Nebraska Ranks Among Top Ten States For Most Improved Labor Productivity Over 10 Years

(KFOR NEWS  August 12, 2022)   New research has revealed the American states which have had the largest increases in productivity since 2012, with Nebraska recording the ninth highest improvement by 16.86%.

The research, conducted by digital adoption magazine digital-adoption.com, analyzed ten years of annual labor productivity data from the Bureau of Labor Statistics (BLS) to establish the U.S. states which improved in labor productivity the most from 2012 (private nonfarm sector).

The analysis revealed that Nebraska is ninth most improved, closely following Utah in eighth, as labor productivity was raised by 16.86% over ten years. Since 2012, labor compensation grew 43.66%, and value-added output was also raised by 46%, going from $76.76 billion to $111.83 billion. Employment and hours worked have only slightly risen, increasing by 3.65% and 1.65% over ten years, respectively.

Washington improved the most compared to any other state, with a 30.31% increase in productivity from 2012. This is due to increased output per worker, which is currently 29.7% higher than 2012, and is the largest output per worker improvement than any other state in the study. The largest increase in Washington’s productivity was seen in 2021, where productivity levels leapt by 6.4% as businesses navigated the pandemic. Hourly compensation had also risen by 9.2%, up from $55.71 dollars per hour worked in 2020 to $60.82 in 2021. Value-added output also rose by 11.9%. Workers in Washington have received the third highest increases in labor compensation in the U.S., growing from a total of $171.28 billion in 2012 to $307.47 billion in 2021, a 79.5% increase in ten years.

California had the second largest increase, where productivity improved by 27.03%, in line with the same increase for output per worker, which went up by 27.87% over the ten year period. Labor compensation also grew from $986 billion to $1.68 trillion between 2012 and 2021. That’s a 71.24% increase compared to 2012, the fifth highest increase of its type in the U.S. over the last ten years.

Kansas is third with a 19.85% productivity increase from 2012. Output per worker has also increased by 17.24%. Despite this, employment is only slightly above that seen in 2012, and hours worked have dropped by 1.79% ten years later. Hourly compensation has increased furthest compared to any other measurement for Kansas, rising from $31.27 dollars per hour worked in 2012 to $42.67 in 2021, an increase of 36.43%. During the pandemic, labor productivity rose by 3.7% in 2020, despite a -5.9% drop in hours worked, -5.1% drop in employment and -1.3% drop in value-added output. In the same year, labor compensation rose by 1.4%.

Colorado labor productivity has improved by 18.74% since the beginning of the study, placing the state in fourth. Labor compensation has also risen by 67.56% since 2012, from $132.16 billion to $221.46 billion, the sixth highest compensation increase recorded. Output per worker and hours worked are currently 13.37% and 14.6% higher than 2012, respectively. That’s an extra 424,000 jobs, with BLS figures showing 2.11 million jobs in 2012 to 2.54 million in 2021.

New Hampshire ranks fifth with an 18.39% worker productivity increase since 2012. During this time period, labor compensation has risen by 54.36%, from $35.37 billion to $54.6 billion, and output per worker has grown by 19.39%. Value-added output has risen 47.9% from $54.16 billion to $80.12 billion. Hours worked and employment levels have grown the least, 5.48% and 4.59%, respectively. That’s an increase from 960 million hours worked to 1.01 billion, and employment growth of 599,400 to 626,900 jobs from 2012 to 2021.

The top ten states have increased worker compensation, output per worker, real value-added output despite higher labor costs, varying levels of employment and hours worked. The western U.S. region saw the largest increase in productivity overall compared to other regions. Productivity increased by 21.47%, in line with increased output per worker. Five of the top ten states also experienced the highest growth in value-added output: Washington, California, Colorado, Utah and Oregon.

In ten years, total U.S. employment has grown from 243.95 million jobs in 2012 to 268.53 million in 2021.

North Dakota is not far behind New Hampshire in sixth place, with an 18.28% boost to productivity levels since 2012. However, unlike New Hampshire, employment levels and hours worked in North Dakota have declined since 2012, by 6.13% and 8.25%, respectively. That’s a drop from 376,600 to 353,500 jobs and 641 million to 588 million hours worked from 2012 to 2021. Over ten years, labor compensation has risen from $21.04 billion to $24.94 billion, an 18.57% increase, and has risen in line with productivity every year, except for 2015. For the years where labor compensation had dropped, so too did value-added output and output per worker.

Massachusetts’ productivity increased by 17.25% since 2012, placing the state seventh most improved. Total labor compensation has increased by 48.3%, from $234.55 billion to $347.84 billion, with a 6% increase in hours worked and a 4.37% increase in employment. Employment has grown from 3.15 million jobs in 2012 to 3.28 million in 2021. Labor productivity grew throughout the pandemic, a 5.4% increase, despite a 9.7% drop in employment, during 2020. During 2020, productivity increased due to higher output levels per worker, which went up by 6.4%, potentially due to the 6.7% increase in hourly compensation for the same period.

Utah is eighth with 16.95% increased productivity levels from 2012. Labor compensation has risen by 82.57% since 2012, the second highest increase in ten years out of any other state, behind Idaho. Utah experienced the highest growth in value-added output, increasing by 77% from $102.4 billion to $181.24 billion over ten years. Productivity continued to grow throughout the pandemic; during 2020, labor compensation increased by 5.1%, and output per worker increased by 2.3%, while employment dropped by 2.3%. Employment has recovered in 2021, growing by 5.5% compared to the year prior, which saw employment jump from 1.36 million to 1.44 million in one year.

Oregon ranks tenth on the list due to an increase of 16.75% productivity. Oregon’s value-added output has increased by 56%, the eighth highest over ten years when compared to any other state.

Four states saw a decrease in labor productivity ten years on from 2012: Wyoming, Nevada, Delaware and Alaska. For these states, the years in which compensation levels dropped, so did output per worker and value-added output.

Alaska’s productivity levels have dropped the furthest out of any U.S. state since 2012, which is currently 8.31% lower, ten years later. Output per worker has dropped by 11.21% compared to 2012. Output levels have yet to improve past this threshold, and are currently at their lowest levels in 2021. Alaska is the only state in the U.S. to have recorded a decline in value-added output, reduced by 12.3% from $45.34 billion to $39.76 billion over ten years.

Delaware is currently 2.19% below 2012 levels of productivity. The largest productivity drop happened in 2016, which saw an 8.5% decrease compared to the previous year. This can be attributed to an 8.6% increase in unit labor costs, 2.2% real wage compensation drop, 6.8% decrease in real value-added output and 8.4% decrease in output per worker.

Nevada’s productivity is currently 1.55% below 2012 levels, and has been below threshold since 2014. Despite this, the state has experienced the eighth largest percentage increase in labor compensation in the study, recovering after the state experienced some of the severest drops to compensation, hours worked, output and employment during the pandemic over 2020. While employment levels have risen from 1.06 million jobs in 2012 to 1.29 million in 2021, output per worker has remained similar to 2012, after experiencing a decline over ten years, and is currently only 0.284% higher ten years later.

Wyoming’s productivity has fallen below 2012 levels for the first time since 2015, and is currently 0.409% below levels experienced ten years ago. Hours worked, employment and output per worker have all dropped after 2015, knocked further by the pandemic, and have not fully recovered since. In 2019, there were 239,500 jobs and the figures for 2021 currently show 233,400 jobs, despite there being 240,400 jobs in 2012.

Commenting on the findings, a spokesperson from digital-adoption.com said: “The nature of work has changed greatly over the last ten years, which has been accelerated by the Covid-19 pandemic. This data reveals that the Western U.S. region has improved greater than other areas of the nation. The two states which are most improved, Washington and California, are home to America’s largest digital tech hubs. The digital sector has enjoyed a boom in recent years, partially due to the effects of the pandemic increasing the transition towards remote working, which this sector was most prepared for. These states have led the way in digital transformation, and offer a great example for others to follow in how digital adoption can accelerate business growth and productivity.”

The study was conducted by digital-adoption.com, which provides detailed information on how companies can maximize and accelerate the impact of their digital transformation strategy.

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