Brad asks: 'Where exactly has labor productivity been falling?'
This is a bit out of date, but Britain's 'strong labour market performance may', in the words of the Department of Trade and Industry, 'actually have . the effect of lowering average measured productivity'.UK Productivity and competitiveness indicators, 2003, p9
This was first noted in 2001, when they wrote that productivity deteriorated as 'the economy has generated an additional 1.5 million jobs at a quicker rate than it has increased investment' (Department of Trade and Industry, UK Competitiveness indicators, 2001: 75).