The formula for productivity is: total productive hours divided by the total output equals the total labor productivity. For example, if the total productive hours were 100 and the total output was $5, 5 divided into 100 gives a labor productivity of $20 per hour.
Economists use labor productivity to look for trends in output efficiency, as noted by Investing Answers. Companies and countries want to improve their labor productivity. A country or company that is experiencing increases in its labor productivity generally does so due to technological innovations, increased resources and additional infrastructure investments. The labor productivity formula requires that all of the labor hours come from the same time period, such as a week, month or quarter.