Durrant Pate/Contributor

The US Bureau of Labour Statistics (BLS) is reporting that labour productivity grew in 24 of the 30 selected service-providing industries in 2021, compared to 17 of 30 in 2020, as declines in hours outpaced declines in output for a number of industries.

Increased levels of output and hours worked were pervasive across these industries in 2021. The rise in output was double that of the figure seen in 2020 with 27 industries experiencing growth compared to 11 in 2020.

The BLS reports that in 2021 hours worked increased in 18 different industries, three times the reported increase in 2020 (six industries). The change in productivity is approximated by subtracting the change in hours worked from the change in output 

Out of the six industries with the largest change in productivity, three experienced a decline in hours worked while output increased, thus resulting in gains in overall productivity. The industries which experienced this were radio and television broadcasting, cable and other subscription programming and travel arrangement and reservation services, which saw the highest productivity growth.

In addition to this amusement parks and arcades, air transportation, and full-service restaurants also witnessed an increase in productivity as their hours worked increased at a slower rate than output. 

Unit labour costs falling

In 2021, unit labour costs fell in 20 different industries. Nineteen of these industries had a rise in productivity. Unit labour costs reflect the total labour costs required to produce a unit of output.

According to BLS data, unit labour costs increased when hourly compensation growth exceeds productivity growth. The impact of increases in hourly pay on employers’ unit labour expenses is offset by changes in labour productivity.

Hourly compensation increased more than productivity in all four industries with both rising productivity and unit labour costs.

2021 Unit Labour Cost trends: 

• The largest declines in unit labour costs were in air transportation (-37.2 per cent), amusement parks and arcades (-44.8 per cent), and travel arrangement and reservation services (-51.6 per cent). Productivity rose by more than 60 per cent in each of these industries. 
• Two industries had double-digit rates of growth in unit labour costs: couriers and messengers (15.8 per cent) and medical and diagnostic laboratories (13.7 per cent). Both industries also had double-digit gains in output, hours worked, and hourly compensation. 
• Hourly compensation rose in 26 of the 30 industries measured. 

2019 to 2021 labour productivity trends  

Even while the output of 27 selected service-providing businesses rose between 2020 and 2021, not all of these industries had their output reach their pre-pandemic levels. Despite positive output growth from 2020 to 2021, eight industries had output levels that were lower in 2021 than in 2019.

Of these eight industries, the two with the steepest average annual declines in output from 2019 to 2021 were air transportation (-17.6 per cent) and line-haul railroads (-7.5 per cent). Similar results are shown by the patterns in hours worked from 2019 to 2021.

Seven of the 18 service-providing industries that saw an increase in hours worked between 2020 and 2021 were still operating below their pre-pandemic levels. Amusement parks and arcades (-14.6 per cent) and the gambling sectors saw the highest average yearly decreases in hours worked from 2019 to 2021 among these seven categories (-7.1 per cent). 

Out of 58 service-related industries, 44 saw an increase in long-term productivity. The most recent year for which data are available for all 58 of the industries reviewed, which are published on the BLS website, is 2020.

This spans the years 1987 to 2020 for the majority of the industries examined. The rates in this section do not include information from 2021. 

Trends in long-term productivity 

• Median long-term productivity growth for all 58 industries was approximately 1.5 per cent per year.
• Output increased over the long term in 41 industries while hours worked increased in 31 industries.
• Productivity increased in 43 of the 58 industries over the business cycle preceding the pandemic: 2007 to 2019. During this period, 40 industries had increases in output and 27 experienced growth in hours worked.