ABSTRACT
Labor productivity is defined as the value of output per hour worked in the business sector of the economy although the Bureau of Labor Statistics actually measures output per hour paid. It is also sometimes measured as output per person employed. The production of lower-quality goods that compete primarily on the basis of price is shifting to countries with lower-cost labor. Producing high-quality goods for increasingly fragmented and competitive markets is only part of the challenge facing the major industrial economies. The management effort to restructure organizations around their core functions is being driven by the need to make their employees more productive. Education and training investments also benefit society in ways additional to the higher-value production and the higher earnings that accrue to employers and workers, and markets always underinvest in goods that yield positive externalities, or third-party benefits.
