Toggle open close Increasing living standards depends on increasing worker productivity. Competition causes firms to tie wages closely to employees’ productivity. Since 1973, the average private-sector employee’s productivity has increased by 81 percent, while their average compensation has increased by 78 percent. Some analysts have produced charts purporting to show that productivity has grown sharply while pay has remained nearly flat. These charts contain many methodological errors. They: Compare the pay of only some workers to the productivity of all employees; Count productivity growth of the self-employed, but exclude their pay growth; and Measure inflation differently to calculate pay growth and productivity growth.