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For release 10:00 a.m. (ET) Thursday, March 23, 2023 USDL-23-0540

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

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

TOTAL FACTOR PRODUCTIVITY – 2022

Total factor productivity (TFP) in the private nonfarm business sector decreased 1.2 percent in 2022, the U.S. 

Bureau of Labor Statistics reported today. (See chart 1, table A.) The 2022 decline in TFP reflects a 2.3-

percent increase in output and a 3.6-percent increase in the combined inputs of capital and labor. Capital input 

grew by 2.9 percent and labor input–which is the combined effect of hours worked and labor composition–

increased by 4.0 percent. This is the first time since 1993 that both capital and labor growth have outpaced 

output growth, leading to the decline in total factor productivity. Besides the COVID-19 pandemic year of 

2020, this is the largest decline in productivity since 1982.

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

sector, 2007-22

Annual percent change

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Total factor productivity Combined inputs Output

Methodology Change for Labor Composition Data

Starting with data released on November 18, 2022, the BLS Productivity program incorporated new 

methodology that uses a combination of the Census American Community Survey (ACS), BLS Current 

Population Survey (CPS), and the CPS Annual Demographic Supplement to estimate labor composition 

for all NAICS industries and Major Sectors. 
Total factor productivity is calculated by dividing an index of real output by an index of combined units of 

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

productivity (output per hour worked) measures because TFP 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.

Private business sector total factor productivity also decreased 1.2 percent in 2022, as output increased 2.2 

percent and combined inputs increased 3.5 percent. (See table A.)

Total Factor Productivity Trends

The 1.2-percent decline in TFP in private nonfarm business in 2022 resulted from combined inputs growth 

outpacing the growth of output. The 2.3-percent growth of output in 2022 represents a stabilization of private 

nonfarm business output after the COVID-19 pandemic, as this growth is in line with the previous business 

cycle (2007-19) growth of 2.0 percent. (See charts 2a and 2b.)

Combined inputs continued its recovery from the 2020 recession with 3.8 percent growth in 2021 and 3.6 

percent growth in 2022. However, due to the large decline in this measure in 2020, combined inputs growth 

during the current business cycle (2019-22) is now in line with the 2007-19 growth.

Productivity growth is often viewed as a long run measure, especially when an economic shock like the 

COVID-19 pandemic happens. While total factor productivity growth has been volatile the last 3 years, 2019-

22 shows similar growth to the previous business cycle. 

Chart 2a. Total factor productivity, combined 

inputs, and output in the private nonfarm 

business sector, 2020-22

Annual percent change

Chart 2b. Total factor productivity, combined 

inputs, and output in the private nonfarm 

business sector, 2007-19 and 2019-22

Annual percent change

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

Output Combined Inputs Total factor

productivity

2020 2021 2022

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Output Combined Inputs Total factor

productivity

2007-19 2019-22
Combined input growth is made up of growth in three components: capital input, hours worked, and labor 

composition. The index of capital input has continued its pre-pandemic trend of positive growth and is now 

8.0-percent higher in 2022 than in 2019. Hours worked grew 4.0 percent in 2022 and has now fully recovered 

from the historic decline in 2020, with the 2022 index 1.4-percent higher than in 2019. The index of labor 

composition experienced historically high growth in 2020 and has remained near this level over the last 2 

years. (See chart 3.)

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

2012-22

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 2022, private 

nonfarm business labor productivity decreased 1.7 percent, the largest decline since the series began in 1948. 

(See chart 4 and table B.)

The 2022 private nonfarm business sector decline in labor productivity was a result of the 1.2-percent decline 

in total factor productivity, and a 0.4-percent decline in the contribution of capital intensity to labor 

productivity growth. Capital intensity is the ratio of capital input growth to labor hours growth. The 2022 

decline in capital intensity was driven by the increase in hours worked of 4.0 percent relative to the slower 

capital input growth of 2.9 percent. (See tables A and B.)

The contribution of labor composition to labor productivity for private nonfarm business was unchanged in 

2022. Labor composition estimates the effect of shifts in the age, education, and gender composition of the 

workforce on hours worked. The historic contribution of labor composition to labor productivity growth in 

2020 was followed by a decline in 2021, the first time this measure declined since 1977. Over the 2019-22 

business cycle, the contribution to labor productivity growth from labor composition was 0.4 percent. (See 

chart 4.) 

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Capital input Hours worked Labor composition
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 2021

Capital input in the private nonfarm business sector increased at an average annual rate of 2.3 percent in 2021, 

the latest year of available detailed capital data. The 2021 capital input growth declined 0.3 percentage point

(see table C) from the 2020 annual rate of 2.6 percent and continues the deceleration of capital growth from 

the 2019 annual rate of 3.2 percent. This is the first 2-year consecutive decline in capital growth since the 

Great Recession of 2007-09.

Capital input is made up of different types of capital assets, including equipment, structures, and intellectual 

property products. In the 2000-07 business cycle, equipment and intellectual property products, which consist 

of software, research and development, and artistic originals assets, accounted for 2.9 percentage points of the 

private nonfarm business capital input growth of 3.5 percent. However, in the following business cycle of 

2007-19, the contribution of equipment decreased by almost half, leading to capital input growth of only 2.4 

percent. (See chart 5.) 

The decline in the contribution of equipment continued into the current 2019-21 business cycle as equipment 

now accounts for 0.5 percentage point of capital input growth. However, capital input growth was unchanged

at the previous rate of 2.4 percent due to the increased contribution of intellectual property products. 

Intellectual property products increased from a 1.0 percentage point contribution in 2007-19 to a 1.5 

percentage point contribution in 2019-21, and now accounts for over half of private nonfarm business capital 

input growth. 

0.4 0.5

-1.2

4.0

-1.2

0.7 0.8

4.1

-1.2

-0.4

0.3 0.4

1.7

-0.5

0.0

1.4 1.7

4.6

2.2

-1.7

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2007-19 2019-22 2020 2021 2022

TFP Contribution of capital intensity Contribution of labor composition Labor productivity
Chart 5. Asset type contributions to capital input growth in the private nonfarm business sector

for selected time periods

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. Other capital consists of inventories, land and residential structures.

1.1 1.0

1.5

1.8

1.0

0.5

0.3

0.3 0.3

0.3

0.2 0.1

3.5

2.4 2.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000-07 2007-19 2019-21

Intellectual property products Equipment Structures Other capital Capital input growth
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. Currentdollar 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 
group’s share of the total wage bill. Hours worked data for the measures this news release include hours 

worked for all persons working in the sector—wage and salary workers, the self-employed and unpaid 

family workers. The primary source of hours data is the BLS Current Employment Statistics (CES) 

program, which provides monthly survey data on the number of jobs held by and hours paid to wage and 

salary workers in nonfarm establishments, counting a person who is employed by two or more 

establishments at each place of employment. Hours of paid time off are excluded from hours paid 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, hours of paid time off are 

excluded using a combination of NCS and Hours at Work survey data. Off-the-clock hours are added, 

yielding hours worked, using data from the Current Population Survey (CPS). To estimate the hours of farm 

labor, nonfarm proprietors, and nonfarm unpaid family workers the CPS data are used. The hours worked of 

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

reflect estimates in the March 2, 2023 “Productivity and Costs” news release 

(www.bls.gov/news.release/archives/prod2_03022023.pdf) and a new methodology for estimating hours 

worked. More information on the methodology change can be found at www.bls.gov/productivity/technicalnotes/labor-productivity-hours-worked-method-using-ces-all-employee-hours-nov-2022.htm.

The estimates of 2022 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 2, 2023 “Productivity and Costs” news release 

(www.bls.gov/news.release/archives/prod2_03022023.pdf). 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.

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/productivity/tables/.

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 23, 2023. The estimates of 2022 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 2, 2023 “Productivity and Costs” news release 

(www.bls.gov/news.release/archives/prod2_03022023.pdf). 

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/productivity/technicalnotes/impact-of-research-and-development-on-productivity-growth-1989.pdf. 
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/productivity/highlights/research-and-development-contribution-to-total-factorproductivity.htm.

Other Information

Detailed information on methods used in this release can be found in the BLS Handbook of

Methods. Productivity Measures: Business Sector and Major Sector section at 

www.bls.gov/opub/hom/msp/home.htm.

Comprehensive tables containing more detailed data than that which is published in this news

release are available upon request at 202-691-5606 or at www.bls.gov/productivity/tables.

Industry specific contributions to output are available at

www.bls.gov/productivity/highlights/contributions-of-total-factor-productivity-major-industry-to-output.htm.

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

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

selected periods, 1987-2022 

Average annual growth rates

1987-2022 1990-2000 2000-07 2007-19 2019-22 2020-21 2021-22

Privatenonfarmbusiness

Productivity

Total factor productivity 0.7 0.9 1.3 0.4 0.5 4.0 -1.2

Labor productivity 1.9 2.2 2.7 1.4 1.7 2.2 -1.7

Output per unit of capital input -0.6 -0.7 -0.6 -0.5 -0.5 5.5 -0.6

Output 2.8 4.0 2.8 2.0 2.1 7.9 2.3

Combinedinputs 2.1 3.1 1.5 1.5 1.6 3.8 3.6

 Laborinput 1.4 2.2 0.6 1.0 1.1 4.7 4.0

 Hours 0.9 1.7 0.1 0.5 0.5 5.6 4.0

 Labor composition 0.5 0.5 0.4 0.5 0.6 -0.9 0.1

 Capital input 3.4 4.8 3.5 2.4 2.6 2.3 2.9

Analyticratio

 Capital intensity 2.5 3.0 3.3 1.9 2.1 -3.1 -1.1

Privatebusiness

Productivity

Total factor productivity 0.8 1.0 1.3 0.5 0.4 3.9 -1.2

Labor productivity 2.0 2.3 2.7 1.4 1.6 2.2 -1.6

Output per unit of capital input -0.5 -0.5 -0.6 -0.4 -0.6 5.3 -0.8

Output 2.8 4.0 2.8 2.0 2.1 7.7 2.2

Combinedinputs 2.0 3.0 1.5 1.5 1.6 3.7 3.5

 Laborinput 1.3 2.2 0.5 1.0 1.0 4.5 3.9

 Hours 0.9 1.7 0.1 0.5 0.4 5.5 3.9

 Labor composition 0.5 0.5 0.4 0.5 0.6 -0.9 0.1

 Capital input 3.3 4.6 3.4 2.4 2.6 2.3 3.0

Analyticratio

Capital intensity 2.5 2.8 3.3 1.8 2.2 -3.0 -0.8
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-

2021

1987-

2022

1990-

2000

2000-

07

2007-

19

2019-

22

2020-

21

2021-

22

Privatenonfarm business

Labor productivity growth 2.0 1.9 2.2 2.7 1.4 1.7 2.2 -1.7

 Contributionof capitalintensity 0.9 0.9 1.0 1.1 0.7 0.8 -1.2 -0.4

Contributionof information processing

equipment (IPE) 0.3 - 0.4 0.4 0.2 - 0.0 -

Contribution of research and 

development (R&D) 0.1 - 0.1 0.1 0.1 - 0.0 -

Contributionof intellectual property

products (IPP) excluding R&D 0.2 - 0.2 0.2 0.2 - 0.1 -

Contribution of capital input 

excluding IPP & IPE 0.2 - 0.2 0.4 0.2 - -1.3 -

 Contributionof labor composition 0.3 0.3 0.3 0.3 0.3 0.4 -0.5 0.0

 Total factor productivity growth 0.8 0.7 0.9 1.3 0.4 0.5 4.0 -1.2

Contribution of R&D to total factor

productivity 0.2 0.2 0.2 0.1 0.2

Privatebusiness

Labor productivity growth 2.1 2.0 2.3 2.7 1.4 1.6 2.2 -1.6

 Contributionof capitalintensity 0.9 0.9 0.9 1.1 0.7 0.8 -1.2 -0.4

Contributionof information processing

equipment (IPE) 0.3 - 0.4 0.4 0.2 - 0.0 -

Contribution of research and 

development (R&D) 0.1 - 0.1 0.1 0.1 - 0.0 -

Contributionof intellectual property

products (IPP) excluding R&D 0.2 - 0.2 0.2 0.2 - 0.1 -

Contribution of capital input

excluding IPE & IPP 0.2 - 0.2 0.4 0.2 - -1.3 -

 Contributionof labor composition 0.3 0.3 0.3 0.3 0.3 0.4 -0.5 0.0

Total factorproductivity growth 0.8 0.8 1.0 1.3 0.5 0.4 3.9 -1.2

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

Average annual growth rates

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

Privatenonfarmbusiness

All assets 3.5 4.8 3.5 2.4 2.4 2.3

 Equipment 4.5 6.6 4.9 3.2 1.8 1.3

 Information processing equipment (IPE) 9.2 13.0 9.5 6.8 5.9 6.0

 Computers & related equipment 15.1 28.1 14.4 6.1 6.8 7.3

 Communication equipment 9.1 8.0 9.7 10.5 8.1 7.9

 Other IPE 3.0 3.3 3.2 2.8 2.8 2.7

 All other equipment 2.4 3.5 2.9 1.7 0.3 -0.3

 Structures 1.5 2.1 1.3 1.0 1.0 0.8

 Intellectual property products (IPP) 6.1 7.5 5.4 4.7 6.5 6.7

 Research and development 4.5 5.5 4.1 3.6 5.1 5.2

 Software 10.3 14.0 8.1 7.2 9.9 10.2

 Artistic originals 3.0 3.7 3.6 2.1 1.3 0.9

 Rental residential capital 1.2 1.4 2.2 0.1 0.8 0.9

 Inventories 2.6 3.5 2.1 2.5 -0.3 -0.5

 Land 0.8 1.2 0.5 0.3 0.9 0.7

Privatebusiness

All assets 3.4 4.6 3.4 2.4 2.4 2.3

 Equipment 4.4 6.5 4.9 3.2 1.8 1.3

 Information processing equipment (IPE) 9.2 13.0 9.5 6.8 5.9 6.0

 Computers & related equipment 15.1 28.1 14.4 6.1 6.8 7.3

 Communication equipment 9.1 8.0 9.7 10.5 8.1 7.9

 Other IPE 3.1 3.4 3.4 3.0 2.8 2.7

 All other equipment 2.3 3.4 2.8 1.7 0.3 -0.3

 Structures 1.5 2.0 1.2 1.0 1.0 0.8

 Intellectual property products (IPP) 6.1 7.5 5.4 4.7 6.5 6.7

 Research and development 4.5 5.5 4.1 3.6 5.1 5.2

 Software 10.3 14.0 8.1 7.2 9.9 10.2

 Artistic originals 3.0 3.7 3.6 2.1 1.3 0.9

 Rental residential capital 1.2 1.4 2.2 0.1 0.8 0.9

 Inventories 2.5 3.4 2.1 2.3 -0.4 -0.6

 Land 0.7 0.7 0.5 0.1 1.3 1.5

Note: Real capital input by asset type is 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.