Puget Sound Business Journal, March 31, 2023
Neetish Basnet, Data reporter
Seattle metro employees are not only more productive than workers in other parts of the country, they’re widening their lead, data shows.
A recent McKinsey & Co. report on worker productivity found that while Seattle-area employees were 16% more productive than average nationally in 2007, the gap grew to 38% by 2019. The study defines labor productivity as economic output per hour worked.
The Seattle area’s real gross domestic product per employee in 2019 was $172,437 — the third-highest in the nation.
Bay Area cities San Francisco and San Jose similarly outran the field over the 13-year period surveyed in the study. (The study period ends in 2019 to avoid economic distortions caused by the Covid-19 pandemic.)
Meanwhile, Washington ranked second among states for labor output and productivity growth in 2019.
“So, for Washington state and for Seattle, it’s really a good story of what has been quite a successful increase in productivity,” McKinsey partner Charles Atkins, one of the authors of the report, told the Business Journal.
But the widening productivity gap reflects a trend in which some U.S. regions are leaving the rest behind. While productivity in the U.S. has increased 2.2% per year since 1948, the average productivity growth rate since 2005 has fallen to 1.4%.
“If the U.S. economy were a car, the engine has been sputtering for a while,” the report said.
The McKinsey researchers estimate a return to the longer-term growth rate by 2030 would result in an additional $10 trillion in output to the U.S. GDP.
Seattle metro employees are not only more productive than workers in other parts of the country, they're widening their lead, data shows.
A recent McKinsey & Co. report on worker productivity found that while Seattle-area employees were 16% more productive than average nationally in 2007, the gap grew to 38% by 2019. The study defines labor productivity as economic output per hour worked.
The Seattle area's real gross domestic product per employee in 2019 was $172,437 — the third-highest in the nation and accounting for two-thirds of Washington state's GDP.
Bay Area cities San Francisco and San Jose similarly outran the field over the 13-year period surveyed in the study. (The study period ends in 2019 to avoid economic distortions caused by the Covid-19 pandemic.) Other top-performing metros included Houston, San Diego, Los Angeles, New York and Boston.
Meanwhile, Washington ranked second among states for labor output and productivity growth in 2019. The average Washington worker yielded $82.89 in real output per hour worked in 2019, up from $64.52 in 2008.
Washington was one of only seven states with both above-average productivity levels and labor output over the study period. Currently, California, Colorado, Massachusetts, New York, North Dakota, Texas and Washington contribute 40% of the nation's GDP and nearly one-third of all jobs, according to the report.
"So, for Washington state and for Seattle, it's really a good story of what has been quite a successful increase in productivity," McKinsey partner Charles Atkins, one of the authors of the report, told the Business Journal.
But the widening productivity gap reflects a trend in which some U.S. regions are leaving the rest behind. While productivity in the U.S. has increased 2.2% per year since 1948, the average productivity growth rate since 2005 has fallen to 1.4%.
"If the U.S. economy were a car, the engine has been sputtering for a while," the report said.
The McKinsey researchers estimate a return to the longer-term growth rate by 2030 would result in an additional $10 trillion in output to the U.S. GDP. That's equivalent to $15,000 per household.
Atkins said the U.S. needs productivity spikes in not just the leading high-growth areas but across the board and in all sectors.
The big question, he said is, "How do we start to unlock more productivity growth within these lower-productivity states' sectors, cities and firms that have fallen behind?
"Therein lies the most important set of challenges for both policymakers as well as CEOs, as they think about their contributions to the nation's productivity outlook."
