Labor Productivity

Past Experience and Prospects for the Future

National Bureau of Economic Research

Summer Institute 2022

Economics of Social Security Workshop

STEVE GOSS, CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION

JULY 27, 2022
What Factors Will Matter for the Future? 

How Will They Differ from the Past?

• Changing age distribution of the adult population, and increased educational 

attainment

◦ Implications for domestic supply of workers and demand for goods and services

• Post-industrial? Or increased innovation and automation in production in the US? 

◦ Physical infrastructure replacement and improvement

◦ Technology—will the US lead in development and production of alternative energy, given 

“climate”?

◦ Biotechnology: genetic-based medicine, genetic engineering, biology of aging

• Services (particularly medical) vs. goods production—aging population

◦ Past innovation in farming, for example

◦ Future of health care—robotics?

2
What Factors Will Matter for the Future? 

How Will They Differ from the Past? (cont.)

• Measurement of real growth

◦ Hedonics, quality adjustment, value added from innovation credited to innovator vs. 

producer?

◦ For example, smart phones that have taken over many functions

• Bottom line—how will this translate into real earnings for workers?

◦ Critical for “standard of living”, but more specifically wage growth vs. price increase for Social 

Security

3
Ratio of 

Employment to 

Population

age adjusted

Recovered more strongly 

from the brief but steep 

recession than did LFPRs. 

Projected to exceed the level 

seen at the peak of the last 

economic cycle by 2022 for 

women and by 2023 for 

men.

4

0.45

0.50

0.55

0.60

0.65

0.70

0.75

1981 1991 2001 2011 2021 2031 2041 2051 2061 2071 2081 2091

Ratio of Employment to Population 

(16 and older, age-sex-adjusted to 2011 population)

2021 TR

2022 TR

Age-sex-adjusted

Men (age-adjusted)

Women (age-adjusted)

Historical Projected
Changing Age 

Distribution Over 

Last 20 and Next 

20 Years Mainly 

Due to Macro 

Aging

Permanent level shifts.

5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Percent of Population at Ages 25+

Age Distribution of the Population Age 25+, 1940 to 2100 (2022 TR)

25-44

45-64

65-84

85+

Boomers 

become 

25-44

Boomers 

become 

45-64

Boomers 

become 

65-84
Employment Over Age 65...

6

Declined briefly with the 2020 recession, but is projected to continue rising. How much of this is 

from changing the NRA and earnings test? Is the best retirement approach a job (Paul Samuelson)?

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Male Ratio of Civilian Employment to Non-Institutionalized Population

25-54

55-59

60-64

65-69

70 and older

Start of 2008 

recession

Start of 2020 

recession

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Female Ratio of Civilian Employment to Non-Institutionalized Population

25-54

55-59

60-64

65-69

70 and older

Start of 2008 

recession

Start of 2020 

recession
Changing Nature 

of Work: Trends in 

Employment by 

Occupation

Employment effects in all areas in 

2020; share for management and 

professional, highly paid, 

increased (BLS cpsaat09).

Will trends of 2010-19 return, and 

continue?

Will these shifts continue with 

technology, automation, and 

increasing education levels?

Might increases in infrastructure 

spending change these trends? 

Also, changes in how job-specific 

tasks are performed.

7
Ratio of Labor 

Compensation to 

GDP (Labor Share)

In the 2022 TR, the labor share of 

GDP increased to 63.3 percent in 

2020, 62.6 percent in 2021 and is 

projected to reach approximately 

63.0 percent by 2031. 

The labor share of GDP decreased in 

2021 because of the unusual nature 

of the COVID-induced recession and 

its aftermath. Aggregate GDP 

recovered rapidly, while wages 

remained suppressed, especially in 

sectors significantly impacted by the 

pandemic.

In the long-range, the labor share of 

GDP is projected to remain 

approximately level.

8

0.60

0.61

0.62

0.63

0.64

0.65

0.66

0.67

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Labor Share of GDP

2021 TR

2022 TR

Average 1950-2021 0.629

Historical Projected
Implications of 

Cycles for 

Productivity and 

Potential GDP

Permanent losses in level of 

GDP from recessions? Or 

were we just projecting too 

much real growth? 

Major correction from the 

2007-09 recession.

How about from the recent 

2020 recession?

9

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031

Potential GDP

(billions of 2012 dollars, intermediate assumptions)

2010 TR

2020 TR

2021 TR

2022 TR

Historical Projected
Ratio of 

Employment to 

Population vs. 

Quits Rate

Ratio of employment to 

population has recovered 

rapidly since the Trustees 

Report projections were 

developed.

Quits rate indicates a “great 

job churn”, and not a “great 

resignation”.

10

0

0.5

1

1.5

2

2.5

3

3.5

0.5

0.55

0.6

0.65

0.7

2000Q12000Q32001Q12001Q32002Q12002Q32003Q12003Q32004Q12004Q32005Q12005Q32006Q12006Q32007Q12007Q32008Q12008Q32009Q12009Q32010Q12010Q32011Q12011Q32012Q12012Q32013Q12013Q32014Q12014Q32015Q12015Q32016Q12016Q32017Q12017Q32018Q12018Q32019Q12019Q32020Q12020Q32021Q12021Q32022Q1

Ratio of U.S. Employment to Population versus Quits Rate

(16 and older, age-sex-adjusted)

Quits Rate

E/Pop 
Labor Productivity 

Growth Rate

total economy

The annual growth in labor 

productivity in 2020 was 2.63 

percent, as employment declined 

more than GDP during the 2020 

recession. 

As employment recovers, especially 

in the labor-intensive service 

industries, productivity growth is 

expected to slow to 0.98 percent in 

2021 and 0.69 percent in 2022, per 

the 2022 TR intermediate 

assumptions.

Projected slowdown in productivity 

growth in the near-term is assumed 

to be temporary.

Ultimate annual change in labor 

productivity growth is unchanged 

from the 2021 TR at 1.63 percent.

11

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Percent

Labor Productivity Growth Rate

(intermediate assumptions)

Average 1955-2020 1.84%

20-year 

average

Historical Projected

2021 TR

2022 TR
I

Historical and 

Ultimate Assumed 

Annual Growth in 

Productivity by 

Component

Private Forecasters year 10 to 30

Nonfarm Business Sector :

IHS Markit August 2021 long run trend forecast for period from 

2031 to 2051: 1.93 percent. (Nov 2019 forecast 1.56 percent) 

Moody’s Analytics October 

2021 forecast for period from 

2031 to 2051: 1.90 percent. (Nov 2019 forecast 1.62 percent)

12

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

Long-Term Historical Averages:a

 1954-2019 (65 years) 1.83 2.04 4.14 3.70 0.52 0.24

 1969-2019 (50 years) 1.58 1.86 3.77 3.21 0.28 0.13

 1969-1994 (25 years) 1.54 1.71 4.76 4.23 0.46 0.30

 1994-2019 (25 years) 1.62 2.02 2.78 2.20 0.11 -0.04

By Economic Cycle:

 1969-1973 2.66 2.99 4.35 7.03 1.32 0.43

 1973-1979 1.07 1.25 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 2.26 3.98 6.26 -0.25 -0.26

 2001-2007 2.18 2.62 3.90 0.71 0.41 0.23

 2007-2019 1.08 1.40 1.22 0.56 0.30 0.12

 2019-2020 (incomplete cycle) 2.59 2.36 20.96 31.74 0.83 2.96

By Multiple Complete Cycles:

 Last Six: 1969-2019 (50 years) 1.58 1.86 3.77 3.21 0.28 0.13

 Last Five: 1973-2019 (46 years) 1.49 1.77 3.72 2.89 0.19 0.11

 Last Four: 1979-2019 (40 years) 1.55 1.84 3.69 2.86 0.17 0.19

 Last Three: 1990-2019 (29 years) 1.60 1.98 2.82 2.72 0.11 0.00

 Last Two: 2001-2019 (18 years) 1.45 1.80 2.11 0.61 0.34 0.15

2022 Trustees Report Ultimate Assumption 1.63 2.00 2.00 1.63 0.00 0.00
Future Course

• Will ultimate growth in total economy labor productivity average 1.63 percent 

per the Trustees’ intermediate assumptions? 

• With ultimate growth in NFB productivity at around 2.00 percent?

13