Productivity is rising in many U.S. service industries. This is a big deal, since rising…
Productivity is rising in many U.S. service industries. This is a big deal, since rising productivity has always accompanied rising economic growth.
According to the Labor Department, labor productivity rose in 18 of 28 selected service-providing industries in 2018.
This was similar to 2017, when labor productivity increased in 19 of 28 industries. Output increased in 21 industries in 2018, while hours worked increased in 15 industries.
Trends in Labor Productivity
Labor productivity increased in 18 of 28 industries in 2018. Among those with increasing productivity, output grew in 15 industries and hours worked grew in 7 industries.
Productivity gains of at least 7.0 percent occurred in 4 industries: natural gas distribution (13.5 percent), dry cleaning and laundry services (10.9 percent), wireless telecommunications carriers (10.1 percent), and travel arrangement and reservation services (7.3 percent).
In all 4 of these industries, output increases coincided with declines in hours worked.
Hours worked grew in 15 of the 28 industries. Hours worked increased in 8 industries which recorded declines in productivity.
Of these, the largest gains in hours worked were in warehousing and storage (10.4 percent), automotive repair and maintenance (4.6 percent), and couriers and messengers (4.4 percent).
Unit labor costs declined in 8 industries in 2018. Each of the industries with a decline in unit labor cost also recorded an increase in productivity.
Increases in labor productivity counter the impact of rising hourly compensation on unit labor costs facing employers.