The Productivity Conundrum

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The country's slow economic growth might have to do with a decrease in productivity.

Only 160,000 jobs were created in April, according to the most recent jobs report — fewer than expected and a bit disappointing compared to previous months. There was, however, some good news: Average hourly earnings have increased 2.5 percent over the year, higher than inflation.

So wages are going up and people are getting jobs, and yet the economy is kind of bumping along — expanding at 0.5 percent in the first quarter, the slowest in growth two years.

The economy's sluggish growth might have something to do with productivity, which basically means how much stuff gets made.

"How much economic output is created for every hour of time that people put in working," was how Neil Irwin, senior economic correspondent at the New York Times described it. "That's important because that's the ultimate driver of standards of living, of incomes."

This week on Money Talking, host Charlie Herman discusses why productivity matters and how it affects U.S. workers and our future with  Irwin and Rana Foroohar, with Time Magazine and the author of the new book, "Makers and Takers: The Rise of Finance and the Fall of American Business."

 

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