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Industry Productivity Measures: History

Timeline Events:

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The U.S. Bureau of Labor Statistics has produced studies of labor productivity in individual industries since the 1800s. Prompted by congressional concern that human labor was being displaced by machinery, a study of 60 manufacturing industries was released as “Hand and Machine Labor” in 1898. This report provided striking evidence of the savings in labor resulting from mechanization in the last half of the 19th century. The effects of productivity advances on employment remained an important focus of BLS throughout the 1920s and 1930s. During this period, BLS also began publishing industry indexes of labor productivity, which were based on available production data from the periodic “Census of Manufactures” and employment statistics collected by BLS.

Productivity, as it related to wage adjustments, was an issue in labor–management relations in the 1920s.  Later, during the Depression, as concerns grew over the effects of increased productivity and technological change on employment, BLS developed data on the impact of technology on employment and the displacement of workers. In 1935, BLS applied to the Works Progress Administration (WPA) for funds to conduct studies of productivity in 50 industries. 

In 1940, Congress authorized BLS to start continuing studies of productivity and technological changes. BLS extended earlier indexes of labor productivity developed by the National Research Project of the WPA, and published measures for selected industries. This work, however, decreased during World War II, because of the lack of meaningful production and employee hour data for many manufacturing industries.

With the arrival of World War II, the BLS Productivity program began to focus on the most efficient use of scarce labor resources. BLS began a number of studies of labor requirements for defense industries, such as synthetic rubber and shipbuilding. After the war, the industry studies program resumed on a regular basis; the program supplemented data for a number of industry studies by directly collecting data from employers. Budget restrictions after 1952 prevented the continuation of direct collection of data. Consequently, the preparation of industry measures was largely limited to those industries where data were readily available.

Over the years, the BLS productivity program has made improvements in production theory and index number theory and has expanded the number of series it produces. In 1987, the program published the first multifactor productivity measures for detailed industries. These measures relate output to combined inputs of capital, labor, energy, materials, and purchased services. In 1995, following a careful review of its methods and the economic literature, the program released labor productivity measures that incorporated an annual chain-weighted Törnqvist index for measuring changes in industry output. The index aggregates the growth rates of various industry outputs with annual weights based on the products’ shares in total value of industry production.

In 1998, the program completed a major industry expansion, increasing coverage from 180 industries to more than 500, as defined by the Standard Industrial Classification (SIC) system. In 1999, the program published industry unit labor cost measures for the first time. These measures reflect the relationship between labor compensation and real output. In 2000, industry multifactor productivity measures were expanded to cover all 140 3-digit SIC manufacturing industries. Industry labor productivity measures were converted from the SIC system to the North American Industry Classification System (NAICS) in 2003, and industry multifactor productivity measures were converted from SIC to NAICS in 2007. Efforts to expand industry coverage for service industries with nontraditional sources and methods continue.

In 2009, BLS developed and published measures of employment and hours of all persons for a comprehensive set of all 3- and 4-digit industries, including industries for which labor productivity measures are not available. In 2011, similar measures were developed for all National Income and Product Accounts (NIPA) industries, and were provided to the Bureau of Economic Analysis for use in the development of a set of prototype industry production accounts. In 2014, BLS began publishing labor measures as hours worked instead of hours paid.


Last Modified Date: August 08, 2017