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Productivity in industry and government, 1990.

As part of its productivity measurement program, the Bureau of Labor Statistics estimates movements in labor and multifactor productivity for a variety of manufacturing and nonmanufacturing industries, as well as changes in Federal, State, and local government productivity. Recently, labor productivity measures were extended through 1990, industry multifactor measures through 1989, and Federal, State, and local government measures through fiscal year 1990. The results of these extensions are presented in this research summary. [1]

Table 1 shows average annual percent changes in labor productivity for selected industries covering the long term (from the initial year listed to 1989 or 1990) and from 1985 to 1989 or 1990, as well percent changes from 1988 to 1989 and from 1989 to 1990. The table includes, for the first time, a labor productivity measure for crude petroleum and natural gas production.2 Table 2 shows average annual percent changes in multifactor productivity and related data for selected industries, covering the periods 1958-89, 1985-89, and 1988-89. This table includes a new measure for the railroad transportation industry.3 In table 3, average annual percent changes in productivity covering the long term, 1985-90, and 1989-90 are given for the Federal Government. Indexes for most of the industry labor productivity measures for selected years between 1973 and 1990 are shown in table 46 of the section, "Current Labor Statistics," in each issue of the Monthly Labor Review.

Labor productivity

Current trends. Productivity, as measured by output per employee hour, increased in 1990 in 57 percent of the industries for which data are currently available.4 Similar movements were observed in 1989, when 53 percent of the same industries experienced increased productivity. Output trended downward in 1990, however: sixty-two percent of the measured industries experienced declining output, compared with 48 percent a year earlier.

Manufacturing. More industries posted productivity gains in 1990 than in 1989, largely because of the performance of the manufacturing sector. Sixtytwo percent of the manufacturing industries experienced productivity gains in 1990, compared with 51 percent in 1989. Output trends for the manufacturing sector nearly matched those of all industries, with 66 percent posting declines in 1990, while 51 percent showed declines in 1989.

The steel industry, reversing declines posted in the previous year, registered increases in both productivity and output. Productivity grew 3.3 percent, the result of an increase in capacity utilization and the continued diffusion of labor-saving processing techniques, such as continuous casting. Output rose about 2 percent, driven by growth in exports and demand from the oil and gas sector.

Several other manufacturing industries exhibited increases in productivity in 1990: farm machinery (10.1 percent), malt beverages and metal cans (7.7 percent each), glass containers (6.9 percent), and bottled and canned soft drinks (6.6 percent). The farm machinery industry benefited from the strength of the agncultural sector, where farm capital spending continued to rise. Productivity in the malt beverage and bottled and canned soft drink industries has been enhanced by more efficient plants and improved processing techniques. Growth in the malt beverage and soft drink industries, in turn, has been beneficial to the metal can industry and, to a lesser extent, the glass container industry.

One closely watched manufacturing industry, motor vehicles, had a decline in productivity of 0.5 percent, the second straight year that productivity in the industry dropped. Output fell 8.4 percent, largely the result of declines in the number of passenger cars and trucks produced, while employee hours decreased 7.9 percent, the largest drop in the industry since 1982.

Other industries in the manufacturing sector also experienced declines in productivity. Both lawn and garden equipment and rice milling had decreases of about 9 percent. Performance in these industties was hampered by the economic slowdown. Productivity declined nearly 8 percent in the oil and gas field machinery industry, even as orders for custommanufactured drilling equipment increased. The labor-intensive nature of the manufacturing process drove employee hours up faster than output.

Mining. The number of industries reporting productivity growth in the mining sector remained unchanged in 1990. Non metallic mineral mining and coal mining both recorded their second straight year of productivity increases, while productivity in the oil and gas production, copper mining, and iron mining industries fell. Iron mining had the largest productivity decline of the industries measured in 1990, dropping 9.3 percent. Output decreased about 4 percent, in part because labor unrest resulted in mine closures. In contrast, copper mining, with a 2'3'percent drop in productivity, had a relatively high increase in output, 5.4 percent. Producers, encouraged by high copper prices, have reopened older mines that are less rich in ores. Thus, more labor time is expended on less productive operations, in an effort to increase total output.

Transportation, communications, and utilities. In 1990, half of the industries within the transportation, communications, and utilities sector recorded productivity increases. Productivity increased 4.9 percent in railroad transportation, 2.7 percent in electric utilities, and 0.6 percent in telephone communications. All three industries benefited from technological improvements, with the last two also posting growth in output, as consumer demand increased. Railroads had a slight decline in output, a result of the weakening economic climate and increased freight costs.

Productivity declined in the remaining industries within this sector: gas utilities (-8.6 percent), air transportation (-3.7 percent), and petroleum pipelines (-0.9 percent). Industry performance in gas utilities and petroleum pipelines was adversely affected by declines in demand. The opposite was true in the airline industry, where output was up 4.5 percent. Relatively more planes were in the air, however, and the increase in the number of passengers carried was outpaced by the rise in the number of available seat miles. Employment also grew, increasing more than 8 percent, the result of stricter inspection guidelines, heightened security concerns, and an effort to improve on-time arrivals.

Trade. Productivity increased in 9 of the 15 industries in the trade sector in 1990. Six of these industries--variety stores, retail bakeries, new- and used-car dealers, hardware stores, women's clothing stores, and family clothing stores--also recorded productivity gains in 1989. Productivity in drug and proprietary stores, liquor stores, and shoe stores fell, while in men's and boys' clothing stores, it registered a strong gain. Eating and drinking places and auto and home supply stores edged ahead from the decline in productivity that was posted in 1989.

Of the trade industries reporting rising productivity, variety stores had the highest rate. The productivity increase of nearly 15 percent occurred even as output fell 5.1 percent, the sector's biggest decline. The drop in output was the sixth consecutive one in the industry.

Productivity rates varied in the remaining industries in the trade sector. Other significant productivity increases were recorded in retail bakeries (7.4 percent) and new- and used-car dealers (3.8 percent). Both industries exhibited growth in output, the latter benefiting from an increase in used-car sales that counterbalanced a decline in sales of new vehicles. Gasoline service stations (-3.3 percent) and grocery stores (-2.4 percent), on the other hand, were prominent among those industries that exhibited productivity declines.

Service. All of the measured servicesector industries recorded decreases in productivity in 1990, with hotels and motels posting the largest drop, 4.7 percent. Productivity in service-sector industries was affected by the economic slowdown. Beauty and barber shops and automotive repair shops both had declines of more than 2 percent, while productivity in laundry, cleaning, and garment services fell 0.4 percent.

Long-term trends. Productivity increased over the long term in 93 percent of the industries that were measured. Of the industries recording increases in productivity, rates of long-term growth vaned from 0.1 percent to more than 12 percent. Industries posting the highest growth in productivity included semiconductors and wet corn milling. In the semiconductors industry, productivity advanced at a rate of 12.6 percent between 1972 and 1990. Strong output growth, coupled with rapid improvements in product design and manufacturing techniques, contributed to this spectacular increase in productivity. In the wet corn milling industry, productivity advanced at a rate of 8 percent. Until 1972, industry productivity and output growth were quite modest. Thereafter, however, output and productivity rose rapidly, the result of increased market penetration of high-fructose and high-glucose syrup and industry modernization.

Other industries with high rates of long-term growth exist in most sectors of' the economy. In the mining sector, productivity in both iron mining and copper mining increased 3.4 percent annually. In iron mining, the increase resulted from the closure of inefficient mines, while in copper mining, the increase was due to incremental improvements in existing technologies. Except for crude petroleum and natural gas production, which had a productivity decline of about 1 percent, all of the mining-sector industries that were measured showed productivity growth over the long term.

In the manufacturing sector, productivity in household audio and video equipment advanced at an average annual rate of 6.8 percent; in synthetic fibers, the rate was 5.9 percent. Increases in productivity in these industries have been driven by the introduction of new technologies. In the manufacturing sector, productivity advanced over the long term in all but four of the industries measured.

Among utilities, productivity in telephone communications grew at an average rate of 6 percent annually. Gains were largely attributable to the diffusion of direct-dialing and electronic operator systems. The introduction of coaxial cable and then fiber optics increased substantially the number of calls that could be transmitted. In addition, the spread of electronic switching and increased computerization reduced the need for repair and maintenance labor.

Long-term productivity rose at a rate of 5.8 percent per year in the air transportation industry, the highest rate of growth in the transportation sector. The industry benefited from substantial growth in output and technological innovations. While output has risen steadily, due mainly to an influx of passengers on leisure-related travel, wide-body aircraft have allowed the industry to carry more passengers with relatively fewer departures. Another significant increase in productivity occurred in the railroad transportation industry, where technological advances and structural changes resulted in a long-term productivity growth rate of 5 percent per year.

In the trade sector, output per hour increased nearly 6 percent in radio, television, and computer stores and slightly more than 4 percent in women's clothing stores. Both industries benefited from strong demand, growth among chain stores, and increased usage of computers in marketing and operations.

Of the remaining service-sector industties that were measured, commercial banking recorded the highest long-term average annual growth in productivity-- 1.5 percent. The computerization of administrative, accounting, and checkhandling functions has resulted in productivity improvements, while increased branch banking and extended hours have spurred a need for additional employees.

Several industries, however, did exhibit declining productivity over the long term. The industry with the greatest rate of decline was the retail bakeries industry, which recorded a long-term falloff of slightly more than 1 percent annually. Output in the industry grew at a rate of less than 1 percent per year, while employee hours increased more than 2 percent annually.

Productivity in variety stores also declined over the long term, at a rate of 1 percent yearly. Sales have been adversely affected by increased competition from other retail outlets. Additionally, the average store size has been shrinking as stores have relocated to shopping malls that command higher rent. Various lines of merchandise have been dropped and sales have fallen, while working hours have had to be maintained to conform with the hours of other stores in the same shopping malls.

It is worthwhile to note that, of the industties with long-term declines in productivity, 60 percent did show increases in productivity in the most recent period (1985-90). Among these industries were retail bakeries, with an annual average increase of 4.7 percent over the 5-year period, crude petroleum and natural gas production, with an increase of 2.7 percent, and variety stores, with an increase of 0.9 percent.

Short-term trends. Average annual rates of productivity varied widely among the industries during the 1985-90 period. Approximately 46 percent of the industries recorded higher productivity growth during that time than in the penod prior to 1985. Of these industries, about one-fifth posted declines in output.

Among the industries that posted average annual increases in productivity from 1985 to 1990, several were notable for the productivity gains they made, compared with earlier years. Coal mining recorded a rate of growth in productivity of 7.4 percent a year from 1985 to 1990, after having grown little more than 1 percent annually from 1955 to 1985. Likewise, farm machinery and equipment registered an increase of nearly 7 percent per year during 1985-90, as opposed to 0.1 percent per year from 1972 to 1985. Productivity in railroad transportation grew at an annual rate of 9.7 percent over the 5-year period, about double the rate of growth posted between 1947 and 1985.

By contrast, several industries exhibited marked slowdowns in productivity growth in the post-1985 period. Wet corn milling exhibited a rate of growth of 8 percent per year between 1963 and 1985, compared with a rate of 2.6 percent per year thereafter. Productivity in the petroleum pipelines industry advanced 5 percent per year between 1958 and 1985, but grew just 0.6 percent annually between 1985 and 1990.

A few industries that had exhibited productivity growth in the earlier period have posted declines in productivity since 1985. Among the most prominent of these was the air transportation industry. Prior to 1985, the annual rate of increase was more than 6 percent, but from 1985 to 1990, productivity declined nearly 1 percent per year. Similar trends were exhibited in industries in other sectors. Productivity in women's clothing stores grew at a rate close to 5 percent per year from 1967 to 1985, but after 1985, it declined at a rate of 0.4 percent annually. Meat-packing plants had pre-1985 productivity increases of 3.4 percent annually and post-1985 declines of more than 2 percent per year.

New labor measures

Crude petroleum and natural gas production. Productivity, as measured by output per employee hour, declined at an average annual rate of 1.1 percent from 1959 to 1990 in this industry. Growth was hampered by increasingly difficult access to new oil and gas supplies and declining oil reservoir pressm, as existing U.S. oil fields aged over the period of study. Productivity was also strongly affected by the volatile rise and fall of the price of oil and related products, which influenced the economic feasibility of employing more marginal and labor-intensive types of recovery.

Between 1959 and 1972, U.S. oil and gas production was growing at an average annual rate of 3.4 percent, as the amount of newly found oil reserves exceeded that of depletions. Oil and gas prices remained low, and many stripper wells (wells producing fewer than 10 barrels of oil per day) were taken out of operation. Low prices also provided little incentive to employ more sophisticated, expensive, and laborintensive enhanced oil recovery production techniques. Employment declined steadily, at a rate of 1.9 percent per year, and output per hour rose at a rate of 5.4 percent per year.

U.S. production of gas and oil, however, peaked in the early 1970's. Rapidly increasing prices led to greatly increased U.S. industry activity in exploration and production during the 1972--82 period. Crude oil, however, had become harder to find and harder to produce than in earlier years. The number of marginal stripper wells increased greatly. Despite advances in enhanced oil recovery production techniques and technological innovations, production declined 0.9 percent per year. Industry employment, however, rose 7.4 percent per year, and output per hour fell at an annual rate of 7.8 percent.

The latest period, 1982-90, was marked by an oversupply of foreign crude oil and declining prices. Prices fell very rapidly in 1986. Some of the more expensive and labor-intensive production techniques lost their economic feasibility. Industry output continued to fall 1.2 percent per year, but employment fell 4.7 percent per year. The industry shrank in size, but what generally remained were the most efficient wells, with the best equipment, run by the most experienced personnel. Accordingly, output per hour increased at a rate of 3.6 percent per year.

The relationship between the price of oil and employment was the key factor influencing productivity trends in the industry. Productivity declines were largely the result of an influx of employees who came into the industry during periods of rapidly rising oil prices. At those times, it became economically feasible to hire more employees, even though increases in output were only marginal.

Multifactor productivity

In industry multifactor productivity, output is related to the combined inputs of labor, capital, and intermediate purchases. Multffactor productivity is equal to output per hour, adjusted to remove the effects of changes in capital per hour and intermediate purchases per hour. Multifactor measures are available for the tires and inner tubes, footwear, steel, farm and garden machinery, motor vehicles and equipment, and railroad transportation industries.

Current developments. Multifactor productivity declined during 1989 in four of the six measured industries: footwear (--4.7 percent), steel (-4.0 percent), farm and garden machinery (-0.8 percent), and motor vehicles and equipment (-0.4 percent). Gains in multifactor productivity were recorded in fires and inner tubes (2.3 percent) and in railroad transportation (3.5 percent).

In the footwear industry in 1989, output, after showing much smaller declines in 1987 and 1988, resumed its sharper downward trend of the earlier 1980's, dropping 7.1 percent. Combined inputs declined a lesser amount--2.4 percent. As a result, multifactor productivity fell 4.7 percent. Employee hours were reduced by almost as much as output (-6.3 percent), but declines in inputs of capital and intermediate purchases were much smaller (-2.0 percent and -0.8 percent). Multifactor productivity also fell significantly in the steel industry--4.0 percent. While output declined 3.2 percent, combined inputs rose 0.7 percent. Hours were reduced only 0.6 percent, capital fell 2.7 percent, and intermediate purchases actually rose 2.9 percent. Farm and garden machinery's 0.8-percent drop in multifactor productivity resulted from a 2.5percent gain in output and a slightly larger 3.4-percent rise in combined inputs. Labor rose 4.6 percent and intermediate purchases increased 6.2 percent, while capital input declined 1.9 percent. The motor vehicles and equipment industry was characterized by small changes in productivity and its components: a 0.4percent decline in multifactor productivity was the result of a 0.8-percent drop in output and a 0.4-percent decline in combined inputs. Labor and intermediate purchases inputs edged up slightly, while capital input fell 3.1 percent.

Multifactor productivity gains were recorded in fires and inner tubes and in railroad transportation. The 2.3-percent gain in tires and innertubes was generated by a 2.1 -percent increase in output and a 0.3-percent decline in combined inputs. Capital input rose 1.9 percent, but labor input decreased 1.8 percent, and intermediate purchases fell 0.2 percent In railroad transportation, output increased 1.7 percent, while combined inputs fell 1.7 percent, yielding a 3.5-percent gain in multifactor productivity. Intermediate purchases input showed a gain similar to that of output, but was more than offset by declines in labor input (-4.2 percent) and capital input (-1.9 percent).

Long-term trends. Multifactor productivity increased, over the long term, in five of the aforemendoned industries. In the tires and inner tubes industry, multifactor productivity rose at an average annual rate of 2.0 percent from 1958 to 1989. Output grew 2.2 percent per year, while combined inputs increased 0.3 percent per year, on average. Employee hours declined 1.0 percent per year, while capital purchases (1.4 percent) and intermediate purchases (0.6 percent) showed long-term increases. In footwear, multifactor productivity fell over the 1958--89 period, at an average rate of 0.8 percent per year. Output declined substantially, 3.4 percent per year, on average, while combined inputs fell at a 2.6-percent annual rate. All three inputs fell over the period: employee hours 3.9 percent per year, capital 0.3 percent annually, and intermediate purchases 2.4 percent per year. In steel, multifactor productivity increased at a rate of 1.3 percent per year, on average, from 1958 to 1989. Output showed a slight gain over the period, 0.2 percent per year, while combined inputs were reduced 1.2 percent annually, on average. Employee hours fell 2.4 percent per year, while capital (-0.6 percent) and intermediate purchases (-0.2 percent) showed smaller declines.

Multifactor productivity grew only slightly, 0.1 percent per year, on average, over the whole period in the farm and garden machinery industry, the average annual increase in output of 0.6 percent being almost matched by the average gain in combined inputs of 0.5 percent per year. Employee hours fell 0.8 percent per year, on average, but capital rose 2.2 percent per year, and intermediate purchases increased 0.4 percent per year. In motor vehicles and equipment, a 3.7' percent average annual galn in output and a 2.5-percent average yearly rise in combined inputs yielded a 1.2-percent average annual increase in multifactor productivity. Average annual increases in the individual inputs ranged from 0.8 percent in employee hours, to 1.4 percent in capital, to 3.7 percent in intermediate purchases. Long-term trends in multifactor productivity in railroad transportation are discussed in the next section.

New multifactor measures

Railroad transportation. Multifactor productivity in the railroad transportation industry rose 3.5 percent per year, on average, for the 1958-89 period. This increase resulted from an average annual gain of 1.0 percent in output and a decrease of 2.4 percent per year, on average, in combined inputs. Employee hours fell at a 4.0-percent average annual rate over the period, while capital input declined 1.6 percent per year, and intermediate purchases showed no change, on average.

Output of weighted freight ton-miles increased over the 1958-89 period by 1.6 percent per year, on average, while passenger miles declined at a rate of 2.0 percent. Other forms of freight transportation, especially truck and pipeline, made substantial inroads into railroads' market share from 1958 to 1973, continuing a trend begun in the previous decade. Since the early 1970's, however, railroads' share in total ton-miles has stabilized at around 37 percent, still the largest share of all transportation modes. Passenger miles fell sharply from 195 8 until the early 1970's, fluctuated somewhat until the early 1980's, and increased thereafter.

Multifactor productivity accelerated in the industry during the 1980's. This was due partly to the introduction and diffusion of new technology and partly to the efficiencies made possible by the Staggers Rail Act of 1980. The Staggers Act allowed for more freedom in setting rates, liberalization of track abandonment procedures, and expedition of merger proposals. Under these new allowances, railroads were more likely to eliminate underutilized track and reduce employee hours when traffic levels fell. As mergers have occurred, more efficient long-line railroads have emerged.

Changes in technology over the years have also contributed to productivity gains. Improvements in centralized traffic control, such as computer-aided dispatching, have allowed railroads to move trains more efficiently over large stretches of track from a single control station. Improvements have also been implemented in the design and operation of classification yards, where trains are disassembled and reassembled for different destinations.

Government productivity

Federal, 1990. Output per employee year increased 2.8 percent in the measured portion of the Federal Government in fiscal year 1990.5 This increase reflected a growth in output of 2.7 percent and a decrease in employee years of O. 1 percent. The increase in productivity was the 20th in 23 years. The only decline occurred in 1974, when productivity decreased 0.5 percent; twice (1984 and 1989) there was no change in the index.

The overall productivity measure covered 304 organizations in 62 Federal agencies in fiscal year 1990. The organizations include 2 million executive branch civilian employees representing 64 percent of the total Federal civilian labor force.

To identify and understand better the factors that affect Federal productivity, the 304 Federal organizations were divided into 28 functional categories based on similarity of tasks performed--for example, auditing, medical tasks, personnel-related tasks, and transportation. In 1990, the change in output per employee year for the 28 functions ranged from an increase of more than 16 percent for personnel investigations to a decline of more than 22 percent for communications. Productivity increased in 16 functions, decreased in 11, and remained unchanged in 1.

Productivity increased by more than 16 percent in the personnel investigations function, which includes those organizations responsible for conducting personnel security checks or criminal investigations of Federal employees, as a result of an increase in output of more than 26 percent and an increase in employee years of nearly 9 percent.

In contrast, the communications function, which includes organizations responsible for processing messages and performing telecommunications services for Federal activities, showed a decline of slightly more than 22 percent in 1990. Output decreased about 1 percent, while employee years increased 27 percent.

The largest of the 28 functions, in terms of number of employees, includes only a single organization, the U.S. Postal Service. Productivity increased 4.4 percent in the Postal Service in 1990, due to an increase in output of 3.7 percent and a decrease in labor of 0.7 percent. In both 1988 and 1989, the Postal Service experienced a O. 1-percent decline in productivity.

Federal trends, 1967-90. Over the period 1967-90, output per employee year in the measured portion of the Federal Government rose at an average annual rate of 1.4 percent. The year-to-year productivity changes ranged from a decline of 0.5 percent in 1974 to an increase of 3 percent in 1977. The overall increase in Federal Government productivity reflected an average annual rise of 1.6 percent in output and an increase of 0.2 percent in labor input. Year-to-year changes in output ranged from an increase of 0.1 percent in 19 8 9 to an increase of 3.7 percent in 1968. Annual rates of change in employee years ranged from a drop of 1.2 percent in 1973 to an increase of 2.6 percent in 1968.

Long-term productivity trends for the 28 functions ranged from an annual increase of more than 8 percent for communications to an annual decline of almost 4 percent for electric power production and distribution. The latter function is the only one to show a decline over the long term.

Shifts in program emphasis and the delivery of Government services over the long term are reflected in trends for both output and employee years. In 6 of the 28 functions, average annual rates of change for output were negative during the 1967-90 period. Long-term output trends ranged from an annual average increase of more than 9 percent for communications to an average annual decline of more than 2 percent for military base services. In 15 of the functions, the average annual rates of change for employee years were negative during 1967-90. Long-term employee-year trends ranged from an average annual increase of close to 4 percent for legal and judicial activities to an average annual decline exceeding 3 percent for supply and inventory control.

Communications had the largest average annual increase in productivity over the long term (8.4 percent for 197 3-90) of any of the 28 functions. Between 1973 and 1982, productivity in communications increased at an average annual rate of nearly 12 percent. However, the increase has slowed dramatically in recent years. Between 1982 and 1988, the average annual increase in the function fell to about half of its earlier rate. In 1989, communications registered its first decline, 3.6 percent, and in 1990, productivity declined again, this time more than 22 percent. In these last 2 years, employee years increased significantly more than the reported outputs. The initial exceptional productivity increases were due primarily to technological improvements in equipment that receives and transmits messages instantaneously all over the world. In preparation for the transition to a new communications system (FTS 2000), a large number of new employees have been added to the communications function in the last few years.

The function having the second largest long-term average annual increase in productivity (4.5 percent) was finance and accounting. This function includes internal Government operations, such as payroll and voucher operations, and final Government services, such as Treasury Department bill and bond sales to the public. 1n 1990, there were 15 organizations included in the function. Productivity in finance and accounting improved in 18 of the 23 years measured, the result of the automation of many routine processing operations. In one organization that serves the public, productivity doubled in 1 year, as output mushroomed, operations were automated, and employment was held fairly constant.

Electric power production and distribution registered the only long-term decrease in productivity (3.7 percent for 1967-90) of the 28 functions. Between 1967 and 1972, productivity increased at an average annual rate of more than 5 percent, due to an increase of nearly 16 percent per year in output and almost 10 percent in employee years. During 197277, productivity declined 2.6 percent annually, a result of a slower average annual increase in output of slightly more than 4 percent and an annual increase in employee years of close to 7 percent. During 1977-82, productivity declined about 8 percent per year, as output declined and employee years increased, at average annual rates of about 4 percent apiece. In the latest period, 1982-90, all three measures decreased: productivity fell 4.2 percent, output 8.9 percent, and employee years 4.9 percent. In 1990, productivity increased by nearly 6 percent, due to an increase in output of close to 4 percent and a decrease in employee years of 2 percent. Productivity in the function has decreased in 14 of the last 23 years, reflecting a decrease in output, particularly in recent years. Although employment in electric power production and distribution has been cut back in most years since 1982, the decreases in output have exceeded the cuts in input by a wide margin. Dry weather affecting hydro-electfic plants and regulatory problems associated with nuclear power produc-tion have had serious effects on output.

State and local government services. Productivity (as measured by output per employee year) in State and local government electric power services increased 0.4 percent in 1990, as output increased 2.5 percent and input increased 2.1 percent. Over the 1985-90 period, productivity increased at an average annual rate of 1.4 percent, with output increasing at a more rapid rate than employment (2.2 percent versus 0.8 percent). The long-term productivity trend (1967-90) in State and local government electric power services shows an average annual increase of 1.5 percent, with output increasing at a rate of 3.3 percent and employment increasing 1.7 percent.

Productivity in State sales of alcoholic beverages increased 0.6 percent in 1990, as output fell 0.9 percent' and input dropped 1.4 percent. In 1985-90, productivity increased slightly, while output and labor input declined. The drop in output from 1985 to 1990 was a continuation of a trend that started in 1980. This trend reflects decreasing demand for spirits and a shift in several States from government to private sector operations.

Productivity in State unemployment insurance activities increased 10.2 percent in fiscal 1990, as output increased 8.2 percent while lab6r input decreased 1.8 percent. During 1985-90, productivity increased, while output and labor input each decreased. Over the 1964-90 period, productivity increased at an average annual rate of 0.7 percent, with output increasing at a rate of 2.7 percent per year and labor increasing at 1.9 percent.

PRODUCTIVITY MEASURES for industries and State and local government functions, published by the Office of Productivity and Technology, are for the most part constructed from secondary source data. Consequently, the preparation of industry measures is largely limited to those industries for which data are readily available. However, more industry and government productivity measures will be developed in the future. Extensions and analyses of previously published industry and Federal, State, and local government services are ongoing.


1 A full report, Productivity Measures for Selected Industries and Government Services, Bulletin 2378 (Bureau of Labor Statistics, 1991), is available for $10 from the Superintendent of Documents, U.S. Government Priming Office, Washington, vc 20402, or from the Bureau of Labor Statistics, Publications Sales Center, P.O. Box 2145, Chicago, IL 60690. A more recent version of this publication, Bulletin 2406, which includes data through 1990 and a list of recent BLS publications in productivity and technology, is forthcoming. For a discussion of concepts, methods, and sources used to develop the productivity measures discussed in this research summary, see "Productivity Measures: Industries and Government," BLS Handboak of Methods, Bulletin 2285 (Bureau of Labor Statistics, 1988), ch. 11. See also Productivity: A Selected Annotated Bibliography, 1983-87, Bulletin 2360 (Bureau of Labor Statistics, 1990).

2 See Brian L. Friedman, "Productivity in crude oil and natural gas production," Monthly Labor Review, March 1992, pp. 9-17.

3 See a forthcoming article in the Monthly Labar Review by John Duke, Diane Litz, and Lisa Usher on multifactor productivity in the railroad transportation industry.

4 The Bureau has productivity measures for 174 industries or groups of industries. Of the 174 measures, 142 are for separate industries. Of the latter, 98 have been updated for the current year.

5 For the Federal Government, the fiscal year begins on October 1 of the previous calendar year and ends on September 30. For example, fiscal year 1990 covers the period between October 1, 1989, and September 30, 1990, Prior to 1977, the Federal Government's fiscal year began July I and ended June 30.
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Author:Dumas, Mark W.
Publication:Monthly Labor Review
Date:Jun 1, 1992
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