(This commentary originally appeared on Sept. 6, 2004 in a number of newspapers.)
As we celebrate their economic achievements on Labor Day, American workers can be proud that they are the most productive in the world. Workers can also be thankful that there is overwhelming evidence that the labor market has improved significantly since last Labor Day and will likely continue to improve.
Measured by output per person, no country in the world even comes close to matching the productivity of American workers – they will produce 30 percent of global output this year with only 5 percent of the world's labor force. Japanese workers are only 74 percent as productive as American workers, and European workers are only 84 percent as productive.
The world-class productivity of American workers also means they have the highest wages, the most stable employment and the highest standard of living in the world.
And economic conditions keep getting better for the U.S. workforce.
The national unemployment rate of 5.5 percent in July was the lowest in 33 months, far below the 6.25 percent average since 1970, and a significant improvement from 6.2 percent last July. Unemployed workers are also finding it easier to find jobs this year – the median number of weeks unemployed is the lowest since 2001 and is two weeks shorter than last year.
We have had 34 consecutive quarters of growth in real wages for American workers, the longest string of real wage increases since the 1960s. Real compensation for U.S. workers has increased by 5 percent since 2002 and is increasing at the highest rate in three years.
Record-low interest rates and the improving economy also boosted both home sales and the homeownership rate to all-time record highs in 2004. Fortunately, the biggest gains in homeownership recently have been by minority households, households under 35 years of age, and households with income less than the median. Homeownership has never been more affordable for the average working household than it is today.
Improvements for workers since last Labor Day have been so positive that for the first time in the current economic expansion, which officially started in November 2001, we can confidently say that the labor market has finally made its long-awaited comeback.
Workers in the United States can celebrate Labor Day this year with pride as the most productive and highest paid workers in the world. In the international competition for labor productivity, American workers take all of the gold medals.
Mark J. Perry is an economist at the University of Michigan-Flint and an adjunct scholar with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.