Economic News Release

                                             Technical Note

Labor Productivity: The industry labor productivity measures describe the relationship between 
industry output and the labor time involved in its production. They show the changes from period to 
period in the amount of goods and services produced per hour. Although the labor productivity measures 
relate output to hours of all persons in an industry, they do not measure the specific contribution of labor 
or any other factor of production. Rather, they reflect the joint effects of many influences, including 
changes in technology; capital investment; utilization of capacity, energy, and materials; the use of 
purchased services inputs, including contract employment services; the organization of production; 
managerial skill; and the characteristics and effort of the workforce.

Output: Industry output is measured as an annual-weighted index of the changes in the various products 
(in real terms) provided for sale outside the industry. Real industry output is usually derived by deflating 
nominal sales or values of production using BLS price indexes, but for some industries it is measured by 
physical quantities of output. 

Industry output measures are constructed primarily using data from the economic censuses and annual 
surveys of the U.S. Census Bureau, U.S. Department of Commerce, together with information on price 
changes primarily from BLS. Output measures for some mining and utilities industries are based on 
physical quantity data from the Energy Information Administration, U.S. Department of Energy, while 
output measures for some transportation industries are based on physical quantity data from the Bureau 
of Transportation Statistics, U.S. Department of Transportation. Other data sources for some industries 
include the U.S. Geological Survey, U.S. Department of the Interior; the U.S. Postal Service; the Postal 
Rate Commission; and the Federal Deposit Insurance Corporation.

Labor Hours: The primary source of industry employment and hours data is the BLS Current 
Employment Statistics (CES) survey. The CES provides monthly data on the number of total and 
nonsupervisory worker jobs held by wage and salary workers in nonfarm establishments, as well as data 
on the average weekly hours of nonsupervisory workers in those establishments. CES and CPS data are 
supplemented or further disaggregated for some industries using data from the BLS Quarterly Census of 
Employment and Wages (QCEW), the Census Bureau, or other sources. Data from the Current 
Population Survey (CPS) are used together with CES data to estimate the historical average weekly 
hours of supervisory workers for each industry. The CPS data are also used to estimate the employment 
and hours of self-employed and unpaid family workers in each industry. Other sources of employment 
and hours data for some service industries include the Association of American Railroads, the U.S. 
Department of Transportation, and the U.S. Postal Service. Hours of all workers in an industry are 
treated as homogeneous and are directly aggregated.  

Unit Labor Costs: Unit labor costs represent the cost of labor required to produce one unit of output.  
The unit labor cost indexes are computed by dividing an index of industry labor compensation by an 
index of real industry output. Unit labor costs also describe the relationship between compensation per 
hour and real output per hour (labor productivity). Increases in hourly compensation increase unit labor 
costs; increases in labor productivity offset compensation increases and lower unit labor costs. 
      
Compensation, defined as payroll plus supplemental payments, is a measure of the cost to the employer 
of securing the services of labor. Payroll includes salaries, wages, commissions, dismissal pay, bonuses, 
vacation and sick leave pay, and compensation in kind. Supplemental payments include legally required 
expenditures and payments for voluntary programs. The legally required portion consists primarily of 
Federal old age and survivors’ insurance, unemployment compensation, and workers’ compensation. 
Payments for voluntary programs include all programs not specifically required by legislation, such as the 
employer portion of private health insurance and pension plans.

Revisions: This news release incorporates data from the 2009 Service Annual Survey (SAS) and the 
November 2010 Subject Series Revision of the 2007 Economic Census, both published by the Census 
Bureau. The labor productivity and output series for all industries have been revised for 2008 and earlier 
years as a result. This news release also incorporates the annual benchmark revision of the BLS Current 
Employment Statistics (CES) survey published in February 2011. The industries included in this release 
are classified according to the 2007 NAICS. All of the measures for 2009 in this release are preliminary 
and subject to revision.

Additional Information: While the rates of change reported by BLS in this news release are rounded to 
one decimal place, all industry productivity percent changes are calculated using index numbers rounded 
to three decimal places.

Year-to-year movements in industry productivity may be erratic, particularly in smaller industries. The 
annual measures based on sample data may differ from measures generated by a census of 
establishments in the industry. Annual changes in an industry’s output and use of labor may reflect 
cyclical changes in the economy as well as long-term trends. As a result, long-term productivity trends 
tend to be more reliable indicators of industry performance than year-to-year changes.

Industry productivity and related indexes and rates of change can be accessed online by visiting the 
Labor Productivity and Costs web site at www.bls.gov/lpc. Levels of industry employment, hours, labor 
compensation, and value of production, and the implicit price deflator for output for these industries, are 
available by calling the Division of Industry Productivity Studies (202-691-5618) or by sending an 
e-mail to dipsweb@bls.gov. Information in this report will be made available to sensory-impaired 
individuals upon request. Voice phone: 202-691-5618; TDD message referral phone number: 1-800-877-
8339.

To subscribe to the industry productivity program’s electronic notification service, send an e-mail to 
dipsnews@bls.gov with the word “subscribe” in the subject line.