29 2.27 2.23 2.24 2.42 2.50

2005 190.71 3.23 2.97 2.85 2.79 2.73 2.70 2.76 2.73 2.69 2.59 2.44 2.37 2.37 2.37 2.40 2.39 2.37 2.40 2.58 2.67

2006 196.76 3.23 2.98 2.86 2.81 2.75 2.72 2.78 2.76 2.71 2.62 2.49 2.42 2.42 2.43 2.46 2.47 2.45 2.49 2.65 2.74

2007 202.46 3.22 2.98 2.86 2.81 2.76 2.73 2.79 2.76 2.72 2.64 2.51 2.45 2.45 2.46 2.50 2.50 2.49 2.53 2.68 2.76

2008 210.68 3.24 3.02 2.91 2.86 2.81 2.79 2.84 2.82 2.79 2.71 2.60 2.54 2.55 2.57 2.61 2.62 2.62 2.67 2.82 2.90

2009 209.34 3.11 2.89 2.78 2.73 2.67 2.64 2.69 2.66 2.62 2.54 2.43 2.36 2.36 2.36 2.39 2.38 2.37 2.39 2.50 2.54

2010 213.69 3.07 2.86 2.75 2.70 2.65 2.62 2.66 2.64 2.60 2.52 2.41 2.35 2.35 2.35 2.37 2.36 2.35 2.36 2.46 2.50

2011 221.28 3.09 2.88 2.78 2.73 2.68 2.66 2.70 2.68 2.64 2.57 2.46 2.41 2.41 2.41 2.44 2.44 2.43 2.45 2.55 2.59

2012 225.97 3.06 2.86 2.76 2.71 2.66 2.64 2.68 2.65 2.62 2.55 2.45 2.40 2.40 2.40 2.42 2.42 2.41 2.43 2.52 2.55

2013 229.16 3.01 2.81 2.71 2.67 2.62 2.59 2.63 2.61 2.57 2.50 2.40 2.35 2.35 2.35 2.37 2.36 2.35 2.36 2.44 2.47

2014 232.77 2.97 2.77 2.68 2.63 2.58 2.56 2.59 2.57 2.53 2.46 2.37 2.32 2.31 2.31 2.33 2.32 2.31 2.32 2.39 2.41

2015 231.81 2.87 2.68 2.58 2.54 2.48 2.46 2.49 2.46 2.42 2.35 2.25 2.20 2.19 2.19 2.20 2.18 2.16 2.16 2.22 2.23

2016 234.08 2.82 2.63 2.53 2.49 2.44 2.41 2.44 2.41 2.37 2.30 2.21 2.15 2.14 2.13 2.14 2.12 2.10 2.10 2.15 2.16

2017 239.05 2.80 2.62 2.52 2.48 2.43 2.40 2.43 2.40 2.36 2.29 2.20 2.15 2.14 2.13 2.14 2.12 2.10 2.10 2.15 2.16

2018 245.15 2.79 2.61 2.52 2.48 2.43 2.41 2.43 2.40 2.37 2.30 2.21 2.17 2.16 2.15 2.16 2.14 2.12 2.12 2.17 2.18

From

To Variable 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1999 162.86

2000 168.60 3.52

2001 173.13 3.10 2.69

2002 175.58 2.54 2.05 1.42

2003 179.53 2.47 2.12 1.83 2.25

2004 184.22 2.50 2.24 2.09 2.43 2.61

2005 190.71 2.67 2.50 2.45 2.79 3.07 3.52

2006 196.76 2.74 2.61 2.59 2.89 3.10 3.35 3.17

2007 202.46 2.76 2.65 2.64 2.89 3.05 3.20 3.04 2.90

2008 210.68 2.90 2.82 2.84 3.08 3.25 3.41 3.37 3.47 4.06

2009 209.34 2.54 2.43 2.40 2.54 2.59 2.59 2.36 2.09 1.68 -0.63

2010 213.69 2.50 2.40 2.37 2.49 2.52 2.50 2.30 2.08 1.81 0.71 2.08

2011 221.28 2.59 2.50 2.48 2.60 2.65 2.65 2.51 2.38 2.25 1.65 2.81 3.55

2012 225.97 2.55 2.47 2.45 2.55 2.59 2.59 2.45 2.33 2.22 1.77 2.58 2.83 2.12

2013 229.16 2.47 2.39 2.36 2.45 2.47 2.46 2.32 2.20 2.09 1.70 2.29 2.36 1.77 1.41

2014 232.77 2.41 2.33 2.30 2.38 2.39 2.37 2.24 2.12 2.01 1.68 2.14 2.16 1.70 1.49 1.57

2015 231.81 2.23 2.15 2.11 2.16 2.15 2.11 1.97 1.84 1.71 1.38 1.71 1.64 1.17 0.85 0.58 -0.41

2016 234.08 2.16 2.07 2.03 2.08 2.06 2.02 1.88 1.75 1.63 1.33 1.61 1.53 1.13 0.89 0.71 0.28 0.98

2017 239.05 2.16 2.08 2.04 2.08 2.07 2.02 1.90 1.79 1.67 1.41 1.67 1.62 1.30 1.13 1.06 0.89 1.55 2.13

2018 245.15 2.18 2.10 2.07 2.11 2.10 2.06 1.95 1.85 1.75 1.53 1.77 1.73 1.47 1.37 1.36 1.30 1.88 2.34 2.55
Price Inflation, Page 18

Table 2.6: Adjusted GDP Deflator: Compound Annual Rates of Growth (%) Base Year = 2012

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

1961 17.11

1962 17.30 1.11

1963 17.48 1.08 1.04

1964 17.72 1.19 1.23 1.42

1965 18.03 1.32 1.39 1.57 1.72

1966 18.52 1.60 1.72 1.94 2.21 2.70

1967 19.03 1.79 1.93 2.16 2.40 2.74 2.79

1968 19.82 2.13 2.30 2.55 2.84 3.21 3.47 4.15

1969 20.78 2.46 2.65 2.92 3.23 3.61 3.91 4.48 4.80

1970 21.85 2.76 2.96 3.24 3.55 3.92 4.22 4.71 4.98 5.17

1971 22.94 2.98 3.18 3.46 3.75 4.09 4.37 4.77 4.98 5.07 4.97

1972 23.90 3.09 3.29 3.54 3.81 4.11 4.35 4.66 4.79 4.78 4.59 4.21

1973 25.19 3.28 3.47 3.72 3.98 4.27 4.49 4.78 4.90 4.93 4.85 4.79 5.37

1974 27.42 3.69 3.91 4.18 4.46 4.77 5.03 5.35 5.55 5.70 5.84 6.13 7.10 8.86

1975 29.94 4.08 4.31 4.59 4.88 5.20 5.48 5.82 6.06 6.28 6.50 6.89 7.79 9.02 9.18

1976 31.55 4.17 4.39 4.65 4.92 5.22 5.47 5.78 5.98 6.15 6.32 6.59 7.19 7.80 7.28 5.40

1977 33.48 4.29 4.50 4.75 5.01 5.29 5.53 5.81 5.99 6.15 6.29 6.51 6.97 7.38 6.88 5.75 6.10

1978 35.80 4.44 4.65 4.90 5.15 5.42 5.65 5.91 6.09 6.23 6.37 6.57 6.96 7.29 6.89 6.14 6.51 6.93

1979 38.77 4.65 4.86 5.10 5.36 5.62 5.85 6.11 6.29 6.44 6.58 6.78 7.15 7.45 7.17 6.68 7.10 7.61 8.29

1980 42.28 4.88 5.09 5.33 5.58 5.85 6.07 6.33 6.51 6.67 6.82 7.03 7.39 7.68 7.48 7.15 7.59 8.09 8.67 9.06

1981 46.27 5.10 5.31 5.56 5.81 6.07 6.30 6.55 6.74 6.90 7.06 7.27 7.62 7.90 7.76 7.53 7.96 8.43 8.93 9.25 9.44

1982 49.13 5.15 5.36 5.59 5.83 6.07 6.29 6.53 6.70 6.84 6.99 7.17 7.47 7.71 7.56 7.33 7.66 7.97 8.24 8.22 7.80

1983 51.05 5.10 5.29 5.51 5.73 5.95 6.15 6.36 6.51 6.63 6.75 6.90 7.14 7.32 7.15 6.90 7.12 7.29 7.36 7.12 6.49

1984 52.89 5.03 5.21 5.41 5.62 5.83 6.00 6.20 6.33 6.43 6.52 6.64 6.84 6.98 6.79 6.53 6.67 6.75 6.72 6.41 5.76

1985 54.57 4.95 5.12 5.31 5.50 5.69 5.85 6.03 6.14 6.22 6.29 6.39 6.56 6.66 6.46 6.19 6.28 6.30 6.21 5.86 5.24

1986 55.67 4.83 4.99 5.17 5.34 5.52 5.66 5.81 5.90 5.97 6.02 6.09 6.23 6.29 6.08 5.80 5.84 5.81 5.68 5.31 4.69

1987 57.04 4.74 4.89 5.05 5.21 5.37 5.50 5.64 5.72 5.77 5.81 5.86 5.97 6.01 5.80 5.52 5.53 5.47 5.31 4.95 4.37

1988 59.06 4.70 4.84 4.99 5.14 5.29 5.41 5.54 5.61 5.65 5.68 5.72 5.82 5.85 5.63 5.37 5.36 5.30 5.13 4.79 4.27

1989 61.37 4.67 4.80 4.95 5.09 5.24 5.35 5.47 5.53 5.56 5.59 5.62 5.70 5.72 5.52 5.26 5.25 5.18 5.02 4.70 4.23

1990 63.68 4.64 4.76 4.91 5.04 5.18 5.28 5.39 5.45 5.48 5.49 5.52 5.59 5.61 5.41 5.16 5.14 5.07 4.92 4.61 4.18

1991 65.82 4.59 4.72 4.85 4.98 5.11 5.20 5.31 5.36 5.38 5.39 5.41 5.48 5.48 5.29 5.05 5.02 4.95 4.80 4.51 4.11

1992 67.32 4.52 4.63 4.76 4.88 5.00 5.09 5.18 5.23 5.24 5.25 5.26 5.31 5.31 5.12 4.88 4.85 4.77 4.61 4.34 3.95

1993 68.92 4.45 4.56 4.68 4.79 4.91 4.99 5.07 5.11 5.12 5.12 5.13 5.17 5.16 4.97 4.74 4.70 4.62 4.46 4.20 3.83

1994 70.39 4.38 4.48 4.60 4.70 4.81 4.88 4.96 4.99 5.00 4.99 5.00 5.03 5.02 4.83 4.60 4.56 4.47 4.32 4.06 3.71

1995 71.86 4.31 4.41 4.52 4.62 4.72 4.79 4.86 4.89 4.89 4.88 4.87 4.90 4.88 4.70 4.48 4.43 4.34 4.18 3.93 3.60

1996 73.18 4.24 4.33 4.43 4.53 4.62 4.69 4.75 4.77 4.77 4.76 4.75 4.77 4.75 4.56 4.35 4.30 4.20 4.05 3.81 3.49

1997 74.45 4.17 4.26 4.35 4.44 4.53 4.59 4.65 4.67 4.66 4.64 4.63 4.65 4.62 4.44 4.23 4.17 4.08 3.93 3.69 3.38

1998 75.27 4.09 4.17 4.26 4.34 4.43 4.48 4.53 4.55 4.54 4.52 4.50 4.51 4.48 4.30 4.09 4.03 3.93 3.79 3.55 3.26

1999 76.35 4.01 4.09 4.18 4.26 4.34 4.39 4.44 4.45 4.43 4.41 4.39 4.40 4.36 4.18 3.98 3.92 3.82 3.67 3.45 3.16

2000 78.07 3.97 4.05 4.13 4.20 4.28 4.32 4.37 4.38 4.36 4.34 4.31 4.32 4.28 4.11 3.91 3.85 3.75 3.61 3.39 3.11

2001 79.82 3.93 4.00 4.08 4.15 4.22 4.26 4.31 4.31 4.30 4.27 4.24 4.25 4.21 4.04 3.84 3.78 3.69 3.55 3.34 3.07

2002 81.04 3.87 3.94 4.01 4.08 4.15 4.19 4.23 4.23 4.21 4.18 4.16 4.15 4.11 3.95 3.76 3.69 3.60 3.46 3.26 3.00

2003 82.57 3.82 3.89 3.96 4.02 4.09 4.12 4.16 4.16 4.14 4.11 4.08 4.08 4.04 3.87 3.69 3.63 3.53 3.40 3.20 2.95

2004 84.78 3.79 3.86 3.93 3.99 4.05 4.08 4.12 4.12 4.10 4.07 4.04 4.04 3.99 3.83 3.65 3.59 3.50 3.37 3.18 2.94

2005 87.41 3.78 3.84 3.91 3.97 4.03 4.06 4.09 4.09 4.07 4.04 4.01 4.01 3.97 3.81 3.64 3.58 3.49 3.36 3.18 2.95

2006 90.07 3.76 3.82 3.89 3.95 4.00 4.03 4.07 4.06 4.04 4.01 3.99 3.98 3.94 3.79 3.62 3.56 3.47 3.35 3.17 2.95

2007 92.50 3.74 3.80 3.86 3.92 3.97 4.00 4.03 4.03 4.01 3.98 3.95 3.94 3.90 3.75 3.59 3.53 3.45 3.33 3.15 2.94

2008 94.26 3.70 3.75 3.82 3.87 3.92 3.95 3.98 3.97 3.95 3.92 3.89 3.89 3.84 3.70 3.54 3.48 3.40 3.28 3.11 2.91

2009 95.00 3.64 3.69 3.75 3.80 3.85 3.88 3.90 3.90 3.87 3.84 3.81 3.80 3.76 3.61 3.45 3.40 3.31 3.20 3.03 2.83

2010 96.11 3.59 3.64 3.69 3.74 3.79 3.81 3.84 3.83 3.81 3.77 3.74 3.73 3.69 3.55 3.39 3.33 3.25 3.13 2.97 2.78

2011 98.11 3.55 3.61 3.66 3.71 3.75 3.77 3.80 3.79 3.77 3.73 3.70 3.69 3.64 3.51 3.35 3.29 3.21 3.10 2.94 2.75

2012 100.00 3.52 3.57 3.62 3.67 3.71 3.73 3.76 3.75 3.72 3.69 3.66 3.64 3.60 3.46 3.31 3.26 3.18 3.07 2.91 2.73

2013 101.77 3.49 3.54 3.59 3.63 3.67 3.69 3.71 3.70 3.68 3.64 3.61 3.60 3.55 3.42 3.27 3.22 3.14 3.03 2.88 2.70

2014 103.65 3.46 3.50 3.55 3.60 3.63 3.65 3.67 3.66 3.64 3.60 3.57 3.55 3.51 3.38 3.24 3.18 3.10 3.00 2.85 2.67

2015 104.69 3.41 3.46 3.50 3.54 3.58 3.60 3.62 3.60 3.58 3.54 3.51 3.49 3.45 3.32 3.18 3.12 3.05 2.94 2.80 2.62

2016 105.77 3.37 3.41 3.46 3.49 3.53 3.55 3.56 3.55 3.52 3.49 3.46 3.44 3.39 3.27 3.13 3.07 2.99 2.89 2.75 2.58

2017 107.80 3.34 3.38 3.43 3.46 3.50 3.51 3.53 3.52 3.49 3.45 3.42 3.40 3.36 3.24 3.10 3.04 2.97 2.87 2.73 2.56

2018 110.38 3.33 3.36 3.41 3.45 3.48 3.49 3.51 3.49 3.47 3.43 3.40 3.38 3.34 3.22 3.08 3.03 2.95 2.86 2.72 2.56
Price Inflation, Page 19

Table 2.6 (continued): Adjusted GDP Deflator: Compound Annual Rates of Growth (%) Base Year = 2012

From

To Variable 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

1980 42.28

1981 46.27 9.44

1982 49.13 7.80 6.18

1983 51.05 6.49 5.04 3.91

1984 52.89 5.76 4.56 3.76 3.61

1985 54.57 5.24 4.21 3.56 3.39 3.16

1986 55.67 4.69 3.77 3.17 2.93 2.59 2.02

1987 57.04 4.37 3.55 3.03 2.81 2.55 2.24 2.46

1988 59.06 4.27 3.55 3.11 2.96 2.79 2.67 2.99 3.53

1989 61.37 4.23 3.59 3.23 3.12 3.02 2.98 3.30 3.73 3.92

1990 63.68 4.18 3.61 3.29 3.21 3.14 3.14 3.41 3.74 3.84 3.76

1991 65.82 4.11 3.59 3.30 3.23 3.17 3.17 3.40 3.64 3.68 3.56 3.37

1992 67.32 3.95 3.47 3.20 3.12 3.06 3.05 3.22 3.37 3.33 3.13 2.82 2.28

1993 68.92 3.83 3.38 3.12 3.05 2.98 2.96 3.10 3.20 3.14 2.94 2.67 2.33 2.37

1994 70.39 3.71 3.28 3.04 2.96 2.90 2.87 2.97 3.05 2.97 2.78 2.54 2.26 2.25 2.13

1995 71.86 3.60 3.20 2.97 2.89 2.83 2.79 2.88 2.93 2.84 2.67 2.45 2.22 2.20 2.12 2.10

1996 73.18 3.49 3.10 2.89 2.81 2.74 2.70 2.77 2.81 2.72 2.55 2.35 2.14 2.11 2.02 1.96 1.83

1997 74.45 3.38 3.02 2.81 2.73 2.66 2.62 2.68 2.70 2.61 2.44 2.26 2.07 2.03 1.95 1.89 1.78 1.73

1998 75.27 3.26 2.90 2.70 2.62 2.55 2.50 2.54 2.55 2.46 2.29 2.11 1.93 1.88 1.78 1.69 1.55 1.42 1.10

1999 76.35 3.16 2.82 2.63 2.55 2.48 2.43 2.46 2.46 2.36 2.21 2.04 1.87 1.81 1.72 1.64 1.52 1.42 1.27 1.43

2000 78.07 3.11 2.79 2.61 2.53 2.46 2.42 2.44 2.44 2.35 2.21 2.06 1.91 1.87 1.80 1.74 1.67 1.63 1.60 1.84 2.26

2001 79.82 3.07 2.76 2.59 2.51 2.45 2.41 2.43 2.43 2.34 2.21 2.08 1.95 1.91 1.85 1.81 1.77 1.75 1.76 1.98 2.25

2002 81.04 3.00 2.70 2.53 2.46 2.40 2.35 2.37 2.37 2.29 2.16 2.03 1.91 1.87 1.82 1.78 1.73 1.72 1.71 1.86 2.01

2003 82.57 2.95 2.67 2.50 2.43 2.37 2.33 2.35 2.34 2.26 2.14 2.02 1.91 1.87 1.82 1.79 1.75 1.74 1.74 1.87 1.98

2004 84.78 2.94 2.67 2.51 2.44 2.39 2.35 2.36 2.36 2.29 2.18 2.07 1.97 1.94 1.90 1.88 1.85 1.86 1.87 2.00 2.12

2005 87.41 2.95 2.69 2.54 2.47 2.42 2.38 2.40 2.40 2.33 2.23 2.13 2.05 2.03 2.00 1.99 1.98 1.99 2.03 2.16 2.28

2006 90.07 2.95 2.70 2.56 2.50 2.45 2.42 2.43 2.43 2.37 2.28 2.19 2.11 2.10 2.08 2.08 2.07 2.10 2.14 2.27 2.39

2007 92.50 2.94 2.70 2.56 2.51 2.46 2.43 2.45 2.45 2.39 2.31 2.22 2.15 2.14 2.12 2.12 2.13 2.15 2.19 2.32 2.43

2008 94.26 2.91 2.67 2.54 2.48 2.44 2.41 2.42 2.42 2.37 2.28 2.20 2.14 2.13 2.11 2.11 2.11 2.13 2.17 2.28 2.37

2009 95.00 2.83 2.60 2.47 2.42 2.37 2.34 2.35 2.35 2.29 2.21 2.13 2.06 2.05 2.03 2.02 2.01 2.03 2.05 2.14 2.21

2010 96.11 2.78 2.55 2.43 2.37 2.32 2.29 2.30 2.29 2.24 2.16 2.08 2.01 2.00 1.98 1.97 1.96 1.97 1.98 2.06 2.11

2011 98.11 2.75 2.54 2.41 2.36 2.31 2.28 2.29 2.29 2.23 2.16 2.08 2.02 2.00 1.98 1.97 1.96 1.97 1.99 2.06 2.11

2012 100.00 2.73 2.52 2.40 2.35 2.30 2.27 2.28 2.27 2.22 2.15 2.07 2.01 2.00 1.98 1.97 1.96 1.97 1.99 2.05 2.10

2013 101.77 2.70 2.49 2.38 2.33 2.28 2.25 2.26 2.25 2.20 2.13 2.06 2.00 1.99 1.97 1.96 1.95 1.96 1.97 2.03 2.07

2014 103.65 2.67 2.47 2.36 2.31 2.27 2.24 2.24 2.24 2.19 2.12 2.05 1.99 1.98 1.96 1.95 1.95 1.95 1.97 2.02 2.06

2015 104.69 2.62 2.43 2.32 2.27 2.23 2.20 2.20 2.19 2.14 2.08 2.01 1.95 1.94 1.92 1.91 1.90 1.90 1.91 1.96 1.99

2016 105.77 2.58 2.39 2.28 2.23 2.19 2.16 2.16 2.15 2.10 2.04 1.97 1.92 1.90 1.88 1.87 1.86 1.86 1.87 1.91 1.94

2017 107.80 2.56 2.38 2.27 2.22 2.18 2.15 2.15 2.14 2.10 2.03 1.97 1.92 1.90 1.88 1.87 1.86 1.86 1.87 1.91 1.93

2018 110.38 2.56 2.38 2.27 2.23 2.19 2.16 2.16 2.15 2.11 2.04 1.98 1.93 1.92 1.90 1.89 1.88 1.89 1.89 1.93 1.96

From

To Variable 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1999 76.35

2000 78.07 2.26

2001 79.82 2.25 2.25

2002 81.04 2.01 1.88 1.52

2003 82.57 1.98 1.88 1.70 1.89

2004 84.78 2.12 2.08 2.03 2.28 2.68

2005 87.41 2.28 2.29 2.30 2.55 2.89 3.10

2006 90.07 2.39 2.41 2.45 2.68 2.94 3.08 3.05

2007 92.50 2.43 2.45 2.49 2.68 2.88 2.95 2.87 2.69

2008 94.26 2.37 2.38 2.40 2.55 2.69 2.69 2.55 2.30 1.91

2009 95.00 2.21 2.20 2.20 2.30 2.37 2.30 2.10 1.79 1.34 0.78

2010 96.11 2.11 2.10 2.08 2.15 2.19 2.11 1.92 1.63 1.28 0.97 1.17

2011 98.11 2.11 2.10 2.08 2.15 2.18 2.11 1.94 1.72 1.48 1.34 1.63 2.08

2012 100.00 2.10 2.08 2.07 2.12 2.15 2.09 1.94 1.76 1.57 1.49 1.72 2.00 1.92

2013 101.77 2.07 2.06 2.05 2.09 2.11 2.05 1.92 1.76 1.61 1.54 1.74 1.93 1.85 1.77

2014 103.65 2.06 2.04 2.03 2.07 2.09 2.03 1.91 1.77 1.64 1.59 1.76 1.91 1.85 1.81 1.84

2015 104.69 1.99 1.98 1.96 1.99 2.00 1.94 1.82 1.68 1.56 1.51 1.63 1.72 1.64 1.54 1.42 1.00

2016 105.77 1.94 1.92 1.89 1.92 1.92 1.86 1.75 1.62 1.50 1.45 1.55 1.61 1.51 1.41 1.29 1.02 1.03

2017 107.80 1.93 1.92 1.90 1.92 1.92 1.86 1.76 1.65 1.54 1.50 1.59 1.65 1.58 1.51 1.45 1.32 1.47 1.91

2018 110.38 1.96 1.94 1.93 1.95 1.95 1.90 1.81 1.71 1.62 1.59 1.68 1.75 1.70 1.66 1.64 1.59 1.78 2.16 2.40
Price Inflation, Page 20

2.7 Appendix

OCACT adjustments to the published CPI-W annual growth rates. Between 1978 and 2018, 

OCACT set the annual growth rate in the adjusted CPI-W to the growth rate in the published 

CPI-W plus an annual growth rate differential, defined as the growth rate in the CPI-U “Research 

Series” (CPI-U-RS) less the growth rate in the published CPI-U. BLS constructs the CPI-U-RS 

by recalculating the CPI-U back to 1978 using present methodology (see 

https://www.bls.gov/cpi/research-series/home.htm). An exception to this specification was made 

because BLS introduced an improvement for “rental equivalence” in 1983 for the CPI-U, but not 

until 1985 for the CPI-W. Thus, for 1983 and 1984, the annual percent change in the adjusted 

CPI-W is defined as the percent change in the CPI-U-RS less 0.1 percentage point. This 

adjustment reflects the belief that, had the introductions been simultaneous in 1983, the observed 

differences in growth between the two inflation measures would have been equal to their 

published compound average annual difference (0.1 percentage point) over the post-1985 period.

Between 1967 and 1977, the annual growth rate in the adjusted CPI-W was set to the growth rate 

in the published CPI-W less 0.2 percentage point plus an annual growth rate differential, defined 

as the growth rate in the CPI-U-X1 (a BLS “experimental series” that incorporates the 

improvement for rental equivalence into the historical CPI-U) less the growth rate in the actual 

published CPI-U. The 0.2 percentage point adjustment reflects a BLS estimate of the effect of 

introducing an improved geometric weighting formula into the CPI-W beginning in January 

1999. Finally, for 1966 and earlier, the annual growth rate in the adjusted CPI-W was set to the 

growth rate in the published CPI-W less the 0.2 percentage point adjustment for the improved 

geometric formula. 

OCACT adjustments to the published PGDP and real GDP (and therefore productivity) annual 

growth rates. As mentioned above, starting in January 1999, BLS introduced a new geometric 

weighting formula to the CPI, estimating that it would lower the future annual growth rate in the 

CPI by about 0.2 percentage point. BEA estimates that this change would have had a 50.0 

percent “feed-through” effect on the aggregate annual PGDP growth rate in the past. Thus, due 

to BLS’ introduction of an improved geometric weighting formula to the CPI, BEA lowered the 

annual growth rate in the aggregate PGDP by about 0.1 percentage point (0.2 * 50.0%). In 

addition, since the BLS improvement to the CPI does not alter the historical path of nominal 

GDP, BEA raised the annual real growth rate in the GDP by about 0.1 percentage point. 

However, BEA made these adjustments only back to 1978. Thus, to improve consistency, 

OCACT added the effect of this BLS improvement to the earlier data. That is, for 1978 and each 

earlier year, OCACT lowered the annual growth rate in the CPI by 0.2 percentage point, lowered 

the annual growth rate in the aggregate PGDP index by 0.1 percentage point, and raised the 

annual real growth rate in GDP, and therefore productivity, by 0.1 percentage point. 

Furthermore, a change in the CPI growth rate affects the PGDP through about 85.0% of the

prices used to determine one of the components of the PGDP, that is, the GDP deflator for 

consumption (PGDP_C). Hence, the annual growth rate for the PGDP_C in 1978 and earlier was 

lowered by about 0.17 percent (0.2 * 0.85).
Average Real Wage Differential, Page 1

3. AVERAGE REAL WAGE DIFFERENTIAL

THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

TABLE OF CONTENTS PAGE

3 AVERAGE REAL WAGE DIFFERENTIAL..................................................................... 2

3.1 SUMMARY ............................................................................................................................................................. 2

3.2 DEFINITION OF AVERAGE REAL WAGE DIFFERENTIAL ...................................................................................... 2

3.3 MEASURES OF REAL EARNINGS GROWTH: ECONOMY-WIDE AND OASDI-COVERED EARNINGS ................... 3

3.3.1 Productivity .................................................................................................................................................... 6

3.3.2 Other Components: Links between Real Earnings and Productivity .................................................................. 6

3.3.2.1 Ratio of Compensation to Nominal GDP ..................................................................................................... 7

3.3.2.2 Ratio of Earnings to Compensation.............................................................................................................. 7

3.3.2.3 Average Hours Worked............................................................................................................................... 9

3.3.2.4 Price Differential (Expressed as Ratio of PGDP to CPI-W) .........................................................................10

3.3.2.5 Total Links................................................................................................................................................10

3.4 PROJECTIONS FROM OTHER SOURCES ............................................................................................................... 11

3.5 APPENDIX............................................................................................................................................................ 14

TABLE OF TABLES PAGE

TABLE 3.1: ASSUMED AVERAGE REAL WAGE DIFFERENTIAL............................................................................................ 2

TABLE 3.2: AVERAGE ANNUAL REAL PERCENTAGE CHANGE IN AVERAGE EARNINGS: COMPARISON OF THE U.S.

ECONOMY TO OASDI COVERED.................................................................................................................................. 5

TABLE 3.3: AVERAGE ANNUAL REAL PERCENTAGE CHANGE IN AVERAGE EARNINGS: TOTAL U.S. ECONOMY AND ITS 

COMPONENTS ................................................................................................................................................................ 7

TABLE 3.4: AVERAGE HOURS WORKED PER WEEK, TOTAL U.S.: COMPOUND ANNUAL RATES OF CHANGE (%) ........ 12
Average Real Wage Differential, Page 2

3 Average Real Wage Differential

3.1 Summary

For the 2020 Trustees Report, over the 65-year period from 2029 to 2094, the average annual 

growth rate in the OASDI covered wage is assumed to be 4.76 percent, 3.54 percent, and 2.32

percent for alternatives I, II, and III, respectively (Table 3.1). 40,41 Also for the 2020 Trustees 

Report, the assumed ultimate annual rates of increase in the CPI-W are 3.00 percent, 2.40 

percent, and 1.80 percent for alternatives I, II, and III, respectively (Table 2.1). Thus, for the 

2020 Trustees Report, the average real wage differential, over the 65-year period 2030 through

2094, is assumed to be 1.76 percent (4.76 less 3.00), 1.14 percent (3.54 less 2.40), and 0.52

percent (2.32 less 1.80) for alternatives I, II, and III, respectively.42 The average real wage 

differential for alternative II is 0.07 percentage point lower than in the 2019 Trustees Report, 

while those for alternatives I and III are 0.08 percentage point lower than in the 2019 Trustees 

Report.

Table 3.1: Assumed Average Real Wage Differential

Average Annual Percent Change

(last 65 years of projection period)

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2019 Trustees Report

I II III I II III I II III

Average Nominal Wage 4.76 3.54 2.32 5.04 3.81 2.60 -0.28 -0.27 -0.28

Less: CPI-W 3.00 2.40 1.80 3.20 2.60 2.00 -0.20 -0.20 -0.20

Equals: 

Average Real Wage Differential

1.76 1.14 0.52 1.84 1.21 0.60 -0.08 -0.07 -0.08

3.2 Definition of Average Real Wage Differential 

The average OASDI covered wage is defined as the ratio of total OASDI covered wages in a 

year to the number of workers with any covered wages during the year. The real wage 

differential for a year is defined as the annual percentage change from the prior year in the 

average OASDI covered wage minus the annual percentage change from the prior year in the 

CPI. The average real wage differential over the 65-year period 2030 through 2094 is the average 

of annual real wage differentials over the period.

 40 The 65-year period begins with the last year of the 10-year (2019 to 2029) short-range projection period 

and ends with the last year of the 75-year (2019 to 2094) long-range projection period. 

41 Starting with the 2010 Trustees Report, the annual growth rate in the average OASDI covered wage has 

been assumed to vary over the last 65 years of the projection, as the ratio of wages to compensation would decline at 

a varying rate over the period, reflecting the assumed path of the national health expenditures and the assumed effect 

of the Affordable Care Act on employer contributions to employee group health insurance. 

42 The real wage differential for a year is defined as the annual percentage change from the prior year in the 

average OASDI covered wage minus the annual percentage change from the prior year in the CPI.
Average Real Wage Differential, Page 3

Both the income to the Social Security program and the benefits paid are related to total covered 

earnings (i.e., the combination of covered wages and covered net earnings from 

self-employment). For this reason, the growth in average earnings, not average wages, is the 

subject of the balance of this section. The future real growth rates in average U.S. earnings, 

average U.S. wages, and the average OASDI covered wage, are expected to be similar, with the 

sources of minor differences described below.

For the 2020 Trustees Report, the average annual rate of increase in average real OASDI covered

earnings, over the 65-year period from 2029 to 2094, is assumed to be 1.71 percent, 1.12 percent, 

and 0.54 percent for alternatives I, II, and III, respectively. These values are 0.06 percentage 

point lower than those in the 2019 Trustees Report. 

3.3 Measures of Real Earnings Growth: Economy-Wide and OASDI Covered Earnings

Average real earnings in the total U.S. economy are defined as the ratio of total nominal earnings 

(wage and salary disbursements and net proprietors’ income) to total adjusted average weekly

civilian employment (see Section 3.5 Appendix A) and U.S. Armed Forces, divided by the 

adjusted CPI-W. BEA estimates historical values for nominal earnings as part of its broader 

responsibility of maintaining the NIPA for the U.S. economy. BLS estimates the CPI-W from its 

sample of prices and the civilian employment from its monthly CPS data. Because CPS data for 

the U.S. represent average weekly employment, the growth in average earnings for the total U.S. 

economy represents the growth in average weekly earnings for those employed.

Average real earnings of OASDI covered workers differ from average U.S. earnings in two 

ways: the types of workers covered and the types of compensation reported.

The types of workers covered by the OASDI program have changed in the past as a result of 

changes in the law and shifts in employment. Even without further changes in the law, the 

proportion of federal civilian government employees covered under the OASDI program will 

continue to increase toward 100 percent. All federal civilian government employees hired after 

1983 are covered under OASDI, while some of those hired earlier are not. Virtually all federal 

civilian government employees will be covered around 2030. As a result, the composition of 

OASDI covered employment, which has varied since 1940, will stabilize around 2030. 

The types of compensation reported for the two measures differ primarily because employeepaid premiums for employer-sponsored group health insurance within cafeteria plans under 

Section 125 of the Internal Revenue Code are counted in the NIPA definition of U.S. earnings, 

but not reported as earnings for OASDI purposes. Like the employer-paid premiums, employeepaid premiums are projected to continue to grow faster than compensation. As a result, OASDI

covered wages are projected to grow at a slightly lower rate than U.S. wages and, similarly, 

covered earnings are projected to grow at a slightly lower rate than U.S. earnings.

Average real weekly earnings in the total U.S. economy increased at an average annual rate of

0.97 percent over the last five complete economic cycles (1969-2007), 0.85 percent over the last 

four cycles (1973-2007), 1.13 percent over the last three cycles (1979-2007), 1.56 percent over 
Average Real Wage Differential, Page 4

the last two cycles (1990-2007), and 0.53 percent over the last complete cycle (2001-2007). The 

average rate since the last cycle peak (2007-2018) has been 0.82 percent. The average real 

earnings of OASDI covered workers increased at an average annual rate of 1.02 percent over the 

last five complete economic cycles, 0.95 percent over the last four cycles, 1.04 percent over the 

last three cycles, 1.33 percent over the last two cycles, and 0.80 percent over the last complete 

cycle. The average rate since the last cycle peak has been 0.49 percent (see Table 3.2 below). 

As the proportion of workers covered by OASDI is expected to change much less in the future 

than it has in the past, it is reasonable to evaluate the 1.18 percent assumed average real rate of 

increase for average covered earnings for alternative II in relation to the historical real growth 

rate in average earnings for all workers in the total economy. Therefore, the balance of this 

section focuses on the past trends for average earnings in the U.S. economy.

Considering complete economic cycles, the average annual real growth rate in earnings for all 

workers in the total U.S. economy was 1.93 percent from 1969 to 1973 (4 years), -0.44 percent 

from 1973 to 1979 (6 years), 0.47 percent from 1979 to 1990 (11 years), 2.13 percent from 1990

to 2001 (11 years), and 0.53 percent from 2001 to 2007 (6 years).43 The 1.18 percent assumed 

average future annual real growth rate in average OASDI covered earnings is close to the 1.13

percent historical average annual real growth rate in average U.S. earnings over the last three

complete cycles (28-year period from 1979 to 2007).

 43 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles.
Average Real Wage Differential, Page 5

Table 3.2: Average Annual Real Percentage Change in Average Earnings: Comparison of the U.S. Economy to 

OASDI Covered

The real growth rate in average earnings of all workers in the economy was depressed for the 

1973-1979 and 1979-1990 cycles in a way not expected to be repeated in the future. During this 

period, the baby boom generation reached working age and the proportion of women in the labor 

force increased dramatically. As a result, the economy accommodated an extraordinary number 

of relatively low-paid (inexperienced and young) workers, thus depressing real growth in overall 

average earnings. However, the inclusion of baby boomers in the labor force ended in the 

mid-1980s, and the increasing percentage of women under age 60 in the labor force stabilized 

more recently.

The rapid increase in average earnings during the complete economic cycle from 1990 to 2001

may reflect maturation of the baby boomers and women in the labor force. The large number of 

baby boomers and women in the labor force have been reaching prime working ages and thus 

boosted growth since 1990. This kind of swing in demographic trends is not projected to occur in 

the future, so consideration of the longer period of the last three complete economic cycles seems 

appropriate. This approach averages out the effects of past demographic trends, which initially 

depressed and later boosted average earnings growth. 

Average Real Ratio of Employed Ratio of Average Real

Earnings for Total Labor Force to Covered Earnings Earnings for

Period U.S. Economy Links Covered Workers to U.S. Earnings OASDI Covered

Historical: (1) (2) (3) (4) (5)

 By Decade:

 1968-1978 0.83 0.39 0.09 0.30 1.23

 1978-1988 0.43 0.22 0.12 0.10 0.65

 1988-1998 1.59 -0.30 -0.13 -0.18 1.28

 1998-2008 0.79 -0.06 -0.03 -0.03 0.73

 2008-2018 1.14 -0.42 -0.09 -0.33 0.72

 1968-2018 0.96 -0.04 -0.01 -0.03 0.92

 1978-2018 0.99 -0.14 -0.03 -0.11 0.84

 1988-2018 1.17 -0.26 -0.08 -0.18 0.91

 1998-2018 0.97 -0.24 -0.06 -0.18 0.72

 2008-2018 1.14 -0.42 -0.09 -0.33 0.72

 By Complete Economic Cycle (Peak-to-Peak):

 Individual Cycle

 1969-1973 1.93 -0.33 -0.23 -0.10 1.60

 1973-1979 -0.44 1.00 0.46 0.53 0.56

 1979-1990 0.47 0.11 0.09 0.02 0.64

 1990-2001 2.13 -0.49 -0.23 -0.26 1.63

 2001-2007 0.53 0.27 0.09 0.18 0.80

 Last Five Cycles

 1969-2007 0.97 0.05 0.02 0.03 1.02

 Last Four Cycles

 1973-2007 0.85 0.10 0.05 0.05 0.95

 Last Three Cycles

 1979-2007 1.13 -0.09 -0.04 -0.06 1.04

 Last Two Cycles

 1990-2007 1.56 -0.22 -0.12 -0.11 1.33
Average Real Wage Differential, Page 6

Additional circumstances contributing to the potential future growth of average earnings are 

discussed in the next two sections on productivity growth and earnings links to productivity.

3.3.1 Productivity

Total-economy productivity growth ultimately affects the growth of real earnings. 

Total-economy productivity is defined as the ratio of real GDP to total hours worked in the U.S. 

economy. For the 2020 Trustees Report, the assumed ultimate annual rates of increase in 

total-economy productivity are 1.93 percent, 1.63 percent, and 1.33 percent for alternatives I, II, 

and III, respectively. These ultimate rates of increase for total-economy productivity are 

consistent with ultimate annual rates of increase in nonfarm business productivity of 2.36

percent, 2.00 percent, and 1.63 percent for alternatives I, II, and III, respectively (see Section 1).

3.3.2 Other Components: Links between Real Earnings and Productivity

Not all of the historical gains in productivity have resulted in proportional increases in average 

real earnings. For example, over the last four economic cycles (1973-2007), average real 

earnings increased at an average annual rate of only 0.85 percent per year, while productivity for 

the total U.S. economy increased at 1.64 percent per year. The approximate difference of -0.78

percent per year (1.0085 / 1.0164; values are rounded) was due to changes in the links, that is, 

factors that connect productivity to average real earnings in a multiplicative fashion. Table 3.3 

summarizes the U.S. experience over the last five economic cycles for each of those factors.44

Those factors include the ratio of compensation to nominal GDP, the ratio of earnings to 

compensation, the ratio of total hours worked to total average weekly employment, and the ratio 

of the gross domestic product implicit price deflator (PGDP) to the CPI-W. Each of those links is 

discussed separately below.

 44 This section calculates values for productivity, hours per week, price differential, and average real 

earnings using adjusted data for the CPI, PGDP, real GDP, and employment (weeks worked). Hence, Table 3.3 

contains adjusted productivity values, which may not equal the unadjusted productivity values in Table 1.4 in 

Section 1. Adjustments to the CPI, PGDP and real GDP are described in Section 2.7 Appendix. Adjustments to 

employment are described in Section 3.5 Appendix. 
Average Real Wage Differential, Page 7

3.3.2.1 Ratio of Compensation to Nominal GDP 

The first link is the ratio of total compensation to nominal GDP, or the total compensation ratio 

(CR). The CR is the ratio of the sum of employee compensation and self-employed (proprietors’) 

income to nominal GDP. For the 2020 Trustees Report, the assumed ultimate annual rate of 

change in the CR is 0.0 percent for alternatives I, II, and III. The CR is closely related to the 

labor share of total output. Most economists believe that the shares of total output going to the 

various factors of production tend toward stable proportions in the long run. Therefore, it is 

assumed that the CR will be constant over the last 65 years of the long-range period.

3.3.2.2 Ratio of Earnings to Compensation 

The second link is the ratio of total worker earnings to compensation. Worker earnings differ 

from compensation because part of compensation comes in the form of employer contributions 

to employee pension plans, insurance premiums, and government social insurance programs. 

Using NIPA definitions, total worker earnings are the sum of total wage and salary 

disbursements and total proprietors’ income. Total compensation is the sum of employee 

compensation and total proprietors’ income. Total employee compensation is the sum of total 

wage and salary disbursements, employer contributions for employee pension and insurance 

funds, and employer contributions to government social insurance programs. Employer 

Total Links Compensation Earnings to Hours per Price Average

Period Productivity Links to GDP Compensation Week Differential Residual Real Earnings

Historical: (1) (2) (3) (4) (5) (6) (7) (8)

 By Decade:

 1968-1978 1.85 -1.00 -0.19 -0.40 -0.69 0.28 0.00 0.83

 1978-1988 1.32 -0.88 -0.09 -0.27 -0.14 -0.39 0.00 0.43

 1988-1998 1.52 0.07 0.08 -0.01 0.29 -0.30 0.00 1.59

 1998-2008 2.19 -1.38 -0.28 -0.16 -0.42 -0.53 0.00 0.79

 2008-2018 1.05 0.09 -0.08 0.07 0.04 0.06 0.00 1.14

 1968-2018 1.59 -0.62 -0.11 -0.15 -0.19 -0.17 0.00 0.96

 1978-2018 1.52 -0.53 -0.09 -0.09 -0.06 -0.29 0.00 0.99

 1988-2018 1.59 -0.41 -0.09 -0.03 -0.03 -0.25 0.00 1.17

 1998-2018 1.62 -0.64 -0.18 -0.04 -0.19 -0.23 0.00 0.97

 2008-2018 1.05 0.09 -0.08 0.07 0.04 0.06 0.00 1.14

 By Complete Economic Cycle (Peak-to-Peak):

 Individual Cycle

 1969-1973 2.76 -0.81 -0.04 -0.34 -0.89 0.46 0.00 1.93

 1973-1979 1.16 -1.58 -0.48 -0.43 -0.55 -0.13 0.00 -0.44

 1979-1990 1.41 -0.92 -0.16 -0.29 -0.11 -0.37 0.00 0.47

 1990-2001 1.85 0.28 0.43 0.05 0.16 -0.36 0.00 2.13

 2001-2007 2.19 -1.63 -0.93 -0.18 -0.37 -0.15 0.00 0.53

 Last Five Cycles

 1969-2007 1.76 -0.78 -0.15 -0.20 -0.22 -0.21 0.00 0.97

 Last Four Cycles

 1973-2007 1.64 -0.78 -0.16 -0.19 -0.15 -0.28 0.00 0.85

 Last Three Cycles

 1979-2007 1.75 -0.61 -0.10 -0.13 -0.06 -0.32 0.00 1.13

 Last Two Cycles

 1990-2007 1.97 -0.40 -0.05 -0.03 -0.03 -0.29 0.00 1.56

 I 1.93 -0.22 0.00 -0.03 0.05 -0.24 0.00 1.77

 II 1.63 -0.50 0.00 -0.11 -0.05 -0.34 0.00 1.18

 III 1.33 -0.78 0.00 -0.19 -0.15 -0.44 0.00 0.60

Recommeded Future Average Annual Rates of Increase for the 2020 Trustees Report (2029-2094)

Table 3.3: Average Annual Real Percentage Change in Average Earnings: Total U.S. Economy and Its 

Components
Average Real Wage Differential, Page 8

contributions to government social insurance programs include payments for public insurance 

and publicly mandated insurance such as for unemployment, workers’ compensation, Medicare, 

and Social Security.

The average annual rate of change for the ratio was -0.20 percent from 1969 to 2007, a 38-year 

period that covers the last five complete economic cycles. The historical decline in the ratio has 

been due primarily to relatively faster growth in employer contributions to employee pensions 

and health insurance.

Most employer contributions to pensions are for employees in the private sector and are 

composed of contributions to defined-benefit (DB) and defined-contribution (DC) plans. After 

declining in the 1980s and 1990s, when the work force was relatively young, asset returns 

relatively high, and the proportion of employees covered by DB plans was beginning to decline, 

employer contributions to pension plans rose sharply between 1997 and 2010 as the work force

aged, the stock market experienced two major crashes, and interest rates reached unusually low 

levels. Counteracting these trends is the continuing decline in DB coverage. Contributions have

declined somewhat since 2010 as the stock market rebounded and may decline further in the near 

future if interest rates rise from current low levels. OCACT also expects a relative increase in 

employer contributions to employee pension funds due to increased life expectancy, and a 

relative decrease due to a continued shift from DB to DC plans.

Contributions to employer-sponsored group health insurance (ESI) in the future have been 

assumed to be significantly affected by provisions in the Affordable Care Act (ACA) enacted in 

2010. This expectation led to a significant change in the assumed future path of the ratio of 

earnings to compensation for the 2010 through 2019 Trustees Reports. However, a major 

provision of the ACA affecting the projected growth in ESI—the excise tax on ESI premiums 

(commonly referred to as the “Cadillac Tax”)—was repealed in December 2019. As a result, the 

Trustees assume ESI premiums will increase faster, and wages therefore more slowly, than was 

assumed in the 2019 report. For the 2020 Trustees Report, the annual rates of change in the ratio 

of wages to employee compensation are assumed to be consistent with the most recent 

projections of ESI from the Center for Medicare and Medicaid Services (CMS). In addition, and 

separate from the repeal of the excise tax, in September 2019, CMS revised its projections of ESI 

growth for the period 2020-2094,very slightly increasing growth compared to their 2018 

projections.45 These changes together result in an average annual rate of growth in the ratio of 

wages to employee compensation of about -0.13 percent for alternative II over the last 65 years 

of the 75-year projection period. This rate of change is 0.07 percentage point lower (more 

negative) than the one used in the 2019 Trustees Report.

Hence, for the 2020 Trustees Report, the average annual rate of change in the ratio of wages to 

employee compensation over the last 65 years of the projection horizon (2029 to 2094) is 

assumed to be -0.03, -0.13, and -0.23 percentage point for alternatives I, II, and III, respectively. 

 45 CMS has projected ESI under two scenarios, with and without the excise tax, in each year, so it is 

possible to separate the changes in CMS projections due to new data and methods from changes due to the 

legislative repeal of the excise tax. The legislative change accounts for almost all of the change in long-range wage 

growth assumption.
Average Real Wage Differential, Page 9

Consistent with this, the assumed average annual rate of change in the ratio of earnings to total 

compensation over the last 65 years of the projection horizon (2029 to 2094) is -0.03, -0.11, 

and -0.19 percentage point for alternatives I, II, and III, respectively.

3.3.2.3 Average Hours Worked

The third link is average hours worked per week (AHW), defined as the ratio of total hours 

worked to total employment in the U.S. economy. Its compounded annual rate of change is 

shown in Table 3.4. Total hours worked in the U.S. economy is a special request series provided 

by BLS, based mostly on the Current Employment Statistics (CES), which surveys 

establishments. Total employment, computed on an average weekly basis, is the sum of civilian 

employment and the U.S. Armed Forces. BLS publishes total civilian employment from the 

Current Population Survey (CPS), which surveys households. The Census Bureau provides 

estimates for the U.S. Armed Forces. For the 2020 Trustees Report, the assumed ultimate annual 

rate of change in average hours worked is +0.05 percent, -0.05 percent and -0.15 percent in 

alternatives I, II, and III, respectively. These rates of change are the same as those used in the 

2019 Trustees Report.

The average annual rate of change in AHW was -0.22 percent over the last five complete 

economic cycles, a 38-year period from 1969 to 2007. Looking at individual cycles, the average 

annual rate of change in AHW was -0.89 percent, -0.55 percent, -0.11 percent, 0.16 percent, 

and -0.37 percent, over the 1969-1973, 1973-1979, 1979-1990, 1990-2001, and 2001-2007 

periods, respectively. 

The historical pattern of AHW is also affected by the difference between CES and CPS 

employment measures. While CES estimates the number of jobs in the economy, CPS estimates 

the number of employed persons. Furthermore, CPS estimates are controlled to population 

annually between censuses. This causes the ratio of the two measures to change over time. Since 

2015, BLS has made both the total hours worked and the employment estimate on which it is 

based available as a special request file.46 The ratio between the employment measure implicit in 

the BLS measure of total hours worked and the total employment measure used in this section 

(i.e., CPS-based civilian employment plus the Census estimate of armed forces) has fluctuated 

between about 1.03 and 1.07. Notably, it was rising steadily between 1990 and 2000 and 

declining between 2000 and 2010. The average annual rate of change in the average weekly 

hours implicit in the BLS calculation of total hours worked was -0.58 percent, -0.49

percent, -0.11 percent, -0.04 percent, and -0.12 percent, over the 1969-1973, 1973-1979, 

1979-1990, 1990-2001, and 2001-2007 economic cycles, respectively. The average annual rate 

of change over the last five complete economic cycles (1969 to 2007) was -0.20 percent, which 

is very close to the average rate of change calculated using the CPS-based employment 

measure.

47

 46 http://www.bls.gov/lpc/special_requests/us_total_hrs_emp.xlsx.

47 One could further decouple the “average hours worked” link into two links, roughly corresponding to 

average hours per job and average jobs per worker. However, despite fluctuations over economic cycles and 

between censuses, the latter link seems to be very stable over longer time periods, so that such an additional step 

seems unnecessary for the purpose of deriving assumptions about the future.
Average Real Wage Differential, Page 10

The average annual rate of change in AHW was -0.37 percent over the last complete economic 

cycle, a 6-year period from 2001 to 2007, suggesting a return to the steep declines seen over the 

period from 1969 to 1979. However, the magnitude of this drop may be due to differences in 

employment estimates described above, as the average annual rate of change implicit in the BLS 

estimates of total hours worked is -0.12 percent. Regardless, the return to declines in the rate of 

change in AHW since 2001 was substantial. Accordingly, the Trustees lowered the assumed 

ultimate annual rate of change in AHW to -0.05 percent starting with the 2012 report, or 

approximately equal to the average annual rate of change of -0.06 percent over the last three 

complete economic cycles, a 28-year period from 1979 to 2007.

48 Since the end of the last 

complete cycle, the decline in AHW has slowed down. The average rate of change in AHW over 

the period from 2007 to 2018 was -0.07 percent (or -0.05 percent using the alternative CESbased employment measure), very close to the current Trustees’ assumption.

 

There are factors that may affect the future AHW in offsetting ways. On one hand, the assumed 

steady increases in productivity will allow workers to gradually increase leisure time while still 

maintaining increases in weekly and annual earnings. On the other hand, it is reasonable to 

assume that the assumed future increases in life expectancy will raise labor force participation 

rates for older workers and it may also raise AHW, holding other factors constant. The average 

projected changes in the education and age-sex distributions of the workforce are not expected to 

significantly affect the average annual rate of change in the AHW in the future. Thus, for the 

2020 Trustees Report the assumed ultimate annual rate of change in AHW is -0.05 percent for 

alternative II.

3.3.2.4 Price Differential (Expressed as Ratio of PGDP to CPI-W)

The final link is the ratio of the PGDP to the CPI-W. Including this ratio is necessary because 

nominal earnings depend on nominal GDP (i.e., the product of real GDP and the PGDP), but are 

converted to real earnings using the CPI-W. For the 2020 Trustees Report, the assumed ultimate 

price differential (expressed as the PGDP less CPI-W average annual rates of increase) 

is -0.25, -0.35, and -0.45 percentage point for alternative I, II, and III, respectively. For 

alternative II, the -0.35 percentage point price differential is the sum of a -0.30 percentage point 

computational difference and a -0.05 percentage point coverage difference (see Section 2.5). 

These assumed values are the same as those assumed in the 2019 Trustees Report.

3.3.2.5 Total Links

The average annual change in the total links was -0.61 percent over the last three complete 

economic cycles and -0.78 percent over the last four complete cycles. For the 2020 Trustees 

Report, the assumed average annual changes in the total links are approximately -0.22

percentage point, -0.50 percentage point, and -0.78 percentage point for alternatives I, II, and III, 

respectively.

 48 The corresponding value implicit in the BLS estimate of total hours worked is -0.09 percent.
Average Real Wage Differential, Page 11

3.4 Projections from Other Sources

IHS Markit (formerly Global Insight, Inc.) provides projections through 2049 in its latest 

long-run trend forecast (see The 30-Year Focus, Third Quarter, August 2019). IHS Markit

projects that the average annual real growth rate for average U.S. earnings be 1.66 percent over 

the 20-year period from 2029 to 2049. Moody’s Analytics’ September 2019 forecast extends to 

2049. Over the 20-year period from 2029 to 2049, Moody’s Analytics projects that the annual 

real growth rate for average U.S. earnings will average 1.36 percent.

The Office of Management and Budget (OMB) Mid-Session Review of the Fiscal Year 2020

Budget includes projections through 2029. OMB projects that the annual growth real rate for 

average U.S. earnings will be about 2.33 percent for 2029. The Congressional Budget Office 

(CBO) June 2019 report, The 2019 Long-Term Budget Outlook, includes projections through 

2049. CBO projects that the annual real growth rate for average U.S. wages will average about 

1.1 percent over the period 2029 to 2049. The Social Security Advisory Board’s 2019 Technical 

Panel on Assumptions and Methods recommended reducing the assumed long-range average 

annual real rate of increase in the average earnings from 1.18 percent in the 2019 Trustees 

Report, alternative II, to 1.08 percent. The prior technical panel, which met in 2015, 

recommended no changes to the long-range average annual real wage differential of 1.17 percent 

in the 2015 Trustees Report, alternative II.
Differential, Page 

Average Real Wage 

12

Table 3.4: Average Hours Worked per Week, Total U.S.: Compound Annual Rates of Change (%)

From

To Variable 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

1961 37.57

1962 37.85 0.73

1963 37.62 0.07 -0.60

1964 37.79 0.19 -0.08 0.44

1965 37.96 0.26 0.10 0.45 0.46

1966 38.15 0.31 0.20 0.47 0.48 0.51

1967 37.68 0.05 -0.09 0.04 -0.10 -0.37 -1.25

1968 37.57 0.00 -0.12 -0.03 -0.14 -0.34 -0.77 -0.28

1969 37.57 0.00 -0.11 -0.03 -0.12 -0.26 -0.52 -0.15 -0.01

1970 36.69 -0.27 -0.39 -0.36 -0.49 -0.68 -0.98 -0.88 -1.18 -2.34

1971 36.38 -0.32 -0.44 -0.42 -0.54 -0.71 -0.95 -0.87 -1.07 -1.59 -0.84

1972 36.29 -0.32 -0.42 -0.40 -0.50 -0.64 -0.83 -0.75 -0.86 -1.15 -0.55 -0.25

1973 36.25 -0.30 -0.39 -0.37 -0.46 -0.58 -0.73 -0.64 -0.71 -0.89 -0.40 -0.18 -0.12

1974 35.70 -0.39 -0.49 -0.48 -0.57 -0.68 -0.83 -0.77 -0.85 -1.01 -0.68 -0.62 -0.81 -1.50

1975 35.08 -0.49 -0.58 -0.58 -0.67 -0.79 -0.93 -0.89 -0.98 -1.14 -0.89 -0.91 -1.12 -1.62 -1.75

1976 34.96 -0.48 -0.57 -0.56 -0.65 -0.75 -0.87 -0.83 -0.90 -1.02 -0.80 -0.79 -0.93 -1.20 -1.04 -0.34

1977 34.93 -0.45 -0.53 -0.53 -0.60 -0.69 -0.80 -0.75 -0.81 -0.90 -0.70 -0.67 -0.76 -0.92 -0.72 -0.21 -0.08

1978 35.04 -0.41 -0.48 -0.47 -0.54 -0.61 -0.71 -0.66 -0.69 -0.77 -0.57 -0.53 -0.58 -0.67 -0.47 -0.04 0.12 0.31

1979 35.07 -0.38 -0.45 -0.44 -0.50 -0.56 -0.65 -0.59 -0.62 -0.68 -0.50 -0.46 -0.48 -0.55 -0.35 0.00 0.11 0.20 0.09

1980 34.77 -0.41 -0.47 -0.46 -0.52 -0.58 -0.66 -0.62 -0.64 -0.70 -0.54 -0.50 -0.53 -0.59 -0.44 -0.18 -0.14 -0.16 -0.39 -0.88

1981 34.53 -0.42 -0.48 -0.48 -0.53 -0.59 -0.66 -0.62 -0.65 -0.70 -0.55 -0.52 -0.55 -0.60 -0.47 -0.26 -0.25 -0.29 -0.49 -0.77 -0.67

1982 34.16 -0.45 -0.51 -0.51 -0.56 -0.62 -0.69 -0.65 -0.68 -0.73 -0.59 -0.57 -0.60 -0.66 -0.55 -0.38 -0.39 -0.45 -0.64 -0.88 -0.88

1983 34.31 -0.41 -0.47 -0.46 -0.51 -0.56 -0.62 -0.58 -0.60 -0.64 -0.51 -0.49 -0.51 -0.55 -0.44 -0.27 -0.27 -0.30 -0.42 -0.55 -0.43

1984 34.59 -0.36 -0.41 -0.40 -0.44 -0.49 -0.54 -0.50 -0.51 -0.55 -0.42 -0.39 -0.40 -0.42 -0.32 -0.16 -0.13 -0.14 -0.22 -0.28 -0.13

1985 34.68 -0.33 -0.38 -0.37 -0.41 -0.45 -0.50 -0.46 -0.47 -0.50 -0.37 -0.34 -0.35 -0.37 -0.26 -0.11 -0.09 -0.09 -0.15 -0.19 -0.05

1986 34.27 -0.37 -0.41 -0.40 -0.44 -0.49 -0.54 -0.50 -0.51 -0.54 -0.42 -0.40 -0.41 -0.43 -0.34 -0.21 -0.20 -0.21 -0.28 -0.33 -0.24

1987 34.40 -0.34 -0.38 -0.37 -0.41 -0.45 -0.49 -0.45 -0.46 -0.49 -0.38 -0.35 -0.36 -0.37 -0.29 -0.16 -0.15 -0.15 -0.21 -0.24 -0.15

1988 34.56 -0.31 -0.35 -0.34 -0.37 -0.41 -0.45 -0.41 -0.42 -0.44 -0.33 -0.30 -0.30 -0.32 -0.23 -0.11 -0.10 -0.10 -0.14 -0.16 -0.08

1989 34.76 -0.28 -0.31 -0.30 -0.33 -0.37 -0.40 -0.37 -0.37 -0.39 -0.28 -0.25 -0.25 -0.26 -0.18 -0.06 -0.04 -0.04 -0.07 -0.09 0.00

1990 34.67 -0.28 -0.31 -0.30 -0.33 -0.36 -0.40 -0.36 -0.36 -0.38 -0.28 -0.25 -0.25 -0.26 -0.18 -0.08 -0.06 -0.06 -0.09 -0.11 -0.03

1991 34.50 -0.28 -0.32 -0.31 -0.34 -0.37 -0.40 -0.37 -0.37 -0.39 -0.29 -0.26 -0.26 -0.27 -0.20 -0.10 -0.09 -0.09 -0.12 -0.14 -0.07

1992 34.26 -0.30 -0.33 -0.32 -0.35 -0.38 -0.41 -0.38 -0.38 -0.40 -0.31 -0.29 -0.29 -0.30 -0.23 -0.14 -0.13 -0.13 -0.16 -0.18 -0.12

1993 34.53 -0.26 -0.30 -0.29 -0.31 -0.34 -0.37 -0.33 -0.34 -0.35 -0.26 -0.24 -0.24 -0.24 -0.18 -0.09 -0.07 -0.07 -0.10 -0.11 -0.05

1994 35.03 -0.21 -0.24 -0.23 -0.25 -0.28 -0.30 -0.27 -0.27 -0.28 -0.19 -0.16 -0.16 -0.16 -0.09 -0.01 0.01 0.02 0.00 -0.01 0.05

1995 35.21 -0.19 -0.22 -0.21 -0.23 -0.25 -0.28 -0.24 -0.24 -0.25 -0.16 -0.14 -0.13 -0.13 -0.07 0.02 0.04 0.04 0.03 0.02 0.08

1996 35.31 -0.18 -0.20 -0.19 -0.21 -0.23 -0.26 -0.22 -0.22 -0.23 -0.15 -0.12 -0.11 -0.11 -0.05 0.03 0.05 0.06 0.04 0.04 0.10

1997 35.39 -0.17 -0.19 -0.18 -0.20 -0.22 -0.24 -0.21 -0.21 -0.21 -0.13 -0.11 -0.10 -0.10 -0.04 0.04 0.06 0.07 0.05 0.05 0.11

1998 35.59 -0.15 -0.17 -0.16 -0.18 -0.20 -0.22 -0.18 -0.18 -0.19 -0.11 -0.08 -0.08 -0.07 -0.01 0.06 0.08 0.09 0.08 0.08 0.13

1999 35.62 -0.14 -0.16 -0.15 -0.17 -0.19 -0.21 -0.18 -0.17 -0.18 -0.10 -0.08 -0.07 -0.07 -0.01 0.06 0.08 0.09 0.08 0.08 0.13

2000 35.70 -0.13 -0.15 -0.14 -0.16 -0.18 -0.20 -0.16 -0.16 -0.16 -0.09 -0.07 -0.06 -0.06 0.00 0.07 0.09 0.09 0.08 0.08 0.13

2001 35.29 -0.16 -0.18 -0.17 -0.18 -0.20 -0.22 -0.19 -0.19 -0.20 -0.13 -0.10 -0.10 -0.10 -0.04 0.02 0.04 0.04 0.03 0.03 0.07

2002 34.95 -0.18 -0.20 -0.19 -0.21 -0.22 -0.24 -0.21 -0.21 -0.22 -0.15 -0.13 -0.13 -0.13 -0.08 -0.01 0.00 0.00 -0.01 -0.02 0.02

2003 34.62 -0.19 -0.22 -0.21 -0.22 -0.24 -0.26 -0.23 -0.23 -0.24 -0.18 -0.15 -0.15 -0.15 -0.11 -0.05 -0.04 -0.03 -0.05 -0.05 -0.02

2004 34.58 -0.19 -0.21 -0.21 -0.22 -0.24 -0.26 -0.23 -0.23 -0.24 -0.17 -0.15 -0.15 -0.15 -0.11 -0.05 -0.04 -0.04 -0.05 -0.06 -0.02

2005 34.52 -0.19 -0.21 -0.20 -0.22 -0.24 -0.26 -0.23 -0.23 -0.23 -0.17 -0.15 -0.15 -0.15 -0.11 -0.05 -0.04 -0.04 -0.06 -0.06 -0.03

2006 34.53 -0.19 -0.21 -0.20 -0.21 -0.23 -0.25 -0.22 -0.22 -0.23 -0.17 -0.15 -0.15 -0.15 -0.10 -0.05 -0.04 -0.04 -0.05 -0.06 -0.03

2007 34.50 -0.19 -0.21 -0.20 -0.21 -0.23 -0.25 -0.22 -0.22 -0.22 -0.17 -0.15 -0.14 -0.15 -0.10 -0.05 -0.04 -0.04 -0.05 -0.06 -0.03

2008 34.11 -0.21 -0.23 -0.22 -0.23 -0.25 -0.27 -0.24 -0.24 -0.25 -0.19 -0.17 -0.17 -0.17 -0.13 -0.08 -0.08 -0.08 -0.09 -0.10 -0.07

2009 33.40 -0.24 -0.27 -0.26 -0.27 -0.29 -0.31 -0.29 -0.29 -0.29 -0.24 -0.22 -0.22 -0.23 -0.19 -0.14 -0.14 -0.14 -0.15 -0.16 -0.14

2010 33.52 -0.23 -0.25 -0.25 -0.26 -0.28 -0.29 -0.27 -0.27 -0.28 -0.23 -0.21 -0.21 -0.21 -0.17 -0.13 -0.12 -0.12 -0.14 -0.15 -0.12

2011 33.71 -0.22 -0.24 -0.23 -0.24 -0.26 -0.28 -0.25 -0.25 -0.26 -0.21 -0.19 -0.19 -0.19 -0.16 -0.11 -0.10 -0.11 -0.12 -0.12 -0.10

2012 33.73 -0.21 -0.23 -0.22 -0.24 -0.25 -0.27 -0.25 -0.24 -0.25 -0.20 -0.18 -0.18 -0.18 -0.15 -0.11 -0.10 -0.10 -0.11 -0.12 -0.09

2013 33.84 -0.20 -0.22 -0.21 -0.23 -0.24 -0.26 -0.23 -0.23 -0.24 -0.19 -0.17 -0.17 -0.17 -0.14 -0.09 -0.09 -0.09 -0.10 -0.11 -0.08

2014 33.93 -0.19 -0.21 -0.20 -0.21 -0.23 -0.24 -0.22 -0.22 -0.23 -0.18 -0.16 -0.16 -0.16 -0.13 -0.09 -0.08 -0.08 -0.09 -0.09 -0.07

2015 34.15 -0.18 -0.19 -0.19 -0.20 -0.21 -0.23 -0.20 -0.20 -0.21 -0.16 -0.14 -0.14 -0.14 -0.11 -0.07 -0.06 -0.06 -0.07 -0.07 -0.05

2016 34.07 -0.18 -0.19 -0.19 -0.20 -0.21 -0.23 -0.21 -0.20 -0.21 -0.16 -0.15 -0.14 -0.14 -0.11 -0.07 -0.06 -0.06 -0.07 -0.08 -0.06

2017 34.01 -0.18 -0.19 -0.19 -0.20 -0.21 -0.23 -0.20 -0.20 -0.21 -0.16 -0.15 -0.14 -0.14 -0.11 -0.07 -0.07 -0.07 -0.08 -0.08 -0.06

2018 34.24 -0.16 -0.18 -0.17 -0.18 -0.19 -0.21 -0.19 -0.19 -0.19 -0.14 -0.13 -0.13 -0.13 -0.09 -0.06 -0.05 -0.05 -0.06 -0.06 -0.04
Differential, Page 

Average Real Wage 

13

Table 3.4 (continued): Average Hours Worked per Week, Total U.S.: Compound Annual Rates of Change (%)

From

To Variable 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

1980 34.77

1981 34.53 -0.67

1982 34.16 -0.88 -1.08

1983 34.31 -0.43 -0.31 0.46

1984 34.59 -0.13 0.06 0.63 0.81

1985 34.68 -0.05 0.11 0.51 0.53 0.26

1986 34.27 -0.24 -0.15 0.08 -0.04 -0.46 -1.18

1987 34.40 -0.15 -0.07 0.14 0.06 -0.19 -0.41 0.37

1988 34.56 -0.08 0.01 0.19 0.14 -0.02 -0.12 0.42 0.46

1989 34.76 0.00 0.08 0.25 0.22 0.10 0.06 0.48 0.53 0.59

1990 34.67 -0.03 0.04 0.19 0.15 0.04 -0.01 0.29 0.26 0.16 -0.27

1991 34.50 -0.07 -0.01 0.11 0.07 -0.04 -0.08 0.14 0.08 -0.05 -0.37 -0.47

1992 34.26 -0.12 -0.07 0.03 -0.02 -0.12 -0.18 -0.01 -0.08 -0.22 -0.49 -0.59 -0.72

1993 34.53 -0.05 0.00 0.10 0.06 -0.02 -0.05 0.11 0.06 -0.01 -0.17 -0.13 0.04 0.80

1994 35.03 0.05 0.11 0.21 0.19 0.13 0.11 0.27 0.26 0.23 0.15 0.26 0.51 1.13 1.45

1995 35.21 0.08 0.14 0.23 0.21 0.16 0.15 0.30 0.29 0.27 0.21 0.31 0.51 0.92 0.98 0.51

1996 35.31 0.10 0.15 0.24 0.22 0.17 0.16 0.30 0.29 0.27 0.22 0.31 0.46 0.76 0.75 0.40 0.29

1997 35.39 0.11 0.15 0.24 0.22 0.18 0.17 0.29 0.29 0.27 0.23 0.30 0.42 0.66 0.62 0.34 0.26 0.23

1998 35.59 0.13 0.18 0.26 0.24 0.20 0.20 0.31 0.31 0.29 0.26 0.33 0.44 0.64 0.60 0.39 0.35 0.39 0.54

1999 35.62 0.13 0.17 0.25 0.23 0.20 0.19 0.30 0.29 0.28 0.24 0.30 0.40 0.56 0.52 0.33 0.29 0.29 0.32 0.10

2000 35.70 0.13 0.17 0.25 0.23 0.20 0.19 0.29 0.29 0.27 0.24 0.29 0.38 0.52 0.48 0.31 0.28 0.27 0.29 0.16 0.22

2001 35.29 0.07 0.11 0.17 0.16 0.12 0.11 0.19 0.18 0.16 0.12 0.16 0.22 0.33 0.27 0.10 0.04 -0.02 -0.08 -0.28 -0.47

2002 34.95 0.02 0.06 0.11 0.10 0.06 0.05 0.12 0.11 0.08 0.04 0.07 0.12 0.20 0.13 -0.03 -0.11 -0.17 -0.25 -0.45 -0.63

2003 34.62 -0.02 0.01 0.06 0.04 0.00 -0.01 0.06 0.04 0.01 -0.03 -0.01 0.03 0.10 0.03 -0.13 -0.21 -0.28 -0.37 -0.55 -0.71

2004 34.58 -0.02 0.01 0.06 0.04 0.00 -0.01 0.05 0.03 0.00 -0.03 -0.02 0.02 0.08 0.01 -0.13 -0.20 -0.26 -0.33 -0.48 -0.59

2005 34.52 -0.03 0.00 0.05 0.03 -0.01 -0.02 0.04 0.02 -0.01 -0.04 -0.03 0.00 0.06 0.00 -0.13 -0.20 -0.25 -0.31 -0.43 -0.52

2006 34.53 -0.03 0.00 0.05 0.03 -0.01 -0.02 0.04 0.02 0.00 -0.04 -0.02 0.01 0.06 0.00 -0.12 -0.18 -0.22 -0.27 -0.38 -0.44

2007 34.50 -0.03 0.00 0.04 0.02 -0.01 -0.02 0.03 0.02 -0.01 -0.04 -0.03 0.00 0.05 -0.01 -0.12 -0.17 -0.21 -0.26 -0.34 -0.40

2008 34.11 -0.07 -0.05 0.00 -0.02 -0.06 -0.07 -0.02 -0.04 -0.06 -0.10 -0.09 -0.07 -0.03 -0.08 -0.19 -0.24 -0.29 -0.33 -0.42 -0.48

2009 33.40 -0.14 -0.12 -0.08 -0.10 -0.14 -0.16 -0.11 -0.13 -0.16 -0.20 -0.20 -0.18 -0.15 -0.21 -0.32 -0.38 -0.43 -0.48 -0.57 -0.64

2010 33.52 -0.12 -0.10 -0.07 -0.09 -0.12 -0.14 -0.09 -0.11 -0.14 -0.17 -0.17 -0.15 -0.12 -0.17 -0.27 -0.33 -0.37 -0.42 -0.50 -0.55

2011 33.71 -0.10 -0.08 -0.05 -0.06 -0.10 -0.11 -0.07 -0.08 -0.11 -0.14 -0.13 -0.12 -0.09 -0.13 -0.23 -0.27 -0.31 -0.35 -0.42 -0.46

2012 33.73 -0.09 -0.08 -0.04 -0.06 -0.09 -0.10 -0.06 -0.08 -0.10 -0.13 -0.12 -0.11 -0.08 -0.12 -0.21 -0.25 -0.29 -0.32 -0.38 -0.42

2013 33.84 -0.08 -0.06 -0.03 -0.05 -0.08 -0.09 -0.05 -0.06 -0.08 -0.11 -0.11 -0.09 -0.06 -0.10 -0.18 -0.22 -0.25 -0.28 -0.34 -0.37

2014 33.93 -0.07 -0.05 -0.02 -0.04 -0.06 -0.08 -0.04 -0.05 -0.07 -0.10 -0.09 -0.07 -0.04 -0.08 -0.16 -0.19 -0.22 -0.25 -0.30 -0.32

2015 34.15 -0.05 -0.03 0.00 -0.01 -0.04 -0.05 -0.01 -0.03 -0.04 -0.07 -0.06 -0.04 -0.01 -0.05 -0.12 -0.15 -0.18 -0.20 -0.24 -0.26

2016 34.07 -0.06 -0.04 -0.01 -0.02 -0.05 -0.06 -0.02 -0.03 -0.05 -0.07 -0.07 -0.05 -0.02 -0.06 -0.13 -0.16 -0.18 -0.20 -0.24 -0.26

2017 34.01 -0.06 -0.04 -0.01 -0.03 -0.05 -0.06 -0.02 -0.04 -0.06 -0.08 -0.07 -0.06 -0.03 -0.06 -0.13 -0.16 -0.18 -0.20 -0.24 -0.26

2018 34.24 -0.04 -0.02 0.01 -0.01 -0.03 -0.04 0.00 -0.01 -0.03 -0.05 -0.04 -0.03 0.00 -0.03 -0.10 -0.12 -0.14 -0.16 -0.19 -0.21

From

To Variable 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

1999 35.62

2000 35.70 0.22

2001 35.29 -0.47 -1.16

2002 34.95 -0.63 -1.06 -0.95

2003 34.62 -0.71 -1.02 -0.95 -0.94

2004 34.58 -0.59 -0.79 -0.67 -0.52 -0.10

2005 34.52 -0.52 -0.67 -0.55 -0.41 -0.14 -0.18

2006 34.53 -0.44 -0.55 -0.43 -0.30 -0.08 -0.07 0.03

2007 34.50 -0.40 -0.49 -0.37 -0.26 -0.09 -0.08 -0.03 -0.09

2008 34.11 -0.48 -0.57 -0.48 -0.40 -0.29 -0.34 -0.39 -0.61 -1.12

2009 33.40 -0.64 -0.74 -0.68 -0.64 -0.59 -0.69 -0.82 -1.10 -1.61 -2.09

2010 33.52 -0.55 -0.63 -0.57 -0.52 -0.46 -0.52 -0.58 -0.74 -0.95 -0.87 0.36

2011 33.71 -0.46 -0.52 -0.46 -0.40 -0.33 -0.37 -0.40 -0.48 -0.58 -0.40 0.45 0.55

2012 33.73 -0.42 -0.47 -0.41 -0.35 -0.29 -0.31 -0.33 -0.39 -0.45 -0.28 0.33 0.31 0.09

2013 33.84 -0.37 -0.41 -0.35 -0.29 -0.23 -0.24 -0.25 -0.29 -0.32 -0.16 0.32 0.31 0.19 0.30

2014 33.93 -0.32 -0.36 -0.30 -0.25 -0.18 -0.19 -0.19 -0.22 -0.24 -0.09 0.32 0.30 0.22 0.29 0.28

2015 34.15 -0.26 -0.29 -0.23 -0.18 -0.11 -0.11 -0.11 -0.12 -0.13 0.02 0.37 0.37 0.33 0.41 0.47 0.65

2016 34.07 -0.26 -0.29 -0.23 -0.18 -0.12 -0.12 -0.12 -0.13 -0.14 -0.02 0.28 0.27 0.22 0.25 0.23 0.21 -0.24

2017 34.01 -0.26 -0.28 -0.23 -0.18 -0.13 -0.13 -0.12 -0.14 -0.14 -0.04 0.22 0.21 0.15 0.16 0.13 0.07 -0.21 -0.19

2018 34.24 -0.21 -0.23 -0.18 -0.13 -0.07 -0.07 -0.06 -0.07 -0.07 0.04 0.28 0.27 0.23 0.25 0.24 0.23 0.09 0.25 0.69
Average Real Wage Differential, Page 14

3.5 Appendix

BLS has introduced numerous changes to the Current Population Survey (CPS) concepts over 

the historical period, such that values for employment are not historically comparable (for more 

detail on noncomparability of CPS concepts, see http://www.bls.gov/cps/eetech_methods.pdf). 

To make the total employment series more comparable, OCACT adjusted the published values 

for the following: 

1990 Census: BLS introduced 1990 Census-based population controls in January 1994, 

increasing employment levels for 1990 from the originally-published estimates by about 880,000 

(0.7%). BLS later revised the 1990 to 1993 estimates, but not those for earlier years. 

Consequently, OCACT adjusted the CPS data for 1981 to 1989 using a linear interpolation of the 

0.7% increase.

2000 Census: BLS introduced population controls based on Census 2000 results in January 2003. 

The revised employment series for 2000 was 1.27% (or 1.724 million persons) higher than the 

previously published series. BLS revised the CPS data only back to January 2000. OCACT 

adjusted the CPS data back to 1991 by linearly interpolating the 1.27% adjustment.

1994 CPS Methodology Change: In 1994, BLS introduced methodology changes and a complete 

redesign of its CPS. Because the survey redesign and methodology changes raised the aggregate 

employment for 1994, the series was not comparable with earlier years. Thus, OCACT applied a 

multiplicative-adjustment factor estimated by Polivka and Miller (1995)49 to the series for years 

prior to 1994. The aggregate employment series was adjusted for 1993 and earlier years by a 

factor of 1.0053.

Population Controls since the 2000 Census: In January 2003, the U.S. Census Bureau introduced 

its updated population controls in the CPS estimates. The difference between the updated and 

originally published employment values for December 2002 is an increase of 576,000 persons. 

Data from December 2002 and earlier are not updated by BLS. OCACT adjusted the 

employment series back to 2000. 

In January 2004, the U.S. Census Bureau reflected revised net international migration estimates 

in its updated population controls. The difference between the updated and originally published 

employment values for December 2003 is a decrease of 409,000 persons. Data from December 

2003 and earlier are not updated by BLS. OCACT adjusted the employment series back to 2000. 

In January 2005, the U.S. Census Bureau introduced updated population controls, which 

reflected updated vital statistics information, as well as revised estimates of net international 

 49 Anne E. Polivka and Stephen M. Miller, "The CPS after the Redesign: Refocusing the Economic Lens,” 

Labor Statistics Measurement Issues; Studies in Income and Wealth Volume 60, Edited by John Haltiwanger, 

Marilyn E. Manser and Robert Topel, National Bureau of Economic Research, 1998, Table 6. Also available at

http://www.bls.gov/ore/pdf/ec950090.pdf. Polivka and Miller’s adjustment factors are for employment-population 

ratios, not employment levels. Because the CPS methodology change affected the employment levels, but not the 

civilian noninstitutional population, their multiplicative employment-population ratio factors are used to adjust the 

employment levels.
Average Real Wage Differential, Page 15

migration. The difference between the updated and originally published employment values for 

December 2004 is a decrease of 45,000 persons. Data from December 2004 and earlier are not 

updated by BLS. OCACT adjusted the employment series back to 2000. 

In January 2006, the U.S. Census Bureau introduced updated population controls, which 

reflected updated vital statistics information, as well as revised estimates of net international 

migration. The difference between the updated and originally published employment values for 

December 2005 is a decrease of 123,000 persons. Data from December 2005 and earlier are not 

updated by BLS. OCACT adjusted the employment series back to 2000.

In January 2007, the U.S. Census Bureau introduced updated population controls, which 

reflected revised estimates of net international migration and updated vital statistics information. 

The difference between the updated and originally published employment values for December 

2006 is an increase of 153,000 persons. Data from December 2006 and earlier are not updated by 

BLS. OCACT adjusted the employment series back to 2000.

In January 2008, the U.S. Census Bureau introduced updated population controls, which 

reflected updated vital statistics information, as well as revised estimates of net international 

migration and the institutional population. The difference between the updated and originally 

published employment values for December 2007 is a decrease of 598,000 persons. Data from 

December 2007 and earlier are not updated by BLS. OCACT adjusted the employment series 

back to 2000.

In January 2009, the U.S. Census Bureau introduced updated population controls, reflecting 

revised net international migration and vital statistics information. The difference between the 

updated and originally published employment values for December 2008 is a decrease of 

407,000 persons. Data from December 2008 and earlier are not updated by BLS. OCACT 

adjusted the employment series back to 2000.

In January 2010, the U.S. Census Bureau introduced updated population controls, reflecting 

updated vital statistics information, revised estimates of net international migration, as well as 

methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2009 is a decrease of 

243,000 persons. BLS does not update data from December 2009 and earlier. OCACT adjusted 

the employment series back to 2000.

In January 2011, the U.S. Census Bureau introduced updated population controls, reflecting 

revised net international migration, vital statistics information, and some methodological changes 

in the population estimation process. The difference between the updated and originally 

published employment values for December 2010 is a decrease of 472,000 persons. BLS does 

not update data from December 2010 and earlier. OCACT adjusted the employment series back 

to 2000.

In January 2012, the U.S. Census Bureau incorporated the Census 2010 population base, as well 

as adjustments for net international migration, updated vital statistics information, and 

methodological changes in the population estimation process. The difference between the 
Average Real Wage Differential, Page 16

updated and originally published employment values for December 2011 is an increase of 

216,000 persons. BLS does not update data from December 2011 and earlier. OCACT adjusted 

the employment series back to 2000.

In January 2013, the U.S. Census Bureau introduced updated population controls, reflecting net 

international migration adjustments, updated vital statistics information, and some 

methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2012 is an increase of 

127,000 persons. BLS does not update data from December 2012 and earlier. OCACT adjusted 

the employment series back to 2000. 

In January 2014, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2013 is an increase of 22,000

persons. BLS does not update data from December 2013 and earlier. OCACT adjusted the 

employment series back to 2000.

In January 2015, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2014 is an increase of 

324,000 persons. BLS does not update data from December 2014 and earlier. OCACT adjusted 

the employment series back to 2000.

In January 2016, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2015 is an increase of 

265,000 persons. BLS does not update data from December 2015 and earlier. OCACT adjusted 

the employment series back to 2000.

In January 2017, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The Census Bureau’s 

methodological improvements included changes in the estimation of the foreign-born emigration 

subcomponent of net international migration. These method changes resulted in higher foreignborn emigration and lower overall net international migration than previously estimated. The 

difference between the updated and originally published employment values for December 2016 

is a decrease of 831,000 persons. BLS does not update data from December 2016 and earlier. 

OCACT adjusted the employment series back to 2000.

In January 2018, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2017 is an increase of 
Average Real Wage Differential, Page 17

318,000 persons. BLS does not update data from December 2017 and earlier. OCACT adjusted 

the employment series back to 2000.

In January 2019, the U.S. Census Bureau updated their population controls, reflecting net 

international migration adjustments, updated birth and death statistics and other information, and 

some methodological changes in the population estimation process. The difference between the 

updated and originally published employment values for December 2018 is a decrease of 

488,000 persons. BLS does not update data from December 2018 and earlier. OCACT adjusted 

the employment series back to 2000.
Unemployment Rate, Page 1

4. UNEMPLOYMENT

THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

TABLE OF CONTENTS PAGE

4 UNEMPLOYMENT RATE .................................................................................................. 2

4.1 SUMMARY ............................................................................................................................................................. 2

4.2 PAST EXPERIENCE................................................................................................................................................. 2

4.3 FUTURE EXPECTATIONS ....................................................................................................................................... 3

4.4 PROJECTIONS FROM OTHER SOURCES ................................................................................................................. 4

TABLE OF TABLES PAGE

TABLE 4.1: ASSUMED ULTIMATE TOTAL CIVILIAN UNEMPLOYMENT RATE ..................................................................... 2

TABLE 4.2: CIVILIAN UNEMPLOYMENT RATES OVER COMPLETE ECONOMIC CYCLES (PEAK-TO-PEAK) ........................ 3

TABLE 4.3: TOTAL AND AGE-SEX ADJUSTED CIVILIAN UNEMPLOYMENT RATES OVER SELECTED INTERVALS (%)...... 5
Unemployment Rate, Page 2

4 Unemployment Rate

4.1 Summary

For the 2020 Trustees Report, the ultimate total civilian unemployment rates (adjusted by the age 

and sex distribution of the 2011 civilian labor force) are assumed to be 4.0 percent, 5.0 percent, 

and 6.0 percent for alternatives I, II, and III, respectively (Table 4.1). These assumptions are 0.5 

percentage point lower than those used for the 2019 Trustees Report.

Table 4.1: Assumed Ultimate Total Civilian Unemployment Rate

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2019 Trustees Report

I II III I II III I II III

Civilian Unemployment Rate 4.0 5.0 6.0 4.5 5.5 6.5 -0.5 -0.5 -0.5

4.2 Past Experience

BLS publishes civilian unemployment rates, defined as the proportion of unemployed persons in 

the civilian labor force, by sex and age group as part of its Current Population Survey. The 

ultimate civilian unemployment rate assumptions are based on analysis of historical experience 

and expected future conditions and trends. Because the aggregate unemployment rate is sensitive 

to changes in the age-sex composition of the civilian labor force, OCACT constructed an 

age-sex-adjusted unemployment rate by weighting the unadjusted age-sex unemployment rates 

by the age-sex distribution of the 2011 civilian labor force. Since the civilian unemployment rate 

varies significantly over an economic cycle, it is useful to look at averages over complete 

economic cycles or long periods (decades). Table 4.2 shows average civilian unemployment 

rates over complete (peak-to-peak) economic cycles. Over the last two (1990-2006), three 

(1979-2006), four (1973-2006), and five (1969-2006) complete economic cycles, the age-sex 

adjusted unemployment rate averaged 5.1, 5.5, 5.5, and 5.4 percent, respectively.50 Table 4.3 

shows annual values for both the adjusted and unadjusted civilian rates. Average rates over 

economic cycles and long periods suggest an ultimate age-sex adjusted unemployment rate in the 

5.1 to 5.5 percent range. 

 50 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles.
Unemployment Rate, Page 3

Table 4.2: Civilian Unemployment Rates over Complete Economic Cycles (Peak-to-Peak)

Total Rate Age-Sex Adjusted Rate

Individual Cycle:

1969-1972 5.0 4.2

1973-1978 6.6 5.5

1979-1989 7.1 6.1

1990-2000 5.6 5.2

2001-2006 5.3 5.1

2007-2018 (Incomplete Cycle) 6.5 6.5

Last Five Cycles

1969-2006 6.1 5.4

Last Four Cycles

1973-2006 6.2 5.5

Last Three Cycles

1979-2006 6.1 5.5

Last Two Cycles

1990-2006 5.5 5.1

It is also useful to look at unemployment rates over specific periods. Beginning around 1975, and 

lasting through about 1994, the U.S. experienced generally high unemployment rates. There are 

several possible explanations for this. Firstly, due to rapid changes in technology and increased 

global competition, job searches and retraining may have become more frequent and lasted for 

longer periods. Secondly, the huge influx of women and baby boomers into the labor market may 

have increased the quantity of labor supplied beyond the quantity demanded in the 1970s and 

1980s. 

Between 1997 and 2000, rapid economic expansion reduced unemployment rates to levels not 

seen since the 1960s. A mild recession raised rates above the long-run average level in 2002 

through 2004. In addition, the recession of 2007-2009 resulted in rates that were well above the 

long-run average level for several years.

Currently, rates are well below the long-run historical average level. At the same time, the 

aggregate labor force participation rate is lower than that projected by OCACT’s models based 

on the observed unemployment rate and other factors, and the resulting employment in the model 

is close to the observed employment level. In recent years, the relationship between 

unemployment rates and labor force participation rates has been different than in the past. The 

Trustees believe that some of this changed relationship is a temporary effect of the slow 

movement of discouraged workers back into the labor force after a long period of weak demand 

for labor, but that there is also a structural change that will persist in the foreseeable future. 

4.3 Future Expectations

The Trustees believe that the structural change noted above reflects permanent changes in the 

nature of employment and job search in the economy. Thus, while the recent unemployment rate 
Unemployment Rate, Page 4

of less than 4 percent is not sustainable in the long range, it does suggest somewhat lower 

measured unemployment rates in the future. For the 2020 Trustees Report, the long-term average 

unemployment rate is assumed to be lower than in recent reports. However, as noted above, the 

projections of employment have been quite accurate, suggesting labor force participation rates 

will be somewhat lower than in past projections, resulting in essentially no change in projected 

levels of employment. 

A significant factor affecting future employment measures is the aging of the baby boom

generation. As the baby boomers age and are replaced at working ages by the lower-birth-rate 

generations that followed, the working-age population is expected to grow more slowly, 

particularly in relation to the size of the total population. This demographic shift is expected to

increase the demand for older workers. Meanwhile, the supply of potential older workers is 

expected to increase, as a significant portion of the baby boomers is expected to remain in the 

labor force, in many cases, out of necessity (as their life expectancies increase). Even with 

increases in labor supply from older workers, it is likely that the increasing aged dependency 

ratio will continue to exert downward pressure on the age-sex-adjusted unemployment rate.

The Trustees believe that there are good reasons to assume that the future age-sex-adjusted 

unemployment rates will average somewhat lower than they did over the last five complete 

economic cycles. Therefore, the assumed ultimate average unemployment rate is 5.0 percent 

(age-sex adjusted to the 2011 labor force) for alternative II. This rate is 0.5 percentage point 

lower than assumed in the 2019 report.

4.4 Projections from Other Sources

IHS Markit (formerly Global Insight, Inc.) provides projections through 2049 in its latest 

long-run trend forecast (see The 30-Year Focus, Third Quarter, August 2019). IHS Markit

projects the civilian unemployment rate will average 4.4 percent over the 20-year period 2030 

through 2049, but will be gradually rising and reaching 4.7 percent in 2047 through 2049. The 

Moody’s Analytics’ September 2019 forecast shows a civilian unemployment rate of 4.3 percent 

in 2029 and 4.6 percent in 2049.

The Office of Management and Budget (OMB) Mid-Session Review of the 2020 Fiscal Year 

Budget includes projections through 2029. OMB projects an aggregate civilian unemployment 

rate of 4.2 percent for 2025 and later. The Congressional Budget Office (CBO) report, 2019

Long-Term Budget Outlook (published in June 2019), includes projections through 2049. CBO 

projects an aggregate civilian unemployment rate of 4.7 percent for 2029 and 4.4 percent for 

2049. The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended assuming an ultimate aggregate civilian age-sex-adjusted unemployment rate of 

4.8 percent for alternative II. The prior technical panel, which met in 2015, recommended no 

changes to the ultimate age-sex-adjusted unemployment rate of 5.5 percent, assumed in the 2015 

Trustees Report, alternative II.
Unemployment Rate, 

Page 5 Table 4.3: Total and Age-Sex Adjusted Civilian Unemployment Rates over Selected Intervals (%)

Year 1 5 10 15 20 25 30 35 40 45 50 1 5 10 15 20 25 30 35 40 45 50

1961 6.7 6.3

1962 5.5 5.2

1963 5.6 5.2

1964 5.2 4.7

1965 4.5 5.5 4.0 5.1

1966 3.8 4.9 3.3 4.5

1967 3.8 4.6 3.3 4.1

1968 3.5 4.2 3.0 3.6

1969 3.5 3.8 2.9 3.3

1970 5.0 3.9 4.7 4.2 3.3 4.2

1971 6.0 4.4 4.6 5.1 3.7 4.1

1972 5.6 4.7 4.7 4.7 4.0 4.0

1973 4.9 5.0 4.6 3.9 4.2 3.9

1974 5.6 5.4 4.6 4.5 4.5 3.9

1975 8.5 6.1 5.0 5.2 7.2 5.1 4.2 4.5

1976 7.7 6.5 5.4 5.2 6.4 5.3 4.5 4.5

1977 7.0 6.7 5.7 5.3 5.8 5.6 4.8 4.5

1978 6.1 7.0 6.0 5.4 4.9 5.8 5.0 4.5

1979 5.8 7.0 6.2 5.4 4.8 5.8 5.2 4.5

1980 7.2 6.8 6.4 5.6 5.6 5.9 5.6 5.3 4.7 4.8

1981 7.6 6.7 6.6 5.9 5.6 6.3 5.5 5.4 4.9 4.8

1982 9.7 7.3 7.0 6.2 5.8 8.3 6.0 5.8 5.2 4.9

1983 9.6 8.0 7.5 6.6 6.0 8.3 6.7 6.2 5.6 5.1

1984 7.5 8.3 7.7 6.9 6.1 6.6 7.1 6.5 5.8 5.2

1985 7.2 8.3 7.5 7.1 6.3 6.1 6.3 7.2 6.4 5.9 5.3 5.2

1986 7.0 8.2 7.5 7.1 6.4 6.1 6.1 7.1 6.3 6.0 5.4 5.2

1987 6.2 7.5 7.4 7.2 6.6 6.2 5.4 6.6 6.3 6.1 5.5 5.2

1988 5.5 6.7 7.3 7.2 6.7 6.2 4.9 5.9 6.3 6.1 5.6 5.2

1989 5.3 6.2 7.3 7.2 6.7 6.2 4.7 5.5 6.3 6.1 5.7 5.2

1990 5.6 5.9 7.1 7.0 6.8 6.2 6.1 5.0 5.2 6.2 6.0 5.8 5.3 5.2

1991 6.8 5.9 7.0 6.9 6.8 6.3 6.1 6.2 5.3 6.2 6.0 5.8 5.4 5.2

1992 7.5 6.1 6.8 7.0 6.9 6.5 6.2 6.9 5.6 6.1 6.0 5.9 5.5 5.3

1993 6.9 6.4 6.6 7.0 7.0 6.6 6.2 6.4 5.9 5.9 6.1 6.1 5.7 5.3

1994 6.1 6.6 6.4 7.0 7.0 6.7 6.2 5.7 6.1 5.8 6.2 6.1 5.8 5.4

1995 5.6 6.6 6.3 6.9 6.9 6.7 6.3 6.2 5.2 6.1 5.7 6.2 6.0 5.8 5.4 5.4

1996 5.4 6.3 6.1 6.8 6.8 6.7 6.3 6.1 5.0 5.8 5.5 6.1 5.9 5.8 5.5 5.3

1997 4.9 5.8 6.0 6.5 6.7 6.7 6.4 6.1 4.6 5.4 5.5 5.8 5.9 5.8 5.5 5.3

1998 4.5 5.3 5.9 6.1 6.6 6.7 6.4 6.1 4.2 4.9 5.4 5.5 5.8 5.8 5.6 5.3

1999 4.2 4.9 5.8 5.9 6.5 6.6 6.4 6.0 3.9 4.6 5.3 5.4 5.8 5.8 5.6 5.3

2000 4.0 4.6 5.6 5.7 6.4 6.4 6.4 6.0 6.0 3.7 4.3 5.2 5.2 5.7 5.7 5.6 5.3 5.2

2001 4.8 4.5 5.4 5.6 6.2 6.3 6.3 6.1 5.9 4.5 4.2 5.0 5.1 5.6 5.6 5.5 5.3 5.2

2002 5.8 4.6 5.2 5.5 6.0 6.3 6.3 6.1 5.9 5.5 4.4 4.9 5.1 5.5 5.6 5.6 5.3 5.2

2003 6.0 4.9 5.1 5.6 5.8 6.3 6.4 6.2 5.9 5.8 4.7 4.8 5.2 5.3 5.6 5.6 5.4 5.2

2004 5.5 5.2 5.1 5.6 5.7 6.3 6.4 6.2 5.9 5.3 5.0 4.8 5.2 5.3 5.6 5.7 5.5 5.2

2005 5.1 5.4 5.0 5.5 5.6 6.2 6.3 6.2 6.0 5.9 4.9 5.2 4.7 5.2 5.2 5.6 5.6 5.5 5.2 5.2

2006 4.6 5.4 4.9 5.4 5.5 6.1 6.2 6.2 6.0 5.9 4.5 5.2 4.7 5.1 5.1 5.5 5.5 5.5 5.3 5.2

2007 4.6 5.2 4.9 5.2 5.4 5.8 6.1 6.2 6.0 5.8 4.5 5.0 4.7 4.9 5.1 5.4 5.5 5.5 5.3 5.2

2008 5.8 5.1 5.0 5.1 5.5 5.7 6.1 6.2 6.1 5.8 5.7 5.0 4.8 4.9 5.1 5.3 5.5 5.5 5.4 5.2

2009 9.3 5.9 5.5 5.3 5.7 5.8 6.2 6.3 6.2 5.9 9.2 5.8 5.4 5.1 5.3 5.4 5.7 5.7 5.5 5.3

2010 9.6 6.8 6.1 5.6 5.9 5.9 6.3 6.3 6.3 6.0 6.0 9.6 6.7 6.0 5.4 5.6 5.5 5.8 5.7 5.7 5.4 5.4

2011 8.9 7.7 6.5 5.8 6.0 5.9 6.3 6.4 6.4 6.2 6.0 8.9 7.6 6.4 5.7 5.7 5.6 5.9 5.8 5.8 5.5 5.4

2012 8.1 8.3 6.8 6.1 6.0 6.0 6.3 6.4 6.5 6.3 6.1 8.1 8.3 6.7 5.9 5.8 5.7 5.9 5.9 5.8 5.6 5.5

2013 7.4 8.7 6.9 6.2 6.0 6.1 6.2 6.4 6.5 6.3 6.1 7.4 8.6 6.8 6.1 5.8 5.8 5.8 6.0 5.9 5.7 5.5

2014 6.2 8.0 7.0 6.4 6.0 6.1 6.1 6.5 6.5 6.4 6.1 6.2 8.0 6.9 6.3 5.8 5.9 5.8 6.0 6.0 5.8 5.6

2015 5.3 7.2 7.0 6.5 6.0 6.1 6.1 6.4 6.4 6.4 6.2 5.3 7.2 6.9 6.4 5.8 5.9 5.8 6.0 5.9 5.8 5.6

2016 4.9 6.3 7.0 6.5 6.0 6.0 6.0 6.3 6.4 6.4 6.2 4.9 6.4 7.0 6.4 5.8 5.8 5.7 5.9 5.9 5.8 5.6

2017 4.3 5.6 7.0 6.4 5.9 5.9 5.9 6.2 6.3 6.4 6.2 4.4 5.6 7.0 6.3 5.8 5.7 5.7 5.8 5.9 5.8 5.6

2018 3.9 4.9 6.8 6.2 5.9 5.8 5.9 6.0 6.3 6.3 6.2 3.9 4.9 6.8 6.2 5.8 5.6 5.7 5.7 5.8 5.8 5.7

Total Rate Age-Sex Adjusted Rate

Annual Average over the Following Number of Years Annual Average over the Following Number of Years
Annual Trust Fund Real Interest Rate, Page 1

5. ANNUAL TRUST FUND REAL INTEREST RATE

THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

TABLE OF CONTENTS PAGE

5 ANNUAL TRUST FUND REAL INTEREST RATE......................................................... 2

5.1 SUMMARY ............................................................................................................................................................. 2

5.2 PAST EXPERIENCE................................................................................................................................................. 2

5.3 FUTURE EXPECTATIONS ....................................................................................................................................... 4

5.4 PROJECTIONS FROM OTHER SOURCES ................................................................................................................. 5

TABLE OF TABLES PAGE

TABLE 5.1: ASSUMED ULTIMATE REAL INTEREST RATES .................................................................................................. 2

TABLE 5.2: AVERAGE ANNUAL REAL INTEREST RATE (CALCULATED USING THE ADJUSTED-CPIW) ............................. 3

TABLE 5.3: REAL INTEREST RATES FOR OASDI TRUST FUND NEW ISSUES AND THE COMPOUND AVERAGE REAL 

YIELD OVER SELECTED INTERVALS ............................................................................................................................. 6
Annual Trust Fund Real Interest Rate, Page 2

5 Annual Trust Fund Real Interest Rate

5.1 Summary

For the 2020 Trustees Report, the assumed ultimate real interest rates (effective annual real 

yields on special public debt obligations issuable to the trust funds by the U.S. Treasury) are 2.8

percent, 2.3 percent, and 1.8 percent for alternatives I, II, and III, respectively (Table 5.1). These 

assumed rates are 0.2 percentage point lower than the rates used for the 2019 Trustees Report.

Table 5.1: Assumed Ultimate Real Interest Rates

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2019 Trustees Report

I II III I II III I II III

Real Interest Rate 2.8 2.3 1.8 3.0 2.5 2.0 -0.2 -0.2 -0.2

Since October 1960, interest rates on special public debt obligations issuable to the trust funds 

each month have been set equal to the average market yield on all marketable fixed-rate federal 

obligations that are not callable and do not mature within the next 4 years. As such, the rate on 

new issues to the trust funds represents a fair market return for longer-term, highly liquid, 

default-risk-free obligations. The real interest rate (real effective annual yield) on these 

obligations can be computed either as an expected yield (i.e., nominal effective annual yield less 

expected future inflation rate) or as the actual realized yield over some period after issue (i.e., 

nominal effective annual yield less the actual increase in price levels after issue). For the purpose 

of this analysis, actual realized yields over the year after issue will be examined for obligations 

issuable each year. Real interest rates over periods of two or more years are computed as the 

average annual yield of an investment at the beginning of the period that is reinvested annually at 

the new issue rate.

5.2 Past Experience

Tables 5.2 and 5.3 show the average annual real interest rates over various decades and 

economic cycles, using an adjusted CPI-W that reflects BLS improvements to the index.

51 (See 

Section 2.7 Appendix.) 

The average annual real interest rate on trust fund assets over the last five complete economic 

cycles was 3.30 percent (computed as the average annual return for investments in 1969 that

were reinvested annually at the new issue rates for years 1969 through 2007). Annual real 

interest rates for individual years within this period varied substantially from this average of 3.30

percent. Even the average rates of 2.01, -0.12, 5.38, 4.34, and 1.95 percent for each economic 

cycle beginning with the 1969-1973 cycle, respectively, varied substantially from one another. 

 51 Peaks in economic cycles roughly follow the NBER cycle dating, except for short recoveries such as 

1980-1981, which are not counted as separate cycles.
Annual Trust Fund Real Interest Rate, Page 3

The large differences among these periods indicate substantially different conditions across these 

cycles.

Table 5.2: Average Annual Real Interest Rate (calculated using the adjusted-CPI-W)

Period

Average Annual Real Interest Rate 

(percent)

Historical:

 By Decade

 1978-1988 4.95

 1988-1998 4.68

 1998-2008 2.18

 2008-2018 0.82

 By Complete Economic Cycle (Peak-to-Peak)

 Individual Cycle

 1969-1973 2.01

 1973-1979 -0.12

 1979-1990 5.38

 1990-2001 4.34

 2001-2007 1.95

 Last Five Cycles

 1969-2007 3.30

 Last Four Cycles

 1973-2007 3.45

 Last Three Cycles

 1979-2007 4.23

 Last Two Cycles

 1990-2007 3.49

Alternative

Ultimate Assumptions I II III

2019 Trustees Report 3.0 2.5 2.0

2020 Trustees Report 2.8 2.3 1.8

After experiencing negative real yields in the investments in U.S. Treasury securities from 1974 

through 1980, caused largely by higher-than-expected price inflation, investors demanded higher 

interest rates to protect their investments. Sustained high real interest rates in the years after 1981 

resulted from the following factors: constrained money supply growth, increased borrowing by 

businesses, reduced savings rates in the U.S. economy, deregulation of banks and other financial 

institutions, and lower than expected inflation in the beginning of that period.

As the rate of inflation declined from the highs of the early 1980s and remained under control, 

the real interest rate slowly followed suit, declining to 2.34 percent in 2000. In October 2001, the 

federal government, in response to its favorable budget situation, suspended the sale of 30-year 

Treasury securities (leaving the 10-year notes as the longest duration being issued). Since then, 

the federal budget has fallen back into deficit and, beginning in February 2006, the Treasury 

re-introduced regular semi-annual auctions of the 30-year nominal Treasury bond. Neither the 

budget deficits nor the federal funds rate hikes by the Federal Reserve between 2004 and 2006 
Annual Trust Fund Real Interest Rate, Page 4

resulted in a spike in real interest rates, due in part to foreigners’ increased willingness to 

accumulate Treasury securities. Instead, the real interest rate continued to trend downward, 

reaching 0.63 percent in 2008. Since 2008, the annual real interest rate has averaged only 0.82

percent, largely due to slow economic growth, unconventional monetary policies such as 

quantitative easing, a global savings glut, as well as a strong demand for safe assets in order to 

satisfy regulatory requirements in the financial sector. 

5.3 Future Expectations

Real interest rates have been unusually low by historical standards during the 2001-2018 period. 

Real interest rates were unusually low during the 2001-2007 period as rates were affected by 

large purchases of safe assets (including Treasury securities) by foreign central banks as their 

foreign exchange reserves accumulated. The low interest rates helped fuel the housing bubble, 

and when the bubble burst in 2007, investors sought a safe haven in Treasury securities. The 

sluggish economic growth in the United States together with reduced international economic 

growth contributed to the low real interest rates in the post-2009 period. In addition, during most 

of this period, foreign central banks continued to accumulate foreign exchange reserves, which 

also contributed to the low real interest rates.

Nominal interest rates have also fallen dramatically in other parts of the developed world, 

including Germany and the Netherlands, where government bond yields fell below zero for 

maturities up to 30 years. These low interest rates around the world reflect investors’ fears of a 

major global economic slowdown and possibly even a “Japanification” of the world economy, 

where economic growth and inflation would be anemic for a decade, if not longer. If such 

economic conditions occur, central banks would likely once again resort to unconventional 

monetary policies such as quantitative easing. However, most economists have not revised 

significantly downward their projections of economic growth over the next decade in light of the 

recent dramatic decline in longer-term nominal interest rates.

Over the longer term, several factors are expected to result in a return to higher yields on 

Treasury securities. First, the return on capital has not fallen and risk aversion is expected to 

return to more normal levels after fears of a global economic slowdown subside and the domestic 

and global economies gradually return to sustainable growth rates. Second, federal deficits and 

debt are expected to rise in the future. For example, CBO projects that annual federal deficits

will exceed $1 trillion again in 2022 and thereafter. They also project the amount of publicly 

held debt will rise from 78 percent of GDP at the end of 2019 to 144 percent of GDP by 2049.

Even assuming that deficits will not be this large, the increasing level of debt will likely

eventually lead to increases in the yields on Treasury securities, and such increases could 

potentially happen suddenly. Third, with the passage of the financial deregulation bill (Economic 

Growth, Regulatory Relief and Consumer Protection Act) in 2018, banks have less of a need to 

hold Treasury securities in order to satisfy liquidity requirements as they may hold investmentgrade municipal bonds instead and enjoy the tax advantages of such securities. 

When determining the assumed ultimate real interest rate for the long-range period, OCACT 

believes it is important to take into consideration the real interest rates experienced over long 

historical periods as well as the degree to which the relatively low real interest rates experienced 
Annual Trust Fund Real Interest Rate, Page 5

in the recent past are indicative of changes that will continue well into the long-range period. 

Over the last five economic cycles (1969-2007), the real interest rate averaged 3.30 percent. 

Even if only the post-1987 period (through 2018) is considered, the real interest rate averaged 

2.62 percent. However, over the 2001-2007 cycle, real interest rates averaged only 1.96 percent. 

In addition, real interest rates for trust fund new issues in the 2007-2018 period averaged only

0.80 percent. In light of the recent low real interest rate experience and the possibility that the 

world has changed in structural ways that will lead to interest rates remaining lower than in the 

past, the ultimate real interest rate assumption for the 2020 Trustees Report was lowered by 0.2 

percentage point to 2.8 percent, 2.3 percent, and 1.8 percent for alternatives I, II, and III, 

respectively. 

5.4 Projections from Other Sources

IHS Markit (formerly IHS Global Insight, Inc.) includes projections through 2049 in its August 

2019 30-Year Focus Trend Forecast. They project real yields on 10-year U.S. Treasury notes to 

average 1.0 percent from 2029 to 2049. Moody’s Analytics’ September 2019 forecast projects 

real yields on 10-year U.S. Treasury notes to average about 2.0 percent for the 20-year period 

2030 through 2049. 

The Office of Management and Budget (OMB) Fiscal Year 2020 Budget projects the real yield 

on the trust funds’ special-issue securities to reach 1.5 percent by 2022 and remain at that level 

thereafter. The Congressional Budget Office (CBO) 2019 Long-Term Budget Outlook (published 

in June 2019) includes projections through 2049. CBO projects real yields on 10-year Treasury 

notes of 2.2 percent in 2049 and later. The Social Security Advisory Board’s 2019 Technical 

Panel on Assumptions and Methods recommended lowering the alternative II real interest rate 

assumption to 2.3 percent, a level to be reached in 25 years. The prior technical panel, which met 

in 2015, recommended lowering the alternative II real interest rate assumption to 2.5 percent.
Annual Trust Fund Real Interest Rate, Page 6

Table 5.3: Real Interest Rates for OASDI Trust Fund New Issues and the Compound Average Real Yield over 

Selected Intervals

Average Annual Percentage Change over the Prior Period of the Following Length (in years):

To RYINDEX 1 5 10 15 20 25 30 35 40 45 50

1961 22.40

1962 23.08 3.03

1963 23.71 2.74

1964 24.38 2.81

1965 25.05 2.74

1966 25.44 1.56 2.58

1967 25.97 2.08 2.39

1968 26.36 1.49 2.14

1969 26.69 1.27 1.83

1970 27.23 2.00 1.68

1971 28.09 3.18 2.00 2.29

1972 28.89 2.85 2.16 2.27

1973 28.90 0.04 1.86 2.00

1974 28.08 -2.84 1.02 1.42

1975 28.01 -0.25 0.57 1.12

1976 28.55 1.92 0.32 1.16 1.63

1977 28.86 1.08 -0.02 1.06 1.50

1978 29.01 0.54 0.08 0.97 1.35

1979 28.70 -1.10 0.43 0.73 1.09

1980 28.26 -1.53 0.17 0.37 0.81

1981 28.71 1.61 0.11 0.22 0.81 1.25

1982 30.85 7.45 1.34 0.66 1.15 1.46

1983 33.54 8.73 2.94 1.50 1.62 1.75

1984 35.87 6.92 4.56 2.48 1.99 1.95

1985 39.16 9.18 6.74 3.41 2.45 2.26

1986 42.81 9.32 8.32 4.13 2.85 2.64 2.62

1987 44.84 4.74 7.76 4.50 2.97 2.77 2.69

1988 47.02 4.87 6.99 4.95 3.30 2.94 2.78

1989 49.15 4.54 6.51 5.53 3.80 3.10 2.84

1990 51.08 3.91 5.46 6.10 4.09 3.20 2.89

1991 53.68 5.09 4.63 6.46 4.30 3.29 3.03 2.96

1992 56.68 5.60 4.80 6.27 4.60 3.43 3.17 3.04

1993 59.38 4.75 4.78 5.88 4.89 3.67 3.30 3.11

1994 61.80 4.08 4.69 5.59 5.25 4.02 3.42 3.15

1995 64.64 4.60 4.82 5.14 5.67 4.27 3.52 3.21

1996 67.42 4.30 4.67 4.65 5.86 4.39 3.56 3.30 3.20

1997 70.44 4.47 4.44 4.62 5.66 4.56 3.63 3.38 3.24

1998 74.29 5.47 4.58 4.68 5.44 4.81 3.85 3.51 3.32

1999 76.93 3.56 4.48 4.58 5.22 5.05 4.11 3.59 3.34

2000 78.74 2.34 4.02 4.42 4.77 5.26 4.22 3.60 3.33

2001 81.54 3.56 3.87 4.27 4.39 5.36 4.29 3.62 3.38 3.28

2002 84.66 3.83 3.75 4.09 4.33 5.18 4.40 3.65 3.43 3.30

2003 86.87 2.62 3.18 3.88 4.18 4.87 4.48 3.74 3.47 3.30

2004 88.14 1.46 2.76 3.61 3.97 4.60 4.59 3.89 3.47 3.27

2005 88.82 0.77 2.44 3.23 3.76 4.18 4.69 3.92 3.44 3.22

2006 89.84 1.15 1.96 2.91 3.49 3.78 4.67 3.90 3.38 3.20 3.13

2007 91.57 1.93 1.58 2.66 3.25 3.63 4.45 3.92 3.35 3.20 3.11

2008 92.15 0.63 1.19 2.18 2.97 3.42 4.12 3.93 3.37 3.18 3.06

2009 96.14 4.33 1.75 2.25 2.99 3.41 4.02 4.11 3.58 3.26 3.10

2010 96.95 0.84 1.77 2.10 2.74 3.26 3.69 4.19 3.61 3.23 3.05

2011 96.22 -0.75 1.38 1.67 2.40 2.96 3.29 4.11 3.53 3.13 3.00 2.96

2012 96.52 0.31 1.06 1.32 2.12 2.70 3.11 3.88 3.51 3.06 2.96 2.90

2013 96.56 0.05 0.94 1.06 1.76 2.46 2.92 3.59 3.50 3.06 2.93 2.85

2014 96.86 0.30 0.15 0.95 1.55 2.27 2.75 3.37 3.54 3.14 2.91 2.80

2015 99.48 2.71 0.52 1.14 1.57 2.18 2.70 3.16 3.66 3.22 2.92 2.80

2016 100.52 1.04 0.88 1.13 1.41 2.02 2.54 2.89 3.65 3.20 2.87 2.79

2017 100.22 -0.30 0.76 0.91 1.13 1.78 2.31 2.72 3.42 3.16 2.80 2.74

2018 100.00 -0.22 0.70 0.82 0.94 1.50 2.11 2.55 3.17 3.14 2.80 2.70

Note: The index for each year is the accumulated value in that year of an investment made in the prior year in the amount of the 

prior year's index, with interest paid at the average rate for special public debt obligations issuable to the OASI and DI Trust Funds 

during the prior year.
Ratio of OASDI Taxable Payroll to Covered Earnings, Page 1

6. RATIO OF OASDI TAXABLE PAYROLL TO COVERED EARNINGS

THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

TABLE OF CONTENTS PAGE

6 RATIO OF OASDI TAXABLE PAYROLL TO COVERED EARNINGS...................... 2

6.1 SUMMARY ............................................................................................................................................................. 2

6.2 PAST EXPERIENCE................................................................................................................................................. 2

6.3 FUTURE EXPECTATIONS ....................................................................................................................................... 3

6.4 PROJECTIONS FROM OTHER SOURCES ................................................................................................................. 4

TABLE OF TABLES PAGE

TABLE 6.1: ASSUMED TAXABLE EARNINGS RATIOS REACHED IN TENTH YEAR OF PROJECTION PERIOD ....................... 2

TABLE 6.2: OASDI TAXABLE RATIO, 1983 TO 2018 .......................................................................................................... 5

TABLE OF FIGURES PAGE

FIGURE 6.1: PERCENTAGE OF OASDI COVERED EARNINGS BELOW THE TAXABLE MAXIMUM: 1983 TO 2018.............. 3
Ratio of OASDI Taxable Payroll to Covered Earnings, Page 2

6 Ratio of OASDI Taxable Payroll to Covered Earnings

6.1 Summary

For the 2020 Trustees Report, the assumed ratios of OASDI effective taxable payroll to covered 

earnings (taxable ratio) for 2029 (the tenth year of the projection period), are 84.0 percent, 82.5 

percent, and 81.0 percent for alternatives I, II and III, respectively (Table 6.1). These assumed 

ratios for the tenth year of the projection period are the same as those used for the 2019 Trustees 

Report. The overall taxable earnings ratio varies slightly after 2029 due to changes in the taxable 

ratio for self-employment earnings. 

Table 6.1: Assumed Taxable Earnings Ratios Reached in Tenth Year of Projection Period

2020 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2020 Trustees Report Less 

2018 Trustees Report

I II III I II III I II III

Taxable Ratio (percent) 84.0 82.5 81.0 84.0 82.5 81.0 0.0 0.0 0.0

OASDI effective taxable payroll (or taxable payroll) is the effective amount of covered earnings 

subject to the full Social Security payroll tax rate (12.4 percent since 1990). Taxable wages for 

an employee are the total covered wages from all wage employment up to the taxable maximum 

(also known as the contribution and benefit base). Taxable wages for an employer are the sum of 

all covered wages paid to each employee up to the taxable maximum. Employees with multiple 

jobs whose total wages exceed the taxable maximum are eligible for a refund of excess employee 

taxes withheld; employers are not eligible for a refund on this basis. For self-employed workers 

with no taxable wages, taxable earnings are the amount of covered self-employment net earnings 

up the taxable maximum. For self-employed workers with taxable wages, covered selfemployment net earnings are taxable up to the excess (if any) of the taxable maximum over their 

taxable wages for the year. The taxable ratio is essentially the proportion of covered earnings that 

is at or below the taxable maximum.

6.2 Past Experience

Table 6.2 shows historical values for the taxable ratio from 1983 through 2018. The taxable ratio 

fell from over 89 percent in 1983 to 84.3 percent in 2001, resulting in an average annual rate of 

change in the taxable ratio of about -0.34 percent (see Figure 6.1). The decline was related to 

several factors that increased the concentration of earnings among the very high earners 

compared to all other earners. Some of the drop in the taxable ratio in the late 1980s was due to 

the Tax Reform Act of 1986, which lowered the top marginal income tax rate from 50 percent in 

1986 to 28 percent in 1988. The drop in the income tax rate influenced some high earners to shift 

some non-covered income to covered earnings, thereby lowering the taxable ratio. In the 1990s, 
Ratio of OASDI Taxable Payroll to Covered Earnings, Page 3

the growth in the use of stock options52 in the pay packages of the very high earners, combined 

with a rapid increase in stock prices, contributed to the drop in the taxable ratio. An 

unprecedented expansion of the financial sector in the 1980s and 1990s also contributed to the 

concentration of very high earnings. 

Between 2001 and 2018, the taxable ratio has varied with the business cycle, rising during 

economic downturns and falling during economic recoveries, and it changed at a much slower 

annual rate of -0.10 percent. It has remained largely at or above the low level of 82.6 percent 

experienced for 2000, roughly stabilizing since 2012.

Figure 6.1: Percentage of OASDI Covered Earnings Below the Taxable Maximum: 1983 to 2018 

6.3 Future Expectations

In spite of nine years of economic expansion since 2009 and record stock prices as measured by 

the S&P 500 index, which have been positively correlated with the share of income reported by 

very high earners, the taxable ratio for 2018 (82.8 percent) has not fallen below the lows reached 

 52 Nonqualified stock options are subject to the OASDI tax. For more information on the tax treatment of 

stock options, see publication by Grant Thornton’s G. Edgar Adkins, Jr., entitled “Taxation of Stock Options and 

Restricted Stock: the Basics and Beyond” (https://www.grantthornton.com/~/media/content-pagefiles/tax/pdfs/white-papers-survey-reports-articles/2013/Taxation-of-stock-options-Adkins.ashx).
Ratio of OASDI Taxable Payroll to Covered Earnings, Page 4

in previous economic cycle peaks. In fact, the average annual rate of decline in the taxable ratio 

from 2001 to 2018 was lower by about two-thirds than the rate for the period 1983 to 2001, and 

the ratio has been stable since 2012. OCACT expects the taxable ratio will remain essentially 

stable, declining slightly to 82.5 percent by the end of 2029 for the alternative II assumption.

Thereafter, the wage taxable ratio is assumed to remain constant. For the self-employed, the 

taxable ratio is expected to drift slightly lower, because the taxable maximum is driven by the 

growth in the average wage, which is projected to grow more slowly than average selfemployment earnings.As the share of self-employment earnings above the taxable maximum 

grows over time, the overall taxable earnings ratio will drift downward.

6.4 Projections from Other Sources

The Congressional Budget Office also makes projections of the taxable earnings ratio. In The 

2019 Long-Term Budget Outlook published in June 2019, CBO projects the taxable ratio to fall 

to 81.1 percent by 2029 and to fall to 79.3 percent by 2049. One year earlier, in The 2018 LongTerm Budget Outlook published in June 2018, CBO projected the taxable ratio to fall to 81

percent by 2028 and to fall below 80 percent by 2048. Three years earlier, in The 2016 LongTerm Budget Outlook, CBO projected the taxable ratio to fall to about 77.4 percent in 2027 and 

remain in the 77.4 to 77.5 percent range thereafter (through 2090).

The Social Security Advisory Board’s 2019 Technical Panel on Assumptions and Methods 

recommended lowering the alternative II long-range taxable ratio from 82.5 percent to about 

80.8 percent, to be reached by the 25th year of the projection period. The 2015 Technical Panel 

recommended long-range taxable ratios of 84.0 percent, 82.2 percent and 79.0 percent for 

alternatives I, II, and III, respectively.
Ratio of OASDI Taxable Payroll to Covered Earnings, Page 5

Table 6.2: OASDI Taxable Ratio, 1983 to 2018

Year OASDI Taxable Ratio (percentage)

1983 89.6

1984 88.7

1985 88.2

1986 88.0

1987 87.0

1988 85.5

1989 86.4

1990 86.8

1991 87.2

1992 86.3

1993 86.8

1994 86.8

1995 85.6

1996 85.2

1997 84.6

1998 83.9

1999 83.6

2000 82.6

2001 84.3

2002 85.7

2003 85.6

2004 84.2

2005 83.5

2006 83.1

2007 82.4

2008 83.4

2009 85.2

2010 84.0

2011 83.3

2012 82.5

2013 83.3

2014 82.8

2015 82.6

2016 82.8

2017 83.1

2018 82.8