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If one looks at the latest GDP figures, you will notice that the total value of all goods and services produced by Americans is roughly $14.3 trillion (at end of June 2008).

That’s nice, but it tells us little about the level of prosperity in the United States, at least as measured by income (more in future posts on this point). If there were one-trillion Americans, then each of us would be producing $14 each – not very much. But there are 305 million Americans. Typically then we measure our prosperity by looking at “average income” per person. So, dividing total GDP by the total population yields a number around $46,900. Thus, the mythical average American produces and earns roughly $47,000 per year.

ASIDE # 1: For the sake of reference, just 100 years ago that number (in real terms) was somewhere around $7,500.

But this does not really tell an accurate picture of how much a typical American worker produces. After all, in a country of 305 million people, not every single American works. My 11 month old is hardly able to contribute to production and my 31 month old probably contributes a good deal to economic destruction (if the crayon marks all over our house are any indication of bigger impacts) – though they each contribute enormously to my happiness. That said, there are about 145.8 million Americans employed in jobs at the time I write this (an additional 9 million are seeking jobs, but cannot find them).

ASIDE #2: 100 years ago, about 20 million Americans were employed. I’d like to ask those people who fear trade and technological developments and outsourcing where these additional 125.8 million jobs came from, and how many would exist today if their favored policies were more seriously enacted?

Back to my point. What matters, at least in my mind, is how much a typical worker is able to produce. If I am able to produce more, then that seriously reduces the burdens on my family members to produce, and they are free to pursue other activities that are perhaps more rewarding than market work (such as education, helping neighbors, recreation, spacing out, etc.). So, how much does a typical American worker produce today? Dividing $14.3 trillion by 145.8 million workers yields the astounding figure of $98,080.

The typical American worker today produces marketed goods and services worth roughly $100,000.

When one considers that in America as recently as 200 or so years ago, everyone had to work because everyone lived a subsistence lifestyle, per worker production was roughly $1,000 in today’s terms. So even though measured changes in GDP per capita tell us that America is much better off today than in the past, those numbers (even when focusing on income alone and ignoring all of the amazing quality of life and other economic improvements we will discuss in future posts) seriously understate how far along we have come. A typical American worker today is at least 100 times better off than a typical worker who lived at the end of the Jefferson Administration.

2 Responses to “American Productivity”

  1. Brian says:

    Well that is interesting, I still wonder if a high paying job is even worth it? The typical worker works hard enough to produce $100 000 but I am sure the typical worker’s salary is no where near that figure. The calculation also left out the 9 million workers who are trying to find work.

  2. wintercow20 says:

    In what sense can you mean, “worth it?” My point is that a typical worker PRODUCES that much stuff, and regardless of what one thinks of reported/measured income or salaries … everything that is produced is either saved or consumed. And since conventional wisdom holds that Americans don’t save anything, that means we are consuming a LOT more than is commonly believed.
    I intentionally leave out non-workers … that is the explicit point of the post – how much a typical worker can PRODUCE. All of that GDP doesn’t float off into thin air. And Bill Gates doesn’t eat it all either.

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