September 14, 1999
The motor vehicles and equipment industry throttled down labor costs during the current economic expansion. In three major segments of the industry—motor vehicle assembly, parts manufacturing, and automotive stampings—unit labor costs were lower in 1998 than they were in 1991.
From 1991 to 1998, unit labor costs of motor vehicle assemblers declined 0.9 percent per year. During the same period, parts manufacturers cut unit labor costs by 2.0 percent annually, on average. The automotive stampings industry had even greater success in cost-cutting, reducing unit labor costs by 4.4 percent per year.
Unit labor costs—the cost of the labor input required to produce one unit of output—are computed by dividing labor costs in nominal terms by real output. Unit labor costs also can be expressed as the ratio of hourly compensation to labor productivity.