Average growth was about 2 percent from 1889 to 1929 and, despite the Great Depression, about 2.4 percent from 1929 to 1973. In the past quarter-century, the growth rate has slowed down, mainly because the rate of growth of productivity of output per employed person has slowed down. Other industrialized countries have experienced a similar decline in growth during this period. That share has risen since 1929 because of the increased importance of Social Security and private benefits such as health insurance. Fringe benefits now constitute some 12 percent of the national income.
Corporate profits dominate the income share attributable to capital.
That share, after taxes, reached a peak in the 1960s but declined in the 1970s and 1980s. The strong expansion in the 1990s has brought the profits share close to the 1960s peak. In 1997, America s real GDP was more than five times its level a half-century earlier. Part of that increase in production came from the use of more labor and capital and part came from the more efficient use of labor and capital, that is, from increased productivity. We are especially interested in measuring productivity growth because rising productivity underlies rising living standards and most of what we think of as economic progress.