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HomeRemote WorkUS worker productivity slows down in Q1, but continues to grow

US worker productivity slows down in Q1, but continues to grow

The productivity of American workers has slightly decreased in the first quarter of 2024, but the overall trend is still strong. Even if it has slowed down from prior quarters, there are increasing indications that productivity growth—albeit modest—remains a driving force behind the economy. This gives businesses that are concerned with growth and efficiency in the face of unstable economic situations a more complex image.

Key statistics from the Bureau of Labor Statistics Report

According to the most recent data available from the Bureau of Labor Statistics (BLS), worker productivity in the United States grew by just 0.3% during the first quarter of 2024. This amount is a considerable decrease from the 3.5 percent rise recorded in the final quarter of 2023 and is less than the 0.8 percent gain predicted by Reuters’ panel of experts.

Analysis of labor costs

Unit labor costs increased by 4.7% in the first quarter, indicating a rise in the ratio of hourly compensation to labor productivity. In addition to this rise, hourly pay is rising by 5%, which represents a significant change from labor expenses that were almost stable in the second half of 2023.

Perspectives from economists

Chief economist Gregory Daco of EY-Parthenon addresses the decrease in productivity, emphasizing that it shouldn’t overshadow the overall upward trend. “This first-quarter slower pace comes on the back of three historically strong prints,” Daco says, alluding to the remarkable growth rates that were uncommon in the ten years before the Covid-19 outbreak.

Daco remains optimistic about the ongoing momentum in productivity growth, emphasizing its strength even in the face of recent decreases. He points out that such growth phases have been rare since 2019, indicating that the current slowdown might be more of a normalization than a downturn.

Business responses to labor costs

The increase in labor costs has certainly added pressure on business owners, especially given the 5 percent rise in compensation. Nevertheless, Daco highlights a silver lining as businesses across various sectors are actively finding ways to manage these costs. Efforts are particularly focused on enhancing business processes through the adoption of new tools and strategies aimed at streamlining operations.

Economic implications and future outlook

Despite the pressures from rising labor costs, the broader economic context remains positive. Daco notes the “positive trade-off” where non-inflationary growth continues, suggesting a balanced approach in managing productivity and labor costs. As businesses adapt to these changes, the ongoing developments in labor market dynamics, including upcoming updates from the Employment Cost Index and average hourly earnings, will be critical in shaping future strategies.


The first quarter of 2024 presents a mixed yet hopeful picture for U.S. worker productivity. Although growth has slowed, the continued focus on improving business processes and managing labor costs suggests that companies are not only adapting but also preparing for sustained productivity in a changing economic landscape. This resilience underscores a strategic approach to harnessing productivity as a key driver of non-inflationary economic growth.