Problems in the Measurement and Performance of Service-Sector Productivity in the United States

In the past two decades, the American economy has evolved quite differently from most other advanced industrialised economies. Unlike economies which have experienced a large increase in unemployment, the US unemployment rate in 1994-95 has been little different than in other prosperous years, such as 1972, 1979, and 1987-88. Instead, there is now a general consensus that the most intractable problems of the American economy are slow growth in productivity and in real wages. Productivity growth has proceeded at barely one per cent per year since 1972, and growth in real wages for most employed persons has been less than that, due to an increase in inequality that has concentrated much of the limited payoff from productivity growth in the top 20 per cent of the income distribution.