Historical, technical USDL 06-1201 information: (202) 691-5618 FOR RELEASE: 10:00 a.m. EDT Media contact: (202) 691-5902 WEDNESDAY, JULY 12, 2006 Internet: http://www.bls.gov/lpc/home.htm PRODUCTIVITY AND COSTS BY INDUSTRY SELECTED SERVICE-PROVIDING AND MINING INDUSTRIES, 2004 The Bureau of Labor Statistics of the U.S. Department of Labor reported today on productivity and costs for selected service-providing and mining industries. Labor productivity -- defined as output per hour -- rose in 2004 in 26 of the 39 industries studied here. Output increased in 31 industries and hours declined in 18 industries. Unit labor costs declined in 13 of the 39 industries measured. Of these, 12 were industries that recorded productivity gains. From 1987 to 2004, labor productivity increased in 34 of the 39 industries. Output rose in 34 industries, while hours decreased in 15 industries. Unit labor costs fell in nine of the industries measured. 2003-2004 change Labor productivity rose in 2004 in two-thirds of the 39 detailed service-providing and mining industries studied. (See table 1.) Seven industries recorded productivity growth in excess of 10 percent. In 2004, many of the service-providing and mining industries studied increased output, employment, and labor hours. While a larger share of industries than in the previous year recorded output increases in 2004, the share of industries with increases in labor hours also rose, resulting in a drop from the previous year in the share of industries with productivity gains. At the same time, labor compensation increased more rapidly than output in many industries, which contributed to a rising share of industries with increases in unit labor costs. (See table 2.) Of the four largest industries studied, those with employment of over a million persons, three had productivity increases in 2004. Productivity rose 7.8 percent in automotive repair (NAICS 8111), 5.3 percent in commercial banking (NAICS 52211), and 5.7 percent in travel accommodations (NAICS 7211), while productivity in janitorial services (NAICS 56172) fell 1.4 percent. The three industries with productivity gains had essentially flat or declining unit labor costs during the year, while unit labor costs in the janitorial services industry increased 3.2 percent. Output per hour in the mining sector fell 7.7 percent, and only one of four detailed mining industries registered productivity growth. Productivity rose 4.1 percent in nonmetallic mineral mining and quarrying (NAICS 2123), but fell 13.7 percent in the oil and gas extraction industry (NAICS 211). Unit labor costs, which reflect the total labor costs required to produce a unit of output, increased 12.4 percent in the mining sector as a whole. Growth in unit labor costs was especially strong in the oil and gas extraction industry, rising 16.4 percent. Productivity increased in 2004 in both of the detailed utilities industries covered. Output per hour grew 2.2 percent in power generation and supply (NAICS 2211) and 3.9 percent in natural gas distribution (NAICS 2212). Output was little changed in either industry over the year, but labor hours fell 2.7 percent in power generation and supply and 3.6 percent in natural gas distribution. Unit labor costs increased 4.6 percent in the power generation and supply industry and 6.9 percent in the natural gas distribution industry. Four of the six transportation and warehousing industries covered increased output per hour in 2004. The strongest growth occurred in air transportation (NAICS 481). Labor productivity increased 11.4 percent in this industry, as output increased and hours remained flat. A productivity decline of 5.7 percent in the couriers and messengers industry (NAICS 492) was the only substantial drop in productivity in the sector. Unit labor costs declined in two of the six transportation industries. Air transportation (NAICS 481) was the only industry in the group to have a considerable decline in unit labor costs, 10.7 percent. Productivity increased in 2004 in six of the eight information industries covered. Double-digit productivity growth occurred in software publishers (NAICS 5112), at 17.0 percent, wireless telecommunications carriers (NAICS 5172), at 19.1 percent, and cable and other program distribution (NAICS 5175), at 12.4 percent. Unit labor costs declined in three information industries, with the largest drop, 15.5 percent, occurring in the software publishers industry. Labor productivity rose in 2004 in 13 of the 19 other service-providing industries for which BLS maintains measures. Of these industries, the truck, utility trailer, and RV rental and leasing industry (NAICS 53212) recorded the largest productivity increase, 18.3 percent. Advertising agencies (NAICS 54181) and travel agencies (NAICS 56151) also had productivity gains exceeding 10 percent. Productivity fell 11.6 percent in the portrait photography studios industry (NAICS 541921). In 2004, unit labor costs declined in eight of the 19 measured industries in this group. Long-term trends Between 1987 and 2004, productivity increased in 34 of the 39 detailed industries studied. (See table 1). Output increased in all but five industries over the period, and labor hours declined in 15 industries. Unit labor costs declined in nine industries, all of which registered productivity increases. (See table 2.) Productivity in the mining sector grew 1.3 percent per year from 1987 to 2004. All four detailed mining industries recorded productivity gains. While output trends varied by industry, employment and labor hours fell for the sector as a whole and for all four individual mining industries. Unit labor costs in the sector increased at an average rate of 3.2 percent per year. Output per hour increased between 1987 and 2004 in the two utilities industries covered by the BLS measures. Productivity growth in power generation and supply (NAICS 2211) and natural gas distribution (NAICS 2212) averaged 2.9 percent per year and 3.3 percent per year, respectively. In both utilities industries, output increased and employment and labor hours fell over the period. Unit labor costs increased at an average rate of about 2 percent per year in both industries. Between 1987 and 2004, productivity increased in four of the six transportation and warehousing industries for which BLS maintains measures. Line-haul railroads (NAICS 482111), the only measured industry in this sector where hours declined over the period, led productivity growth with an average increase of 5.5 percent per year. Unit labor costs increased in most of the transportation and warehousing industries over the period, but declined in line-haul railroads. Productivity rose between 1987 and 2004 in seven of the eight information industries presented here. Output per hour expanded rapidly in the software publishing industry (NAICS 5112), averaging 17.7 percent per year. Both wired and wireless telecommunications carriers (NAICS 5171 and 5172) registered average annual productivity growth of 5.0 percent per year or more. Output growth of over 20 percent per year in software publishing and wireless telecommunications carriers contributed to the strong productivity growth in those industries. On the other hand, productivity growth was essentially flat in the newspaper, periodical, book, and directory publishers industry (NAICS 5111), and productivity edged down over the period in the radio and television broadcasting industry (NAICS 5151). Unit labor costs declined between 1987 and 2004 only in the information industries with strong productivity growth -- software publishers (NAICS 5112) and wired and wireless telecommunications carriers (NAICS 5171 and 5172). Output per hour grew over the long term in 17 of the 19 other service-providing industries covered, including medical laboratories (NAICS 621511) and diagnostic imaging centers (NAICS 621512) for which data begin in 1994 (1994-2004 average annual percent changes represent the long-term growth rates for these industries). In this group of industries, productivity growth was modest, with only seven industries recording average productivity increases of 2.5 percent per year or more. Productivity gains for many of the industries in this group resulted from output growth in excess of labor hours growth. In contrast, the small productivity gain in the photofinishing industry (NAICS 81292) resulted from a 4.0 percent per year decline in labor hours that exceeded a 3.6 percent per year decline in output. Unit labor costs increased between 1987 and 2004 in all but four of the industries in this group. Technical Note Output Industry output is measured as sectoral output, the total value, in real terms, of goods and services produced for sale outside the industry. Wherever possible, the indexes of industry output are calculated with a Törnqvist formula. This formula aggregates the growth rates of the various industry outputs between two periods, using their relative shares in industry value of production, averaged over the two periods, as weights. Industry output measures for service-providing and mining industries are constructed primarily using data from the economic censuses and annual surveys of the Bureau of the Census, U.S. Department of Commerce, together with information on price changes primarily from BLS. Other data sources include the United States Geological Survey of the U.S. Department of the Interior, the U.S. Department of Energy, the U.S. Department of Transportation, the U.S. Postal Service, and the Postal Rate Commission. Labor Hours The industry labor input measures represent the hours of all workers in the industry. The primary source of data on employment and hours is the BLS Current Employment Statistics (CES) survey, which provides monthly data on the number of jobs held by wage and salary workers in nonfarm establishments. The CES survey also provides data on the average weekly hours of production and nonsupervisory workers in these establishments. Data from the Current Population Survey (CPS) are used to supplement the CES data. The Office of Productivity and Technology (OPT) estimates the average weekly hours of supervisory and nonproduction workers by industry using data from the CPS together with the CES data. CPS data are also used to estimate the employment and hours of self-employed and unpaid family workers in most of the service-providing industries. The hours of nonsupervisory workers, supervisory workers, and self-employed and unpaid family workers are treated as homogeneous and are directly aggregated. Other sources of employment and hours data for service industries include the American Association of Railroads, the U.S. Department of Transportation, and the U.S. Postal Service. Unit Labor Costs The unit labor cost series represents the cost of labor input required to produce one unit of output. The indexes of unit labor costs for each industry are computed by dividing an index of industry labor compensation by an index of industry output. 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 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. Labor Productivity The industry labor productivity measures 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. Industry output per hour indexes are prepared from data published by various public and private agencies, using the greatest level of industry detail available. Although the labor productivity 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. Year-to-year movements in productivity measures for some industries might be erratic, particularly in the smaller industries. The annual changes in an industry’s output and use of labor may reflect cyclical changes in the economy rather than long-term trends. Also, annual productivity indexes 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. Notes The measures in this news release replace the mining, utilities, and service industry series published in table 51 of the Monthly Labor Review and in the news release Productivity and Costs by Industry, 2003 (released August 26, 2005), and may reflect revisions to those series. Output measures for the U.S. Postal Service (NAICS 491) reflect changes to the weights used to aggregate products and services. All of the measures for 2004 in this release are preliminary and subject to revision. Estimates of employment and hours of self-employed and unpaid family workers for all years have been revised to more accurately account for employment and hours of proprietors in secondary jobs. Previously, a proprietor’s hours worked at secondary jobs were attributed to the industry of the proprietor’s primary job. Hours worked at secondary jobs are now included in a proprietor’s hours only if the person is a proprietor in the secondary job, and these hours are classified in the industry of the secondary job. Published productivity and unit labor cost indexes for selected NAICS industries, including the industries covered in this report, can be accessed electronically by visiting the Labor Productivity and Costs Web site: http://www.bls.gov/lpc/home.htm. While the index numbers and rates of change reported by BLS in this news release are rounded to one decimal place, all percent changes in this release and on the BLS web site are calculated using index numbers to three decimal places. Measures for additional detailed service-providing industries are available upon request by calling the Division of Industry Productivity Studies (202-691-5618) or by sending a request by e-mail: dipsweb@bls.gov. Data on industry employment, annual hours, the net value of production, and the implicit price deflator for output also are available upon request. Material in this report is in the public domain and, with appropriate credit, may be used without permission. Information in this report will be made available to sensory- impaired individuals upon request. Voice phone: 202-691-5618; TDD message referral phone number: 1-800-877-8339. Table 1. Annual percent change in output per hour and related series, 1987-2004 and 2003-2004 2004 Annual percent change, Annual percent change, 1987-2004 (1) 2003-2004 --------------------------- ----------------------------- NAICS Industry Employment Output Output code (thousands) per hour Output Hours per hour Output Hours Mining 21 Mining 523 1.3 -0.2 -1.5 -7.7 -1.2 7.1 211 Oil and gas extraction 123 2.0 -0.9 -2.9 -13.7 -2.6 12.9 212 Mining, except oil and gas 205 3.0 1.0 -2.0 1.2 3.4 2.2 2121 Coal mining 71 3.9 0.0 -3.7 -0.3 3.8 4.1 2122 Metal ore mining 28 4.0 2.2 -1.7 -4.7 0.9 5.9 2123 Nonmetallic mineral mining and quarrying 107 1.4 1.1 -0.3 4.1 4.1 -0.1 Utilities 2211 Power generation and supply 409 2.9 1.1 -1.8 2.2 -0.5 -2.7 2212 Natural gas distribution 109 3.3 1.5 -1.8 3.9 0.2 -3.6 Transportation and Warehousing 481 Air transportation 483 2.6 3.4 0.8 11.4 11.5 0.0 482111 Line-haul railroads 178 5.5 2.6 -2.7 3.1 5.6 2.5 48412 General freight trucking, long-distance 864 1.5 3.2 1.7 -0.8 6.1 6.9 48421 Used household and office goods moving 104 -1.1 0.3 1.4 2.9 5.7 2.7 491 Postal service 782 1.1 1.2 0.1 2.1 0.1 -1.9 492 Couriers and messengers 598 -0.9 2.6 3.5 -5.7 -2.3 3.6 Information 511 Publishing 953 4.3 5.1 0.8 3.9 4.3 0.4 5111 Newspaper, book, and directory publishers 718 0.1 -0.4 -0.4 -2.4 0.6 3.0 5112 Software publishers 236 17.7 26.4 7.4 17.0 9.5 -6.5 51213 Motion picture and video exhibition 140 0.8 2.5 1.7 3.3 -3.1 -6.2 515 Broadcasting, except internet 338 0.5 2.0 1.5 1.5 2.0 0.5 5151 Radio and television broadcasting 249 -0.4 -0.1 0.3 -3.1 -0.8 2.4 5152 Cable and other subscription programming 88 2.4 8.2 5.6 8.5 6.9 -1.5 5171 Wired telecommunications carriers 558 5.0 3.8 -1.2 0.8 -4.5 -5.3 5172 Wireless telecommunications carriers 195 8.2 24.0 14.6 19.1 16.5 -2.2 5175 Cable and other program distribution 132 0.5 5.8 5.3 12.4 8.7 -3.3 Finance and Insurance 52211 Commercial banking 1281 2.4 2.0 -0.4 5.3 4.8 -0.5 Real Estate and Rental and Leasing 532111 Passenger car rental 125 1.6 3.8 2.1 -1.8 9.3 11.3 53212 Truck, trailer and RV rental and leasing 62 4.8 4.6 -0.2 18.3 13.0 -4.5 53223 Video tape and disc rental 158 4.2 7.4 3.1 4.2 6.6 2.3 Professional and Technical Services 541213 Tax preparation services 131 1.2 4.3 3.1 -7.9 6.4 15.4 54131 Architectural services 207 1.6 3.7 2.1 5.2 5.3 0.1 54133 Engineering services 831 1.1 3.0 1.9 7.4 10.5 2.9 54181 Advertising agencies 180 1.9 1.8 -0.2 10.3 9.4 -0.8 541921 Photography studios, portrait 78 -0.4 2.5 2.9 -11.6 2.6 16.1 Administrative and Support Services 56151 Travel agencies 128 3.8 2.9 -0.8 13.9 7.7 -5.4 56172 Janitorial services 1129 3.1 4.6 1.4 -1.4 3.0 4.5 Health Care and Social Assistance 6215 Medical and diagnostic laboratories 198 4.5 7.5 2.9 0.1 4.7 4.6 621511 Medical laboratories 136 3.6 6.2 2.5 1.6 4.4 2.7 621512 Diagnostic imaging centers 62 5.6 9.8 4.0 -3.7 5.3 9.4 Accommodation and Food Services 7211 Traveler accommodations 1750 2.3 3.1 0.8 5.7 6.0 0.4 Other Services 8111 Automotive repair and maintenance 1155 1.6 2.6 1.0 7.8 1.2 -6.1 81211 Hair, nail and skin care services 899 2.5 3.5 1.0 5.7 8.9 3.0 81221 Funeral homes and funeral services 111 -0.6 0.3 1.0 -2.4 -5.9 -3.5 8123 Drycleaning and laundry services 382 0.8 0.5 -0.3 7.4 0.6 -6.3 81292 Photofinishing 43 0.4 -3.6 -4.0 2.5 -11.8 -13.9 (1) For NAICS industries 6215, 621511, and 62512, annual percent changes are for 1994-04. Table 2. Annual percent change in total compensation, output, and unit labor costs, 1987-2004 and 2003-2004 2004 Annual percent change, Annual percent change, 1987-2004 (1) 2003-2004 ----------------------------------- ----------------------------------- NAICS Industry Employment Total Unit labor Total Unit labor code (thousands) compensation Output costs compensation Output costs Mining 21 Mining 523 2.9 -0.2 3.2 11.1 -1.2 12.4 211 Oil and gas extraction 123 3.5 -0.9 4.4 13.4 -2.6 16.4 212 Mining, except oil and gas 205 0.8 1.0 -0.2 6.2 3.4 2.7 2121 Coal mining 71 -1.4 0.0 -1.5 6.6 3.8 2.7 2122 Metal ore mining 28 2.3 2.2 0.1 8.0 0.9 6.9 2123 Nonmetallic mineral mining and quarrying 107 3.2 1.1 2.1 5.2 4.1 1.1 Utilities 2211 Power generation and supply 409 3.0 1.1 1.9 4.1 -0.5 4.6 2212 Natural gas distribution 109 3.4 1.5 1.9 7.1 0.2 6.9 Transportation and Warehousing 481 Air transportation 483 4.0 3.4 0.5 -0.5 11.5 -10.7 482111 Line-haul railroads 178 0.8 2.6 -1.8 5.6 5.6 0.0 48412 General freight trucking, long-distance 864 3.5 3.2 0.2 8.9 6.1 2.7 48421 Used household and office goods moving 104 4.4 0.3 4.1 5.7 5.7 -0.1 491 Postal service 782 4.1 1.2 2.8 3.4 0.1 3.2 492 Couriers and messengers 598 7.3 2.6 4.6 6.8 -2.3 9.3 Information 511 Publishing 953 5.9 5.1 0.8 -2.4 4.3 -6.5 5111 Newspaper, book, and directory publishers 718 3.6 -0.4 4.0 1.2 0.6 0.6 5112 Software publishers 236 13.1 26.4 -10.5 -7.4 9.5 -15.5 51213 Motion picture and video exhibition 140 4.3 2.5 1.7 4.5 -3.1 7.8 515 Broadcasting, except internet 338 5.5 2.0 3.5 6.3 2.0 4.2 5151 Radio and television broadcasting 249 4.6 -0.1 4.7 5.4 -0.8 6.2 5152 Cable and other subscription programming 88 11.0 8.2 2.6 13.7 6.9 6.4 5171 Wired telecommunications carriers 558 2.0 3.8 -1.7 -6.4 -4.5 -1.9 5172 Wireless telecommunications carriers 195 17.1 24.0 -5.6 16.5 16.5 0.0 5175 Cable and other program distribution 132 10.2 5.8 4.1 7.1 8.7 -1.5 Finance and Insurance 52211 Commercial banking 1281 5.4 2.0 3.4 2.9 4.8 -1.8 Real Estate and Rental and Leasing 532111 Passenger car rental 125 6.7 3.8 2.9 6.4 9.3 -2.7 53212 Truck, trailer and RV rental and leasing 62 3.8 4.6 -0.8 5.1 13.0 -7.0 53223 Video tape and disc rental 158 5.7 7.4 -1.6 4.8 6.6 -1.7 Professional and Technical Services 541213 Tax preparation services 131 4.4 4.3 0.1 12.7 6.4 5.9 54131 Architectural services 207 5.6 3.7 1.8 6.7 5.3 1.4 54133 Engineering services 831 6.3 3.0 3.3 7.8 10.5 -2.5 54181 Advertising agencies 180 4.8 1.8 3.0 4.1 9.4 -4.9 541921 Photography studios, portrait 78 5.2 2.5 2.5 3.7 2.6 1.1 Administrative and Support Services 56151 Travel agencies 128 5.1 2.9 2.2 0.1 7.7 -7.0 56172 Janitorial services 1129 5.6 4.6 1.0 6.3 3.0 3.2 Health Care and Social Assistance 6215 Medical and diagnostic laboratories 198 6.2 7.5 -1.2 11.5 4.7 6.5 621511 Medical laboratories 136 5.4 6.2 -0.7 10.6 4.4 6.0 621512 Diagnostic imaging centers 62 8.1 9.8 -1.6 13.6 5.3 7.9 Accommodation and Food Services 7211 Traveler accommodations 1750 5.5 3.1 2.4 6.1 6.0 0.1 Other Services 8111 Automotive repair and maintenance 1155 4.5 2.6 1.8 -2.4 1.2 -3.6 81211 Hair, nail and skin care services 899 5.6 3.5 2.0 9.4 8.9 0.4 81221 Funeral homes and funeral services 111 5.1 0.3 4.7 8.8 -5.9 15.6 8123 Drycleaning and laundry services 382 3.4 0.5 2.9 1.0 0.6 0.4 81292 Photofinishing 43 -0.1 -3.6 3.6 -10.1 -11.8 1.8 (1) For NAICS industries 6215, 621511, and 62512, annual percent changes are for 1994-04.