MarketWatch recently reported the the US productivity dropped for the third straight quarter, an unexpected development that suggests a larger economic problem that leaves many economists worried. What does this drop mean for the US economy? How will it affect the years to come? Read on for a short overview of what productivity is and its significance in the determining the strength of the US market.

What is productivity?

Productivity is the marker of how much hard our nation works each hour. When productivity is high, employees are working more per hour. This commonly leads to increases in wage and a higher standard of living because more goods or services are produced at an efficient rate. When productivity is low, wages tend to be more stagnant.

How do we measure it?

According to the Bureau of Labor Statistics, to measure the productivity level, we compare the amount of goods or services produced with the materials that were used during production. Labor productivity is an important marker to watch. To produce products, companies are required to input a significant amount of wages–or salaries–for their employees to produce the goods. This is the measure we use to report quarterly levels.

What is the current productivity level?

In the most recent report, the current level of productivity fell by 0.5% during the last quarter. Experts had anticipated a 0.4% growth. This is the third straight drop this year.

What the drop suggests?

The drop suggests that despite the increase in the nation’s hiring stats, output levels lag. This is an impossible relationship to continue and economists warn that an increased amount of workforce will be unable to increase levels naturally.

How we can get increase levels of productivity?

It’s important to note that productivity can be mismeasured. Many experts warn that the formula to measure our economy’s growth does not accommodate newer technologies and industries, where innovation continues to skyrocket at a fast clip. Companies can also look to increase the efficiency of the labor by investing in better technologies. Increases in product or service pricing is also another option.