New York Fed: revenue per worker grows 2.2% a year since 2019, and profit margins rose with it

Serguey Asael Shinder16 October 2026, 14:322 min read

US labour productivity growth has roughly doubled since 2019 after a weak decade, and part of the gain has gone into firms' profit margins, according to a Liberty Street Economics post by New York Fed research economist Jeremy Pearce, published on 15 October 2026.

The productivity turn. Non-farm business output per hour grew 1.0% a year from 2010 to 2019 and 2.2% a year from 2019 to 2025, the post says. Using firms' 10-K filings in the Compustat database, Pearce finds the same acceleration at the company level: real revenue per worker — sales deflated by industry output prices and divided by employment — rose from 0.7% a year to 2.2% a year over the same two periods. The sample covers manufacturing and services from 2010 to 2025 and excludes agriculture, utilities, finance, real estate and public administration because of known problems in measuring their productivity. "Across all datasets, the labor productivity uptick is real," he writes.

Who keeps the gain. Higher revenue per worker does not say whether the extra revenue goes to workers through higher wages or to firms through wider margins, so the post looks at margins directly. Through the 2010s they were flat: gross margins grew about 0.4% a year from 2010 to 2019 and operating margins were roughly flat. Both then turned up. On what the author calls a reasonable baseline, the operating margin rose by more than 2% a year from 2019 to 2025.

R&D as a predictor. Firms that entered the period with more research and development spending relative to sales saw larger gains: 10% more R&D intensity in 2019 went with about 0.7% higher operating-markup growth over 2019–2025, and 0.5% over 2022–2025. Higher capital intensity showed no comparable pattern. Pearce reads this as consistent with returns to intangible investment rather than to physical capital, and as pointing to a potentially important role for technology and intangibles in driving markups.

What remains open. The post leaves unresolved whether the rising margins are a return on substantial investment in intangibles or simply a windfall for firms, calling it a question for future work. As with all Liberty Street posts, the views are the author's and not necessarily those of the New York Fed or the Federal Reserve System.

Source: Federal Reserve Bank of New York, Liberty Street Economics — https://libertystreeteconomics.newyorkfed.org/2026/10/revenue-per-worker-is-up-are-firms-getting-a-larger-share/