Historical, technical USDL 00-156 information: (202) 691-5618 FOR RELEASE: 10:00 a.m. EDT Media contact: (202) 691-5902 Friday, May 26, 2000 Internet: http://stats.bls.gov/iprhome.htm PRODUCTIVITY AND COSTS: SERVICE-PRODUCING AND MINING INDUSTRIES, 1987-98 The Bureau of Labor Statistics of the U.S. Department of Labor reported today on labor productivity and unit labor cost changes for selected industries in the service-producing and mining sectors of the U.S. economy. This is the first industry productivity news release to include unit labor costs, introduced by BLS in 1999 for these industries. Labor productivity--defined as output per hour--rose for most of these industries in 1998. Nearly half of the industries registering productivity growth also posted declines in unit labor costs. In 1998, labor productivity increased in 80 percent of the service-producing and mining industries reported here. Output growth was recorded by 82 percent of the industries, while hours of labor grew in 54 percent of the industries. The proportion of service-producing and mining industries experiencing long-term productivity growth was larger than the proportion with short- term productivity growth. Over the 1987-98 period, output per hour advanced in 92 percent of the service-producing and mining industries. Output rose in 88 percent of the industries, while hours of labor grew in 64 percent of the industries. The attached tables present data for service-producing and mining industries for which BLS publishes productivity series at the 3-digit level of the Standard Industrial Classification (SIC) Manual. Although the analysis that follows will focus on industries at the 3-digit level, BLS also publishes productivity series at the 2- and 4-digit level for these industries as well as for manufacturing industries. (See section on “Productivity measurement” in the technical note.) ********************************************************* * Productivity and costs measures for the manufacturing * * industries, 1987-97, also are being released today by * * BLS. See news release USDL 00-155. * ********************************************************* Retail trade Current trends Productivity rose in 1998 in 25 of the 28 published 3-digit industries in retail trade. The increases ranged from 0.1 percent in new and used car dealers to 20.4 percent in radio, television, computer, and music stores. The largest industries in retail trade, those with more than 2,400,000 employees, are eating and drinking places, grocery stores, and department stores. In 1998, output per hour rose 0.6 percent in eating and drinking places, 1.1 percent in grocery stores, and 4.8 percent in department stores. Productivity declined in only three retail trade industries reported here. The three industries registering productivity declines were fuel dealers (-1.3 percent), shoe stores (-5.0 percent), and retail bakeries (-13.9 percent). Of the 25 industries in retail trade that recorded productivity growth, 13 also experienced decreases in unit labor costs in 1998. The decreases in unit labor costs ranged from 0.6 percent in nonstore retailers to 8.9 percent in radio, television, computer, and music stores. Despite productivity growth, unit labor costs rose in the largest industries in retail trade--4.7 percent in eating and drinking places, 2.7 percent in grocery stores, and 0.3 percent in department stores. All of the industries that experienced productivity declines also experienced increases in unit labor costs. Long-term trends Although the proportion of retail trade industries with long-term productivity growth from 1987-98 was the same as the proportion with short-term productivity growth, the long-term rates tended to be lower than the 1998 rates. Output per hour increased in 25 of the 28 industries during the 1987-98 period. Among these retail industries, labor productivity advanced at average annual rates exceeding 5.0 percent in five industries. An additional 13 industries registered annual growth rates in output per hour in the 2.0-5.0 percent range. Over the 1987-98 period, unit labor costs declined in 8 of the 28 retail trade industries. The largest declines were in variety stores (-4.7 percent per year), radio, television, computer, and music stores (-3.5 percent per year), and household appliance stores (-2.2 percent per year). Finance and services Short-term trends In 1998, gains in output per hour were posted in eight of the nine industries in finance and services for which BLS published data at the 3-digit level. The largest industry in terms of employment was hotels and motels, where productivity climbed 0.8 percent. In the next largest industry, commercial banks, output per hour was virtually unchanged. The only declines in unit labor costs occurred in automotive repair shops (-1.0 percent) and funeral services and crematories (-2.0 percent) in 1998. The largest industries in finance and services experienced rising unit labor costs. Unit labor costs advanced 4.9 percent in hotels and motels and 8.6 percent in commercial banks. Long-term trends All nine industries in the finance and services sector registered long-term labor productivity growth. From 1987 to 1998, output per hour rose at an average annual rate of 0.8 percent in hotels and motels and 2.6 percent in commercial banks. All but one of the nine industries in finance and services experienced rising unit labor costs. Only barber shops posted a long-term decline in unit labor costs. Unit labor costs decreased 0.9 percent per year in this industry. Transportation, communications, and utilities Current trends Among the transportation industries with 1998 data included in this release, output per hour advanced 1.1 percent in the U.S. postal service, but fell in trucking (-1.8 percent) and in air transportation (-2.8 percent). (See table 1.) Productivity gains were recorded in two of the three communications industries, rising 6.4 percent in telephone communications and 0.4 percent in cable and other pay TV services. In contrast, productivity fell 0.3 percent in radio and television broadcasting. In the utilities sector, output per hour climbed 4.5 percent in electric utilities, but declined 3.3 percent in gas utilities. In 1998, unit labor costs fell 2.1 percent in telephone communications. All other industries in the transportation, communications, and utilities sectors with 1998 data recorded rising unit labor costs. NOTE: The most recent productivity and costs figures available for railroad transportation are for 1997. Long-term trends Over the 1987-98 period, all of the industries in the transportation, communications, and utilities sectors posted gains in labor productivity with the exception of cable and other pay TV services. (See table 2.) The largest gains were in telephone communications (5.0 percent per year); electric utilities (4.2 percent per year); and gas utilities (4.0 percent per year). The 1987-97 productivity gain in railroad transportation was 5.5 percent per year. Unit labor costs rose over the long term in all of the industries in the transportation, communications, and utilities sectors, except railroad transportation and telephone communications. Mining Current trends Productivity increased in 1998 in three of the five 3-digit mining industries reported here. Declines in output per hour were recorded in copper ores (-1.1 percent) and in crushed and broken stone (-1.9 percent). Unit labor costs fell 0.4 percent in bituminous coal and lignite mining and 2.4 percent in copper ores in 1998. Increases in unit labor costs occurred in crude petroleum and natural gas (3.2 percent) and crushed and broken stone (9.1 percent). Long-term trends Over the 1987-98 period, all of the mining industries posted productivity gains. The largest increase was in bituminous coal and lignite mining, 5.9 percent per year. The two mining industries with the fastest growth in productivity were the only ones to reduce unit labor costs. From 1987 to 1998, bituminous coal and lignite mining registered the largest reduction in unit labor costs, 2.9 percent per year. Technical Note Coverage In the service-producing sector, the BLS industry productivity series cover 100 percent of employment in retail trade, 90 percent in communications and utilities, 57 percent in transportation, 17 percent in finance and services, and 2 percent in wholesale trade. In the goods- producing sector, the BLS industry productivity series cover 100 percent of employment in manufacturing and 96 percent in mining; the construction sector is not covered. In the sectors with low coverage, a lack of adequate basic data and, in some cases, serious conceptual issues have prevented development of productivity measures. (The coverage percentages noted here relate to unpublished as well as published series. For information on series that do not meet BLS publication standards, see discussion below.) Revisions The data in this news release reflect revisions to series as published in table 42 of the Monthly Labor Review; in Unit Labor Costs for Selected Industries, 1987- 97, BLS Report 939, November 1999; and in Productivity by Industry: Service Sector and Mining, 1997, annual BLS news release. The productivity series for the gas utilities industry (SIC 492,3PT) has been revised for the years 1967 to 1997. The revision is due to a change in the underlying data source. Indexes of productivity by industry have been revised for the years 1993 to 1997 for most industries in the retail trade sector. These revisions are due to the incorporation of annual sales data from the Census Bureau which were benchmarked to preliminary Census of Retail Trade data. The revised series can be obtained in several ways: by visiting the Industry Productivity web site (http://stats.bls.gov/iprhome.htm); by calling the Division of Industry Productivity Studies (202-691-5618); or by sending a request by e-mail (dipsweb@bls.gov). Industry output indexes are prepared from basic data published by various public and private agencies, using the greatest level of detail available. Data from the Bureau of the Census, U.S. Department of Commerce, are used extensively in developing output statistics for manufacturing, trade, and service-producing industries. All of the measures for 1998 in this news release are preliminary and subject to revision. Productivity measurement The productivity measures in this release describe the relationship between 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 these measures relate output to hours of employees or all persons engaged in an industry, they do not measure the specific contribution of labor, capital, or any other factor of production. Rather, they reflect the joint effects of many influences, including changes in technology; capital investment; level of output; utilization of capacity, energy, and materials; the organization of production; managerial skill; and the characteristics and effort of the workforce. The reader should note that, occasionally, the year- to-year movements in productivity measures might be somewhat erratic, particularly in the smaller industries. The annual changes in an industry's productivity are based on sample data, which are likely to differ from data generated by a census of establishments in the industry. As a result, long-term trends tend to be more reliable indicators of the performance of an industry than are the year-to-year changes. Unit labor cost measurement The unit labor cost series in this release describe the cost of labor input required to produce one unit of output. Unit labor costs are calculated as the ratio of current dollar labor compensation to constant dollar output. The indexes of unit labor costs for each industry are computed by dividing an index of current dollar compensation by an index of constant dollar output. Compensation is a measure of the cost to the employer of securing the services of labor. It is defined as payroll plus supplemental payments. Payroll includes salaries, wages, commissions, dismissal pay, bonuses, vacation and sick leave pay, and compensation in kind. Supplemental payments are divided into legally required expenditures and payments for voluntary programs. The legally required expenditures include employers’ contributions to Social Security, unemployment insurance taxes, 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. The indexes of industry output used in measuring labor productivity and unit labor costs are, wherever possible, calculated with a Tornqvist formula. This formula aggregates the growth rates of the various industry products between two periods using the products’ shares in industry value of production, averaged over the two periods, as weights. Published productivity and unit labor cost data for 452 industries in the goods-producing and service-producing sectors are available on the Internet at http://stats.bls.gov/iprhome.htm. Productivity series for an additional 222 industries have been withheld from publication because they do not meet BLS publication standards. Among the unpublished industries are 32 previously published industries. An additional nine industries that were previously unpublished are now published, including computer and office equipment (SIC 357) and electronic components and accessories (SIC 367). Unpublished data can be requested by phoning 202-691-5618 or by sending e-mail to dipsweb@bls.gov. Information in this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691-5200; TDD message referral phone number: 1-800-877-8339. Table 1. Annual percent change in output per hour and related series: mining and service-producing industries, 1997-98 1998 Annual percent change SIC Code Industry Employment (1) Output Employee Total Unit (thousands) per hour (2) Output hours (3) Compensation Labor Costs Mining 102 Copper ores 15 -1.1 -4.1 -3.0 -6.4 -2.4 104 Gold and silver ores 16 17.2 -0.1 -14.7 -7.5 -7.4 122 Bituminous coal and lignite mining 86 6.1 -1.0 -6.7 -1.4 -0.4 131 Crude petroleum and natural gas 138 2.8 -1.6 -4.3 1.5 3.2 142 Crushed and broken stone 42 -1.9 -1.6 0.3 7.4 9.1 Transportation 4011 Railroad transportation 205 (4) 1.9 (4) 1.4 (4) -0.5 (4) 0.8 (4) -0.6 4213 Trucking, except local 878 -1.8 2.2 4.0 7.4 5.0 431 U.S. Postal Service (5) 867 1.1 2.4 1.3 4.0 1.6 4512,13,22(PTS) Air transportation 682 -2.8 2.5 5.5 6.6 3.9 Communications and Utilities 481 Telephone communications 1007 6.4 12.0 5.3 9.6 -2.1 483 Radio and television broadcasting stations 247 -0.3 2.2 2.5 9.2 6.8 484 Cable and other pay television stations 181 0.4 6.2 5.8 16.1 9.2 491,3(PT) Electric utilities 501 4.5 2.5 -1.9 3.0 0.4 492,3(PT) Gas utilities 158 -3.3 -4.6 -1.4 4.1 9.1 Retail Trade 521 Lumber and other building materials dealers 582 8.8 10.7 1.8 11.0 0.3 523 Paint, glass, and wallpaper stores 68 15.5 10.2 -4.6 0.8 -8.5 525 Hardware stores 173 12.7 6.0 -5.9 -1.7 -7.3 526 Retail nurseries, lawn and garden supply stores 112 6.2 13.1 6.5 9.4 -3.3 531 Department stores 2426 4.8 7.3 2.4 7.7 0.3 533 Variety stores 129 6.0 3.3 -2.5 2.3 -1.0 539 Miscellaneous general merchandise stores 191 12.9 6.8 -5.4 1.5 -4.9 541 Grocery stores 3157 1.1 1.5 0.3 4.2 2.7 542 Meat and fish (seafood) markets 56 6.2 5.0 -1.0 3.8 -1.2 546 Retail bakeries 234 -13.9 -7.0 8.0 13.0 21.5 551 New and used car dealers 1048 0.1 0.3 0.2 6.3 5.9 553 Auto and home supply stores 418 2.6 3.6 0.9 4.1 0.5 554 Gasoline service stations 713 4.5 4.8 0.3 3.5 -1.2 561 Men's and boy's wear stores 85 10.1 8.4 -1.5 5.1 -3.1 562 Women's clothing stores 285 6.2 0.7 -5.2 5.1 4.3 565 Family clothing stores 389 2.5 9.9 7.3 14.4 4.1 566 Shoe stores 222 -5.0 3.1 8.5 10.2 6.9 571 Furniture and homefurnishings stores 606 1.9 5.5 3.6 10.3 4.6 572 Household appliance stores 74 18.6 5.3 -11.3 -1.6 -6.5 573 Radio, television, computer, and music stores 473 20.4 25.6 4.3 14.4 -8.9 581 Eating and drinking places 7999 0.6 2.6 1.9 7.4 4.7 591 Drug and proprietary stores 656 2.0 5.2 3.1 7.3 2.0 592 Liquor stores 139 4.6 2.5 -2.0 2.9 0.4 593 Used merchandise stores 182 14.8 12.8 -1.7 5.1 -6.8 594 Miscellaneous shopping goods stores 1155 6.3 6.6 0.3 7.5 0.9 596 Nonstore retailers 553 9.2 9.2 -0.1 8.5 -0.6 598 Fuel dealers 99 -1.3 -4.8 -3.6 1.6 6.7 599 Retail stores, n.e.c. 671 7.0 9.3 2.2 6.0 -3.1 Finance and services 602 Commercial banks 1468 0.0 1.5 1.5 10.2 8.6 701 Hotels and motels 1744 0.8 2.4 1.6 7.5 4.9 721 Laundry, cleaning, and garment services 527 5.1 2.6 -2.4 2.9 0.3 722 Photographic studios, portrait 77 14.7 3.5 -9.8 4.2 0.7 723 Beauty shops 726 0.8 3.5 2.6 5.4 1.8 724 Barber shops 50 2.7 -0.9 -3.5 2.4 3.3 726 Funeral services and crematories 102 5.6 3.4 -2.1 1.3 -2.0 753 Automotive repair shops 899 5.2 4.6 -0.7 3.5 -1.0 783 Motion picture theaters 138 1.5 7.3 5.7 11.1 3.5 (1) Employment figures are based primarily on data from the BLS Current Employment Statistics (CES) program and the Current Population Survey (CPS). Other sources are: the Association of American Railroads, the Department of Transportation, and the U.S. Postal Service. (2) Output per employee hour is measured in mining, transportation, communications, and SICs 531, 551, 602, and 783. Output per hour of all persons is used for all other trade and services industries. All persons includes self-employed and unpaid family workers as well as employees. In SIC 4213 and 4512,13,22(pts), output per employee hour is based on output per employee with the assumption of constant average weekly hours. (3) Employee hours are measured in mining, transportation, communications, and in SICs 531, 551, 602, and 783. Hours of all persons are used for all other trade and service industries. All persons includes self-employed and unpaid family workers as well as employees. In SIC 4213 and 4512,13,22(pts), employee hours are based on employees with the assumption of constant average weekly hours. (4) 1996-97. (5) Employee hours in SIC 431 are based on the number of full-time equivalent (FTE) employee years, as reported in the U.S. Postal Service budget. FTE employee years are computed by dividing total hours of full-time, part-time, and intermittent workers by the number of hours in a standard work year. The output and hours for SIC 431 reflect the Federal fiscal year. Table 2. Average annual percent change in output per hour and related series: mining and service-producing industries, 1987-98 1998 Average annual percent change SIC Code Industry Employment (1) Output Employee Total Unit (thousands) per hour (2) Output hours (3) Compensation Labor Costs Mining 102 Copper ores 15 1.5 3.4 1.9 5.7 2.2 104 Gold and silver ores 16 5.8 7.5 1.6 6.7 -0.7 122 Bituminous coal and lignite mining 86 5.9 1.0 -4.6 -1.9 -2.9 131 Crude petroleum and natural gas 138 2.3 -0.9 -3.2 2.0 2.9 142 Crushed and broken stone 42 1.0 1.8 0.8 4.7 2.9 Transportation 4011 Railroad transportation 205 (4) 5.5 (4) 2.8 (4) -2.5 (4) 0.3 (4) -2.5 4213 Trucking, except local 878 2.4 3.3 0.9 5.4 2.1 431 U.S. Postal Service (5) 867 0.8 2.0 1.1 5.1 3.1 4512,13,22(PTS) Air transportation 682 0.7 4.2 3.4 5.4 1.2 Communications and Utilities 481 Telephone communications 1007 5.0 6.3 1.2 5.3 -0.9 483 Radio and television broadcasting stations 247 0.1 0.9 0.8 5.1 4.1 484 Cable and other pay television stations 181 -1.2 4.0 5.2 10.0 5.8 491,3(PT) Electric utilities 501 4.2 2.5 -1.7 3.0 0.5 492,3(PT) Gas utilities 158 4.0 1.8 -2.1 2.4 0.6 Retail Trade 521 Lumber and other building materials dealers 582 2.6 5.2 2.5 6.2 1.0 523 Paint, glass, and wallpaper stores 68 4.7 3.3 -1.4 2.8 -0.5 525 Hardware stores 173 2.1 1.3 -0.7 3.0 1.6 526 Retail nurseries, lawn and garden supply stores 112 2.8 3.6 0.7 4.7 1.1 531 Department stores 2426 2.4 5.0 2.6 4.9 -0.1 533 Variety stores 129 9.2 2.8 -5.8 -2.0 -4.7 539 Miscellaneous general merchandise stores 191 6.0 5.1 -0.8 5.8 0.7 541 Grocery stores 3157 -0.9 0.2 1.1 4.2 4.0 542 Meat and fish (seafood) markets 56 -1.0 -2.9 -2.0 0.7 3.7 546 Retail bakeries 234 -3.8 -1.7 2.2 5.8 7.6 551 New and used car dealers 1048 0.7 1.8 1.0 5.0 3.2 553 Auto and home supply stores 418 0.6 2.2 1.6 5.1 2.8 554 Gasoline service stations 713 2.5 2.2 -0.2 3.3 1.0 561 Men's and boy's wear stores 85 3.5 0.5 -2.8 0.9 0.3 562 Women's clothing stores 285 4.1 0.3 -3.6 0.7 0.4 565 Family clothing stores 389 3.5 6.9 3.3 7.9 0.9 566 Shoe stores 222 2.9 2.3 -0.6 2.9 0.6 571 Furniture and homefurnishings stores 606 1.8 3.1 1.3 4.9 1.8 572 Household appliance stores 74 5.7 2.8 -2.7 0.5 -2.2 573 Radio, television, computer, and music stores 473 9.0 13.8 4.4 9.8 -3.5 581 Eating and drinking places 7999 0.1 2.1 2.0 6.0 3.9 591 Drug and proprietary stores 656 1.5 2.4 0.9 5.5 3.0 592 Liquor stores 139 1.2 -0.7 -1.9 1.9 2.6 593 Used merchandise stores 182 4.3 8.2 3.7 7.9 -0.3 594 Miscellaneous shopping goods stores 1155 2.5 4.0 1.5 5.6 1.5 596 Nonstore retailers 553 6.2 7.8 1.5 6.8 -0.9 598 Fuel dealers 99 1.0 -0.3 -1.4 2.4 2.7 599 Retail stores, n.e.c. 671 4.2 6.2 1.9 5.3 -0.8 Finance and services 602 Commercial banks 1468 2.6 2.0 -0.6 5.2 3.2 701 Hotels and motels 1744 0.8 2.5 1.8 6.7 4.1 721 Laundry, cleaning, and garment services 527 1.2 1.7 0.6 4.2 2.5 722 Photographic studios, portrait 77 4.0 5.7 1.6 5.9 0.2 723 Beauty shops 726 0.7 2.3 1.5 5.6 3.3 724 Barber shops 50 3.9 -0.7 -4.5 -1.6 -0.9 726 Funeral services and crematories 102 0.6 1.5 0.9 5.6 4.1 753 Automotive repair shops 899 1.8 3.3 1.5 5.4 2.0 783 Motion picture theaters 138 0.1 2.6 2.4 5.3 2.7 (1) Employment figures are based primarily on data from the BLS Current Employment Statistics (CES) program and the Current Population Survey (CPS). Other sources are: the Association of American Railroads, the Department of Transportation, and the U.S. Postal Service. (2) Output per employee hour is measured in mining, transportation, communications, and SICs 531, 551, 602, and 783. Output per hour of all persons is used for all other trade and services industries. All persons includes self-employed and unpaid family workers as well as employees. In SIC 4213 and 4512,13,22(pts), output per employee hour is based on output per employee with the assumption of constant average weekly hours. (3) Employee hours are measured in mining, transportation, communications, and in SICs 531, 551, 602, and 783. Hours of all persons are used for all other trade and service industries. All persons includes self-employed and unpaid family workers as well as employees. In SIC 4213 and 4512,13,22(pts), employee hours are based on employees with the assumption of constant average weekly hours. (4) 1987-97. (5) Employee hours in SIC 431 are based on the number of full-time equivalent (FTE) employee years, as reported in the U.S. Postal Service budget. FTE employee years are computed by dividing total hours of full-time, part-time, and intermittent workers by the number of hours in a standard work year. The output and hours for SIC 431 reflect the Federal fiscal year.