Unlocking Productivity: Innovative Paths for People, Performance, and Progress

News

“Productivity isn’t everything, but in the long run it is almost everything.”
— Paul Krugman, Nobel Prize-winning economist

We talk a lot about jobs, training, and economic growth—but if there’s one concept that quietly drives all of these, it’s productivity. It may not make flashy headlines, but it holds the key to understanding where the labor market is headed and how we can prepare for it.

At its simplest, productivity measures how much we get done in a given amount of time—usually output per hour worked. But beneath that surface, it tells a much bigger story. It reflects how our industries evolve, how our tools improve, and how work itself is changing. For workforce and economic development professionals, keeping an eye on productivity isn’t just useful—it’s essential.

What the Latest Numbers Are Telling Us

In the United States, productivity slipped in early 2025. According to the U.S. Bureau of Labor Statistics (BLS), labor productivity in the nonfarm business sector declined by 0.8% in the first quarter. That’s the first drop we’ve seen since mid-2022. Output fell slightly, while the number of hours worked increased. At the same time, unit labor costs rose sharply—up 5.7%—suggesting businesses are paying more for every unit produced. That kind of imbalance can squeeze profits and put pressure on hiring.

Globally, the OECD projects modest growth, with global GDP expected to slow from 3.2% in 2024 to 3.1% in 2025. Europe, in particular, is seeing sluggish productivity growth, with uncertainty and lower investment holding back gains. These productivity headwinds can lead to stagnant wages and limited job creation if not addressed.

Why This Matters for Your Work

For those of us in workforce and economic development, these trends are more than numbers. When productivity rises, businesses may need fewer people to do the same work—at least initially. But with that efficiency comes an opportunity: firms that are more productive can expand faster, pay better wages, and create entirely new types of jobs.

The challenge is making sure our workforce can keep up. When productivity is driven by technology—whether it’s automation, AI, or process innovation—it reshapes the skills employers need. If we’re not keeping pace through training, reskilling, and career development, we risk leaving large parts of the workforce behind.

There’s also an equity dimension here. Productivity gains don’t automatically translate into higher wages or better working conditions. Sometimes the benefits go to shareholders, not workers. That’s where workforce professionals can make a difference—by designing policies and programs that ensure productivity growth is shared more broadly.

Connecting Productivity to Strategy

Productivity is more than an economic metric—it’s a directional signal. It helps us understand which industries are thriving, where job opportunities are emerging, and how we can align training investments to match. If your region has rising productivity but stagnant wages, that’s worth investigating. If productivity is falling while labor costs rise, that’s a sign it’s time to reevaluate work structures, technology adoption, and investment strategies.

Agencies like the BLS and OECD offer free, accessible productivity data. Knowing how to interpret and apply that data in workforce strategy discussions can give your team a real edge.

Turning Insight Into Impact

“Rising productivity is the key to long-term economic growth and higher living standards.”
— OECD Economic Outlook

Visit the BLS Productivity Program page and the OECD Productivity Statistics portal to explore the latest data. Use these insights to inform your next workforce strategy session, grant proposal, or partnership meeting. Think critically about how shifts in productivity are shaping the demand for skills, the structure of jobs, and the distribution of wages—and how your work can help ensure those changes lead to more opportunity for more people.

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