Bob Murphy also points out that composition matters for how much stock we put into productivity figures with the following hypothetical:
In 1968, a nation of identical workers collectively puts in 1 billion labor-hours, to produce 1 billion units of finished consumer goods, at a price of $1 per unit. (There are different types of goods, but they all have the same unit price.) Everyone gets paid $1/hour. This is the only production, so nominal GDP is $1 billion. The government also happens to set a minimum wage law of $1/hour, but this has no effect because that’s what the competitive wage was anyway. (Assume that not only the average product, but also the marginal product, is $1/hour.)
In 1971, there is a major policy change that unleashes the printing press. The government’s cronies start getting humongous payments of new $100 bills, which they do partially spend on consumer goods, but which mostly go into financial assets, real estate, and precious metals. After decades of this new pattern, we find…
In 2013, the same workers collectively put in 1 billion labor-hours, to produce 1 billion units of finished consumer goods, at a price of $2 per unit. Everyone gets paid $2/hour. This contributes $2 billion in nominal GDP. However, the fat cats provide “financial services” of $8 billion in nominal GDP, for a total nominal GDP of $10 billion. Since CPI has doubled, in 1968 dollars real GDP is $5 billion, a five-fold increase.
EPI publishes a paper saying that if the minimum wage kept pace with “inflation,” it would be $2 in 2013. If it kept pace with real productivity growth, it would be $10/hour.BLS does produce productivity figures by industry and presumably that would stand up to Bob's scrutiny better (I don't personally know how non-financial productivity behaved relative to the economy's productivity).
It's an interesting sort of thought experiment... maybe I'm not understanding it but workers seem to be paying other for consumption goods and fat cats pay other fat cats for financial services? I don't know. Even so, it still shows the limits of these figures especially if you think the financial sector is bigger than it ought to be.
From the BLS tables -
Nonfinancial productivity grew 125.7% between 1968 and 2011
Total productivity grew 131.5% between 1968 and 2011
So there is some fat-cat finance outpacing but there's still been a lot of productivity growth since 1968.
btw - I know the division chief for major sector productivity at BLS, Susan Fleck. She was my gender micro professor and wrote a recommendation for me for that long term care fellowship I mentioned the other day. She has an essay on the productivity/wage gap here.