Productivity in the U.S. and Japan: A reexamination

U.S.-Japan productivity comparisons published by the U.S. Bureau of Labor Statistics are misleading. In the U.S., growth is understated because the BLS is unable to measure productivity for more than half of the labor force. Productivity growth is assumed to be zero for all of these people. In Japan, growth is exaggerated because small business output is counted, while small business employment is not. The BLS also assumes that work hours per person are about the same in the U.S. and in Japan. We present corrected statistics showing that American output per hour is roughly double that of Japan. During the last 10 years, the Japanese have made little progress in closing the productivity gap.