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/77V ■

Productivity and the Economy

U.S. DEPARTMENT OF LABOR
Bureau of Labor Statistics

Revised 1973 Edition

Bulletin 1779




Dayton & Montgomery Co.

Public Library

JUL 31 '1973
DOCUMENT COLLECTION




Productivity and the Economy
Bulletin 1779

U.S. DEPARTMENT OF LABOR
Peter J. Brennan, Secretary
BUREAU OF LABOR STATISTICS
Ben Burdetsky, Deputy Commissioner
1973

Prepared for the
National Commission
on Productivity by
the Bureau of Labor Statistics

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402, GPO Bookstores, or BLS Regional




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Make checks payable to Superintendent of Documents.

Microfiche edition available from National Technical Information Service, Springfield, Va. 22151, at 95 cents a set.
Make checks for microfiche payable to NTIS.







Preface

Productivity is involved in one way or another with most issues of economic
policy. As a result, there is a continuous need for information about productivity,
although the focus o f attention varies with the economic climate. During periods of
economic slowdowns, for example, interest turns to the relationship between
productivity and unemployment, and concentrates on the role o f changing technology.
On the other hand, during periods o f rising prices, attention centers on the relationship
between productivity and wages.
This chartbook is designed to show what productivity is and how it operates. With
this end in view, the book is divided into three parts. The first part shows how
productivity has developed over time, the second presents changes in factors that are
influenced by productivity, and the third traces trends in the various factors that
influence productivity. Wherever possible, comparisons are made with foreign countries in
order to add an international perspective to a subject that is often treated within a solely
national framework.
In order to create a better understanding o f productivity, this chartbook draws on
the best available information, using a variety o f sources in addition to material produced
by the Bureau o f Labor Statistics. This presentation in no way implies that the Bureau
accepts all o f the measures and concepts involved, but rather our hope o f broadening the
scope o f discussion o f that essential element in the Nation’s economic well being —
productivity.
This bulletin was prepared by the* staff o f the Office o f Productivity and
Technology under the general direction o f Jerome A. Mark, Assistant Commissioner for
Productivity and Technology.

iii


iv


Contents

I.

1

Productivity tren d s ..............................................
Output per man-hour trends: The United States
Productivity trends in the private economy and the nonfarm and corporate
sectors ......................................................... * ............................................................
Recent trends in productivity
..................................................................................
Productivity trends in major sectors

.......................................................................

Trends in construction labor requirements

............................................................

2
4
6
8

Productivity trends in industries.................................................................................. 10

Output per man-hour trends: International comparisons
Productivity trends in manufacturing

.......................................................................... 12

Productivity levels in the iron and steel industry

II.

..................................................14

A. Implications of productivity growth for price and cost s ta b ilit y ........... 17
Trends in productivity, unit labor costs, and compensation
Recent
Trends
Trends
Trends

............................18

trends in productivity, unit labor costs, and com pensation.................20
in productivity, unit labor costs, and prices ............................................22
in productivity and p ro fits ...............................................................................24
in productivity, unit labor costs, and compensation in

manufacturing: International comparisons, 1 9 6 5 -7 0 .......................................... 26
Trends in productivity, unit labor costs, and compensation in
manufacturing: International comparisons, 1 9 7 0 -7 2 ......................................... 28
Recent trends in productivity, prices, unit labor costs, and compensation
in major sectors .......................................................................................................... 30
Trends in industry productivity and p r ic e s ...............................................................32

B. Other implications of productivity growth

.................................................... .3 5

Trends in productivity and real com pensation.......................................................36
Trends in product per person and average weekly h o u r s ....................................38
Trends in productivity and em p lo ym en t..................................................................40
Differences in industry productivity situations.......................................................42




III.

Factors affecting productivity g ro w th ....................................................................... 45
The sources of g ro w th ....................................................................................................46

Capital investment
Trends in capital stock per m an -h o ur.......................................................................48
Trends in capital investment:

International comparisons

..............................50

Technological change
Trends in diffusion o f major technological innovations................................... 52
Trends in diffusion o f major technological innovations: International
comparisons

............................................................................................................. 54

Trends in R & D expenditures .................................................................................. 56
Trends in employment o f scientists and engineers in industry ..................... 58

Labor quality
Trends in educational attainment ............................................................................ 60
Trends in occupational composition ....................................................................... 62
Worker attitudes and p ro d u c tiv ity .............................................................................64




P
Trends in
productivity




Productivity is a concept that expresses the relationship between the quantity o f
goods and services produced—
output, and the quantity o f labor, capital, land, energy, and
other resources that produced it—
inputs. Basically, productivity can be measured in two
ways. One way relates the output o f an enterprise, industry, or economic sector to a
single input such as labor or capital. The other way relates output to a composite o f in­
puts, combined to reflect their relative importance. The latter type o f measure, which is
usually called a total factor measure, is the most comprehensive as it takes all possible
inputs into account. However, the practical problem o f identifying and measuring all in­
puts is a long way from being solved, and no total factor measure has yet won general
acceptance. The most commonly used measure o f productivity using a single input relates
output to the input o f labor tim e-output per man-hour, or its reciprocal-unit labor re­
quirements. Labor time includes the man-hours o f all persons employed in the produc­
tion process. Man-hours are treated as homogeneous: no distinction is made between
hours of employees at different levels o f skill or pay.
One reason for the usefulness o f a labor productivity measure is that labor input is
readily measurable at several levels: the total private economy, its component sectors,
industries, or plants. In addition, labor is quantitatively the most important factor in the
economy. For these reasons, the productivity measures used in this book are expressed
in terms of output per man-hour. Nevertheless, output per man-hour indexes do not im­
ply that labor is solely or primarily responsible for productivity growth. In a technologi­
cally advanced society, labor effort is only one o f many interrelated sources of improve­
ment. Trends in output per man-hour also reflect technological innovation, changes in
capital stock and capacity utilization, scale of production, materials flow, management
skills, the state o f labor relations, competitive pressure, and many other factors the con­
tribution o f which often cannot be measured.
The output side o f the output per man-hour ratio refers to the finished product or
the amount o f product added in the various enterprises, industries, sectors, or the econ­
omy as a whole. Few plants or industries produce a single homogeneous commodity that
can be measured by simply counting the number of units produced. Consequently, for
the purpose o f measurement the various units of a plant or industry’s output are com­
bined on some common basis, either their man-hour requirements in a base period or
their dollar value. When information on the amount o f units produced is not available,
as is often the case, output must be expressed in terms o f the dollar value of production,
adjusted for price changes.

1

P ro d u ctiv ity trends
in the total private
economy and the
nonfarm and
corporate sectors

Digitized2for FRASER


Long-term movements in aggregates such as productivity in the private, nonfarm,
and corporate sectors reflect changes within the various component industries as well as
shifts in their relative importance. That is, changes in output per man-hour are influenced
not only by increases or decreases in the component sectors but also by employment
shifts between high and low productivity industries.
Between 1950 and 1972, productivity grew faster in the total private economy
than in the nonfarm sector. To a large extent, this situation reflected both the greater
increase in farm productivity and the shift o f workers out o f the farm sector, where the
level o f productivity is relatively low, into higher productivity jobs in the nonfarm sector.
This shift contributed about 0.3 percent to the long-term average rate o f growth in the
private economy.
Corporate productivity also grew faster than nonfarm productivity. This disparity
came about because the greater part o f industries where productivity tends to be low —
industries such as services, construction, finance, and real estate — are not incorporated
and are thus not part o f the corporate sector.
Average annual percent change in o u tp u t per
man-hour
Year and period

T ota l private econom y

N onfarm sector

Corporate sector

1950-72

3.0

2.6

1950-60

2.8

2.2

2.7

1960-65

3.9

3.5

4.1

3.0

1965-72

2.3

2.0

2.7

1968-

69

0.4

-0.1

2.1

1969- 70

1.0

0.6

1.0

1970- 71

3.6

3.6

4.7

1971- 72

4.2

4.7

4.7

Chart i.




PerM an-hour in the Private Economy and the

Output

Nonfarm and Corporate Sectors, *950-72
Index ( 1 9 5 0 = 1 0 0 )

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

3

Recent trends in
p ro d u ctivity


4


Productivity analysis varies with the length o f the period studied: short-term
movements show cyclical effects, while long-term movements reveal a secular trend.
Typically, productivity movements follow a certain pattern in the course of a business
cycle. When business activity starts to decline, output per man-hour generally drops
sharply as capacity utilization falls below optimum rates. Once cost-cutting efforts get
underway, adjustments are made and the decline in productivity is arrested or reversed.
When activity picks up again, output per man-hour increases at a faster rate because of
higher capacity utilization. Then, after a sustained period o f production increase,
bottlenecks emerge, less efficient resources are brought into use, and the rate of
productivity advance declines.
Recent movements in productivity show how the business cycle causes shortrun
changes that diverge from the long-term trend rate. Chart 2 shows that actual
productivity fell behind trend productivity in late 1968 and reached its most distant
point in the first quarter o f 1970. The economic upswing started to close the gap in 1971,
and virtually eliminated it by the end o f 1972.
T otal private economy
Average annual percent change
Year and quarter
I

-0.5

3.6

-0.9

1.8

III

-0.1

1.7

IV
1970

O utput

II

1969

O u tp ut per man-hour

-0.8

-2.5
-2.6

-1.3
4.3

1.7

III

6.9

2.3

IV

-1.9

-5.1

1

7.5

8.7

II

1971

1
II

2.2

3.7

III

1972

3.2

2.5

IV

3.7

7.2

1

3.9

7.0

II

6.2

10.2

III

4.1

6.5

IV

4.7

8.4




Output Per Man-Hour and Output in the Private Economy
Difference Between Quarterly Productivity Movements and Long'
Term Trend, 1965-72
Percent

Difference Between Actual and Potential Output Levels, 1965-72

1965

1966

1967

1968

1969

1970

1971

1 Long te rm trend = 3.0 percent, 1950 - 1972
2Trend of 4.0 percent from 1965 (1st Q tr.) to 1969 (4th Q tr.). Trend o f 4.3 percent fro m 1969 (4th Q tr.) to 1972 (4th Q tr.).

5

Productivity trends
in major sectors


6


Productivity growth varies from sector to sector over both the short and the long
term. Between 1950 and 1971, the average improvement in output per man-hour ranged
from 5.8 percent a year in the farm sector to 2.9 percent a year in trade and
manufacturing. Sectors for which adequate productivity information is not yet available
— services, construction, and finance, insurance, and real estate — are estimated to have
even lower long-term rates o f productivity growth.
Productivity growth in sectors varies in the short run according to the effect o f
changes in the business cycle. For instance the farm sector, which is relatively unaffected
by cyclical movements, was the only one in which productivity grew faster during the
latter half o f the 1960’s than during the early half.

Percent change in o u tp u t per m an-hour
Sector
1950-71

Farm

...................................................

1960-71

1965-71

5.8

6.1

6 .5

5.6

5.2

4.7

E le ctricity, gas, and sanitary services

5.3

4.3

3.8

M ining

3.7

3.3

2.8

................................

3.3

4.1

2.9

M a n u fa c tu rin g ...................................

2.9

3.2

2.5

T rade

2.9

3 .2

2.2

Com munications

.............................

................................................

Transportation

...................................................

Chart 3 .




Per M an-Hour by M ajor Sector, 1950-n

Output
Index (1950= 100)

1950

1953

1956

1959

1962

1965

1968

1971

7

Tren ds in
construction labor
requirements


8


Since technical problems still impede development of an adequate productivity
measure for the construction sector, the best available insight into changes in
construction productivity is provided by studies o f labor and materials requirements for
various types of construction over time. Though declines in man-hour requirements
would seem to be another way o f expressing increases in output per man-hour, changes in
construction labor requirements reflect the introduction o f new methods, equipment, and
materials; geographic shifts in demand; and shifts in the type o f building constructed; as
well as improvements in productivity.
Man-hour requirements declined for all types o f construction studied by the BLS
over recent periods, but the rates o f decline varied considerably. The sharpest decline
occurred in highway construction in the early 1960’s: a significant slackening was noted
in 1964. The average decline for building construction was about 2 percent, ranging from
1 percent for general hospitals to 2.7 percent for elementary schools.
Onsite man-hour
Type o f C onstruction

requirements per

and year

$1000 constant dollars
o f construction

Federally-aided highways
ig 5 8

............................................ ................

1g64

............................................ ................

91
72

-|g70

................................................... ................

65

1962

................................................... ................

72

1969

...................................................... ................

64

1g60

............................................................... ................

114

1968

.................................................................. ................

96

Private single-fam ily housing

Public housing

General hospitals
1960

............................................................ ................

2301

1966

.................................................................. ................

2171

Elementary and secondary schools
1959
1 QRR

i

Per 100 square feet.

............................................ ................
................................................

................

119

i

1021

Chart

4.




Decline in Onsite Man-Hour Requirements for Various Types
oj Construction, Selected Periods, 4958-70
Average annual percent change
4 .0

Federally-aided highways

<

Private single-family housing

Public housing

General hospitals

Elementary and secondary schools

P ro d u ctivity trends
in industries


10


Variations in output per man-hour growth among industries stem from many
sources. For example, the large productivity advances o f the 1960’s in air transportation
were produced by the introduction of jets and the great expansion in traffic. The lack of
productivity growth in the footwear industry resulted from the fact that footwear
producers deal with a variety of sizes and styles that make adoption o f mass-production
methods difficult. Low productivity gains in copper mining reflected a situation in which
operators were faced with less and less recoverable ore as the richest veins became
exhausted.
Although productivity trends for individual plants are not shown in the chart,
they vary in both the level and the rate o f productivity growth. Some plants may exceed
the trend for the industry significantly, while others may lag well behind the average.

Chart

5.




Growth in Output Per Man-Hour in Selected
Industries, 1960-71
1971
P e tro le u m p ip e lin e s
A ir t r a n s p o r t a t io n
R a d io a n d te le v is io n re c e iv in g sets
H o s ie ry
M a lt liq u o rs
a n d e le c tr ic u t ilit ie s
R a ilro a d s , re v e n u e t r a f f ic
M a n -m a d e f i b e r s — P e tro le u m r e fin in g
A lu m in u m r o llin g a n d d r a w in g — B o ttle d a n d c a n n e d s o ft d r in k s
Ir o n m in in g , c r u d e o re — C o p p e r m in in g , c ru d e o re
M a jo r h o u s e h o ld a p p lia n c e s
C o n c re te p r o d u c ts
B itu m in o u s c o a l a n d lig n ite m in in g
H y d r a u lic c e m e n t / Paper, p a p e rb o a rd (a n d p u lp m ills
Su gar
F lo u r a n d o t h e r g ra in m ill p r o d u c ts

m in in g
C igars
T ire s a n d in n e r tu b e s
a n d s o lid fib e r b o x e s
R a ilro a d s , c a r-m ile s
B a k e ry P ro d u c ts
C a n d y & o th e r c o n f e c tio n e r y p r o d u c ts
M o to r v e h ic le s a n d e q u ip m e n t
Ir o n m in in g , u s a b le o re
Glass c o n ta in e rs
ir o n fo u n d a r ie s
P r im a r y a lu m in u m
C o p p e r m in in g , re c o v e ra b le
n g a n d p re s e rv in g
T o b a c c o p r o d u c ts - to ta l
S te e l

C ig a re tte s , c h e w in g a n d s m o k in g
P r im a r y c o p p e r, lead, z in c

F o o tw e a r

1960

1971

11

International
com parisons:
P ro d u c tiv ity trends
in m anufacturing


12


Growth in manufacturing productivity since 1960 has varied substantially in the
countries for which the BLS makes productivity comparisons. Between I9 6 0 and 1972,
average annual gains in output per man-hour ranged from 3.1 percent in the United States
to 10.4 percent in Japan. Although the U.S. growth rate was the lowest, the evidence
available indicates that the United States continues to have the highest level of
manufacturing productivity, though this may not be true for all industries.
The largest gap between productivity growth rates existed during the 1965-70
period, when manufacturing productivity grew 2.0 percent a year in the United States
and 13.2 percent a year in Japan. The economic recovery that began in 1970 brought
about a substantial improvement in U.S. productivity growth. Though productivity still
grew at a faster rate in most o f the other countries between 1970 and 1972, the margins
by which these rates exceeded the U.S. rate were reduced significantly.

1

Country

Average annual percent change, 1960-72
1960-72

1960-65

1965-70

1970-72

......................................... . . . .

3.1

4.3

2.0

4.9

..................................................... . . . .

4.4

4.3

4.7

5.1

6.0

5.9

6.0

5.7

5.3

7.9

6.5

5.8

4.9

6.0

6.9

United States
Canada

European economic community
Belgium

............................................

France

............................................... . . . .

Germany
Italy

............................................ . . . .

5.8

6.3

5.7

5.1

.................................................. . . . .

6.0

6.8

5.3

3.5

...................................... . . . .

7.2

5.5

8.9

6.6

........................................................ . . . .

10.4

8.5

13.2

7.7

..................................................... . . . .

7.1

7.2

7.7

4.5

................................... . . . .

4.2

4.0

3.9

6.6

Netherlands
Japan
Sweden

United Kingdom

1

For many of the foreign countries, 1972 estimates are based on data for less than the fu ll year.




Output Per Man-Hour in Manufacturing, United States
and Other Industrial Nations, 1 9 6 0 -7 2
Index

(1 9 6 0 = 1 0 0 )

1960

1962

1964

1966

1968

1970

1972

13

International
comparisons:
Productivity levels
in the iron and steel
industry


14


In 1964, productivity in the U.S. iron and steel industry greatly exceeded the
levels reached in other major steel-producing countries. Output per man-hour was about
60 percent of the U.S. level in Germany and around 50 percent in France, Japan, and the
United Kingdom. In 1971, however, though labor productivity in the British steel
industry was still only about half the U.S. level, the French industry was up to two-thirds
the U.S. level, the German to about three-fourths, and the Japanese may have exceeded
it.

Index of output per
Country

Relative output per

man-hour: 1964 = 100

man-hour: U.S. = 1001

1964
United States
Japan

1970

1971

.........................................

100.0

104.8

108.6

........................................................

100.0

232.6

234.2

United Kingdom
France
Germany

1964
100
43-54

1970
100
96-119

1971
100
93-116

...................................

100.0

115.3

110.6

46-50

51-55

47-51

.....................................................

100.0

148.2

147.6

48-51

68-73

65-70

..................................................

100.0

139.6

137.0

54.63

73-84

68-80

^The data for Japan and the Western European countries are presented in terms of ranges,
with high and low estimates, because of data gaps and limitations.

Chart

7.




Relative Levels oj Output Per Man-Hour in the Iron and
Steel Industries of Five Countries, \964-i\
Index (U.S. in 1 9 6 4 = 100)
125

100

Jwi
75

'C m
jMf&W

Japan

■
50

France

G erm any

U n ite d Kingdom

25

1964

1971

1964

1971

1964

1971

1964

1971

15




P art II- a .
Im plications o f
productivity growth
fo r price and
cost stability




Productivity movements are an important factor in determining price and cost
stability. This aspect o f productivity change stems from the role o f output per man-hour
— an especially relevant concept when dealing with unit labor costs — as a critical link
between the cost o f labor and the price o f goods.
In most industries, labor costs, including hourly rates o f pay, overtime, and all
types o f fringe benefits, are the largest single cost element. Consequently, the trend of
labor costs per unit of output plays a major role in determining the price per unit of
output. I f the effect o f an increase in unit labor costs can be minimized by a greater
increase in productivity, pressure to increase prices will obviously be lessened, although
changes in profits or materials cost per unit o f output may offset this effect.
On the other hand, changes in unit labor costs can be a result as well as a cause of
price rises. Price increases that cause employee purchasing power to fall lead to pressure
for higher wages. I f the wage increases exceed productivity growth, unit labor costs will
increase also.
These relationships come into play at all economic levels, ranging from
competition within an industry to competition between countries. For this reason,
achieving productivity growth is a matter o f concern to workers and consumers as well as
to employers and stockholders.

17

Trends in
productivity,
unit labor costs,
and compensation

Due to the relative stability o f growth in hourly compensation, changes in unit
labor costs display a close inverse relation to changes in output per man-hour. The almost
mirror image o f chart 8 shows that unit labor costs tend to rise when productivity growth
slows and to slow or decline when productivity growth accelerates.

Total private economy
Average annual percent change
Output

1950-60
1960-65
1965-72
1968-69
1969-70
1970-71
1971-72

18




per

labor

per

period
1950-72

Unit

Year and

man-hour

costs

man-hour

Compensation

............................. ..................
............................. ..................

3.0

2.1

5.2

2.8

2.2

5.0

............................. ..................
.............................

3.9

0.4

4.3
7.1

............................. ..................
.............................

0.4

............................. ..................
.............................

3.6

4.7
7.1

7.6

6.5

7.6

3.4

7.1

2.0

6.2

Chart 8
.




Average Annual Percent Change in Productivity and
Labor Costs in the Private Economy, 1950-72
Percent change

10.0

8.0
6.0
4 .0

2.0
0

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972
19

Recent trends in
productivity ,
unit labor costs,
and compensation

20



U nit labor cost movements are influenced by productivity change which, in turn,
is influenced by shortrun changes in output. During 1971 and 1972, the economic
recovery was reflected in productivity growth which offset gains in hourly compensation.
As a result, quarterly increases in unit labor costs were generally smaller in these 2 years
than they had been in the preceeding few years, when growth in compensation far
exceeded growth in productivity.

T otal private economy
Q uarterly percent change at annual rate
Year and quarter

U n it labor

Compensation

m an-hour

1969

O u tp u t per

costs

m an-hour

I

.............................

-0.5

6.3

II

.........................

-0.9

8.9

8.0

I ll

.........................

-0.1

7.3

7.2

.........................

-0.8

10.7

9.9

.............................

-1.3

8.3

6.9

IV
1970

I

5.8

II

4.3

1.6

5.9

.........................

6.9

2.4

9.4

I V .........................
1971

.........................

I ll

-1.9

7.4

5.4

7.5

1.7

9.2
6.2

I

.............................

II

2.2

3.9

.........................

3.2

2.6

5.8

I V .........................
1972

.........................

I ll

3.7

1.0

4.7

I

.............................

3.9

4.6

8.7

II

..........................

6.2

-0.6

5.6

I ll

.........................

4.1

0.3

4.4

I V .........................

4.7

3.0

7.9

Chart

9.




Productivity and Labor Costs in the Private Economy, 1966-72
Quarterly Changes at Annual Rates
Percent change

10.0

5 .0

0
-

2.0

15.0

10.0

5 .0

0

15.0

10.0
5 .0

0

1966

1967

1968

1969

1970

1971

1972

21

Trends in
productivity,
unit labor costs,
and prices

22



During the early 1960’s the unit labor cost component o f price change was slight
— mainly because productivity increases kept pace with the growth in hourly
compensation. As increases in productivity slowed in the late 1960’s and increases in
compensation speeded up, unit labor costs accelerated and came to represent a larger
component o f price growth, particularly in 1969 and 1970.
In 1971 and 1972, the trends reversed; productivity accelerated and the growth in
hourly compensation slowed. Consequently, the effect o f unit labor costs on price
increases was much less than in the previous 4 years.

T otal private economy
Com position o f price change
in percentage points
Annual percent
Year and period

change in

U n it labor

U n it

prices

costs

p ro fits

O ther u n it
nonlabor
payments

................

1.2

0.3

0.5

0.4

1966

......................

2.5

1.7

0.2

0.6

1967

......................

2.9

2.2

-0.8

1.4

1968

......................

3.6

2.8

-0.1

0.9

1960-65

1969

......................

4.5

4.4

-1.2

1.3

1970

......................

4.8

4.1

-1.6

2.4

1971

......................

4.3

2.2

0.6

1.5

1972

......................

2.6

1.3

0.4

1.0

Chart to.




Composition of Price Changes, Private Economy,

72

Percent change

Points con tributing to percent change

1

2
3

U n it p ro fits includes corporate pro fits, estimated profits o f unincorporated enterprises and net rental
earnings o f owner - occupied dwellings.
O ther u n it nonlabor costs include depreciation, interest, and indirect taxes.
No change.

23

Trends in
productivity
and profits




Profits per unit are affected by many different factors, and the rate of
productivity improvement seems to be one o f them. Profits have generally increased when
productivity was growing rapidly; they have usually decreased during periods o f reduced
productivity growth.

Chart u.




Average Annual Percent Change in Productivity and
Profits in the Non-Financial Corporate Sector,
72
Percent change

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

25

Trends in
productivity,
unit labor costs,
and compensation
in manufacturing:
International
comparisons, 1965-70


26


Unit labor costs in manufacturing, measured in national currencies, rose more in
the United States between 1965 and 1970 than in Canada, Japan, or Western Europe.
Hourly compensation rose over 6 percent a year in the United States, while output per
man-hour increased only 2 percent a year. The result was an average rise in U.S. unit labor
costs o f 4 percent a year. A ll o f the foreign countries had larger percentage increases in
hourly compensation
productivity growth.

than the United States, but they also had faster rates of

On a U.S. dollar basis, Canada and Germany had rates o f increase in unit labor
costs about as large as the United States because they revalued their currencies during the
period. Similarly, the United Kingdom had a decline in unit labor costs and France a
relatively small increase because they devalued their currencies.
Average annual percent change, 1965-70

O u tp u t per
C ountry

man-hour

U n it labor costs
U.S. dollar

Currency
United States

National

Com pensation
per m an-hour

basis

................ .............

2.0

4.0

4.0

......................... .............

7.9

1.4

1.3

9.4

Canada

............................. .............

4.7

3.2

3.7

8.1

France

............................. .............

6.0

3.8

1.5

10.0

......................... .............

5.7

2.6

4.1

8.4

Ita ly

................................ .............

5.3

3.9

3.8

9.4

Japan

................................ .............

Belgium

Germany

6.1

13.2

2.0

2.2

15.4

................... .............

8.9

2.8

2.7

11.9

S w e d e n ............................. .............

7.7

2.0

1.9

9.8

U nited Kingdom

3.9

3.6

-0.4

7.7

Netherlands

. . . . .............

Chart 4 2

.




Average Annual Percent Change in Output Per Man-Hour,
Unit Labor Costs, and Compensation Per Man-Hour in
Manufacturing, Ten Countries, i9 6 5 -7 0
O utput per man-hour
0

United States

Belgium

4

8

12

U nit labor costs
16 0

2

Compensation per man-hour

4

Y/7777777777)
J National currency
2 2 2 U . S . dollars

I

Canada
France

Germany

7ZZZ2

///////P////7 A
....... I ............... I

Italy
--------------1

Japan

'/ / / / / A
_ 1

Netherlands

Sweden

V///////A
'/ / / / / /
ia m r i ;

United Kingdom

-0.4

27

Trends in
productivity
unit labor costs,
and compensation
in manufacturing:
International
comparisons, 1970-72


28


Beginning in 1970, the position o f U.S. unit labor costs relative to other industrial
countries improved. This reversal was due to a speedup in output per man-hour in the
United States and sharp increases in hourly compensation in the other countries. Though
productivity continued to grow at a faster rate in most o f the foreign countries than in
the United States, growth rates in hourly compensation abroad exceeded productivity
growth rates by wider margin than was the case in the United States.
The relative cost position o f the United States was further improved by the
general realignment o f the world’s major currencies that took place in 1971. A fter taking
these changes in currency values into account, the average 1970 to 1972 rates o f increase
in unit labor costs abroad ranged from about 6 percent in Canada to 17 percent in Japan,
compared with 1.4 percent in the United States.
Average annual percent change, 1970-72

C ountry

United States . . . . . . . . . . .
Belgium ....................................
Canada .......................................
France .......................................
G e rm a n y ....................................
I t a l y .............................................
Japan ..........................................
N e th e rla n d s ...............................
S w e d e n .......................................
United Kingdom .......................

O u tp u t per
man-hour

4.9
6.5
5.1
6.9
5.1
3.5
7.7
6.6
4.5
6.6

i

U n it labor costs
'
N ational
U.S. d o lla r
Currency
basis
1.4
6.3
3.4
4.6
6.9
11.3
7.7
9.2
7.8
5.7

1.4
13.0
6.1
9.5
14.3
15.4
17.0
15.9
12.5
8.0

Compensation
per man-hour

6.5
13.3
8.8
11.8
12.3
15.3
16.0
16.4
12.6
12.5

i

For many o f the foreign countries, 1972 estimates are based on data fo r less than the fu ll year.




Average A nnual Percent Change in Output Per Man-Hour,
Unit Labor Costs, and Compensation Per M an-H our in
Manufacturing, Ten Countries,
U nit labor costs

O utput per man-hour

8

0

8

12

Compensation per man-hour

16

0

4

8

12

16

20

National currency
U.S. dollars

United States

1

Belgium

mmmmsmmmm

Canada

ZZZZZZZ2
_____

France
Germany

ix ! irito '.*:
—

^ZZZZZZZZZZZA
7ZZZZZZZZZZZZZZZZZA
—

Italy

Japan
Netherlands
Sweden

United Kingdom

7
Z

Z

Z

Z

Z

Z

Z

Z

Z

Z

Z

Z

L

vzzzzzzzzzzzzzzzzzm
TZZZZZZZZZZZZZZZZZZA

V/y////77)/7777A
7ZZZZZZ2
29

Recent trends in
productivity, prices,
unit labor costs, and
compensation in
m ajor sectors

30



The rate o f productivity growth in a sector is generally related directly to
increases in the prices and costs o f a sector’s production. Unit labor costs and prices
usually rise most in sectors where productivity growth is lagging and least in sectors where
productivity growth is rising. Between 1965 and 1971, prices rose most in trade, a sector
with a relatively low rate o f productivity growth, and least in communications, a sector
with a very high rate o f productivity growth.

I

Chart

14 .




Average Annual Percent Change in Output Per Man-Hour,
Prices, and Costs by Major Sectors, 1965-74
Percent

F a rm

C 1m m u n ic a tio n s
o
E le c tr ic , gas, a n d s a n ita r y services

T r a n s p o r t a t io n
J

Prices

M in in g

M a n u fa c tu r in g
-----------------------1

T ra d e

__

h 'i

F a rm

F a rm

C o m m u n ic a tio n s
__________ I

C o m m u n ic a tio n s

E le c tric , gas, a n d s a n ita r y s e rvice s
--------------------- 1

E le c tr ic , gas, a n d s a n ita r y s e r v ic e ij

■

T r a n s p o r t a t io n

T r a n s p o r t a t io n

Compensation
per man-hour

—

Unit labor costs
M in in g

M in in g

M a n u fa c tu r in g

M a n u fa c tu r in g

T ra d e

T ra d e

10

12

10

12

31

Trends in industry
productivity
and prices

32



A close inverse relationship between changes in prices and changes in productivity
exists at the industry level, too. Prices declined between 1960 and 1971 in industries such
as hosiery and radio and T V sets, where the rate o f productivity gain was larger than the
average. A t the same time, prices increased in industries such as footwear where
productivity advances were small. Although there are some exceptions, the pattern shows
that as productivity grows faster, prices tend either to decline or increase at slower rates.

Chart




Annual Average Rates of Change' in Output Per ManHour and Prices fo r Selected Industries,

1960-71

Prices

5.0

•

(Copper, lead, and zinc)

-1.0

0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

O utput per man-hour
^ Rate of change based on the linear least squares trends of the logarithms of the index numbers.

33




P
Il-b.
O ther implications
o f productivity




growth

One o f the best known effects o f productivity growth is the increase it makes
possible in workers’ incomes. Labor compensation expressed in terms o f its buying power
— real compensation — has risen at about the same rate as output per man-hour over the
post-World War I I period.
Productivity growth not only provides workers with more income, but also
increases the amount o f goods and services available for the population as a whole to
consume. The increase in per capita product since World War I I has largely been due to
the increase in real product per man-hour, though the effect o f productivity growth has
been offset somewhat by the continued decline in man-hours.
This situation shows that two potential benefits of productivity growth are
alternatives: Increases in output per man-hour mean either that a given amount of labor
time can produce more output, or that a given amount o f output can be produced with
less labor time. Though these two alternatives are theoretically exclusive, in practice the
benefits o f productivity growth have been divided between them.
A third alternative has received a good deal o f attention during periods of
unemployment. Increases in output per man-hour can result in producing a given output
with fewer workers. Though this alternative has prevailed in some industries such as
railroads or coal mining, experience has shown that many industries increase employment
as productivity grows because demand for their product grows even more.

Trends in
productivity and
real compensation


36


Over the long run, labor has shared in the steadily increasing productivity o f the
nation: Hourly compensation, adjusted to take account of changes in purchasing power
(real hourly compensation), has risen at about the same rate as output per man-hour. In
1972, real hourly compensation was almost 85 percent higher than it was in 1950.
Changes in productivity and compensation do not always parallel each other over
the short run. In general, when productivity rises rapidly, as in 1971 and 1972, increases
in real hourly compensation tend to lag behind. Conversely, in times o f low productivity
improvement, such as 1969 and 1970, increases in real wages tend to out pace increases
in productivity.

Total private economy
Average annual percent change
Year and

Output

Real compen-

per

sation per

man-hour

man-hour

1950-72

3.0

3.0

1950-60

2.8

3.3

1960-65

3.9

3.0

Period

1965-72

2.3

1968- 69

0.4

i

2.6
2.3

1969- 70

1.0

2.1

1970- 71

3.6

1.5

1971- 72

4.2

2.7

Chart




Output
PerMan-Hour and Real Compensation
Per Man-Hour, Private Economy, 1950-72
Index (1950 = 100)

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972
37

Trends in product
per person and
average w eekly
hours


38


One benefit o f productivity improvement is an increase in amount o f goods
produced and thus available for purchase by each member o f the population. Gross
national product per person rose an average o f 2.1 percent a year between 1950 and
1972. The most rapid increase occurred during the 1960’s, when productivity growth was
particularly high.
Though productivity growth is the major factor influencing trends in product per
person, it is not the only one. Two other factors — the proportion of the population in
the labor force and the proportion o f the labor force that is employed — did not change
very much between 1950 and 1972. The third factor, average hours per worker, declined
0.4 percent a year and thus partially offset the effect o f productivity growth on the rise
in product per capita. (The decline in hours varied from sector to sector; hours did not
decline at all in manufacturing.)
I f the entire gain in output per man-hour during the last 2 decades had been taken
in leisure time, average weekly hours would have decreased by an average o f 3 percent a
year. Estimating the actual change in average weekly hours due to productivity growth is
difficult since economic fluctuations affect average hours so strongly; nevertheless, the
slight decline in average weekly hours, compared with the large increase in per capita
product, indicates that increased income had greater appeal than increased leisure.

Chart




47.

GNP
PerCapita and Average W eekly Hours
Per Worker, Private Economy, 1950-72
Dollars (1958)
4 ,0 0 0

Hours

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970 1972
39

Trends in
productivity
and em ploym ent




Some people think that increases in productivity automatically lead to decreases
in employment, but the chart shows that this is not necessarily true. Between 1960 and
1971, for example, productivity went up in every industry studied by the BLS and
employment grew in over half o f them.
In many industries, large productivity increases are accompanied by large increases
in output that require increases in employment. This situation occurred in the air
transportation and man-made fibers industries. Productivity growth in petroleum
pipelines

was also associated with

a large increase in output, but technological

improvements in this highly mechanized industry enabled it to expand production while
further reducing its already low employment. On the other hand, in some industries such
as cigars and railroads employment reductions were associated with high productivity
gains and only moderate increases in output.

Chart

18




.

Average Annual Rates of Change' in Output Per Man-Hour
and Employment fo r Selected Industries, \960-n
Employment

10

8

6

4

2

0

-2

-4
Output per man-hour
1 Rate of change based on the linear least squares trends of the logarithms of the index numbers.

41

D ifferences in
industry
productivity
situations




Industries with similar trends in output per man-hour may have vastly different
trends in output and employment. For instance, between 1960 and 1971, productivity
grew at an average rate o f nearly 6 percent a year in man-made fibers, railroad
transportation, and gas and electric utilities, but each one o f these industries has a
different productivity story. High productivity growth in man-made fibers represented a
big increase in output, accompanied by substantial growth in man-hours, while the same
rate o f productivity growth was achieved in railroads by a large reduction in man-hours,
coupled with a small increase in output. The rate o f productivity increase for gas and
electric utilities stayed close to the rate o f output growth, as man-hours barely changed.
These three industries show the major types o f high productivity growth
situations. They indicate that the implications o f productivity growth for employment
are closely associated with trends in output: Industries that have large increases in output
tend to increase man-hours too, while industries that have small output growth tend to
reduce man-hours.

Chart 19.




Change in Output and Man-Hours for Selected Industries
with Similar Productivity Growth, i960-7i
Percent change

43




III.
Factors affecting
productivity
growth




The factors to which changes in productivity can be attributed vary according to
whether the movements are short term or long term. As many o f the charts in part I
show, short-term movements in productivity are directly related to the business cycle
because productive capacity, including the work force, is not so flexible that producers
can adjust it immediately to changes in demand.
Long-term productivity growth reflects basic changes in the factors underlying
productivity improvement, such as increased availability o f capital, improvement in the
quality o f labor, and advances in technology. Other factors include improvements in the
allocation o f resources, increased economies o f scale, and advances in managerial
know-how. Some economists attempt to analyze all o f these factors, however difficult
they may be to quantify and measure, and the results of some of these attempts are
presented on the next page. Another approach is to measure those factors that are readily
quantifiable and to treat them as indicators of the sources o f growth.
Capital investment makes an important contribution to growth in output per
man-hour. Most researchers have concluded that output per man-hour has increased in
large part because the amount o f capital supporting each worker has increased
substantially. The role o f capital investment is outlined by measures such as capital
investment as a proportion o f output and, most revealing for productivity analysis, capital
stock per man-hour in the private economy.
Technological innovation is another important source o f growth in output per
man-hour. Much o f this innovation is a result o f organized research and development
(R & D ) programs, and the amount, rate, and location o f spending on R&D gives some idea
o f the importance placed on this activity by both government and industry. An even
better approximation o f the pace o f technological development can be attained by tracing
the rate of diffusion o f important innovations that have had a clear and direct effect on
productivity growth. Otherwise, measuring the effects of so generalized a process as
technological change is difficult, if not impossible.
A third important contributor to growth in output per man-hour is improvement
in the quality o f the labor force. This improvement can be seen clearly in the statistics
which compare the skills o f the jobs at which Americans work now with those of an
earlier period, or which trace the rise in the median level o f education. And, since worker
motivation plays as important a part as worker skill in improving productivity, surveys of
worker attitudes are extremely illuminating, particularly when prospects for future pro­
ductivity growth are being estimated.

The sources o f


46


growth

The factors affecting productivity growth are so interrelated that determining the
separate effect o f each one is difficult. Moreover, the economists who have attempted this
task — Denison, Kendrick, Thurow, Grilliches, Jorgensen, and Christiansen, among others
— have come up with different measures because o f differences in definitions, concepts,
and assumptions.
It is not possible to compare the results o f all the research undertaken to date in
this area, since not all researchers have focused on the same factors. However, three
studies — those by Edward Denison, John Kendrick, and Lester Thurow — encompass
similar factors and thus provide a good idea o f current thought in this area. Though their
measures differ, they all conclude that improved technology and the availability o f more
capital per worker have been the major sources o f productivity growth.
For all three researchers, technology refers not to the measured effect of
technological improvements but to the residual — the part o f productivity growth not
accounted for by the other factors measured.One reason that Kendrick’s residual exceeds
Denison’s is that it includes the effects o f economies o f scale and improved resource
allocation, which Denison measured separately. Thurow’s residual is smaller than
Kendrick’s mainly because he assigned technological progress embodied in labor or capital
to the part of productivity growth that he attributed to those two factors.

Chart 20.




Factors Affecting Productivity

More Capital
25.4

Technology

Better Resource
Allocation
Labor
Economies
of Scale
12.7

Labor Quality
14.3

D EN ISO N

THUROW

More Capital

Technology

18.8

71.9

Labor Quality

K E N D R IC K
47

Capital Investment

Trends in capital
stock per man-hour


48


Growth in capital per man-hour has been an important factor in productivity
improvement, since more and better equipment allows a worker to perform his job more
effectively. Capital per man-hour rose 2.5 percent a year between 1950 and 1970, as
capital increased almost four times as fast as man-hours did. The increase in the
capital-labor ratio contributed about one percentage point to the 3-percent average
annual increase in output per man-hour between 1950 and 1970.
The growth in the capital-labor ratio was faster in the 1950’s than in the 1960’s.
Although capital growth accelerated in the 1960’s, the rate of increase in man-hours
almost tripled.

Capital per
man-hour

Period

Capital

Man-hours

1950-70

......................................................................................

2.5

3.2

0.7

1950-60

......................................................................................

3.1

3.3

0.2

1960-70

......................................................................................

2.0

3.6

1.4

Chart 24.




Capital Per Man-Hour in the Private Economy,

1950-70

Index (1950=100)

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

Source: U.S. Department of Commerce.

49

Capital Investment

Trends in
pital investment:
International
comparisons




Since growth in output per man-hour is closely related to the amount of capital
supporting each worker, the ratio o f capital investment to output is a precursor of
potential growth in productivity. Productivity is more likely to increase rapidly in
countries where this ratio is high than in countries where it is low.
During the 1960’s, the United States, Canada, and the United Kingdom had the
lowest average capital investment ratios in manufacturing as well as the lowest average
increases in manufacturing productivity. A t the other end o f the scale, Japan had the
highest investment ratio and the highest rate o f productivity gain.
Data on capital investment in manufacturing are not available for most of the
Common Market countries. Consequently, capital investment ratios for industry as a
whole — mining, manufacturing, construction, and public utilities — are substituted in the
chart even though they can be imprecise indicators o f capital investment ratios in
manufacturing. For instance, Canada has a very high capital investment ratio for all
industry, but a relatively low ratio for manufacturing.
Average annual
percent change

Capital investment

in output per

Country

as percent of

man-hour in manu­

output,

facturing, 1960-721

1960-70
All industry

United States
Belgium

. ................... .............

3.1

2 14.5

12.3

......................... ... . .............

6.6

19.9

19.6

21.0

15.1

5.8

21.2

N.A.
N.A.

Canada

...................................

France

................................ ................

Germany

Manufacturing

................................ .............

5.8

3 22.2

Italy

...................................... .............

6.0

17.9

N.A.

Japan

...................................... .............

10.4

28.1

31.4
N.A.

......................... .............

7.2

21.4

S w e d e n ................................... .............

Netherlands

7.1

18.8

16.7

United Kingdom

4.2

16.6

13.4

................ .............

1 For many of the foreign countries, 1972 estimates are based on data for less than the full year.

2

Excludes construction.
3Capital investment, excluding residential dwellings, as percent of total output.

Chart 22.




Growth in Output Per Man-Hour in Manufacturing
and Rate of Capital Investment, Ten Countries
O utput per man-hour, 1960-72
(average annual percent change)

12

8

4

Capital investment as percent of output
1960-70
0

0

10

20

30

40

United States

Belgium

Canada
France
Germany 2
Italy
Japan

Netherlands
Sweden
United Kingdom

manufacturing, mining, construction,
2Includesinvestment as percent of total output. and public utilities.
Capital

51

Technological C han ge

Productivity growth is directly affected by the rate o f acceptance o f a new
technology. Researchers generally concur that the rate o f diffusion o f any major new
technology varies considerably within and between industries, but disagree as to the
specific factors causing this variation and their relative importance. Factors which are

Trends in

reported to affect the diffusion rate include cost and profitability o f the innovation, size
of the firm, and level o f output o f the firm.

diffusion o f

innovations o f the post World War I I period: The electronic computer, which has

m ajor technological
innovations


52


The accompanying chart shows trends in the diffusion o f four major technological
achieved significant productivity gains in industry, business, and government; the basic
oxygen furnace (BOF), a steelmaking process which reportedly lowers production and
capital costs and increases output; numerical control, a system for the automatic
operation o f machine tools which has increased productivity in the metalworking
industries; and the production o f electricity by nuclear energy.




Growth in Use of Some Key Technological
Innovations, 1956-72
Number in use (000)

Percent of total steel output
produced by BOF's

125

60

Source: International Data Corporation, EDP Industry Report:
Review and Forecast Issue, March 1972.

Percent N/C machine tools
comprised of total machine
tool shipments

Percent of total kilowatt hours
produced by nuclear generation

25

3
Numerically

20

controlled machine tools

15
10
(Not
available)

1956
Source:

1960

1964

Bureau of the Census.

1968

1972
Source: Federal Power Commission.

N o t available.

53

Technological Change

Productivity improvement that results from technological change is an important
element in international competition. Information available for three o f the innovations
examined in the preceding section shows that the United States leads other major
industrial countries in both computer installations and the production of

Trends in
diffusion o f

numerically-controlled machine tools, but that it trails Japan and Germany in the
proportion o f steel produced in basic oxygen furnaces.

m ajor technological
innovations:
International
com parisons


54


Chart 24.




Diffusion of Three Innovations, Selected Countries
Proportion of steel output
produced in basic oxygen furnaces,
selected countries, 1960 and 1970

Value of numerically controlled
machine tool production
in selected countries, 1967

Percent

Millions of Dollars

20

40

60

280

300

0

20

40

Electronic digital computers in use,
selected countries,
1965 and 1971

Thousands

60

80

20

30

80

90

United States

Germany

United Kingdom

Italy

France

Japan

]
Sweden

Source: Organization for Economic
Cooperation and Development.

Source: U.S.: E D P In d u s try Report, March 1972.
Other countries: 1963and 1965:
National Bureau of Standards; 1971:
EDP In d u s try Report, December 17, 1971
(except Japan); Japan: Japan I nformation
Processing Center.

55

Jjchnolvgical Change

Trends in

Expenditures for research and development can generate increases in productivity
through the development and subsequent application o f more efficient equipment and
processes. One indicator o f the relative importance o f R & D is the proportion of GNP
devoted to it. Over the past decade, this proportion remained relatively stable for both
total R & D spending and spending on industrial R &D .
R & D funds come from both government and private sources. During the early

research and
development
expenditures


56


part o f the 1960’s, the Federal government provided the major part o f R & D spending.
Most o f the Federal funds came, as they did throughout the decade, from the Department
o f Defense. Beginning in 1968, however, company-supplied funds exceeded Federal
financing. This shift reflected a sharp increase in company spending o f 157 percent
between 1960 and 1972, compared with a moderate increase o f 34 percent in Federal
spending.
The amount and rate o f spending for R & D varied between major industries. For
in s ta n c e , tw o in d u s tr ie s h e a v ily in v o lv e d in F e d e r a l c o n t r a c t w o r k f o r d e f e n s e a n d sp a c e

programs — aircraft and missiles and electrical equipment and communication — spent
proportionately much more on R & D in 1971 than other industries did. Federal funding
was a much less significant element in other industries where R & D expenditures were
proportionately large.

Chart 25.




of GNP,
Funds
for
R&D as a Percent m o -12 and R&D
Expenditures as a Percent of Net Sales, \9io
R&D E X P E N D IT U R E S

FU N D S FOR R & D
Percent of GNP

Percent o f Net Sales (Federal and Company Contributions)

SELECTED
INDUSTRIES
Chemicals

Petroleum

Rubber
Stone,
clay, and glass
Fabricated
metal products
Machinery
Electrical equip,
and communication
Motor vehicles

Aircraft and missiles
Professional and
scientific instruments
Source: National Science Foundation and U.S. Department
of Commerce.

Source: National Science Foundation

57

Technological Change

Another precursor o f potential growth in productivity is the trend in employment
o f scientists and engineers in industry. These employees are primarily responsible for
devising and implementing new technology.

Trends in

Employment o f scientists and engineers increased throughout industry between
1950 and 1970. Increases were particularly pronounced in industries such as aircraft,
machinery, and electrical equipment which already had large numbers o f employees in
this category.

em ploym ent o f
scientists and
engineers in industry


58


Chart

26.




Percent Change in Number of Scientists and Engineers
Employed in Selected Industries, 1950 and 1970
Percent change

160

140

120

100

80

60

40

20

0
Ordnance

Chemicals

Primary
metals

Machinery

Electrical
equipment

Aircraft

Mining

Construction Transportation

59

Labor Quality

Trends in
educational
attainment




The general upgrading o f the work force over time is usually considered an
important factor in productivity growth. This upgrading occurs primarily in two ways:
Increases in the proportion o f the work force employed in higher-skilled occupations and
improvements in the level o f education o f the working population.
The level o f education o f the American work force has risen steadily and is
expected to rise even more, largely because young people have been spending more time
in school. The proportion o f the working population that has not completed high school
has been dropping; by 1980, almost three-fourths o f the work force w ill have a high
school diploma.

1960

Years of School Completed

....
....
....
....
....
....

Elementary: less than 5 years.......................... . . . .
5 to 7 y ears.............................
8 y e a r s ....................................
High school: 1 to 3 years................................
4 y e a rs....................................
College: 1 to 3 y e a r s ....................................
4 years or m o re .......................

1970

Projected
1980

5.1
9.8
14.4
19.6
31.2
9.7
10.1

2.4
5.9
9.2
17.3
39.0
13.3
12.9

1.5
3.5
5.3
16.6
43.4
14.5
15.3

Chart

27.




Estimated and Projected Years of School Completed, the Civilian
Labor Force
18 a
nd Over, i960, 197o, and m o Proje
Percent of the civilian labor force 18 and over

61

Labor Quality

Trends in
occupational
composition


62


The occupational groups which are growing in importance — professional, clerical,
and service workers — are characterized by fairly high educational requirements.
Similarly, the occupational groups which account for a decreasing proportion o f the work
force — operatives, laborers, and farmers — require relatively little education.

Occupational groups

Occupational distribution of labor force
(In percent)
1960

Professional, technical, and kindred workers . . . .
Managers, officials, and p ro p rie to rs.......................
Clerical and kindred w o rk e rs..................................
Salesw orkers............................................................
Craftsmen, foremen, and kindred workers ............
Operatives and kindred w o rk e rs .............................
Service workers .......................................................
Laborers, except farm and m i n e .............................
Farmers and farmworkers .....................................

1970

1980

11.4
10.7
14.8
6.4
13.0
18.2

14.2
10.5
17.4
6.2
12.9
17.7
12.4
4.7
4.0

16.3
10.0
18.2
6.1
12.9
16.2
13.7
3.9
2.7

5.4
7.9

Chart

28 .




Changes in the Occupational Composition of the Labor Force,
i960, 1970, and Projected m o
Percent

100 •

Farmworkers
Laborers
Service workers

80 •
Operatives

60*

Craftsmen
I

Salesworkers
40 •
Clerical workers

Managers, officials,
and proprietors

20*

Professional, technical,
and kindred workers

0
1960

1970

1980 (Projected)
63

Labor Qualitx
W orker attitudes
and productivity


64


Worker attitudes are an important key to productivity improvement: Given
conditions in which he can produce more, a worker’s attitude determines whether he will
do it. A survey of worker attitudes conducted for the Department of Labor indicated that
workers are more concerned with production-oriented goals than has previously been
thought. When asked the question, “All in all, what do you feel is the single biggest
problem or difficulty you encounter on your job?” most workers answered in terms of
day-to-day difficulties in getting their work done. The largest cluster o f “biggest
problems” included obstacles such as technical problems, work overload, and inadequate
resources.
The survey also found high correlations between the content of job (worker’s
concern with resource adequacy, autonomy, challenge, and so on) and worker’s job
satisfaction. These findings suggest that workers are considerably motivated toward
productivity and achievement.




Workers' Reports of ‘Single Biggest Problem They Faced
on Their Jobs
Percent distribution 1

10

1 Percentages do not add to 100 percent, since miscellaneous problems were included.
Source: "The Working Conditions Survey", M o n th ly La b or Review, April 1971.

15







Users of this chartbook interested in keeping abreast of current information on
productivity can find up-to-date statistics on productivity, prices, wages, costs, and
profits in the U.S. economy in the Quarterly Review of Productivity, Wages, and Prices
and the Quarterly Review of Productivity and Costs, as well as in the chartbook on
Prices, Wages, and Productivity, a monthly supplement to the more detailed quarterly
reports. These reports are free and are available from the Bureau of Labor Statistics.
Many of the same tables also appear in the Monthly Labor Review and Employment
and Earnings, two monthly publications of the Bureau of Labor Statistics that are
available by subscription from the Superintendent of Public Documents or from any of
the BLS regional offices.

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