Productivity and Costs by Industry: Wholesale Trade and Retail Trade News Release

For release 10:00 a.m. (ET) Thursday, July 28, 2022                                            USDL-22-1552

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                                   PRODUCTIVITY AND COSTS BY INDUSTRY 
                           WHOLESALE TRADE AND RETAIL TRADE INDUSTRIES - 2021


Labor productivity rose 5.7 percent in wholesale trade and 6.6 percent in retail trade in 2021, the U.S. 
Bureau of Labor Statistics reported today. Unit labor costs, which reflect the total labor costs required 
to produce a unit of output, rose in both wholesale trade and retail trade.

Annual productivity growth for retail trade slowed from its peak growth in 2020, with hours worked and 
output both increasing at the fastest rates since measurement began in 1987. For wholesale trade, output 
was the second highest since 1987, and productivity and hours rose at the fastest rates since 2010 and 
2011, respectively.

Among the 6 four-digit NAICS industries with the highest productivity growth, all reported growth in 
output while two showed declines in hours worked. Productivity growth was greatest in shoe stores 
(+34.9 percent) where there was a significant growth in output and a small decline in hours worked. 

Of the 6 four-digit NAICS industries with the largest declines in productivity, hours worked increased in 
all six and output decreased in three. The two industries with the greatest decreases in productivity were 
farm product raw material merchant wholesalers (-10.5 percent) and lawn and garden equipment and 
supplies stores (-10.2 percent). 

Labor Productivity Rose in Nearly Every Industry in 2021

Productivity increased in 14 of the 15 three-digit NAICS industries studied in 2021. (See table 1.) Ten 
industries had productivity gains of at least 6.8 percent; among these, the largest changes occurred in 
clothing and clothing accessories stores (+28.0 percent) and electronics and appliance stores (+22.5 
percent). The only industry with a productivity decline, building material and garden supply stores, 
dropped 1.7 percent. 

In wholesale trade, productivity rose 5.7 percent as output growth (+8.7 percent) surpassed growth in 
hours worked (+2.8 percent).
    •  Productivity increased in 14 of the 19 four-digit NAICS wholesale trade industries while output 
       rose in 16 industries and hours worked grew in all 19.
    •  Productivity rose 9.6 percent in durable goods wholesalers and 0.9 percent in nondurable goods 
       wholesalers.
    •  The highest increase in productivity occurred in miscellaneous durable goods merchant 
       wholesalers (+17.3 percent) as output rose at a much faster rate (+21.2 percent) than hours 
       worked (+3.4 percent).

In retail trade, productivity increased by 6.6 percent as output growth (+10.4 percent) exceeded growth 
in hours worked (+3.6 percent).
    •  Productivity increased in 23 of the 27 four-digit NAICS retail trade industries while output grew 
       in 26 industries and hours worked rose in 22. 
    •  Shoe stores saw the largest productivity increase (+34.9 percent) as output increased 32.2 percent 
       while hours fell 2.0 percent.
    •  Seven of the top ten employers in retail experienced productivity increases in which output 
       growth outpaced growth in hours.
    •  In the largest retail employer, grocery stores, hours worked fell faster (-1.4 percent) than output 
       (-0.3 percent) leading to a productivity increase of 1.2 percent.

Unit Labor Costs Decline in Half of Four-Digit NAICS Industries in 2021

When productivity gains outpace hourly compensation, unit labor costs decline.
    •  Unit labor costs fell in 8 of 15 three-digit NAICS wholesale and retail trade industries in 2021. 
       Productivity rose in all the industries where unit labor costs declined.
    •  The largest decrease in unit labor costs occurred in clothing and clothing accessories stores 
       (-16.3 percent) in which hourly compensation growth (+7.1 percent) trailed productivity growth 
       (+28.0 percent). 
    •  Unit labor costs declined in 10 of 19 four-digit NAICS wholesale trade industries. In retail trade, 
       13 of 27 four-digit NAICS industries had declines in unit labor costs.
    •  Hourly compensation rose in 39 of the 46 four-digit NAICS industries.

2019 to 2021 Trends

Although 42 of the 46 four-digit trade industries increased output in 2021, not all of these industries saw 
their output return to pre-pandemic levels. (See table 3.) Six of these 42 industries had levels of output 
that were lower in 2021 than in 2019. The two industries with the steepest average annual declines in 
output from 2019 to 2021 were vending machine operators (-7.7 percent) and book stores and news 
dealers (-6.2 percent).

The recovery in hours worked was not as widespread. Of the 41 four-digit trade industries where hours 
worked increased in 2021, 28 remained below their 2019 levels. The two industries with the largest 
average annual decreases in hours worked from 2019 to 2021 were office supplies, stationery, and gift 
stores (-10.6 percent) and clothing stores (-6.6 percent).

Long-term Labor Productivity Increases in All but One Industry

From 1987 to 2021, labor productivity increased at an average annual rate of 2.8 percent in wholesale 
trade and 3.1 percent in retail trade. (See table 2.)
    •  Among the 46 four-digit NAICS industries, productivity rose in all but one industry, metal and 
       mineral merchant wholesalers, from 1987 to 2021. 
    •  Of the 45 four-digit NAICS industries with increasing productivity growth, 39 experienced rising 
       output while 21 had an increase in hours worked.
    •  Median productivity among four-digit NAICS industries grew at an average annual rate of 2.0 
       percent.
    •  The 2007 to 2021 productivity growth in durable wholesale, nondurable wholesale, and retail 
       trade industries was slower than during the 1987-2000 and 2000-2007 periods.  
    •  Productivity grew in 43 of the 46 four-digit NAICS industries during the 1987-2000 period. The 
       number of industries fell to 42 from 2000-2007 and then to 40 from 2007-2021.

Long-term Trends in Unit Labor Costs Vary by Sector

From 1987 to 2021, unit labor costs increased at an average annual rate of 1.1 percent in wholesale trade 
and 0.1 percent in retail trade. (See table 2.)
    •  Among the 46 four-digit NAICS industries, unit labor costs rose in 17 of 19 wholesale trade and
       14 of 27 retail trade industries from 1987 to 2021. 
    •  Unit labor costs rose in 27 industries in 1987-2000, 25 in 2000-2007, and 31 industries in 2007-
       2021. 
    •  In all three periods, unit labor costs for wholesale nondurable goods remained positive. Unit 
       labor costs were negative for wholesale durable goods in the periods prior to 2007. In retail trade, 
       unit labor costs hovered above zero in the 1987-2000 and 2007-2021 periods yet fell during 
       2000-2007.

Additional Information

The trade measures in this release incorporate 2017 Economic Census data and benchmark data from the 
Census Bureau's Annual Wholesale Trade Report (December 2021), Monthly Wholesale Trade Survey 
(May 2022), Annual Retail Trade Survey (January 2022), and Annual Revision of the Monthly Retail 
and Food Services: Sales and Inventories (April 2022). Accordingly, the labor productivity and output 
series for all industries have been revised for 2020 and earlier years. Additionally, the unit labor cost 
measures incorporate preliminary data from the BLS Quarterly Census of Employment and Wages (June 
2022). 

More information about the North American Industry Classification System (NAICS) can be found at 
www.census.gov/naics/.

Access the productivity data dashboard at www.bls.gov/productivity/tables/labor-productivity-detailed-industries.xlsx for
    •  Additional industries and sectors
    •  Detailed data series: indexes of productivity and related measures; rates of change; and levels of 
       industry employment, hours worked, nominal value of production, and labor compensation 
    •  Additional years and long-term data

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                                       Technical Note

Labor Productivity: Labor productivity describes the relationship between real output and the labor 
hours involved in its production. These measures show the changes from period to period in the 
amount of goods and services produced per hour worked. Although the labor productivity measures 
relate output in an industry to hours worked of all persons in that industry, they do not measure 
the specific contribution of labor to growth in output. 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; the characteristics and effort of the workforce; and managerial 
skill.

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 nominal industry labor 
compensation by an index of real industry output. Unit labor costs also describe the relationship 
between compensation per hour worked (hourly compensation) and real output per hour worked (labor 
productivity). When hourly compensation growth outpaces productivity, unit labor costs increase. 
Alternatively, when productivity growth exceeds hourly compensation, unit labor costs decrease.

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 for data in
this release is derived by deflating nominal sales or values of production using price indexes. 
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 from BLS.  

Labor Hours: Labor hours are measured as annual hours worked by all employed persons in an industry. 
Data on industry employment and hours come primarily from the BLS Current Employment Statistics (CES) 
survey and Current Population Survey (CPS). CES data on the number of total and production worker 
jobs held by wage and salary workers in nonfarm establishments are supplemented with CPS data on 
self-employed and unpaid family workers to estimate industry employment. Hours worked estimates are 
derived using CES and CPS employment, CES data on the average weekly hours paid of production workers, 
CPS data on hours of nonproduction, self-employed, and unpaid family workers, and ratios of hours 
worked to hours paid based on data from the National Compensation Survey (NCS). For some industries, 
employment and hours data are supplemented or further disaggregated using data from the BLS Quarterly 
Census of Employment and Wages (QCEW), the Census Bureau, or other sources. Hours worked are estimated 
separately for different types of workers and then are directly aggregated; no adjustments for labor 
composition are made.

Labor Compensation: Labor 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 both 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. Industry compensation measures are constructed primarily using data from 
the BLS QCEW and the economic censuses of the Census Bureau, U.S. Department of Commerce.