Organization Salary Determinations

Productivity levels

Output per hours worked (labor productivity) can be measured at any of the following levels:

• Job level. At the job level, it's possible to measure worker application and effort separately from other inputs as the basis for incentive plans.
• Plant or operating unit level. At the plant level, estimates of the source of productivity increases can be made the basis of pay-for-performance plans.
• Industry level. At the industry level, productivity improvements cannot be traced separately to the behavior of workers, managers, and investors in the industry. Nor can the contributions of one industry to another industry's productivity be separated. For these reasons, plus predictable adverse economic consequences, industry productivity is seldom suggested as a salary determinant.
• Economy level. At the level of the economy, changes in labor productivity have been suggested as appropriate for salary determination. In fact, the improvement factor in labor contracts employed in the automobile industry from 1948 until the early 1980s is an example of such a use. For information on productivity levels at both the industry and economy level see: https://www.bls.gov/productivity/.