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The Most Productive Metro Areas in America

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Employee productivity is really about business efficiency and effectiveness. And business productivity impacts the community. So what are the most productive metro areas in America?

That’s a question tackled by a recent article in The Atlantic Cities, which argues that a micro-analysis is what is needed to get America growing again.. From the article:

Productivity at the national level has stalled since the Great Recession and even before. Productivity growth was 1.9 percent in the third quarter and just 1.5 percent for the past year. A number of leading economists, led by George Mason University’s Tyler Cowen, argue that the United States has in fact entered into a period of prolonged stagnation, having exhausted its capacity for innovation and productivity improvement.

A very different picture emerges when we consider the United States not just as a single national economy but as a collection of city and metro economies. Some have dramatic productivity growth, while others are stagnating.

If you plot this productivity data on a map, you get the following insight:

Productivity Ratio

Map courtesy of MPI’s Zara Matheson

By the way, our own local Indianapolis-Carmel metropolitan area is ranked #13, with a ratio of 1.26. A full chart of the top twenty regions is listed in the article.

But what is a “productivity ratio?” First: we need to talk about what economists mean when they use the word “productivity.” For them, productivity is a measure of the value of output for a consistent amount of input. For example, if you work for one hour and create a product or service that can be sold for a hundred bucks, that’s your economic productivity.

The “productivity ratio” from The Atlantic Cities article compares economic output per person for a particular metro area to the average gross domestic product for the entire country. In other words, it compares how much value the average worker in Seattle produces to the average worker across the United States. That’s the productivity ratio.

It’s hard to know if this aggregate data is especially meaningful. But it is interesting to see that some areas appear to be twice as “productive” as others. And if we compare the ranking of cities on this chart to desirability, it tells us even more about how productivity may be linked to satisfaction.

What do you think? Should we consider productivity in this way?

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