_ 

For release 10:00 am (ET) March 24, 2022 USDL-22-0506

Technical information: (202) 691-5606 • Productivity@bls.gov • www.bls.gov/mfp

Media contact: (202) 691-5902 • PressOffice@bls.gov

TOTAL FACTOR PRODUCTIVITY – 2021 

Private nonfarm business sector total factor productivity (TFP) increased 3.2 percent in 2021, the U.S. 

Bureau of Labor Statistics reported today. (See chart 1, table A.) The 2021 increase in TFP reflects a 7.4-

percent increase in output and a 4.1-percent increase in the combined inputs of capital and labor. Capital 

input grew by 2.0 percent and labor input–which is the combined effect of hours worked and labor 

composition–increased by 5.3 percent. 

Chart 1. Total factor productivity, combined inputs, and output in the private nonfarm business sector, 2007-

21 

Annual percent change

Total factor productivity (TFP) is calculated by dividing an index of real output by an index of combined 

inputs of labor and capital. Total factor productivity annual measures differ from BLS quarterly labor 

productivity (output per hour worked) measures because the former also includes the influences of capital 

input and shifts in the composition of workers. Measures for the most recent year of this release are 

preliminary estimates. See the Technical Notes for additional information.

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Total factor productivity Combined inputs Output

Terminology Change for Multifactor Productivity Data

The BLS Productivity program replaced the term multifactor productivity (MFP) with total factor productivity

(TFP) in November 2021. This was a change in terminology only and will not affect the data or methodology used

in computing the measures. The use of the term “total factor productivity” will improve the visibility and 

accessibility of our data and was accompanied by changes to the BLS website and will be adopted in all future 

productivity news releases.
2

Private business sector total factor productivity also increased 3.2 percent in 2021, as output increased

7.2 percent and combined inputs increased 4.0 percent. (See table A.)

Total Factor Productivity Trends

The 3.2-percent growth in private nonfarm business TFP in 2021 was the largest growth since 1983 and 

resulted from strong output growth outpacing growth of combined inputs. The 7.4-percent growth of output 

in 2021 was the largest output growth since 1984, while the combined inputs growth of 4.1 percent was the 

largest growth for the series since 1997.

In 2021, both output and combined inputs were at higher levels than their pre-pandemic levels of 2019. The 

level of output is 2.7 percent higher than 2019, while the level of combined inputs is 1.6 percent higher. The 

quick recovery of these measures from the 2020 COVID-19 recession is in sharp contrast to the recovery 

seen in the previous 2007-09 Great Recession, when it took output 4 years to recover to the 2007 levels and 

5 years for combined inputs to recover.(See chart 2.)

Chart 2. Total factor productivity, output, and combined input indexes in the private nonfarm business sector, 

2007-21

Index 2012=100

While combined inputs have recovered from the effects of the pandemic, not all of the input components

have returned to pre-pandemic levels. Combined input growth is made up of growth in three components:

capital input, hours worked, and labor composition. Capital input growth has slowed from the pre-pandemic 

growth of 3.3 percent in 2019 to 2.0 percent in 2021. Hours worked grew 5.4 percent in 2021, the largest 

growth in the series since 1984, however hours worked levels remain 1.7 percent below the 2019 level. 

Labor composition experienced historic growth in 2020 (1.5 percent) but 2021 grew much more slowly (0.1 

percent) even below the average growth experienced over the past 20 years (0.4 percent). (See chart 3).

80

85

90

95

100

105

110

115

120

125

130

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Total factor productivity Output Combined inputs
3

Chart 3. Components of combined inputs: capital input, hours worked, and labor composition, 2007-21

Index 2012=100

Labor Productivity Trends

Labor productivity growth is the approximate sum of three components: total factor productivity growth, the 

contribution of capital intensity, and the contribution of shifts in the composition of labor. In 2021, private 

nonfarm business labor productivity increased 1.9 percent. (See chart 4 and table B.)

The contribution of capital intensity to labor productivity growth declined 1.3 percent in the private nonfarm 

business sector in 2021. This was the largest annual decline since the series began in 1948. Capital intensity 

is the ratio of capital input growth to labor hours growth. The 2021 decline is a result of choices toward 

hiring labor and working more hours rather than investing in more capital. The 2021 decrease in this 

measure was driven by the increase in hours worked of 5.4 percent relative to the slower capital input growth 

of 2.0 percent in 2021.

The contribution of labor composition to labor productivity for private nonfarm business had no growth in 

2021 due to minimal labor composition growth. This follows record growth in the contribution of labor 

composition in 2020 of 0.9 percent. (See chart 4.) Labor composition estimates the effect of shifts in the age, 

education, and gender composition of the workforce on hours worked. The deceleration in the labor 

composition growth from 1.5 percent in 2020 to 0.1 percent in 2021 is primarily due to lower paid workers 

reentering the labor market in 2021 following employment declines during the COVID-19 pandemic. (See 

table A).

90

95

100

105

110

115

120

125

130

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Capital input Hours worked Labor composition
4

Chart 4. Contributions to labor productivity growth, private nonfarm business sector, selected time periods

Average annual percent growth

Note: The sum of long-term rates of change of total factor productivity, contribution of capital intensity, and contribution 

of labor composition may differ from the long-term rate of change in labor productivity. 

Detailed Capital Input Trends

Capital input in the private nonfarm business sector increased at an average annual rate of 2.7 percent in 

2020, the latest year of available detailed capital data. The growth of capital input in 2020 was 0.6 

percentage point slower than the 3.3 percent growth in the previous year, the largest slowdown in capital 

growth since the Great Recession year of 2009, as the COVID-19 pandemic slowed production. (See table 

C.)

Chart 5 shows the contribution of asset types to capital input growth. As in all years, intellectual property 

products and equipment are the largest contributors to capital input growth. In the pandemic recession year 

of 2020, the 0.6-percentage pointslowdown in growth was primarily due to the equipment and inventories 

assets, as their contributions to capital input growth decelerated by 0.3 percentage point and 0.2 percentage 

point, respectively. The Great Recession years of 2008 and 2009 saw a similar trend, when capital input

growth also slowed significantly in the equipment and inventories assets, but at a much larger magnitude. In 

2009, the contribution of equipment assets slowed a full percentage point from 1.4 percentage points to 0.4 

percentage point, while the contribution of inventories was a drag on capital growth, declining 0.4

percentage point.

-0.4

0.5 0.6

-2.0

3.2

0.5

0.2 0.5

0.9

2.5

0.7

1.2 3.7

-1.3

2.6

1.4

2.2 2.5

1.9

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

2007-09 2007-19 2019-21 2020 2021

Total factor productivity Contribution of labor composition

Contribution of capital intensity Labor productivity
5

Chart 5. Asset type contributions to capital input growth in the private nonfarm business sector, 2007-20

Average annual percent change

Note: The sum of contributions of the rates of change of the asset types may differ from the rate of change in capital 

growth.

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Intellectual property products Equipment Structures

Inventories Other capital Capital growth
6

Technical Notes

Capital Input

Capital input is the services derived from the stock of physical assets and intellectual property assets. There 

are 90 asset types for fixed business equipment, structures, inventories, land, and intellectual property 

products. Data on investment for fixed assets are obtained from the Bureau of Economic Analysis (BEA). 

Data on inventories are estimated using information from BEA and the Internal Revenue Service (IRS) 

Corporation Income Returns. Data for land in the farm sector are obtained from the U.S. Department of 

Agriculture (USDA). Nonfarm industry detail for land is based on IRS book value data. Current-dollar 

value-added data, obtained from BEA, are used in estimating capital rental prices.

Additional detail on information processing equipment and intellectual property products are available in 

table C. Information processing equipment is composed of three broad classes of assets: computers and 

related equipment, communications equipment, and other information processing equipment. Computers 

and related equipment include mainframe computers, personal computers, printers, terminals, tape drives, 

storage devices, and integrated systems. Communications equipment is not further differentiated. Other 

information processing equipment includes medical equipment and related instruments, electromedical 

instruments, nonmedical instruments, photocopying and related equipment, and office and accounting 

machinery. Intellectual property products are composed of three broad classes of assets: software, research 

and development, and artistic originals. Software is comprised of pre-packaged and custom. Research and 

development is creative work undertaken to increase the stock of knowledge for the purpose of discovering 

or developing new products or improving existing ones. Research and Development also includes ownaccount R&D for software which had previously been classified in software. Artistic originals include 

theatrical movies, long-lived television programs, books, music, and other forms of entertainment. 

Structures include nonresidential structures and residential capital that are rented out by profit-making 

firms or persons.

Financial assets are excluded from capital input measures, as are owner-occupied residential structures. 

The aggregate capital input measures are obtained by Tornqvist aggregation of the capital stocks for each 

asset type within each of 61 NAICS industry groupings using estimated rental prices for each asset type. 

Each rental price reflects the nominal rate of return to all assets within the industry and rates of economic 

depreciation and revaluation for the specific asset; rental prices are adjusted for the effects of taxes. 

Current-dollar capital costs can be defined as each asset’s rental price multiplied by its constant-dollar 

stock, adjusting for capital composition effects. 

Capital input measures constructed for the most recent year are preliminary and are based on less detail than 

the rest of the series. These measures consist of 6 asset types as opposed to the 90 asset types for fixed 

business equipment, structures, inventories, land, and intellectual property products included in estimates for 

all previous years. The assets included in the most recent year are structures, fixed business equipment, 

intellectual property products, inventories, rental residences, and land. Investments, depreciation, and capital 

income are estimated for each of these six aggregates. Capital input is calculated by a chained superlative 

Tornqvist index combining stocks of the six asset categories, weighted by capital income shares. See the 

June 2005 Monthly Labor Review article, “Preliminary estimates of multifactor productivity growth” located 

at www.bls.gov/opub/mlr/2005/06/art3full.pdf. 

Labor Input

Labor input in private business and private nonfarm business is obtained by a chained superlative Tornqvist 

aggregation of the hours worked, classified by age, education, and gender with weights determined by each 
7

group’s share of the total wage bill. Hours paid of employees are largely obtained from the Current 

Employment Statistics (CES) program. Weekly paid hours are adjusted to hours worked using data from 

the National Compensation Survey (NCS) for 1996 forward and data from the BLS Hours at Work survey, 

conducted for this purpose, prior to 1990. Between 1990 and 1995, weekly paid hours are adjusted to hours 

at work using a combination of NCS and Hours at Work survey data. Hours worked for nonproduction and 

supervisory workers are derived using data from the Current Population Survey (CPS), CES, and NCS. The 

hours worked of proprietors, unpaid family workers, and farm employees are derived from the CPS. Hours 

worked data reflect estimates in the March 3, 2022 “Productivity and Costs” news release 

(www.bls.gov/news.release/archives/prod2_03032022.htm).

The estimates of 2021 hours worked for the private nonfarm business and private business sectors are 

extrapolated from the hours worked reported in the nonfarm business and business sectors, respectively, in the 

March 3, 2022 “Productivity and Costs” news release 

(www.bls.gov/news.release/archives/prod2_03032022.htm). The growth rate of labor composition is defined 

as the difference between the growth rate of weighted labor input and the growth rate of the hours of all 

persons. The index of hours worked of all persons including employees, proprietors, and unpaid family 

workers, classified by age, education, and gender are weighted together using median wages to compute the 

labor composition estimates reflecting the different skillset of the work force. These cell estimates are 

smoothed using a three-year moving average to address missing observations and reduce volatility.

Additional information concerning data sources and methods of measuring labor composition can be found 

in “Changes in the Composition of Labor for BLS Multifactor Productivity Measures, 2014” 

(www.bls.gov/mfp/mprlabor.pdf). 

Combined Inputs

Labor input and capital input are combined using chained superlative Tornqvist aggregation, applying 

weights that represent each component's average share of total costs. The chained superlative Tornqvist 

index uses changing weights; the share in each year is averaged with the preceding year's share. Total costs 

are defined as the value of output less a portion of taxes on production and imports. Most taxes on 

production and imports, such as excise taxes, are excluded from costs; however, property and motor vehicle 

taxes remain in total costs.

Capital Intensity

Capital intensity is the ratio of capital input to hours worked in the production process. The higher the 

capital to hours ratio, the more capital intensive the production process becomes. 

In a production process, profit-maximizing/cost-minimizing firms adjust the factor proportions of capital and 

labor when the price of one factor is less than the other factor; there is a tendency for the firms to substitute 

the less expensive factor for the more expensive one. In the short run, changes in hours worked are more 

variable than changes in capital input. Changes in hours worked in business cycles can result in volatility of 

the capital intensity ratio over short periods of time. In the long run an increase in wages relative to the price 

of capital will induce the firm to substitute capital for labor, resulting in an increase in capital intensity. 

Rising labor costs are, in fact, an incentive for firms to introduce automated production processes. Industry 

estimates of capital to hours ratios can be obtained at www.bls.gov/mfp/mprdload.htm.
8

Value-Added Output

Private business sector output is a chain-type, current-weighted index constructed after excluding from gross 

domestic product (GDP) the following outputs: general government, nonprofit institutions, private 

households (including owner-occupied housing), and government enterprises. This release presents data for 

the private business and private nonfarm business sectors. Additionally, the private nonfarm business sector 

excludes farms from the private business sector but includes agricultural services. Total factor productivity 

measures exclude government enterprises, while the BLS quarterly Productivity and Costs series include 

them. 

The output measures are based on the National Income and Product Accounts (NIPA) data released by BEA 

on February 24, 2022. The estimates of 2021 output for the private nonfarm business and private business 

sectors are extrapolated from the output reported in the nonfarm business and business sectors, respectively, 

in the March 3, 2022 “Productivity and Costs” news release 

(www.bls.gov/news.release/archives/prod2_03032022.htm). 

Total Factor Productivity

Total factor productivity measures describe the relationship between output in real terms and the inputs 

involved in its production. They do not measure the specific contributions of labor or capital, or any other 

factor of production. Rather, total factor productivity is designed to measure the joint influences of 

technological change, efficiency improvements, returns to scale, reallocation of resources, and other factors 

on economic growth, allowing for the effects of capital and labor. 

The total factor productivity indexes for private business and private nonfarm business are derived by 

dividing an output index by an index of combined inputs of capital input and labor input. The output indexes 

are computed as chained superlative indexes (Fisher Ideal indexes) of components of real output.

Research and Development

The stock of research and development in private nonfarm business is derived by aggregating different 

vintages of constant dollar measures of research and development expenditures and allowing for 

depreciation. Current dollar expenditures for privately financed research and development are obtained 

from annual issues of Research and Development in Industry published by the National Science 

Foundation. BLS develops price deflators and estimates of the rate of depreciation.

The research and development data in the private nonfarm business sector presented here show the effect 

of spillovers from economic units that conduct research and development. BEA publishes measures of 

research and development investments in each industry that include estimates of the direct returns to firms 

conducting such research and development activities. By combining the direct returns to firms conducting 

research and development with the spillover effect of other firms, a picture of the total overall effects of 

research and development can be drawn.

Further description of these data and methods can be found in BLS Bulletin 2331 (September 1989), "The 

Impact of Research and Development on Productivity Growth" at www.bls.gov/mfp/mfparchive.htm. BLS 

measures of year-to-year contributions of research and development to the private nonfarm business sector 

and measures of the stock of research and development are available at www.bls.gov/mfp/rdtable.pdf.
9

Other Information

Comprehensive tables containing additional data beyond the scope of this press release are available at 

www.bls.gov/mfp/mprdload.htm or upon request through https://data.bls.gov/forms/mfp.htm. More detailed 

information on methods, limitations, and data sources of capital and labor are provided in BLS Bulletin 2178 

(September 1983), “Trends in Multifactor Productivity, 1948-81” (www.bls.gov/mfp/mfparchive.htm) and 

on the BLS Multifactor Productivity website under the title “Technical Information About the BLS 

Multifactor Productivity Measures for Major Sectors and 18 NAICS 3-digit Manufacturing Industries” 

(www.bls.gov/mfp/mprtech.pdf). General information is available on the BLS website at 

www.bls.gov/mfp/mprover.htm. Additional data not contained in the release can be obtained at 

www.bls.gov/mfp. Comprehensive tables for the private business and private nonfarm business sector can be 

downloaded at www.bls.gov/mfp/mprdload.htm, including data that links 1948-87 SIC data to NAICS data 

from 1987 forward. 

If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications 

relay services.
10

Table A. Productivity, output, and inputs in the private nonfarm business andprivatebusinesssectorsfor

selected periods, 1987-2021

Average annual growth rates

1987-2021 1990-2000 2000-07 2007-19 2019-20 2020-21

Privatenonfarmbusiness

Productivity

Total factor productivity 0.8 0.9 1.3 0.5 -2.0 3.2

Labor productivity 2.0 2.2 2.7 1.4 2.5 1.9

Output per unit of capital input -0.6 -0.7 -0.6 -0.5 -6.8 5.3

Output 2.8 4.0 2.8 2.0 -4.3 7.4

Combinedinputs 2.0 3.0 1.5 1.5 -2.4 4.1

 Laborinput 1.3 2.2 0.5 1.0 -5.3 5.3

 Hours 0.8 1.7 0.1 0.6 -6.7 5.4

 Labor composition 0.4 0.5 0.4 0.4 1.5 0.1

 Capital input 3.5 4.7 3.5 2.5 2.7 2.0

Analyticratio

 Capital intensity 2.6 3.0 3.3 1.9 10.1 -3.2

Privatebusiness

Productivity

Total factor productivity 0.8 1.0 1.3 0.5 -1.9 3.2

Labor productivity 2.0 2.3 2.7 1.4 2.6 1.9

Output per unit of capital input -0.5 -0.5 -0.6 -0.4 -6.6 5.0

Output 2.8 4.0 2.8 2.0 -4.2 7.2

Combinedinputs 2.0 3.0 1.4 1.5 -2.3 4.0

 Laborinput 1.2 2.2 0.4 1.0 -5.3 5.2

 Hours 0.8 1.7 0.1 0.6 -6.6 5.3

 Labor composition 0.4 0.5 0.4 0.4 1.4 0.1

 Capital input 3.4 4.6 3.4 2.4 2.6 2.1

Analyticratio

Capital intensity 2.5 2.8 3.3 1.8 9.9 -3.0
11

Table B. Labor productivity growth and the contributions of capital intensity, labor composition,and total factor

productivityto labor productivity growth, privatenonfarm business and privatebusinesssectors

Average annual growth rates/percentage point contributions

1987-

2020

1987-

2021

1990-

2000

2000-

07

2007-

19

2019-

20

2020-

21

Privatenonfarm business

Labor productivity growth 2.0 2.0 2.2 2.7 1.4 2.5 1.9

Contributionof capital intensity 0.9 0.9 1.0 1.1 0.7 3.7 -1.3

Contributionof information processing

equipment (IPE) 0.3 - 0.4 0.4 0.2 0.4 -

Contribution of research and 

development (R&D) 0.1 - 0.1 0.1 0.1 0.5 -

Contributionof intellectual property

products (IPP) excluding R&D 0.2 - 0.2 0.2 0.2 0.6 -

Contribution of capital input

excluding IPP & IPE 0.3 - 0.2 0.4 0.2 2.0 -

Contributionof labor composition 0.3 0.3 0.3 0.3 0.2 0.9 0.0

Total factor productivity growth 0.7 0.8 0.9 1.3 0.5 -2.0 3.2

Contribution of R&D to total factor

productivity 0.2 - 0.2 0.2 0.1 0.2 -

Privatebusiness

Labor productivity growth 2.0 2.0 2.3 2.7 1.4 2.6 1.9

Contributionof capital intensity 0.9 0.9 0.9 1.1 0.7 3.6 -1.2

Contributionof information processing

equipment (IPE) 0.3 - 0.4 0.4 0.2 0.4 -

Contribution of research and 

development (R&D) 0.1 - 0.1 0.1 0.1 0.5 -

Contributionof intellectual property

products (IPP) excluding R&D 0.2 - 0.2 0.2 0.2 0.6 -

Contribution of capital input

excluding IPE & IPP 0.3 - 0.2 0.4 0.2 2.0 -

Contributionof labor composition 0.3 0.3 0.3 0.2 0.2 0.9 0.0

Total factorproductivity growth 0.8 0.8 1.0 1.3 0.5 -1.9 3.2

*- Data for the most recent year not available

Note: Total factor productivity plus contribution of capital intensity and labor composition may not sum to labor 

productivity due to independent rounding. Contributions of the components of capital intensity may not sum to the total 

contribution of capital intensity due to independent rounding.
12

Table C. Real capital input growth byasset type, private nonfarm business andprivatebusiness sectors 

Average annual growth rates

1987-2020 1990-2000 2000-07 2007-19 2019-20

Privatenonfarmbusiness

All assets 3.5 4.7 3.5 2.5 2.7

 Equipment 4.6 6.6 4.9 3.2 2.7

 Information processing equipment (IPE) 9.4 13.0 9.5 6.8 6.8

 Computers & related equipment 15.3 28.1 14.4 6.1 6.4

 Communication equipment 9.2 8.0 9.7 10.6 9.8

 Other IPE 3.0 3.3 3.2 2.8 3.6

 All other equipment 2.5 3.5 2.9 1.7 1.2

 Structures 1.6 2.1 1.3 1.0 1.1

 Intellectual property products (IPP) 6.0 7.5 5.4 4.7 6.2

 Research and development 4.5 5.5 4.1 3.6 4.7

 Software 10.4 14.0 8.1 7.2 9.4

 Artistic originals 3.0 3.7 3.6 2.1 1.8

 Rental residential capital 1.2 1.4 2.2 0.1 0.6

 Inventories 2.7 3.5 2.1 2.6 -0.2

 Land 0.8 1.2 0.5 0.3 1.2

Privatebusiness

All assets 3.4 4.6 3.4 2.4 2.6

 Equipment 4.5 6.4 4.9 3.2 2.6

 Information processing equipment (IPE) 9.4 13.0 9.5 6.8 6.7

 Computers & related equipment 15.3 28.1 14.4 6.1 6.4

 Communication equipment 9.2 8.0 9.7 10.6 9.8

 Other IPE 3.1 3.4 3.3 3.0 3.6

 All other equipment 2.4 3.4 2.8 1.7 1.2

 Structures 1.5 2.0 1.2 1.0 1.1

 Intellectual property products (IPP) 6.0 7.5 5.4 4.7 6.2

 Research and development 4.5 5.5 4.1 3.6 4.7

 Software 10.4 14.0 8.1 7.2 9.4

 Artistic originals 3.0 3.7 3.6 2.1 1.8

 Rental residential capital 1.2 1.4 2.2 0.1 0.6

 Inventories 2.6 3.4 2.1 2.4 -0.3

 Land 0.7 0.9 0.5 0.1 1.1

Note: Real capital input by asset type are not available for the most recent reference year. For a brief discussion of

methods used in preparing these data see the Technical Notes in this release.