A Closer Look: Selected Service-Providing Industries
Labor productivity for selected service-providing industries
On June 11, 2021, the Bureau of Labor Statistics (BLS) updated measures for 29 detailed industries in Productivity and Costs by Industry: Selected Service-Providing Industries - 2020. Chart 1 from the news release illustrates the six industries with the greatest gains in labor productivity – defined as output per hour worked – and the six greatest decliners.Chart 1. Largest changes in productivity in selected service-providing industries, 2020
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2020, redefining "service"
The BLS productivity program publishes productivity data for detailed industries on an annual basis using source data and estimation methods as described in the BLS Handbook of Methods. Here we examine the data underlying these measures to get additional insight into industry trends. This webpage presents three examples of analysis associated with the release of data for the 2020 reference year. Employers and workers in various industries differed in how they were able to respond to the year's unique and unexpected challenges.
Restaurants: full-service and limited-service
Since the Great Recession, which began in 2007, the annual changes in labor productivity for full-service restaurants (NAICS 722511) and limited-service eating places (NAICS 722513,4,5) have generally been similar. This pattern changed in 2020. Productivity fell 8.2 percent in full-service restaurants, but rose 1.3 percent in limited-services eating places.
The COVID-19 pandemic was detrimental to restaurants in at least three related ways:
Full-service restaurants recorded an output decline of 30.8 percent in 2020, which corresponds to approximately 96 billion fewer dollars generated than in 2019. In contrast, limited-service eating places had a decline in nominal value of production of only 12 billion dollars, a loss of real output of 7.4 percent. Hours declined by nearly 25 percent in full-service restaurants, while limited-service eating places had a significantly smaller decline of 8.6 percent.
Over the last several years, quick-service restaurants have been investing heavily in digital infrastructure, and they made even greater use of technology in response to the pandemic. Online and digital systems allowed consumers to access restaurant services via delivery, drive-through, takeout, and curbside pickup. Because of these technological and labor-saving innovations, productivity remained positive in limited-service eating places, despite the impact of the pandemic.
On the other hand, the pandemic was truly devastating to full-service restaurants. Because much of their appeal depends on traditional table service with waiters, many establishments were unable to rely on takeout service like limited-service eateries could. According to the National Restaurant Association, over 110,000 restaurants closed either long term or permanently in 2020.
Two recreation industries
In-person leisure activities were sharply curtailed during the height of the pandemic. This is reflected in the output and hours worked series for two large leisure industries: amusement parks and arcades (NAICS 7131) and gambling industries (NAICS 7132).
The pandemic was disastrous for amusement and theme parks in 2020. According to the International Association of Amusement Parks and Attractions, U.S. theme parks suffered $18 billion in economic losses in 2020 and cut an estimated 125,000 jobs as a result of COVID-19 closures. Output declined by a whopping 61.4 percent and hours decreased by 37.3 percent, making for a 38.5 percent decline in productivity. This result can be entirely ascribed to the pandemic, as only two years ago amusement parks and arcades saw a 20 percent increase in productivity. This large productivity increase resulted from a decline in hours of nearly 13 percent and a 5.3 percent increase in output.
The pandemic also had a dire effect on casino operations in 2020. According to the American Gaming Association, U.S. casinos' revenue plunged 31.3 percent to $30.0 billion in 2020, the lowest level since 2003. U.S. casinos lost 27 percent of their normal operating days due to mandated closures.
However, output declines from closures of physical gambling sites were offset somewhat by increases in online gambling. Six states (Colorado, Illinois, Michigan, Montana, Tennessee, Virginia) and Washington, D.C., passed legislation to legalize sports wagering in 2020. A total of 21 states now have legalized sports betting.
Online gambling requires far fewer labor hours than traditional casino operations. As a result, hours worked fell even more than output in gambling industries in 2020. The pandemic's impact combined with the rise in online activity caused labor productivity to make a big jump, rising 16.2 percent. This was the largest single year increase in the productivity index since 2002.
Similar to amusement parks and arcades, both output and productivity plummeted in the air transportation industry in 2020. Output fell by 60.4 percent and productivity dropped by 57.0 percent. At the same time, hours worked were remarkably stable, falling only 8.0 percent. This indicates that payroll support programs designed to prevent layoffs for most of 2020 were largely effective.
The traffic changes in air transportation in 2020 can clearly be seen in data from the Bureau of Transportation Statistics. The blue lines in the chart 5 represent passenger travel and the grey lines are for freight carriage. While passenger travel fell to near-zero levels at the height of the pandemic in the United States, freight volumes increased. Because passenger travel accounts for far more revenue than freight, the overall output measure was still negative for the air transportation industry.
Last Modified Date: July 20, 2021