Labor productivity is a measurement used to evaluate the country’s economic growth. It measures the volume of services and goods produced per labor hour. More particularly, labor productivity evaluates the produced amount of the actual GDP per labor hour. Productivity is evaluated by contrasting the amount of inputs employed in a production with the amount of services and goods produced. Labor productivity is therefore the ratio of the labor hours dedicated to the output production to the output of services and goods (Bureau of Labor Statistics, 2012).
Relation between Living Standards and Growth in the rate of Production
Labor productivity is an evaluation of the amount of services and goods which the average worker outputs per hour of work. The productivity level is the single most essential determinant of the living standard of a country. A high rate of productivity growth results to improved living standards. Living standards can be evaluated in various ways though one of the best aspects for evaluating living standards of a country is the average yearly increase in the inflation-adjusted income of the distinctive American family. Increase in the labor productivity results to increase in the number of different products in the market. In this regard, the cost of products tends to go down as a result of stiff competition from companies selling similar products this makes most products. This makes products to be affordable to many in the country. It also unable individuals to purchase more products since the cost is favorable this makes life affordable and thus, improving the living standards of the population. The reduction of product prices also increases the volume of sales and thus, the producing company’s revenue. In this regard, these companies are able to give good compensation to their workers, boosting their living standards too (Field, 2008).