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Productivity
Bureau of Labor Statistics > Productivity > Publications > Productivity Highlights

Labor Productivity for Selected Service-Providing Industries

On June 30, 2022, the Bureau of Labor Statistics (BLS) updated measures for 30 detailed industries in Productivity and Costs by Industry: Selected Service-Providing Industries - 2021. Chart 1 from the news release illustrates the six industries with the greatest gains in labor productivity, three of which are featured in our analysis below.

Chart showing largest changes in productivity in selected service-providing industries, 2020
Chart 1 data. Largest increases in productivity in selected service-providing industries, 2021

 

On This Page:

2021 Pandemic Effects

The economy came roaring back in 2021, bringing a rebound in demand for services. According to the Bureau of Economic Analysis, real gross domestic product increased in all four quarters of 2021, with growth above 6 percent in 3 out of 4 quarters. Growth in service consumption was also positive in all four quarters of 2021, with growth in two quarters exceeding 8 percent.[1] Output in selected services matched this overall economic trend, rising in 27 of 30 industries published by the productivity program. These increases in output came despite widespread labor shortages. Twenty-four out of thirty service industries had positive labor productivity growth in 2021 caused primarily by a strong return in output coupled with relatively smaller increases in hours worked.

The BLS productivity program publishes productivity data for detailed industries as defined by NAICS on an annual basis using source data and estimation methods as described in the BLS Handbook of Methods. Here we examine the data underlying these measures to get additional insight into industry trends. This webpage presents two examples of analysis associated with the release of data for the 2021 reference year. Employers and workers in various industries differed in how they were able to respond to the year's unique and unexpected challenges.

Getting Back to Normal in Recreation and Travel-Related Industries

Recreation and travel-related industries are examples of industries that managed a recovery in output despite labor shortages. At the beginning of the pandemic, recreation and travel-related industries experienced an economic shock caused by lockdowns and a sudden decrease in demand. In 2021, many lockdowns ended, and customers began frequenting these businesses again, often at higher rates than before the pandemic. Output in 2021 for travel arrangement and reservation services, gambling industries, and food service and drinking places exceeded 2019 output. Amusement parks and arcades returned to 97 percent of 2019 output. (See chart 2.)

Output was up from 2019 to 2021 in three of four recreation and travel-related industries.

  

Chart 2 data. Output Rebound in Recreation and Travel-Related Industries, 2019 to 2021

 

Increased demand for these services in 2021 posed challenges as employers struggled to find enough workers. According to the U.S. Chamber of Commerce, businesses added 3.8 million jobs in 2021, but chart 3 shows workforce participation remained below pre-pandemic levels. This left 3.4 million fewer Americans in the workforce in 2021 compared to February 2020.[2]

Civilian labor force participation declined from about 65 percent in 2010 to level of around 63 percent through early 2020. After falling to near 60 percent in early 2020 in the wake of COVID-19, participation remained below 62 percent at the close of 2021.

 

Chart 3 data. Civilian Labor Force Participation Rate, January 2010 through December 2021

 

Despite the labor constraints, travel and recreation-related service industries all managed to adapt and had growth in output that outstripped increases in hours worked, resulting in exceptionally high labor productivity. (See chart 4.) Food services and drinking places, amusement parks and arcades, and travel arrangement and reservation services all had labor productivity growth in 2021 that exceeded any year since measurement began for those industries.

Output growth in 2021 led to labor productivity growth in four, select recreation and travel-related industries.

 

Chart 4 data. Labor productivity, output, and hours worked in recreation and travel-related industries, 2021

 

A Closer Look: Full-Service Restaurants

Full-service restaurants were hit especially hard by the stay-at-home orders and indoor gathering restrictions during the onset of COVID-19 and suffered a 26 percent decrease in output in 2020. This output decrease was completely reversed in 2021 with a 44.2 percent increase in output. This stark output reversal came despite widely reported labor shortages throughout the full-service restaurant industry. In a survey of 3,000 restaurant operators conducted by the National Restaurant Association in November and December 2021, half reported recruitment and retention as their largest challenge.[3] This issue is clearly visible in the 2021 hours worked data shown in chart 5. Hours worked has generally kept pace with output increases in the past but broke from that trend in 2021. The 44.2 percent increase in output in 2021 coupled with the smaller 15.2 percent increase in hours worked resulted in a 25.3 percent increase in labor productivity.

Hours worked has generally kept pace with output increases in the past but broke from that trend in 2021.The 44.2 percent increase in output in 2021 is coupled with the smaller 15.2 percent increase in hours worked.

 

Chart 5 data. Output and hours worked indexes for full-service restaurants, 2012-2021

 

The fierce competition for limited employees among service industries can also be seen in the 12.3 percent increase in hourly compensation in full-service restaurants in 2021, the largest annual increase in hourly compensation for this industry since measurement began in 1987. (See chart 6.)

Hourly compensation in full-service restaurants annual increases remain below 6 percent from 2000 through 2020. In 2021, the increase jumps to over 12 percent.

 

Chart 6 data. Annual percent change in hourly compensation for full-service restaurants, 2000-2021

 

Widespread anecdotal reporting has documented increased use of technology in full-service restaurants since the onset of the COVID-19 pandemic. Innovations such as digital menus, online ordering, and contactless payment could explain how this industry has adapted to support output growth without increasing hours worked. A February 2022 press release from the National Restaurant Association states that technological advances have become commonplace in the restaurant industry since COVID-19 began.[4] It’s no wonder that full-service restaurants saw such a productivity resurgence.

Supply Chain Issues Continue in 2021

Supply-chain related service industries were not as vulnerable to pandemic changes as recreation and travel-related service industries. The warehousing and storage industry and the couriers and messengers industry were able to maintain positive output growth in 2020 and 2021. Truck transportation experienced only a minor output decline in 2020 of less than 1 percent, but more than rebounded with 7.4 percent output growth in 2021. (See chart 7.) This output growth was spurred by increased demand for goods in the U.S. economy. Demand for both durable and non-durable goods grew significantly in 2021, especially in the first quarter where personal consumption expenditures rose 50 percent for durable goods and 15.9 percent for non-durable goods according to data from the Bureau of Economic Analysis.[5]

The warehousing and storage industry and the couriers and messengers industry were able to maintain positive output growth in 2020 and 2021. Truck transportation experienced only a minor output decline in 2020 of less than 1 percent, but more than rebounded with 7.4 percent output growth in 2021.

 

Chart 7 data. Output Growth in Supply-Chain Related Industries, 2019 to 2021

 

Despite rising output, supply-chain related services could not keep up with the strong demand for goods. Pandemic related supply chain issues that began in 2020 worsened in 2021, according to a May 2022 report from the Congressional Research Service.[6] Chart 8 shows the global supply chain pressure index (GSCPI) from 1998 through 2021. The GSCPI comes from the New York Federal Reserve and is an aggregate measure of country-specific supply chain variables, global shipping rates, and international freight costs.[7]

Global supply chain index shows negative pressure in most periods from 1998 through 2019 remaining between -2 and +2. Since 2020, the index remains positive with a momentary dip to near zero in late 2020 and a pressure rating of over +4 by the end of 2021.

 

Chart 8 data. Global supply chain pressure index, January 1998 to December 2021

 

Supply-chain related service industries were unable to remain productive in the face of these challenges and all three had negative or near zero labor productivity growth in 2021. (See chart 9.)

Three supply-chain related service industries were unable to remain productive in 2021 with negative or near zero labor productivity growth despite growing output and hours.

 

Chart 9 data. Labor productivity, output, and hours worked in supply-chain related service industries, 2021

 

Supply-chain related service industries have struggled with labor shortages and employee turnover. The Bureau of Labor Statistics Job Opening and Labor Turnover Survey reports quit rates, the number of quits during one month as a percent of total employment. Quit rates in the broader industry grouping for transportation, warehousing, and utilities almost doubled since 2012. Quit rates had their largest annual increase (16.4 percent) in 2021.[8] (See chart 10.)

Quit rates in the broader industry grouping for transportation, warehousing, and utilities almost doubled since 2012. Quit rates had their largest annual increase in 2021.

 

Chart 10 data. Transportation, warehousing, and utilities annual quit rates, 2012-2021

 

These rising quit rates are occurring despite rising hourly compensation in truck transportation and warehousing and storage. Chart 11 shows hourly compensation rising annually in both industries since 2017. Hourly compensation in the warehouse and storage industry was 18.7 percent higher in 2021 than it was in 2017. Hourly compensation in the truck transportation industry was 12 percent higher in 2021 than it was in 2017.

Hourly compensation growth in the warehouse and storage industry was 18.7 percent higher in 2021 than it was in 2017. Hourly compensation in the truck transportation industry was 12 percent higher in 2021 than it was in 2017.

  

Chart 11 data. Hourly compensation growth in warehousing and storage and truck transportation, 2017-2021

 

A Closer Look: Warehousing and Storage

The pandemic exacerbated an existing trend of negative labor productivity in warehousing and storage. Labor productivity in the warehousing and storage industry has decreased every year since 2015 with increases in hours worked that outpace increases in output. (See chart 12.)

Labor productivity in the warehousing and storage industry has decreased every year since 2015 with increases in hours worked that outpace increases in output.

 

Chart 12 data. Labor productivity, output, and hours worked in warehousing and storage, annual changes, 2015-2021

 

Warehousing and storage employers may be having their own unique issues with keeping employees after widespread reporting of hazardous warehouse working conditions. Data from the Bureau of Labor Statistics Injuries, Illnesses, and Fatalities news release show warehouse employees suffer work related illness and injury that are severe enough to cause days away from work at 2.3 times the rate of all private industries.[9]

The warehouse and storage industry’s failure to adapt to labor issues as effectively as full-service restaurants could be due to the hesitation in the warehousing industry to adopt emerging technologies. Separate research conducted in the UC Berkeley Labor Center in 2019 and the MIT Work of the Future Task Force in 2020 both report that the warehousing industry has been slow to adopt new technologies due to risk aversion in such a low-margin industry and the costs needed to restructure warehouses around new technologies.[10]

Related resources

Industries at a Glance: Service-Providing Industries

 

Notes

[1] Source: https://www.bea.gov/data/gdp/gross-domestic-product

[2] Source: https://www.uschamber.com/workforce/understanding-americas-labor-shortage

[3] Source: https://restaurant.org/education-and-resources/resource-library/new-2022-state-of-the-restaurant-industry-report-projects-trends/

[4] Source: https://restaurant.org/research-and-media/media/press-releases/association-releases-2022-state-of-the-restaurant-industry-report/

[5] Source: https://www.bea.gov/data/gdp/gross-domestic-product

[6] Source: https://crsreports.congress.gov/product/pdf/IN/IN11926

[7] Source: https://libertystreeteconomics.newyorkfed.org/2022/01/a-new-barometer-of-global-supply-chain-pressures/

[8] Source: https://www.bls.gov/jlt/

[9] Source: https://www.bls.gov/iif/oshsum.htm

[10] Sources:
https://laborcenter.berkeley.edu/future-of-warehouse-work/
https://workofthefuture.mit.edu/wp-content/uploads/2020/09/2020-Research-Brief-Mehta-Levy-4.pdf

Last Modified Date: September 26, 2022