Productivity and Costs by Industry: Selected Service-Providing Industries News Release

For release 10:00 a.m. (EDT) Thursday, June 29, 2023                                              USDL-23-1419

Technical information: 	(202) 691-5606  •  productivity@bls.gov  • www.bls.gov/productivity/ 
Media contact:          (202) 691-5902  •  PressOffice@bls.gov


                               PRODUCTIVITY AND COSTS BY INDUSTRY
                           SELECTED SERVICE-PROVIDING INDUSTRIES - 2022


Labor productivity rose in 15 of 30 selected service-providing industries in 2022, the U.S. Bureau of Labor 
Statistics reported today. This was fewer industries compared to 2021, when labor productivity increased in 
23 out of 30 industries. Output rose in 18 industries in 2022 while hours worked increased in 22 industries.

Four of the six industries with the largest gains in productivity achieved output growth at a faster rate than 
growth in hours worked. This was the case in amusement parks and arcades which had the highest productivity 
growth (+16.3 percent). Four out of the six industries with the greatest declines in productivity had growth 
in hours worked while at the same time output declined. This was the case in drycleaning and laundry services 
which had the largest drop in productivity (-13.6 percent).

Trends in Labor Productivity in 2022

	• Labor productivity rose in half of the 30 selected service-providing industries in 2022.
	• There were three industries where productivity rose more than 10 percent: amusement parks and arcades 
	  (+16.3 percent), travel arrangement and reservation services (+15.5 percent), and air transportation 
	  (+13.9 percent). In all three of those industries, output grew more than 25 percent and hours worked 
	  rose by more than 9 percent.
	• The three industries with the greatest productivity and output gains in 2022 also saw the largest 
	  productivity increases in 2021. In 2021, these three industries all had growth in productivity of 
	  over 48 percent, following similarly large declines in 2020.
	• Hours worked rose in each of the four industries that recorded declines in productivity greater than 
	  6 percent. Two of these industries had double-digit growth in hours worked: warehousing and storage 
	  (+12.6 percent) and drycleaning and laundry services (+12.3 percent). 

Unit labor costs increased in 22 industries in 2022. In 11 of these industries, productivity increased as well. 
Hourly compensation increased more than productivity in all 11 industries with both rising productivity and unit 
labor costs. Unit labor costs reflect the total labor costs required to produce a unit of output. Unit labor 
costs increase when hourly compensation growth exceeds productivity growth. Changes in labor productivity 
counter the impact of changes in hourly compensation on unit labor costs facing employers. 

Trends in Unit Labor Costs in 2022

	• The largest declines in unit labor costs were in air transportation (-9.2 percent), wireless 
	  telecommunications carriers (-8.8 percent), and newspaper publishers (-8.1 percent). Productivity 
	  rose by more than six percent in each of these industries. 
	• Four industries had growth in unit labor costs greater than 15 percent: gambling industries 
	  (+33.1 percent), drycleaning and laundry services (+22.6 percent), warehousing and storage 
	  (+19.9 percent), and full-service restaurants (+15.2 percent). All four industries also had gains in 
	  hours worked and hourly compensation.
	• Hourly compensation rose in 22 of the 30 industries measured.

2019 to 2022 Trends

Labor productivity increased in 23 out of 30 selected service-providing industries from 2019 to 2022. Note that 
the percent changes for periods of more than one year in this section and the following section are annual 
percent changes. The two industries with the highest productivity gains during that period were travel arrangement 
and reservation services (+11.6 percent per year) and radio and television broadcasting (+9.8 percent). The 
largest annual decline in productivity from 2019 to 2022 occurred in warehousing and storage (-9.4 percent).

Output increased in 22 out of 30 selected service-providing industries from 2019 to 2022. The two industries with
the highest increases during that period were software publishers (+12.4 percent per year) and medical and 
diagnostic laboratories (+6.7 percent). The steepest annual declines in output during this period were newspaper 
publishers (-5.3 percent) and drycleaning and laundry services (-4.7 percent).

Hours worked decreased in 16 of the 30 selected service-providing industries from 2019 to 2022. The two industries
with the largest decreases in hours worked over the 3 years were newspaper publishers (-10.6 percent per year) and
travel arrangement and reservation services (-7.9 percent). The industry with the largest increase in hours worked
during this period was warehousing and storage (+15.2 percent).

Trends in Long-Term Productivity Through 2021

Long-term productivity rose in 48 out of 58 service-providing industries. For most industries studied, this period
extends from 1987 to 2021, the latest year for which data are available for all 58 selected service-providing 
industries published on the BLS website. Measures for some industries begin in years later than 1987, however none
of the rates in this section incorporate data for 2022.

	• Median long-term productivity growth for all 58 industries was approximately 1.8 percent per year, 
	  ranging from -2.4 percent per year in couriers and messengers to 11.5 percent in wireless 
	  telecommunications carriers.
	• Output increased over the long-term in 45 industries while hours worked increased in 33 industries.
	• Productivity increased in 40 of the 58 industries over the business cycle preceding the pandemic: 2007 
	  to 2019. During this period, 39 industries had increases in output and 31 experienced growth in hours 
	  worked. 

Additional Information

The productivity and costs measures in this release incorporate data from the Census Bureau's Service Annual 
Survey (November 2022). Accordingly, the labor productivity and output series for all industries have been revised
for 2021 and earlier years.

Measures of hours worked for all industries reflect a change in methods and are revised historically. The new 
method of determining hours worked uses all-employee hours data from the BLS Current Employment Statistics (CES)
survey as the main source of data. This is an improvement upon the prior method which instead used the CES 
production worker hours data. Another improvement is the use of BLS Current Population Survey (CPS) data to adjust 
CES all-employee hours paid to account for hours worked but not paid, also known as off-the-clock hours. Hours 
worked data also now incorporate all-employee based hours-worked-to-hours-paid ratios from the National 
Compensation Survey, rather than ratios based only on production workers. For more information on the new hours 
worked methodology, see
www.bls.gov/opub/mlr/2022/article/improving-estimates-of-hours-worked-for-us-productivity-measurement.htm.

The following NAICS codes are included in Tables 1 and 3 but not counted in the short-term count of 30 selected 
industries because they are duplicate codes or aggregates for which full underlying coverage is published:  22, 
221, 484, 4841, 4911, 4931, 511, 5111, 515, 5173, 54121, 722, and 72251.

The following NAICS codes are included in Table 2 but not counted in the long-term count of 58 selected 
industries because they are duplicate codes or aggregates for which full underlying coverage is published:  
22, 221, 484, 4841, 4842, 491, 493, 4931, 511, 5111, 515, 5151, 5173, 5412, 54121, 5615, 6215, 6221,3, 7131, 
72, 721, 7211, 722, 72251, 8121, and 8123.

Access productivity data at http://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 and real output per hour (labor productivity). 
Increases in hourly compensation increase unit labor costs; increases in labor productivity 
offset compensation increases and reduce unit labor costs.

Output:  Real 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 from BLS. Other data sources include: the Energy Information 
Administration, U.S. Department of Energy; the Bureau of Transportation Statistics, U.S. 
Department of Transportation; the U.S. Postal Service; the Postal Rate Commission; and the 
Federal Deposit Insurance Corporation. Data from the Quarterly Service Survey from the Census
Bureau are used to construct preliminary output measures for 2022 for some industries. Data 
from both the Census Bureau's Quarterly Service Survey and Monthly Retail Trade Survey are 
used to construct preliminary output measures for 2022 for some industries.

Labor Hours:  Labor hours are measured as annual hours worked by all employed persons in an 
industry. This includes hours worked for pay as well as uncompensated work time. 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 self-employed and unpaid family worker data 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 both the CPS and 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. Additional sources of employment and 
hours data for certain service industries include the Association of American Railroads, the 
U.S. Department of Transportation, and the U.S. Postal Service. 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 economic censuses and 
annual surveys of the Census Bureau, U.S. Department of Commerce. The estimates for 2022 are 
constructed using data from the BLS Quarterly Census of Employment and Wages (QCEW).

Annual Percent Change:  The annual percent change is the compound annual growth rate in an 
index series over a period of more than one year. The change of an index series varies from
year to year. However, the annual percent change is the constant rate that can be applied to 
each year in a period, from the start to the end, that would give the same total result. It 
is calculated as (Ending Value/Starting Value)^(1/Number of Years)-1.