Today I ran across an infographic from GOOD, reposted by the Business Pundit, that attempts so show the efficiency of a country’s workforce using the amount of hours worked compared to a country’s Gross Domestic Product (GDP) per capita.
Clicking the image below will take you to the full infographic
The size of each gear’s diameter in the infographic represents the amount of value added to a given country’s GDP by the average individual citizen on an hourly basis. In other words, how much you contribute to your nations economic output each hour worked. The average American worker put in 1,792 hours of work for year 2008, and their per capita GDP was $47,186. When you divide the per capita GDP by the hours worked, Americans are contributing $26.33 to our nation’s GDP on an hourly basis. Compare that to an hourly contribution margin of $54.48 by the average worker from Luxembourg who puts in 1,555 hours, and has a per capita GDP of $84,713. For a citizen of Luxembourg they contribute to their GDP slightly more than twice what the average American contributes to their GDP. The Business Pundit and GOOD say this is a measure of workforce efficiency, and don’t quite see it that way.
A as soon as I saw how this infographic was described I knew something wasn’t right, and it’s taken me most of the day to figure out why. Couple my suspicion with GOOD giving it the additional title of “The Value of an Hour of Work”, and then commenting on the stark contrast between the hourly effort given by the average US and Luxembourg citizens I was confused. On the surface it felt like they were somehow trying to compare Starbucks to the Boston Consulting Group using only average employee salary.
If I were instead to give this infographic a label it would read: “The Contribution of an Hour’s Work to a Nation’s GDP”. To me it better represents the efficiency of a nation’s economy, and not its workforce. You could have the most efficient workforce on the planet and still have a low per capita GDP contribution margin if your country imports more than it exports, and has a large population. If a country’s citizens are spending money on goods and services from another country, they’re not contributing to their nation’s GDP, which will lower the per capita contribution margin. The cost of imports, which subtract from a country’s GDP, is independent of workforce efficiency other than possibly helping create the market where the workforce attempts to operates. This is why I think the infographic is misleading.
I’m not an economist, and I might be treading into unfamiliar waters, but looks as if the average Luxembourg citizen has such a high contribution margin to their nation’s GDP because they are the world’s second largest investment fund next to the United States with a population of only 600,000. More money is simply coming into that country than what’s going out, and with a small denominator of citizens it’s easy to see why the per capita GDP contribution margin is so great. However, this is no reflection of workforce efficiency. It instead reflects on the high efficiency of the Luxembourg economy.
What does this all really mean anyway? Luxembourg has an economy that’s more than twice as efficient as the US on a per capita basis, but when you simply look at GDP another picture emerges. For 2008 the United State’s gross domestic product was $14,500,000,000,000 (trillion dollars) for a nation of over 300 million people. The next highest GDP was Japan at $4.9 trillion dollars for a population of 127 million people. Luxembourg comes in with a total GDP of $53.7 billion for a population of 600,000, which is more than 270 times less than the US GDP. The infographic is mislabeled and misleading. It doesn’t have anything to do with workforce efficiency, and instead represents the economic efficiency of a nation as a whole expressed on a per capita basis. Without a broader perspective it’s kind of like using only miles-per-gallon to describe an automobile.
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