Productivity measures the amount of output that workers produce per hour.
The big jump in fourth-quarter productivity was accompanied by slower growth in unit labor costs. Unit labor costs represent the amount that a business pays a worker to produce each product or service. Rising productivity theoretically means that employers can afford to pay higher wages without igniting inflation. But the current productivity boom is generating higher profits, not higher wages. In general, the strong productivity data, combined with surging profits, proves that there is plenty of room for workers' wages to grow.