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Productivity
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State Labor Productivity: productivity trends during COVID-19
This webpage takes a closer look at trends in the latest state-level labor productivity and cost measures through 2022. The emphasis for this year’s review is on productivity during the current business cycle that includes the COVID-19 pandemic.
The Bureau of Labor Statistics (BLS) released updates to the state-level data for the private nonfarm sector on May 25, 2023. Data series in the release include labor productivity, output, hours worked, unit labor costs, hourly compensation, and real hourly compensation. The data cover 50 states and the District of Columbia, and four Census regions, from 2007-22. By analyzing state-level labor productivity measures, data users can learn more about regional business cycles, the persistence of regional income inequality, and which states are driving national productivity trends.
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The next two sections of this webpage examine two patterns of growth in state productivity:
- States where productivity growth accelerated during the COVID-19 pandemic, meaning their annual percent change in productivity was higher from 2019-22 than from 2007-19.
- States where productivity growth decelerated during the COVID-19 pandemic, meaning their annual percent change in productivity was lower from 2019-22 than from 2007-19.
States where productivity accelerated during the pandemic
Chart 1 shows annual percent changes for selected states where productivity grew at a faster annual rate during the pandemic than during the years prior to the pandemic.
What's driving productivity growth in accelerating states
The productivity growth acceleration during the pandemic was not the same across all 10 states and the District of Columbia. Six of the featured states and the District of Columbia had annual hours worked decelerate during the pandemic, combined with annual output acceleration. Output acceleration and hours worked deceleration boosts productivity growth rates. The District of Columbia, which had the largest acceleration in pandemic productivity growth, had the sharpest slowdown in hours worked. Hours worked in the District of Columbia shifted from an annual increase of 1.4% from 2007-19 to a decline of 2.6% from 2019-22. The remaining four featured states saw hours worked accelerate during the pandemic. Despite accelerated hours worked growth, these states still managed to accelerate their productivity due to significant increases in annual output growth in 2019-22 compared to 2007-19. This was especially true for Idaho, which saw its annual output growth increase from 2.2% from 2007-19 to 5.8% from 2019-22.
| Geography | Productivity | Output | Hours worked | |||
|---|---|---|---|---|---|---|
| 2007-19 | 2019-22 | 2007-19 | 2019-22 | 2007-19 | 2019-22 | |
|
National (private nonfarm) |
1.2% | 1.5% | 1.8% | 1.9% | 0.6% | 0.4% |
|
District of Columbia |
0.4% | 4.8% | 1.8% | 2.0% | 1.4% | -2.6% |
|
Iowa |
0.6% | 3.1% | 1.0% | 2.1% | 0.4% | -1.0% |
|
Maine |
0.9% | 2.6% | 1.0% | 2.9% | 0.1% | 0.4% |
|
Tennessee |
1.1% | 2.5% | 1.8% | 4.3% | 0.7% | 1.7% |
|
Idaho |
1.4% | 2.7% | 2.2% | 5.8% | 0.8% | 3.0% |
|
Michigan |
0.5% | 1.8% | 0.7% | 1.6% | 0.2% | -0.1% |
|
New Hampshire |
1.3% | 2.6% | 1.7% | 2.7% | 0.4% | 0.2% |
|
Florida |
0.7% | 1.9% | 1.5% | 3.8% | 0.8% | 1.9% |
|
Ohio |
0.9% | 2.1% | 1.2% | 1.7% | 0.3% | -0.4% |
|
Oregon |
1.7% | 2.9% | 2.5% | 2.8% | 0.7% | -0.1% |
|
Virginia |
1.3% | 2.5% | 1.4% | 2.0% | 0.1% | -0.5% |
|
Source: U.S. Bureau of Labor Statistics |
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Productivity growth in Florida remains positive throughout the pandemic
Chart 2 displays the annual percent changes for productivity, output, and hours worked in Florida from 2019-22 and also for each year. Measured by private nonfarm value-added output, Florida is the fourth largest economy in the country (after California, Texas, and New York). Thus, changes in the productivity growth rate make a major contribution to the country’s productivity trend.
Florida maintained productivity growth throughout the pandemic years (2019-22), allowing annual growth in this period to outpace the prior period (2007-19). The bulk of these gains occurred in 2020. Productivity growth in Florida in 2020 was the largest since measurement began in 2007, driven by a 7.1% decrease in hours worked that exceeded the 3.3% decline in output. Both output and hours worked increased in the next two years, exceeding their 2019 levels by 2021 and continuing to grow in 2022. However, productivity growth was slower in the last two years.
States where productivity decelerated during the pandemic
Chart 3 shows annual percent changes for selected states with lower annual productivity growth during the pandemic than during the years prior to the pandemic.
Output slowdown restrains productivity for some states
The productivity slowdown for the 11 states featured in Chart 3 is mainly explained by decelerating output. Nine of the eleven featured states had lower annual output growth from 2019-22 than from 2007-19. In North Dakota, which had the largest pandemic productivity deceleration, annual output growth slowed from 5.8% from 2007-19 to -2.4% from 2019-22. The remaining two featured states, Nevada and Georgia, saw annual output growth speed up during the pandemic. This accelerated pandemic output growth was outweighed, however, by hours worked growth.
| Geography | Productivity | Output | Hours worked | |||
|---|---|---|---|---|---|---|
| 2007-19 | 2019-22 | 2007-19 | 2019-22 | 2007-19 | 2019-22 | |
|
National (private nonfarm) |
1.2% | 1.5% | 1.8% | 1.9% | 0.6% | 0.4% |
|
North Dakota |
3.5% | -0.4% | 5.8% | -2.4% | 2.3% | -2.0% |
|
Oklahoma |
1.7% | -0.8% | 2.5% | -2.0% | 0.8% | -1.1% |
|
Louisiana |
-0.2% | -2.1% | 0.2% | -3.4% | 0.4% | -1.3% |
|
Texas |
1.2% | -0.6% | 2.9% | 1.3% | 1.7% | 1.9% |
|
Alaska |
0.1% | -1.6% | 0.2% | -2.8% | 0.1% | -1.2% |
|
Hawaii |
0.9% | -0.8% | 1.2% | -2.1% | 0.3% | -1.3% |
|
West Virginia |
1.3% | -0.2% | 0.9% | -0.7% | -0.3% | -0.6% |
|
New Mexico |
1.4% | 0.4% | 1.0% | 0.1% | -0.4% | -0.3% |
|
Nevada |
0.5% | -0.4% | 0.8% | 2.0% | 0.3% | 2.4% |
|
Georgia |
1.3% | 0.9% | 2.0% | 2.3% | 0.7% | 1.5% |
|
Maryland |
1.5% | 1.1% | 1.8% | -0.3% | 0.3% | -1.4% |
|
Source: U.S. Bureau of Labor Statistics |
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Hours worked growth outpaces output growth in Texas during COVID-19
Chart 4 gives annual percent changes of productivity, output, and hours worked in Texas – the second largest economy in the country – over the 2019-22 period alongside data for each pandemic year. Productivity growth in Texas over the 2019-22 pandemic period was pulled down by a decline of 2.3% in 2022, which was the largest annual drop since measurement began in 2007. In both 2021 and 2022, hours worked growth outpaced output growth, leading to falls in productivity that wiped out the 2020 productivity gain.
Florida’s long-term productivity growth (2007-22) catches up to Texas in 2022
Accelerating productivity growth in Florida during the pandemic combined with decelerating productivity growth in Texas allowed Florida to close the long-term productivity growth gap between these two large Sun Belt states. (Chart 5 shows the trends.) Texas saw generally higher annual productivity growth than Florida from 2012-20 but recent productivity declines in Texas in 2021 and 2022 left Texas less productive in 2022 than it was in 2019. As a result, Florida’s productivity growth since 2007 is now slightly higher than Texas’.
A slowdown in output was a key factor in Texas’ productivity downturn in 2021. Florida and Texas maintained similar annual output growth rates from 2012-2020, but Florida broke away from Texas in 2021 and 2022. Texas recovered its 2019 level of output by 2021 (like Florida) and took even longer to recover its pre-pandemic level of work hours (by 2022). However, the recovery of output in Texas was not as robust.
Florida maintained steady output growth in its top four industries by real GDP from 2012-2022, with especially strong growth in its top two industries: Finance, insurance, real estate, rental, and leasing, and professional and business services in 2021 and 2022. (See chart 6.)
Texas, on the other hand, experienced much more volatility in its four largest industries, especially in mining, quarrying, and oil and gas extraction. (See chart 7.) Texas has the largest mining industry in the U.S. and ranks 7th in the country for mining as a share of total GDP. In contrast, Florida’s mining industry is only the country’s 24th largest; mining’s share of the state’s GDP ranks 40th in the U.S. Despite Texas seeing similar growth in finance, insurance, real estate, rental, and leasing, and professional and business services in 2021 and 2022 to Florida, Texas’ overall output growth was held back by the downturn in its mining industry.
Frequently asked questions
1. How is output measured for states?
BLS state-level measures of output for the private nonfarm sector are created using GDP by state and industry data published by the Bureau of Economic Analysis (BEA). BEA does not produce a private nonfarm sector measure of real output by state. To create the necessary output series, BLS subtracts several industry components — the farm sector, private households, and owner-occupied housing — from GDP by state using a Fisher ideal index formula. See the output subsection of the Monthly Labor Review (MLR) article, "BLS Publishes Experimental State-level Labor Productivity Measures," for more information on BEA's methods for nominal and real measures of GDP by state.
2. How are work hours measured for states?
Hours worked are the number of hours worked by all employed persons, including wage and salary workers, self-employed persons, and unpaid family workers. Hours for wage and salary workers are primarily from BLS Current Employment Statistics (CES) and hours for self-employed and unpaid family workers are from the BLS Current Population Survey (CPS). The hours are adjusted from an hours paid basis to an hours worked basis using data from the BLS National Compensation Survey (NCS). Hours are also adjusted to account for work that is done “off the clock” that is not reported by employers. See the hours subsection of the MLR article for more information.
3. What is different between how BLS constructs state-level and national labor productivity measures?
The state-level measures cover the private nonfarm sector which adjusts the nonfarm business sector used in national productivity measurement by adding nonprofit institutions serving households and removing government enterprises.
4. Does BLS have data on industry productivity by state?
At this time, BLS does not have measures of industry productivity by state. However, it is possible to construct measures of output and hours worked, respectively, by state and industry using the data sources provided in the MLR article.
Last Modified Date: June 7, 2023