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Productivity and the Economy U.S. Department of Labor Bureau of Labor Statistics 1977 Bulletin 1926 Productivity and the Economy U.S. Department of Labor Ray Marshall, Secretary Bureau of Labor Statistics Julius Shiskin, Commissioner 1977 Bulletin 1926 For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. GPO Bookstores, or BLS Regional Offices listed on inside back cover. Price Make checks payable to Superintendent of Documents. Stock Number Catalog Number PREFACE Productivity plays a role in most issues of econom ic policy. Conse quently, there is a continuous need for inform ation about productivity, though the focus of attention varies with the econom ic climate. During periods of rising prices, for example, attention centers on the relation ship between productivity, wages, and costs. During periods of eco nomic slowdown, interest turns to the relationship between produc tivity and em ploym ent, taking into consideration such factors as the role of technological change. In addition to the short-term economic outlook, econom ists are concerned with productivity in relation to long term econom ic growth. This chartbook is designed to show what productivity is and how it interacts with other aspects of the economy. With this end in view, the book is divided into three parts. The first part shows how productivity has developed over time, the sec ond presents changes in factors that are influenced by productivity, and the third traces trends in the various factors that influence pro ductivity. W herever possible, com parisons are made with foreign coun tries in order to add an international perspective to a subject that is often tre a te d w ith in a s o le ly n a tio n a l framework. In order to create a better under standing of productivity, this chartbook draws on the best available information, using a variety of sources in addition to material produced by the Bureau of Labor Statistics (BLS). This presentation in no way implies that the Bureau endorses all the measures and concepts involved, b ut in d ic a te s ra th e r its hope of broadening the scope of discussion of that essential elem ent of the Nation's economic w e ll-b e in g productivity. This chartbook was produced in the Office of Productivity and Tech nology of the Bureau of Labor Sta tistics under the direction of Jerome A. Mark, Assistant Commissioner. It was prepared by Martha Farnsworth Riche, under the supervision of Chester Myslicki. Material in this publication is in the public domain and may be re produced w ithout permission of the Federal Government. Please credit the Bureau of Labor Statistics and cite the name and num ber of the publication. CONTENTS PART I. Trends in productivity Historical trends in the total private economy and the nonfarm sector...................................................................................... Trends in the private and nonfarm business sectors............... The effect of employment shifts on productivity...................... Recent trends............................................................................ Productivity changes during the business cycle...................... Trends in major sectors............................................................. Trends in construction labor requirements.............................. Trends in the Federal Government.......................................... Trends in industries................................................................... International comparisons: Trends in output per employed civilian..................................................................................... International comparisons: Trends in manufacturing.............. International comparisons: Productivity levels in the iron and steel industry................................................................... Page Page 1 PART III. Factors affecting productivity growth 61 Estimates of the sources of growth.......................................... 62 2 4 6 8 10 12 14 16 18 20 22 24 Capital: Capital stock per hour............................................................... The capital/labor ratio............................................................... International comparisons: Investment/output ratios............. International comparisons: Real investment per capita......... 64 66 68 70 Energy: Productivity of energy inputs.................................................... 72 Technological change: Diffusion of technological innovations..................................... International comparisons: Diffusion of technological innovations............................................................................. Research and development expenditures............................... International comparisons: Research and development......... Employment of scientists and engineers in industry............... 74 76 78 80 82 Labor quality: PART II. A. implications of productivity growth for costs and prices.......... Productivity, unit labor costs, and compensation..................... Recent changes in productivity, unit labor costs, and compensation......................................................................... Unit labor costs during the business cycle............................... Productivity, unit labor costs, and prices.................................. Productivity and unit profits...................................................... International comparisons: Productivity, unit labor costs, and compensation in manufacturing, 1950-67...................... International comparisons: Productivity, unit labor costs, and compensation in manufacturing, 1967-75...................... Recent changes in productivity, unit labor costs, compensation, and prices in major sectors.................................................... Industry productivity and prices............................................... Industry productivity and hourly compensation....................... B. Other implications of productivity growth.................................. Productivity and real compensation......................................... Product per person and average weekly hours........................ Working life and life expectancy............................................... Industry productivity and employment..................................... Productivity, output, and employment patterns....................... 27 28 30 32 34 36 Educational attainment............................................................. Education and lifetime earnings............................................... Occupational composition........................................................ Worker attitudes and productivity............................................. Appendix. Supporting data for charts 84 86 88 90 92 38 40 42 44 46 49 50 52 54 56 58 V PARTI Trends in productivity Productivity is a concept that ex presses the relationship between the quantity of goods and services produced —o utp ut—and the quanti ty of labor, capital, land, energy, and other resources that produced it— inputs. P roductivity can be mea sured in two ways. One way relates the output of an enterprise, industry, o re con o m ic sector to a single input such as labor or capital. The other way re la te so u tp u tto a com posite of inputs, com bined to reflect their relative importance. The choice of a particular productivity measure de pends on the purpose for which it is to be used. The most generally useful, mea sure of productivity relates output to the input of labor tim e —output per hour, or its reciprocal, unit labor requirem ents. This kind of measure is used w idely because labor pro ductivity is relevant to most eco nomic analyses, and because labor is the most easily measured input. Relating output to labor input pro vides a tool for analyzing produc tivity, labor costs, real income, and em ploym ent trends. Measuring la bor productivity can be done readily at several levels: the private econ omy, its com ponent sectors, indus tries, or plants. For these reasons, the productivity measures used in this chartbook are expressed in terms of output per hour. Depending on the com ponents of the measure used, labor productivity will be called output per hour of all persons (en gaged in the productive process), output per em ployee-hour, or just output per hour when the context makes it clear w hether it is a ques tion of a specific measure or labor productivity in general. The use of labor productivity in dexes does not imply that labor is solely or prim arily responsible for productivity growth. In a techno logically advanced society, labor e ffo rt is o n ly one of m any in terrelated sources of productivity improvement. Trends in output per hour also reflect technological in novation, changes in capital stock and capacity utilization, scale of production, materials flow, manage ment skills, labor relations, com petitive pressure, and other factors whose contribution often cannot be measured. The output side of the output per hour ratio refers to the finished product or the amount of real value added in various enterprises, indus tries, sectors, or the econom y as a whole. Few plants or industries pro duce a single hom ogeneous com m odity that can be measured by simply counting the num ber of units produced. Consequently, for the pur pose of measurement, the various units of a plant's or industry's output are com bined on some common basis—either their unit labor require ments in a base period or their dollar value. When inform ation on the amount of units produced is not available, as is often the case, out put must be expressed in terms of the dollar value of production, ad justed for price changes. 1 2 Historical trends in the total private economy and the nonfarm sector Official U.S. measures of produc tivity begin with the year 1909 and continue to the present. In general, productivity has moved upward. In 1975 productivity in the private economy was more than four times its 1909 level. Productivity grew more slowly in the nonfarm sector than in the total private economy throughout the period. The largest differences be tween the rates of growth of the two measures occurred between 1941 and 1968. O utput per hour of all persons (average annual percent change) Period Total private econom y Nonfarm sector 1909-75 . . . . ............. 2.5 2.2 1909-29 . . 1 9 2 9 -4 7 .. 1947-75 . . ............. ............. ............. 1.6 2.9 2.8 1.7 2.4 2.4 1. Output per hour of all persons in the total private economy and the nonfarm sector, 1909-75. Ratio Scale Indexes, 1909 = 100 500 400 Source: Bureau of Labor Statistics 300 200 100 90 3 4 Trends in the private and nonfarm business sectors Over the last 25 years, productiv ity grew at an average rate of 2.8 percent a year in the private busi ness sector and 2.3 percent a year in the nonfarm business sector. (The private and the nonfarm business sectors are terms which will be used throughout the remainder of this chartbook. They differ from the terms used in the first chart—the total private economy and the non farm sector—in that they exclude households, nonprofit institutions, and the gross housing product of owner-occupied dwellings, as well as the statistical discrepancy.) T h e se lo n g -te rm ra te s m ask changes that took place during the period, especially after 1966. Pro ductivity growth rates, which had averaged 3.1 percent a year in the private business sector and 2.6 per cent a year in the nonfarm business sector between 1950 and 1967, fell to 1.4 and 1.2 percent a year, respec tively, between 1967 and 1975. O utput per hour of all persons (average annual percent change) Private business sector Nonfarm business sector 1950-75 ..................................................... 2.8 2.3 1950-67.................................................. 1967-75 .................................................. 3.1 1.4 2.6 1.2 Indexes, 1950 = 100 2 . | Output per hour of all persons in the private and nonfarm business sectors, 1950-75. 200 175 Source: Bureau of Labor Statistics Private business sector ^ 150 125 100 1960 1965 1970 1975 5 6 The effect of employment shifts on productivity Productivity movements in aggre gates such as the private and the nonfarm business sectors reflect shifts in the relative importance of their component sectors as well as changes within them. For example, productivity might increase in the private business sector without in creasing in any of its component sectors just because employment shifted from low- to high-productivity sectors. The preceding chart showed that productivity grew faster in the pri vate than in the nonfarm business sector between 1950 and 1975. This situation reflected both the greater increase in farm productiv ity and the shift of workers out of the farm sector, where the level of pro ductivity is relatively low, into higher productivity jobs in the nonfarm sector. The chart opposite shows the trend of labor productivity in the private business sector before and after adjusting it to exclude the pro ductivity gain associated with the farm/nonfarm employment shift. In recent years the gap between the farm and nonfarm levels of labor productivity has narrowed, and the magnitude of the employment shift has lessened. Consequently, the fraction of productivity change in the private business sector attribu table to this shift has declined. There has also been considerable change in the distribution of hours of labor input within the various nonfarm sectors. Nevertheless, be cause the differences in productivity levels are smaller between these sectors than between the farm and the nonfarm sectors, these shifts have had little effect on total produc tivity growth: Since 1950, the effect of shifts among nonfarm sectors has contributed little more than 0.1 percentage point to the overall pro ductivity growth rate. Period O utput per hour in the private business sector (average annual percent change) 1 9 0 9 -7 5 ............ 12.3 2.0 0.3 12 1 9 0 9 -4 7 ........ 1 9 4 7-75 ........ 1967-75. . . 1.9 2.8 11.5 1.6 2.5 1.4 .3 .3 .1 14 11 6 Shift e ffe ct as a A ttributed to — percent of P roductivity Shift total productivity effect effect change 1 These numbers differ slightly from those used elsewhere in the chartbook because they were computed as an average of annual rates of change rather than by the linear least squares method. i Output per hour of all persons in the private business sector, ad justed for shifts in employment from the farm to the nonfarm business sector, 1950-75. 180 160 Output per hour Source: Bureau of Labor Statistics Indexes, 1950 = 100 200 140 Shiftadjusted output per hour 100 1960 1965 1970 1975 7 Recent trends Productivity analysis varies with the length of the period studied: Long-term movements reveal secu lar trends; short-term movements, primarily cyclical effects. The chart shows that short-term changes in productivity generally parallel short term changes in output, changes which in turn are closely associated with the business cycle. In the most recent contraction, for example, pro ductivity began to decline in the second quarterof 1973 when output stagnated. It was not until the sec ond quarter of 1975 that output, and co n se q u e n tly p ro d u c tiv ity , recovered Quarterly percent changes at annual rates 4. Output per hour of all persons and output in the private business sector, 1968-75. Output per hour of all persons Source: Bureau of Labor Statistics 0 rr -5 Output I- - - - - - - - - - - f - - - - - - - - - - - I f I -15 1968 1969 1970 1971 1972 1973 1974 1975 9 10 Productivity changes during the business cycle The chart shows the typical pattern of productivity movements during a recession and the subsequent re covery. In the most recent recession, productivity declined in six of the seven quarters preceding the trough reached in the first quarter of 1975. Productivity suffered more in the 1974-75 recession than it did in previous ones, due to the severe drop in output in this recession compared to the much smaller de clines that characterized earlier re cessions. Typically, productivity movements follow a pattern in the course of a business cycle. When business activity starts to decline, output per hour generally drops sharply, as capacity utilization falls below optimum rates and the level of labor input is maintained despite a decline in output. Once cost-cut ting efforts get underway, adjust ments are made and the decline in productivity is accordingly arrested or reversed. When business activity picks up again, output per hour in creases at a faster rate because of higher capacity utilization. Then, after a sustained period of produc tion increase, bottlenecks emerge, less efficient resources are brought into use, and the rate of productivity advance declines again. Productivity rose significantly in the second and third quarters of 1975 and by the fourth quarter had almost regained its 1973 level. Al though the "lost” productivity was almost made up, the recession meant that the growth in output and employment that could have occur red in the absence of a recession did not take place. 5. P e r c e n t c h a n g e a t a n n u a l ra te Output per hour of all persons in the private business sector during the most recent and previous recessions. Source: Bureau of Labor Statistics M o s t re c e n t r e c e s s io n A v e ra g e o f p r e v io u s r e c e s s io n s T ro u g h o f th e b u s in e s s c y c le 11 12 Trends in major sectors Productivity growth varies from sector to sector as well, over both the short and the long term. Between 1950 and 1974, the average im provement in labor productivity for sectors shown in the chart ranged from 5.2 percent a year in communicationsto 2.6 percenta year in man Sector Communications............................... Electricity, gas, and sanitary services Farm.................................................. Manufacturing.................................. M ining............................................... Trade................................................. Transportation.................................. ufacturing and trade. Sectors for which adequate productivity infor mation is not yet available—services, co n s tru c tio n , and finance, insur ance, and real estate—are estimated to have had even lower long-term rates of productivity growth. Output per hour (average annual percent change) 1950-74 1950-67 1967-74 5.2 4.9 5.1 2.6 3.3 2.6 3.1 5.5 5.9 5.2 2.7 3.9 2.6 3.0 4.6 1.4 4.6 2.2 -0.1 2.0 2.7 6. R a tio S c a le In d e x e s , 1950 = 100 340 Output per hour of all persons by major sector, 1950-74. 30 0 Source: Bureau of Labor Statistics 260 E le c tr ic , g a s , a n d s a n it a r y s e r v ic e s > C o m m u n i c a tio n s M in in g 220 T ra n s p o r t a t io n \ A F a rm 180 140 M a n u f a c t u r in g T ra d e 100 19 50 1 9 56 1 9 62 1 9 68 1974 13 http://fraser.stlouisfed.org/ 14 Federal Reserve Bank of St. Louis Trends in construction labor requirements Technical problems still impede development of an adequate pro ductivity measure for the construc tion sector. Consequently, the best available insight into changes in construction productivity is provided by comparing labor and materials requirements for various types of construction over time. Labor re quirements declined for all types of construction studied by the BLS during recent periods, but the rates of decline in labor requirements varied considerably by type of con struction. The sharpest decline oc curred in highway construction in the early 1960’s; the decline con tinued, but at a slackened pace after 1964. The average decline for building construction was about 2 percent a year, ranging from 1 per cent for general hospitals to 2.7 percent for elementary schools. / 7. Decline in onsite labor requirements for various types of new construction, selected periods. 1958-73 F e d e r a lly a id e d h ig h w a y s 1958 64 < - 1964-73 Source: Bureau of Labor Statistics F e d e ra l o f f ic e b u ild in g s 1959 72/3 Sew er w o rk s 1963-71 P riv a te s in g le - f a m ily h o u s in g 1962-69 P u b lic h o u s in g 1960 68 G e n e ra l h o s p it a ls 1960-66 E le m e n ta r y a nd s e c o n d a ry s c h o o ls 1959-65 - - 0 A v e ra g e a n n u a l p e r c e n t c h a n g e Trends in the Federal Government http://fraser.stlouisfed.org/ 16 Federal Reserve Bank of St. Louis The public sector is still another sector for which productivity infor mation has been lacking until re cently. As this sector accounts for 1 out of every 6 jobs in the econ omy, its productivity has a signifi cant impact on the Nation's eco nomic performance. In recent years, BLS has develop ed and refined productivity mea sures for a substantial portion of the Federal sector, which employs 20 percent of all government work ers. Currently, these measures cover about 65 percent of Federal civilian employment. Productivity increas ed in the measured sample at a rate of 1.3 percent a year between 1967 and 1975, a combination of a 1.3 percent annual increase in output with unchanged employment. The overall p r o d u c t i v i t y rate masks a variety of rates found in the different functional groupings for which productivity is measured. Growth in output per employeeyear between 1967 and 1975 rang ed from an annual increase of 6.5 percent for general support services to an annual decrease of 2.4 per cent in standard printing. unc lona grouping Total Agriculture and natural resources.............. Citizens' records.......................................... Education and training................................ Facilities maintenance................................ Finance and accounting.............................. General support services............................ Internal audit................................................ Library services........................................... Loans and grants......................................... Medical services.......................................... Military base services.................................. Overhaul, repair of equipment, and vehicle maintenance................................ Personnel management.............................. Postal Service.............................................. Power—production and distribution........... Procurement................................................ Reference services..................................... Regulation—finance.................................... Regulation —inspection and enforcement............................................. Regulation—employment and labor relations........................................... Regulation —rulemaking and licensing................................................... Specialized manufacturing......................... Standard printing......................................... Supply.......................................................... Transportation.............................................. Output per employee-year, 1967-75 (average annual percent change) 1.3 1.8 2.7 .3 .6 1.5 6.5 2.7 4.2 5.6 — .4 —2.0 .6 2.1 1.1 2.5 1.3 — .1 3.8 3.2 3.2 2.4 2.7 —2.4 1.4 2.5 8. In d e x e s , 1967 = 100 R a tio S c a le 115 Output per employeeyear, output, and employee years in the Federal Government, total measured sample, fiscal years 1967-75. Source: Bureau of Labor Statistics O u tp u t p e r em p lo y e e year O u tp u t Em p lo y e e y e a rs 17 18 Trends in industries Productivity growth varies from industry to industry for a variety of reasons, many of them unique to the industry. For example, the large advance in productivity in air trans portation was caused by the intro duction of jets in the 1960’s and the consequent expansion in traffic. An equivalent increase in productivity in hosiery manufacture arose from a combination of increased demand caused by fashion change and in creased production efficiency due to new, advanced machinery. At the other extreme, the lack of pro ductivity growth in the footwear in dustry results from the fact that footwear producers have found adoption of mass-production meth ods difficult. Low productivity gains in copper mining reflect the declin ing proportion of recoverable ore available once the richest veins were exhausted. 9. Output per employee hour in selected industries, 1960-75. Source: Bureau of Labor Statistics 1975 A v e ra g e annual p e rc e n t change 1960 1975 19 International comparisons Trends in output per employed civilian The rate of change in real gross domestic product (GDP) per em ployee between 1950 and 1975 varied s u b sta n tia lly am ong the countries compared. Productivity grew slowly in Canada, the United States, and the United Kingdom in comparison with the other coun tries, especially Japan. The rate of growth varied within the same period for each country, Country United States............................. ........ Canada ....................................... ........ France........................................ ........ Germany.................................... ........ Japan .................................................. United Kingdom................................. largely reflecting the effect of the business cycle. All the countries compared had a lower rate of growth between 1967 and 1975 than they did between 1950 and 1967. The 1975 recession was pri marily responsible for the slowdown in Japan and the European coun tries shown and was an important contributing factor for the United States and Canada as well. Real gross domestic product per employed civilian (average annual percent change) 1950-75 1950-67 1967-75 1.7 2.2 4.4 4.8 7.2 2.2 2.4 2.6 4.7 5.2 7.4 2.4 0.4 1.4 3.8 4.0 6.9 2.0 10 . Ratio Scale Indexes, 1950 = 100 600 Real gross domestic product (GDP) per employed civilian in selected countries, 1950-75. 500 Japan 400 Source: Bureau of Labor Statistics 300 Germany \d France 200 Canada United Kingdom 1950 1955 1960 1965 1970 United States 1975 21 22 Manufacturing productivity has International comparisons: grown since 1950 at substantially Trends in manufacturing different rates in the major indus trialized countries. Between 1950 and 1975, average annual gains in output per employee-hour ranged from 2.6 p e rce n t in the United States to 9.2 percent in Japan. In spite of the U.S. growth rate’s being the lowest among the countries compared, available evidence indi cates that the United States con Country United States............................. .......... Canada....................................... .......... France.................................................. Germany.................................... .......... Japan .................................................... United Kingdom................................... tinues to have the highest level of manufacturing productivity, though this may not be true for all industries. The 1975 recession affected all the countries compared and re sulted in a general lowering of pro ductivity growth rates for the 196775 period compared to 1950-67. (The rates for the 1967-74 period were slightly higher than those for 1950-67.) Output per employee-hour (average annual percent change) 1950-75 1950-67 1967-75 2.6 4.1 5.3 6.0 9.2 3.4 2.7 4.1 4.9 6.2 8.6 3.0 2.1 3.6 4.6 5.2 8.2 3.2 11 . Ratio Scale Indexes, 1950 = 100 Output per employeehour in manufacturing in selected countries, 1950-75. Source: Bureau of Labor Statistics 1950 1955 1960 1965 1970 1975 23 International comparisons Productivity levels in the iron and steel industry In a very few industries, sufficient data exist to permit comparing not only the change in productivity over time but also the level of produc tivity at different times. BLS has made such comparisons in the iron and steel industry going back to 1964. In 1964, U.S. productivity greatly exceeded the levels reached in other major steel-producing coun tries. Output per employee-hour in Germany was only about 60 percent of the U.S. level, and in France, Japan, and the United Kingdom, it was around 50 percent. By 1974, however, though labor productivity in the British steel industry was still about half the U.S. level, the French industry was up to two-thirds, the German industry had reached over three-fourths, and the Japanese in dustry had exceeded the U.S. level. Country United States............................................... France......................................................... Germany...................................................... Japan........................................................... United Kingdom.......................................... Output per employee-hour, 1964-74 (average annual percent change) 2.1 5.9 6.3 14.6 2.2 Indexes, U.S. = 100 175 12. Levels of output per em ployee-hour in the iron and steel industry, selected countries, 1964-74. Source: Bureau of Labor Statistics t 150 / 125 MOO - 75 Germany 1964 1974 1964 Range of estimates United Kingdom PART II A. Implications of productivity growth for costs and prices Productivity movements are an important factor in cost and price changes. This aspect of productiv ity change stems from the role of output per hour as a critical link between the cost of labor and the price of goods. In most industries, labor costs, including hourly rates of pay, over time, and all types of 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 of a product or service. If the effect of an increase in unit labor costs can be minimized by a greater in crease in productivity, pressure to increase prices will obviously be lessened, although changes in ma terials cost per unit of 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 pur chasing power to fall lead to pres sure for higher wages. If the wage increases exceed p ro d u c tiv ity growth, unit labor costs will increase also. These relationships come into play at all economic levels, ranging from individual industry measures within a country to international comparisons at the total economy level. For these reasons, achieving productivity growth can be a matter of concern to workers and con sumers as well as to employers and stockholders. 27 http://fraser.stlouisfed.org/ 28 Federal Reserve Bank of St. Louis Productivity, unit tabor costs, and compensation time, year-to-year fluctuations in this measure are not as pronounced as those that characterize produc tivity. Changes in compensation per hour also influence changes in unit labor costs. For instance, the large annual increase in unit labor costs between 1967 and 1975 resulted as much from the increase in the rate of growth of hourly compensa tion as from the decrease in the rate of productivity improvement. Productivity change is an impor tant d e te rm in a n t of cost m ove ments. Due to the relative stability of growth in hourly compensation, changes in unit labor costs have a close inverse relation to changes in output per hour. The two top panels of the chart are almost a mirror image of each other, and show that unit labor costs tend to rise when productivity growth slows and to slow or decline when pro ductivity growth accelerates. Although the rate of change in hourly compensation does vary over Average annual percent change Period Output per hour Unit labor costs Compensation per hour 1950-75 ........................... 2.8 2.7 5.6 1950-67 ........................ 1967-75 ........................ 3.1 1.4 1.8 5.9 5.0 7.4 13 . Output per hour of all persons and labor costs in the private business sector, 1950-75. Percent change Output per hour of all persons Source: Bureau of Labor Statistics Unit labor costs Compensation per hour 1950 1955 1960 1965 1970 1975 29 Recent changes in productivity, unit labor costs, and compensation Unit labor cost movements are influenced by productivity change which, in turn, is influenced by short-run changes in output. In 1971 and 1972, the economic upswing was reflected in productivity growth which offset gains in hourly com pensation. As a result, quarterly increases in unit labor costs were generally smaller in these 2 years than they had been in the preced ing few years, when growth in com pensation far exceeded growth in productivity. Then, when productivity declined in 1973 and 1974, unit labor costs shot up. This increase was moder ated somewhat in 1975 when pro ductivity began to grow again. Hour ly compensation continued to in crease at about the same rate, but unit labor costs actually declined in the second and third quarters of 1975 under the impetus of unusual ly high productivity growth. 14. Output per hour of all persons and labor costs in the private business sector, 1968-75. Quarterly percent change at annual rates Output per hour of all persons Source: Bureau of Labor Statistics Unit labor costs Compensa tion per hour 1968 1969 1970 1971 1972 1973 1974 1975 31 32 Unit labor costs during the business cycle The inverse relationship between productivity and unit labor costs accounts in large part for the in creased attention given to produc tivity measurement during periods of recession a n d /o r in fla tio n . Throughout a business cycle, move ments in unit labor costs respond directly to productivity changes due to the small effect the cycle has on hourly labor compensation. Thus, during the expansion phase of the business cycle, productivity rises and unit labor costs either fall, or rise more slowly, depending on the rate of change in compensation per hour. As the business upswing matures, unit labor costs advance more rapidly as productivity growth slows. When the downturn begins and output falls, productivity usually falls also, resulting in more rapid increases in unit labor costs. Near the trough of the cycle, business continues to contract, the pressure of rising costs leads to a reduction in employment and hours, and unit labor costs either rise more slowly or decline as the recovery begins and productivity grows rapidly. The chart shows this pattern clear ly. Unit labor costs increased much more rapidly in the latest business contraction than in the previous ones because hourly compensation advanced at a faster pace than in earlier cycles. Thus the general pattern of rising unit labor costs in the downturn phase of the cycle and later falling, or more slowly rising, unit labor costs during the recovery phase, was particularly pronounced. Percent change at annual rate 15. Unit labor costs in the private business sector during the most recent and previous recessions. Source: Bureau of Labor Statistics Most recent recession Average of previous recessions Quarter before trough Quarter after trough Trough of the business cycle 33 34 Productivity, unit labor costs, and prices The relationship between produc tivity and unit labor costs is particu larly important when it comes to analyzing changes in prices. As the chart shows, changes in unit labor costs generally are the single big gest component of price changes. Thus, if productivity growth miti gates increases in unit labor costs, this will in turn mitigate increases in prices. During periods such as the early 1960’s, the unit labor cost compo nent of price change was slight— m ainly because p ro d u c tiv ity in creases kept pace with the growth of hourly compensation. In the late 1960’s however, hourly compensa tion increased at a faster rate while productivity growth slowed, with the result that unit labor costs in creased and so did prices. This situation moderated somewhat in the early 1970’s, as the normal re covery pattern of increased produc tivity and reduced unit labor costs took place. However, by 1973 unit labor costs started to climb again, pushing prices along with them, as compensation increased at near record rates and productivity growth slowed and even declined. Percent change Composition of price changes in the private business sector, 1950-75. Prices Source: Bureau of Labor Statistics Point contribution to percent change 8 Unit labor costs 4 0 4 Unit profits 0 -4 4 Other unit costs 0 -4 1960 1965 1970 1975 35 Productivity and unit profits Although profits per unit are af fected by many factors, they have generally increased when produc tivity has grown rapidly and de creased during periods of reduced productivity growth. Because profits accrue only after all the other factors of production have been compensated, this mea sure varies widely from year to year. Nevertheless, the chart shows that unit profits and productivity fluctuate in the same direction, even though the magnitude of the fluctu ation differs. For example, between 1962 and 1966, unit profits had their longest period of sustained growth, paralleling a period of rela tively high productivity growth. When productivity growth slowed in the late 1960's, unit profits dropped, only to pick up again along with productivity in the recovery that followed in the early 1970’s. 17 . Percent change 10 Output per employeehour and unit profits in Output the nonfinancial corporate per employeesector, 1950-75. hour Source: Bureau of Labor Statistics Unit profits 1950 1955 1960 1965 1970 1975 37 International comparisons Productivity, unit labor costs, and compensation in manufacturing, 1950-67 Between 1950 and 1967, unit labor costs in manufacturing, mea sured in terms of national curren cies, rose less in the United States than in Western Europe but more than in Canada and Japan. All the foreign countries studied had larger percentage increases in hourly com pensation than the U nited States did, but they also had faster rates of productivity growth. In both Canada and Japan, productivity growth more nearly matched com pensation growth than it did in the United States, which accounts for the relatively slower rate of growth of unit labor costs in these two countries. On a U S. dollar basis, France also had a smaller rate of increase in unit labor costs than the United States did because the franc was devalued during the period. 18 . Source: Bureau of Labor Statistics Unit labor costs Compensation per hour MmHMk Output per employeehour and labor costs in manufacturing, selected countries, 1950-67. Output per employee-hour United States Canada France Germany Italy Japan Netherlands Sweden United Kingdom 0 5 10 0 Average annual percent change National currency 5 U.S. dollars 10 0 5 International comparisons Productivity, unit labor costs, and compensation in manufacturing, 1967-75 Unit labor costs reflect the inter play of wage and p ro d u c tiv ity changes. This relationship explains the sharp increase in unit labor costs in manufacturing that took place in the major industrialized countries between 1967 and 1975. Hourly compensation grew rapidly in all the countries studied, but more rapidly abroad than in the United States. Consequently, while productivity continued to grow at a faster rate abroad than in the United States, unit labor costs abroad also grew at a faster rate. Only Canada had a lower rate of growth in unit labor costs, and that only on a na tional currency, not a U.S. dollar, basis. The relative cost position of the United States was further improved by the general realignment of the world's major currencies that took place in 1971 and the devaluation of the dollar in 1973. After these changes in currency values are taken into account, the average 1967-75 rates of increase in unit labor costs abroad, expressed in U.S. dollars, ranged from 6 percent in Canada to almost 15 percent in Germany, compared with only 5.3 percent in the United States. 19 . Output per employeehour and labor costs in manufacturing, selected countries, 1967-75. Source: Bureau of Labor Statistics Output per employee-hour Unit labor costs Compensation per hour United States Canada France Germany Italy Japan Netherlands Sweden United Kingdom 0 10 20 0 10 Average annual percent change I National currency H i U.S. dollars 20 0 10 http://fraser.stlouisfed.org/ 42 Federal Reserve Bank of St. Louis Recent changes in productivity, unit labor costs, compensation, and prices in major sectors The rate of productivity growth in a sector is generally reflected in the trends of costs and prices of the sector’s output. Unit labor costs and prices usually rise most in sec tors where productivity is growing slowly and least in sectors where productivity is growing rapidly. Between 1968 and 1974, with the exception of the farm sector where other factors came into play, prices rose most in mining, the only sector in which productivity de clined, and least in communications, the sector where productivity grew the most. Trends in hourly compen sation did not vary as widely from sector to sector as productivity, prices, and costs did, but the high est increase was in communications, and the lowest in manufacturing and trade, where productivity in creases were relatively moderate. Output per hour of all persons, prices, and labor costs in major sectors, 1968-74. Average annual percent change 15 10 Output per hour of all persons 0 Source: Bureau of Labor Statistics -5 15 10 Compen sation per hour 0 -5 15 10 Unit labor costs 5 0 -5 15 10 Prices 5 0 -5 ^ \P ' rtS' ^ A\e° o <c> ^ 6 43 Digitized 44 for FRASER Industry productivity and prices A close inverse relationship be tw een changes in prices and changes in productivity exists at the industry level, too. Prices de clined between 1960 and 1974 in industries such as hosiery, synthetic fibers, and radio and TV sets, where the rate of productivity gain was larger than average. At the same time, prices increased in industries such as footwear and copper, where productivity advances were small. Although there are some excep tions, the pattern shows that prices of products made by industries with high rates of productivity growth tend either to decline or if they in crease, to do so slowly. Prices 21 . Output per employee-hour and prices in selected industries, 1960-74. Average annual percent change Source: Bureau of Labor Statistics Output per employee-hour 45 46 Industry productivity and hourly compensation Unlike prices, the factors influenc ing compensation changes for in dividual industries seem largely independent of the factors influenc ing productivity change for those industries. This is shown by the relative flatness of the line on the chart. Hourly compensation increas ed almost as much between 1960 and 1974 in industries with a low rate of productivity growth, such as footwear and cigarettes, as in in dustries with a high rate of produc tivity growth, such as pharmaceuti cals and household appliances. C o m p e n s a tio n p e r e m p lo y e e - h o u r 22. 8 C ig a r e tte s , c h e w in g 4 a n d s m o k in g to b a c c o Output per employeehour and compensation per employee-hour in selected industries, 1960-73. A v e ra g e a n n u a l p e r c e n t change Source: Bureau of Labor S tatistics 0 2 8 O u t p u t p e r e m p lo y e e - h o u r 47 B. Other implications of productivity growth One of the best known effects of are alternatives: Increases in output p ro ductivity growth is the increase per hour mean either that a given it makes possible in w orkers’ in amount of labor time can produce com es. L a b o r c o m p e n s a tio n e x more output, or that a given amount pressed in terms of its buying pow of output can be produced with e r - r e a l com pensation—has risen less labor time. Though these two at about the same rate as output alternatives are theoretically exclu per hour over the post-World War II sive, in practice the benefits of pro period. ductivity growth have been divided Productivity growth not only pro between them. vides workers with more income, A third alternative has received a but also increases the am ount of good deal of attention during per goods and services available for iods of unemployment. Increases the population as a whole to con in output per hour can result in pro sume. The increase in per capita ducing a given output with fewer product since World War II has workers. Though this alternative largely been due to the increase in has prevailed in some industries real product per hour, though the such as railroads or coal mining, effect of productivity growth has experience has shown that many been offset somewhat by the con industries increase em ploym ent as tinued decline in hours. productivity grows because demand This situation shows that two po for the ir product grows even more. tential benefits of productivity growth 49 Productivity and real compensation O v e r th e lo n g run, la b o r has shared in the steadily increasing productivity of the Nation s econ omy: H ourly com pensation, adjust ed to take account of changes in purchasing power (real hourly com pensation), has risen at about the same rate as output per hour. In 1975, real hourly compensation was over 90 percent higher than it was in 1950. Average annual percent change Period O utput per hour of all persons Real com pensation per hour 1950-75 ............................... ......................... 2.8 2.9 1950-67 ........................... ......................... 1967-75 ............................ ......................... 3.1 1.4 3.3 1.4 23 . R a tio S c a le i In d e x e s , 1 9 50 = 100 4 4 4 200 4 Output per hour of all persons and real compensation per hour in the private business sector, 1950-75. Source: Bureau of Labor S tatistics 1950 1955 1960 1965 1970 1 9 75 51 52 Product per person and average weekly hours One benefit of p ro du ctivity im provem ent is an increase in the amount of goods produced and thus available for purchase by each m em ber of the population. Gross dom estic product (GDP) per person rose at an average of 1.9 percent a year between 1950 and 1975. It increased most rapidly during the 1960’s, when p ro du ctivity growth was particularly high. P ro d u c tiv ity g ro w th does not autom atically produce an equiva lent increase in product per capita because declines in other facto rs— average w eekly hours, the em ploy ment rate, and the labor force par ticipation rate—may have a damp ening effect. Between 1950 and 1975, average w eekly hours de clined 0.5 percent a year, and the em ploym ent rate declined 0.2 per cent a year. These declines were offset slightly by an increase in the rate of labor force participation. In a broad sense, the econom y has a choice of using p ro ductivity gains to increase e ithe r product per capita or leisure tim e —primarily through shorter workweeks but also through earlier retirem ent or later entry into the labor force. If the p ro du ctivity gains of the last 25 years had been allocated to one of these factors rather than the other, e ithe r product per capita would have increased 2.7 percent a year or average w eekly hours would have decreased 2.6 percent a year. The slight decline in average weekly hours com pared with the large in crease in per capita product indi cates that increased income had greater appeal than increased lei sure did. 24. R a tio S c a le In d e x e s , 195 0 = 100 Gross domestic product (GDP) per capita and average weekly hours per person engaged in production in the total private economy, 1950-75. Source: Bureau of Economic Analysis and Bureau of the Census, U.S. Department of Commerce; Bureau of Labor S tatistics. 1950 1955 1960 1965 1970 1975 53 54 Working life and life expectancy One effect of pro du ctivity growth has been to increase leisure tim e by allowing people to postpone the ir entry into the labor force at the beginning of th e ir w orking lives and to hasten th e ir exit by early retirement. For men, this possibility, coupled with the continued length ening of life expectancy, has meant that the num ber of years spent out side the labor force, in proportion to total life expectancy, has grown appreciably throughout this century. Working years have increased too, Work and nonw orklife expectancy at birth (percent of total life expectancy) Period Men: W o rk life ..................................... Outside labor fo r c e ................ Women: W o rk life .................................... Outside labor fo r c e ................ as a result of the increase in life expectancy. The situation for women is some what different, given the ir low labor fo rce p a rtic ip a tio n rates b e fo re World War II. Nevertheless, despite the ir increasing labor force partici pation and consequent increase in w orking life expectancy, the ir in crease in life expectancy has meant that, in 1970, the num ber of years women could be expected to spend outside the labor force was still higher than it was in 1900. 1900 1950 1975 ....... ....... 66.6 33.4 63.4 36.6 59.8 40.2 ....... ....... 12.4 87.6 21.3 78.7 30.6 69.4 25. M en Working life and life expectancy, by sex, 19 00,1950, and 1970 1900 Source: Bureau of Labor S tatistics 1950 1970 W om en 1900 1950 1970 Y e a rs o f lif e e x p e c t a n c y a t b ir t h W o r k in g y e a rs Y e a rs o u t s id e th e la b o r f o r c e 55 Digitized 56for FRASER Industry productivity and employment Some people think that produc tivity increases cause decreases in em ploym ent, but the chart shows that this is not necessarily so. Be tween 1960 and 1974, for example, productivity went up in every indus try series published by BLS and yet em ploym ent grew in almost twothirds of them. In many industries, large produc tivity increases are accom panied by increases in output that require more labor input. This situation oc curred in the air transportation and synthetic fibers industries. In other industries, increases in productivity and output are accom panied by a reduction in em ploym ent. This was true in the highly mechanized petro leum pipeline industry, as a result of continued technological improve ment. In still other industries, such as railroads, employment reductions were associated with strong produc tiv ity gains and only moderate in creases in output. Employment 26 . 6 Output per employeehour and employment in selected industries, 1960-75. Average annual percent change Source: Bureau of Labor S tatistics Output per employee-hour 57 Digitized58 for FRASER Productivity, output, and employment patterns The same trend in labor produc tivity can reflect vastly d iffe re n t trends in output and em ploym ent, depending on the nature of the industry. For instance, betw een 1960 and 1974, p ro ductivity grew by over 5 percent a year in tele phone co m m u n ica tio n s, railroad transportation, and gas and electric utilities, but each one of these in dustries has a different productivity, output, and em ploym ent pattern. High p roductivity growth in tele phone communications represented a large increase in output accom panied by substantial grow th in hours, w hile a sim ilar rate of pro ductivity growth was achieved in railroads by a large reduction in hours coupled with a moderate in crease in output. The rate of pro d uctivity increase for gas and elec tric utilities stayed close to the rate of output growth, as hours barely changed. These three industries show the major types of high productivity growth situations. They indicate that the im p lic a tio n s of p ro d u c tiv ity growth for em ploym ent are closely associated with trends in output: Industries that have large increases in output tend to increase hours too, while industries that have small output growth tend to reduce hours. 27. Average annual percent change Output and hours in selected industries with similar productivity growth, 1960-75. Source: Bureau of Labor S tatistics Telephone communications Output per employee-hour Railroads (revenue traffic) Output Gas and electric utilities Hours 59 PART III Factors affecting productivity growth The factors to which changes in productivity can be attributed vary according to w hether the move ments are short term or long term. As many of the charts in part I show, short-term movements in pro ductivity are dire ctly related to the business cycle because productive capacity, including the work force, is not so flexible that producers can adjust it im m ediately to changes in demand. Long-term productivity growth re flects basic changes in the factors underlying productivity improvement, such as increased availability of capital, advances in technology, and im provem ent in the quality of labor. O ther long-term factors, which are often included under “ tech n o lo g y” , are im provem ents in the allocation of resources, increased econom ies of scale, and advances in mana gerial know-how. Some economists analyze the various factors and at tem pt to quantify the ir impact upon productivity. A nother approach is to measure individual items that are readily quantifiable and to treat them as indicators of the sources of growth. Both approaches are dis cussed in this chartbook. One of the individual item s—energy use— reflects both increased capital growth and technological change. Capital makes an im portant con trib u tio n to p ro d u c tiv ity grow th. Most researchers have concluded that output per hour has increased in large part because the am ount of capital supporting each w orker has increased substantially. The role of capital is outlined by measures such as the capital/labor ratio, investment as a proportion of output, and capi tal stock per hour. Technological innovation is an other im portant source of produc tivity growth. Much of this innova tion is a result of organized research and developm ent (R&D) programs; the amount, rate, and location of spending on R&D gives some idea of the im portance placed on this activity by both governm ent and in dustry. An even better approxim a tion of the pace of technological developm ent can be attained by tracing the rate of diffusion of im portant innovations that have had a clear and direct effect on produc tivity growth. Otherwise, measuring the effects of so generalized a pro cess as technological change is difficult, if not impossible. A third im portant co ntribu tor to productivity growth is improvement in the quality of the labor force. This im provem ent can be seen clearly in the statistics which com pare the skills of the jobs at which Americans work now with those of an earlier period, or which trace the rise in educational attainment. And, since w orker m otivation plays as im portant a part as w orker skill in im proving productivity, surveys of w orker attitudes are extrem ely illuminating, particularly when pros pects for future productivity growth are being estimated. 61 62 Estimates of the sources of growth The factors affecting p ro ductivity growth are so interrelated that de term ining the separate effect of each one of them is difficult. M ore over, the econom ists who have at tem pted this task have come up with d iffe re n t measures because of differences in definitions, concepts, and assumptions. It is not possible to com pare the results of all the research under taken to date in this area, since not all researchers have focused on the same factors. However, three stud ie s—those done by Edward Denison, John Kendrick, and Laurits Christensen and Dale Jorgenson— encompass similar factors, and thus provide a good idea of current thought in this area. Though their measures differ, they all conclude that improved “ technology” and the a v a ila b ility of m ore ca pita l per worker have been the major sources of growth. The term “ tech n olog y” is used here to represent all factors other than labor quality and capital growth. Differences in the researchers’ ap proach to measuring those two fac tors thus affect the ir residual—or “ technology” —item. Denison attrib utes a larger role to labor, as he provides the most elaborate analysis of the labor force. Christensen and Jorgenson use gross dom estic pro duct rather than net income as the ir base, which tends to raise the part of growth attributable to capital and reduce the part attributable to “ technology.” 28 . Kendrick Denison Three estimates of the factors affecting productivity Labor quality Source: C alculations by the Bureau of Labor S tatistics based on: Edward F. Denison, A c c o u n t i n g fo r U n ite d S ta te s E c o n o m ic G r o w t h , 1 9 2 9 -1 9 6 9 ; John W. Kendrick, P o s t w a r P r o d u c t i v i t y T r e n d s in t h e U n i t e d S t a te s , 1 94 8 -1 9 6 9 ; and Laurits R. C hristen sen, Dianne Cummings, and Dale W. Jorgenson, A n I n t e r n a t i o n a l 1 8 °/c 20 % Capital 72 % All other factors “ Technology” C o m p a r i s o n o f G r o w t h in P r o d u c t iv it y , 194 7-1973. Christensen and Jorgenson 14 7o 44 42% 63 64 Capital: Capital stock per hour Growth in capital stock per hour of labor input has been an impor tant factor in im proving labor pro ductivity, since more and better equipm ent allows w orkers to per form th e ir jobs more effectively. Capital stock per hour rose by 2.9 percent a year between 1950 and 1974, as capital increased four times as fast as hours of labor input did. The capital/labor ratio grew stead ily throughout the period. Although growth in capital stock accelerated after 1967, hours also increased at a faster pace. The total stock of fixed capital (defined here as gross fixed nonresidential stock) can be broken down into its two com ponents of structures (plant) and equipment. The chart shows that the growth in structures per hour of labor input has been slower than the growth in equipm ent per hour. Average annual percent change Capital stock per hour 7TT “ : 7 T7 7 Capital Hours Total Equipment Structures (plant) 1950-74 ....................................... 2.9 3.4 2.5 3.6 0.7 1950-67.................................... 1967-74 .................................... 3.0 2.7 3.5 3.5 2.6 2.0 3.3 4.1 .3 1.4 29 . Ratio Scale Indexes, 1950 = 100 Total capital stock, capital equipment, and capital structures per hour of all persons in the private business sector, 1950-74. Source: Bureau of Economic Analysis, U.S. Department of Commerce; Bureau of Labor Statistics. 1950 1954 1958 1962 1966 1970 1974 65 66 The capital/labor ratio The capital/labor ratio measures the intensity with which the capital stock and labor are used in produc tion. This ratio has grown steadily since 1950 and is a primary factor in explaining the rise in labor pro ductivity. Labor productivity is also a func tion of capital productivity, which fluctuates more than labor produc tivity does. Although the long-term effect of the change in the output/ capital ratio on labor productivity was small, the relatively sharp de cline in this ratio since 1966 is as sociated with lowering the average annual rate of productivity growth to 1.6 percent. Several reasons have been adduced for the decline in capital productivity: lower utiliza tion of the existing capital stock in recent years during recessions, a possible shift of capital investment to sectors where capital productivity is low, and an increase in the pro portion of capital investment allo cated to meet environmental and safety needs. It would not be correct to interpret the trends shown in the chart as reflecting solely the substitution of capital for labor, or to consider such substitution as the only source of productivity change where capital is concerned. In a broader sense, labor and capital cooperate in the production of goods and services. Attributable to— Interaction Change in labor productivity Change in the capital/labor ratio Change in the output/capital ratio 1950-74. . . . 2.6 2.8 -0 .2 0 1950-66. . 1966-74. . 3.1 1.6 2.7 3.0 .4 -1 .3 0 -0.1 Period 30 . Output per hour of all persons and the output/ capital and capital/labor ratios in the private business sector, 1950-74. Source: Bureau of Labor Statistics 67 International comparisons Investment/output ratios Since growth in output per hour of labor input is closely related to the amount of capital supporting each worker, the ratio of investment to output is an indicator of potential growth in labor productivity. Pro ductivity is more likely to increase rapidly in countries where this ratio is high than in countries where it is low since it indicates that a higher percentage of output in current values is being set aside to increase capital stock. Between 1960 and 1973, the United States, Canada, and the Unit ed Kingdom had the lowest average capital investment ratios in manu facturing as well as the lowest aver age increases in manufacturing pro ductivity. At the other extreme, Japan had the highest investment ratio and the highest rate of pro ductivity gain. Data on capital investment in manufacturing are not available for all the European Economic Com m unity (EEC) countries. Conse quently, investment ratios for the total economy have been substi tuted in the chart even though they can be imprecise indicators of capi tal investment in manufacturing. For instance, Canada had a relatively high investment ratio for the total economy, but a relatively low ratio for manufacturing. National ratios of investment to output should be compared with caution, since such comparisons may mislead if the relative prices of capital goods and consumer goods vary widely between countries. If this is the case, a country which spends a higher proportion of its output on investment goods may actually be devoting a sm aller amount of new real resources to future production. The chart on the next page shows real resources in vested in capital, but for a single year only. Output per employee-hour, 1960-74 Capital investment, 1960-73 (average annual percent change) (average percent of output) 31. Output per employeehour in manufacturing, 1960-74, and capital investment, 1960-73, selected countries. Source: Bureau of Labor Statistics United States Belgium Canada France Germany Italy Japan Netherlands Sweden United Kingdom 0 5 Total economy Manufacturing 10 15 0 10 20 International comparisons Real investment per capita The best measure of the amount of resources a country is devoting to increasing its capital stock, and thus to improving labor productivity, is one that is expressed in real terms, unlike the ratio used in the previous chart. This is a difficult task, and data are limited in s c o p e in this case to a single year. The chart shows that real capital formation (gross addition to capital stock in a year) per capita was higher in three countries in 1970 than it was in the United States; in these three countries—France, Ger many, and Japan—gross domestic product (GDP) per capita has been nearing the U.S. le vel ra p id ly throughout the post-World War II period. In the other two countries compared —Italy and the United Kingdom—gross capital formation per capita was far below the U.S. level. Although the rate of produc tivity growth has exceeded that of the United States in both of these countries during the past 25 years, it has not been sufficient to move them to within range of the U.S. productivity level. Clearly, a measure of capital for mation covering several years would be more informative than one lim ited to a single year, but such a measure is not available on a constant-dollar basis—that is, one that is adjusted for price changes that could distort the underlying trend. The measure depicted in the chart is taken from a United Nations study that was done for a single year. 32. Indexes, U.S. = 100 Gross capital formation per capita in selected countries, 1970 Source: Irving Kravis et al, A System of International Comparisons of Gross Product and Purchasing Power Total gross capital formation h h Producers’ durables Construction 71 72 Energy: Productivity of energy inputs The total productivity of an econ omy is a measure of the efficiency with which all of the factors of pro duction have been combined. The nature of this combination generally reflects differences in the relative prices or availability of major in puts—labor, capital, and energy. Most of the fluctuations in the chart show that output per unit of energy input—“ energy productivity’’ —is as subject to the business cycle as is the productivity of the other factors of production. The sustained improvement in energy productivity between 1960 and 1966 parallels a similar improvement in both labor and capital productivity, as techno logical improvements contributed to a general upswing in productivity. The drop in energy productivity between 1966 and 1970 represents a substitution of then-cheap energy for relatively more scarce and ex pensive labor and capital resources. In the same way, the increase in energy productivity between 1970 and 1975 represents a response to the increasing cost of, first, elec tricity and then petroleum. Index, 1950 = 100 33. Output per unit of energy input, 1950-75 Source: U.S. Department of the Interior, Bureau of Mines; U.S. Department of Commerce, Bureau of Economic Analysis 1950 1955 1960 1965 1970 1975 73 Digitized 74for FRASER Technological change: Diffusion of technological innovations Productivity growth is d ire ctly af fected by the rate of acceptance of new technology. Researchers gen erally concur that the rate of d iffu sion of any major new technology varies considerably within industries and between them, but disagree as to the specific factors causing this variation and the ir relative impor tance. Factors which are reported to affect the diffusion rate include the cost and profitability of adopting the innovation, the size of the firm, and the level of output of the firm. The chart shows trends in the diffusion of four major technological innovations of the post-World War II period: The electronic computer, which has resulted in significant productivity gains in industry, busi ness, and governm ent; the basic oxygen furnace, a steelm aking pro cess which lowers production and capital costs and increases output; num erical control, a system for the autom atic operation of machine tools which has increased produc tivity in the metalworking industries; and the production of e le ctricity by nuclear energy. Each of the innovations shown has developed a d iffe re n t pattern of diffusion. The num ber of com puters in use is growing at an in creasing rate, while the proportion of steel produced by basic oxygen furnaces apparently has failed to grow past a certain level, partly because some firm s cannot afford to install the new system, and partly because another technology, the electric-arc furnace, is being adopted. The proportion of e le ctricity gen erated by nuclear power is increas ing but is still relatively small, partly due to the environm ental impact of possible accidents, while the pro portion of machine tools that are num erically co ntro lle d seems to have stabilized. 34. Thousand of units Use of some key technological innovations, 1956-75 ' 200 Source: Bureau of the Census; American Iron and Steel Institute; International Data Corporation; and Federal Power Com m ission. 150 100 50 0 Percent of total 75 Steel output produced in basic oxygen furnaces 50 Value of shipments of numerically controlled machine tools Electricity generated by nuclear power 25 0 1960 1965 1970 1975 75 International comparisons Diffusion of technological innovations Productivity im provem ent that re sults from technological change is an im portant elem ent in interna tional competition. Information avail able fo r two of the innovations ex amined in the preceding section shows that the United States con tinues to lead other major industrial countries in com puter installations, but that it trails Japan, Germany, and France in the proportion of steel produced in basic oxygen furnaces. A possible reason fo r the decline in the relative p ro du ctivity level of the U.S. steel industry is the lag in substituting the basic oxygen fur nace fo r the open-hearth method. The chart shows that in 1960 only 3 percent of U.S. steel and about 12 percent of Japanese steel was pro duced by the basic oxygen process. By 1965, this process accounted for over half of Japanese steel pro duction, but only 17 percent of U.S. production, a gap that has persisted to the present. 35 . Use of two key technological innovations in selected countries. Electronic digital computers in use, 1965 and 1974 United States Canada France Source: International Data Corporation and National Bureau of Standards. Germany Italy Japan United Kingdom Steel output produced in basic oxygen furnaces, 1960 and 1974 United States Canada France Germany Italy Japan United Kingdom 77 Digitized 78 for FRASER Research and development expenditures Expenditures fo r research and developm ent (R&D) can generate increases in productivity through the developm ent and subsequent application of more e fficie n t equip ment and processes. One indicator of the relative im portance of R&D is the proportion of gross national product (GNP) devoted to it. This proportion was relatively stable for both total R&D spending and spend ing on industrial R&D during most of the 1960’s, but it declined be tween 1968 and 1974. The am ount and rate of spending for R&D varied between major in dustries. For instance, two indus tries heavily involved in Federal contract work for defense and space program s—the aircraft and missiles industry and the electrical equip ment and communication in d u s try spent proportionately more on R&D in 1973 than other industries did. Federal funding was a much less significant elem ent in other indus tries where R&D expenditures were proportionately large. 36 . Funds for research and development (R&D) as a percent of GNP, selected years, R&D expenditures in selected industries, 1973. Source: National Science Foundation; U.S. Department of Commerce, Bureau of Economic Analysis R&D expenditures Chemicals Petroleum Rubber Stone, clay, and glass Fabricated metal Electrical equipment Machinery Transportation Aircraft and missiles Professional and scientific instruments 0 HI 3 6 9 Industrial R&D Federally-funded Other R&D Company-funded 12 15 79 80 International comparisons: Research and development Statistics on R&D activity are not as readily available for other coun tries as they are fo r the United States. Nevertheless, su fficient in formation exists to make some com parison possible between activity in the United States and its major trading partners. R&D expenditures as a proportion of GNP were higher in the United States than in other industrial coun tries until 1974, when the German rate of expenditure exceeded the Am erican one. The latest available data indicate that the proportion of GNP devoted to R&D was very sim ilar in all of the countries compared — ranging between 1.7 percent and 2.4 percent. The principal objectives of U.S. expenditures for R&D were national defense and space efforts, while the principal objectives of R&D in the other countries were econom ic developm ent and the ad vancem ent of science. There was greater variation in the proportion of scientists and engi neers engaged in R&D. This varia tion was substantially sm aller in 1973, however, than it had been 10 years earlier. W hile the num ber of scientists and engineers engaged in R&D per 10,000 members of the p o p u la tio n rem ained a bo u t the same in the United States, it almost doubled in France, tripled in G er many, and increased by more than half in Japan. 37. Thousands employed Scientists and engineers engaged in R&D in selected industries, 1960 and 1974. Source: National Science Foundation 1974 81 82 Employment of scientists and engineers in industry A nother precursor of productivity growth is the increase in em ploy ment of scientists and engineers engaged in research and develop ment (R&D) in industry. These em ployees are prim arily responsible fo r d e v is in g and a p p ly in g new technology. E m ploym ent of scie n tists and engineers in R&D increased in most manufacturing industries between 1960 and 1974. Increases were particularly pronounced in indus tries such as machinery, electrical equipm ent, and chemicals, which already had large numbers of em ployees in this category. The air craft industry was a special case— the loss of Federal contracts due to the winding down of the space pro gram and the com pletion of certain m ilitary projects led to a decline in the em ploym ent of scientists and engineers in R&D in this industry. 38 . Research and development in selected countries. Percent of GNP R&D expenditures, 1961-74 Source: National Science Foundation 1961 1971 1966 1974 est. Number per 1,000 population Scientists and engineers engaged in R&D, 1963 and 1973 United States France Germany Japan 1973 83 Labor quality: Educational attainment The general upgrading of the work force over tim e is considered an im portant factor in productivity growth. This upgrading occurs pri m arily in two often interrelated ways: Increases in the proportion of the w ork force em ployed in higher skilled occupations and im provements in the level of education of the w orking population. The e d u ca tio n a l level of the A m erican w o rk force has risen H ighest level of schooling com pleted steadily and it is expected to rise even more, largely because young people have been spending more tim e in school. The proportion of the working population that has not com pleted high school has been dropping; by 1985 it is expected that over three-fourths of the work force will have a high school diploma. Proportion of the labor force March 1960 March 1975 Projected 1985 Elementary: Less than 8 y e a rs .............. ........ 8 y e a rs ................................. ) . [ 30.8 5.7 6.0 3.3 4.2 High school: 1 -3 y e a rs ............................. ........ 4 y e a rs ................................. ........ 22.2 27.6 17.4 39.7 15.5 40.7 College: 1 -3 y e a rs ............................. ........ 4 years or m o re .................. ........ 10.1 9.2 15.4 15.7 17.1 19.2 39. Percent distribution Educational attainment of the civilian tabor force, 1960,1975, and projected 1985. Source: Bureau of Labor S tatistics Elementary (0 through 8 years) High school (1 through 4 years) College (1 or more years) 1985 (projected) 85 http://fraser.stlouisfed.org/ 86 Federal Reserve Bank of St. Louis Education and lifetime earnings One indication that increased ed ucation does in fact make a w orker more productive is the increased earnings that workers with more education command. In effect, this is another way of saying that work ers with more education must be worth more, since the em ployer is willing to pay more for their services. In addition to higher earnings at a given point in time, workers with more education also receive higher lifetim e earnings. The chart shows that estimated lifetim e earnings ex pressed in constant dollars have gone up for male workers since 1956 at all levels of educational attainment. Nevertheless, even in 1975 workers with 8 years of ele mentary education could expect to earn less than half the lifetim e in come of workers with 4 or more years of college, while workers with 4 years of high school education could expect less than tw o-thirds the income of college graduates. 40. 1972 dollars ( In thousands) Estimated lifetime income for men by educational attainment, selected years. Source: Bureau of the Census 1956 1961 1967 1972 8 years of elementary school 4 years of high school 4 or more years of college 87 Occupational composition The occupational groups which are growing in im portance—profes sional, clerical, and service workers —generally have relatively high ed ucational requirem ents. The occu pational groups which account for a decreasing proportion of the work fo rc e —o pe ra tive s, laborers, and farm w orkers—require relatively lit tle education. Occupational group O ccupational distribution of the labor force (percent) 1960 1974 1985 (projected) W hite-collar w o rk e rs .......................................... Professional and technical w o rk e rs ........ Managers and a d m in is tra to rs................... Sales w o rk e rs ............................................... Clerical w o rk e rs ........................................... 43.1 11.0 11.2 6.4 14.5 48.6 14.4 10.4 6.3 17.5 51.5 15.5 10.5 6.1 19.4 Blue-collar w o rk e rs ............................................ Craft and kindred w o rk e rs ......................... O p e ra tiv e s ..................................................... Nonfarm la b o re rs ........................................ 36.3 13.3 17.3 5.7 34.6 13.3 16.2 5.1 32.6 13.3 14.7 4.6 Service w o rk e rs .................................................. 12.7 13.2 14.1 Farm w o rk e rs ....................................................... 7.9 3.5 1.8 41 . Percent distribution, labor force M Occupational composition of employment, 1960, 1974, and projected 1985. k - . . Source: Bureau of Labor S tatistics 100 80 60 40 20 0 1960 1974 White-collar workers Service workers Blue-collar workers Farm workers 1985 (projected) 89 Worker attitudes and productivity Worker attitudes are an important key to p ro ductivity im provem ent. A survey of w orker attitudes conduct ed for the Departm ent of Labor in 1972-73 indicated that workers are more concerned with productionoriented goals than had previously been thought. This survey asked a national sample of workers to rate a large num ber of d iffe re n t job facets according to how im portant the workers considered them. The chart shows the job facets most fre qu e ntly rated as “ very im portant” by the workers. Only t w o pay and job security—are econom ic aspects of work. The other nine reflect w orkers’ concerns with hav ing adequate resources to do th e ir work as w ell as having an interest ing and challenging job. 42. Proportion of workers rating selected job facets as “ very im portant,” 1972-73 Source: Survey Research Center, University of Michigan Job facet The work is interesting I have enough inform ation to get the job done The people I work with are friendly and helpful I receive enough help and equip ment to get the job done I have an o pp o rtun ity to develop my own special a b ilitie s I have enough authority to do my job The pay is good My supervisor is com petent in doing (his/her) job I can see the results of my work My resp on sib ilitie s are clearly defined The job security is good Percent 91 APPENDIX Supporting data for charts 92 Table Output per hour of all persons in the total private economy and the nonfarm sector, 1909-75 1. (Index, 1909 = 100) Year Total private economy 1909. 100.0 1910. 1911. 1912. 1913. 1914. 1915. 1916. 1917. 1918. 1919. 105 5 1007 103.4 1034 1920. 1921. 1922. 1923. 1924 1925. 1926. 1927 1928. 1929. 100.0 99.8 100.9 97.8 1035 1076 104.0 104.6 1144 119.9 1220 128.1 131.5 131.9 1313 137.8 131.6 Nontarm sector 100.0 994 100 8 101.6 1026 99.2 975 983 944 101.9 106 5 1029 104.3 113.7 1173 121 3 1270 1301 128.5 128.7 134 4 1930. 1931 . 1932. 1933. 1934. 1935. 1936. 1937. 1938. 1939. 124.1 121.9 134.9 141.1 1495 1498 153.4 159.8 130.0 131.1 1258 124 1 137 1 142.3 148 9 1483 151.9 156.9 1940. 1941 . 166 3 176 9 163.1 1686 131.0 Year Total private economy Nonfarm sector 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949. 178 6 182 9 1950 2032 196 4 197 0 205.1 211.4 1686 1722 184 7 192 5 1835 182 6 1883 1951 1950. 1951 . 1952. 1953. 1954. 1955. 1956. 1957. 1958. 1959. 2280 235.5 242.7 251.2 256 1 2650 2660 274.1 2844 293 3 207.0 211 9 2166 221.1 225 1 232 7 231.9 237.3 244 7 252 6 1960. 1961. 1962. 1963. 1964. 1965. 1966. 1967. 1968. 1969. 297 2 308 4 321 8 332 9 345 9 356 2 368 7 376.4 386.6 386.7 254 4 263 1 274 0 282 4 292 5 300 1 309 0 314 4 322 6 321 3 1970. 1971 . 1972. 1973. 1974. 1975. 391 0 405 4 4184 427.8 417.1 422.5 323 4 3345 3458 352 8 3443 347 3 Table 2. Output per hour of all persons in the private and nonfarm business sectors, 1950-75 Table _ 3. Output per hour of all persons in the private business sector, adjusted for shifts in employment from the farm to the nonfarm business sector, 1950-75 (Index, 1950 = 100) (Index, 1950 = 100) Year Private business sector Nonfarm business sector Year Output per hour Shift-adjusted output per hour 1950......................................................................................... 1951......................................................................................... 1952.......................................................................................... 1953.......................................................................................... 1954.......................................................................................... 1955.......................................................................................... 1956.......................................................................................... 1957 .......................................................................................... 1958.......................................................................................... 1959.......................................................................................... 1000 1026 105.7 1097 111.6 1161 117.5 120.7 1246 1293 100 0 101.5 104 1 106 0 1076 1119 1124 1146 1176 1220 1950.......................................................................................... 1951 ..................................................................................... 1952........................................................................................ 1953.......................................................................................... 1954........................................................................................ 1955........................................................................................ 1956........................................................................................ 1957........................................................................................ 1958........................................................................................ 1959......................................................................................... 1000 1026 105 7 109 7 1116 116 1 1175 120 7 124 6 1293 100 0 101 5 1038 106 8 1086 1128 113.5 1159 1194 1235 1960.......................................................................................... 1961.......................................................................................... 1962.......................................................................................... 1963......................................................................................... 1964.......................................................................................... 1965......................................................................................... 1966.......................................................................................... 1967.......................................................................................... 1968.......................................................................................... 1969.......................................................................................... 131.3 135.6 141.0 1464 153 0 1581 1633 1674 172 7 1731 1232 126 7 131 4 135 9 141.4 145.6 1494 1526 1573 156 8 1960......................................................................................... 1961.......................................................................................... 1962.......................................................................................... 1963......................................................................................... 1964.......................................................................................... 1965.......................................................................................... 1966....................................................... 1967...................................................................................... 1968 ........................................... 1969...................................................... 131 3 135 6 141 0 146 4 1530 158 1 163 3 167 4 172 7 173 1 1251 1288 1336 1383 143.9 148 3 152 3 155 8 160 5 160 4 1970.......................................................................................... 1971.......................................................................................... 1972.......................................................................................... 1973......................................................................................... 1974......................................................................................... 1975......................................................................................... 174 4 180.1 1856 189.2 1828 186.5 157 1 161 8 1670 1699 1639 1669 1970......................................................................................... 1971......................................................................................... 1972 ......................................................................................... 1973......................................................................................... 1974.................................................................................... 1975......................................................................................... 174 4 1801 185.6 1892 182 8 1865 161 4 166 6 171 6 174 5 168 6 1721 93 Table 4. Output per hour of all persons and output in the private business sector, 1968-75 Table 5. Output per hour of all persons in the private business sector during the most recent and previous recessions (Percent change at annual rate) (Percent change at annual rate) Year and quarter 1968: I ....................................................................................................... II.......................................................................................................... Ill ........................................................................ IV ......................................................................................................... 1969; I ........................................................................................................... II.......................................................................................................... I ll......................................................................................................... IV ......................................................................................................... 1970: I ........................................................................................................... II.......................................................................................................... I ll.......................................................................................................... IV ......................................................................................................... 1971: I .................................................................................................. II.......................................................................................................... Ill ............................................................................................ IV ......................................................................................................... 1972 I ........................................................................................................... II.......................................................................................................... I ll.......................................................................................................... IV ......................................................................................................... 1973: I ........................................................................................................... II.......................................................................................................... I ll.......................................................................................................... IV ......................................................................................................... 1974 1........................................................................................................... II.......................................................................................................... I ll......................................................................................................... IV ......................................................................................................... 1975: 1........................................................................................................... II.......................................................................................................... I ll.......................................................................................................... IV ......................................................................................................... 94 Output per hour of all persons Quarter before ( - ) or after ( + ) trough Output Average of previous -6 .6 -3 .8 - 2 .6 -4 0 (1975 1) 1.6 127 8.5 -1 .6 7.5 4.1 -1 .6 -0 .2 4.6 3.0 10.0 3.9 6.3 0.6 recessions' 4.8 2.9 37 -0 .4 5.5 5.6 65 24 0.3 -1 .3 -0 .9 -1 .3 37 2.3 0.3 - 1 .8 Trough Trough Trough Trough Trough Trough Trough Trough Trough 0.8 2.2 7.1 -1 .9 -2 .8 - 0 .2 3.0 -4 9 1 The previous recessions and their respective troughs included in the calculations were designated by the National Bureau of Economic Research as follows: For the 1969-70 period, 4th quarter ot 1970; tor 1960-61, 1st quarter ot 1961; tor 1958, 2nd quarter; for 1954, 3rd quarter; and for 1948-49, 4th quarter of 1949 7.6 -0 .9 6.7 -0 .3 91 1.9 44 4.7 33 48 16 7.0 10 5 7.6 4.5 10.1 44 -3 9 — 19 0.3 11 3 02 07 1.9 -6 .6 -3 .8 -2 6 -4 .0 -6 4 -3 .8 -3 9 -9 .4 16 12.7 8.5 -1 .6 -1 1 2 89 12 3 3.6 Table + + + + 4 ...................................................................................... 3 ...................................................................................... 2 ...................................................................................... 1 ...................................................................................... ...................................................................................... 1 ...................................................................................... 2 ...................................................................................... 3 ....................................................................................... 4 ....................................................................................... Most recent recession Output per hour of all persons by major sector, 1950-74 6. (Index, 1950 = 100) Year Communi cations Gas, electric, and sanitary services 100 0 105.7 1085 114.0 116 8 124 6 124 7 132 4 145.6 1581 100.0 1133 120.5 126 9 138 5 145.5 153 2 161.1 1685 183.2 1281 131.0 136.1 1438 156 4 165.7 . 165.7 . 1648 1738 1745 165.5 176.2 1879 201.2 207 3 2151 2236 2364 247.7 256 1 195 6 207 1 217.2 227.6 2407 247.6 2602 2698 287 3 2960 175 3 1771 187.1 199 8 ' 1992 263.0 282 3 295 1 306 0 323 1 296 6 310.4 311.1 321.0 2852 Farm Mining Manufac turing Trade Transpor tation 1950....................................... 1951....................................... 1952....................................... 1953....................................... 1954....................................... 1955....................................... 1956....................................... 1957....................................... 1958....................................... 1959....................................... 100 0 101.3 108.5 123.1 129.9 131.8 136.5 144.8 162.8 156.6 100 0 104.9 106.7 1123 1185 125.3 127.4 128.4 134.0 138 2 100.0 103.3 104.9 107.0 1087 114.2 113.3 115.8 115.1 1205 100.0 989 101.4 1035 103.5 109.4 109.8 112.2 113.1 118.1 100 0 105.4 103.7 104.3 107.7 113.7 . 118.7 1190 121.2 124 7 1960....................................... 1961....................................... 1962....................................... 1963....................................... 1964....................................... 1965....................................... 1966....................................... 1967....................................... 1968....................................... 1969....................................... 169.8 180 0 1851 196.4 202 2 2140 2236 2409 2445 261.3 144.0 153 0 161.0 169.4 172 7 177.4 186 2 194.5 2037 2034 121.8 124.7 130 3 139.3 146.6 151.6 154.0 154 6 160.1 1622 .118.0 ■ 121.0 1283 133.3 138.0 1424 148.6 151.7 157.9 1570 1970....................................... 1971....................................... 1972....................................... 1973....................................... 1974....................................... 291.8 3170 3058 324 4 307.3 2084 2082 207 1 2034 191.1 161.5 170 4 1789 182.1 174 9 159.5 1640 171.5 1765 170.7 . Table 7 Onsite labor requirements for various types of new construction, selected periods Table Output per employee-hour in selected industries, 1960-75 9. (Average annual percent change) Industry Type of construction Period Percent change' Federally aided highways2................................................................................. 1958-73 1958-64 1964-73 1959-72/73 1963-71 1962-69 1960-68 1960-66 1959-65 -2 .5 -3 .8 -1 .8 -2 .0 -2 2 -1 9 -2 2 -1 .0 - 2 .7 Federal office buildings2 ................................................................................... Sewer works2................................................................................................... Private single-family housing2........................................................................... Public housing2................................................................................................ General hospitals3............................................................................................ Elementary and secondary schools3.................................................................. ’ Compound interest method. 2 Constant dollars. 3 Square feet. Table 8 Output per employee-year, output, and employee years in the Federal Government, measured sample, fiscal years 1967-75 (Index, 1967 = 100) Fiscal year 1967.................................................................................. 1968.................................................................................. 1969.................................................................................. 1970.................................................................................. 1971.................................................................................. 1972................................................................................... 1973................................................................................... 1974.................................................................................. 1975................................................................................... Output per employee-year Output Employee years 100.0 101.1 1035 104.0 105.6 106.3 109 2 1087 1107 100.0 1037 107.1 107.4 108.8 109 0 110.5 1107 1128 100.0 1026 1035 1033 1030 102.6 101.2 101.9 101.8 P ipelines'.............................................. Hosiery'................................................. Malt liquors'.......................................... Air transportation................................... Synthetic fib ers'.................................... Aluminum rolling and drawing'................ Pharmaceuticals2................................... Gas and electric utilities........................ Telephone communications..................... Petroleum refining'................................ Railroads, revenue traffic........................ Major household appliances'.................. Radio and TV s e ts '................................ Paper, paperboard, and pulp mills’ ........ Candy and other confectionery'.............. Concrete products3................................ Gas stations.......................................... Corrugated and solid fiber boxes'........... Hydraulic cement'.................................. Flour and other grain mill products’ ......... Nonmetallic minerals.............................. Tires and inner tubes'............................ Clay construction products'.................... Canning and preserving3......................... Motor vehicles and equipment................ Sugar'................................................... C ig a rs'.................................................. Bakery products'.................................... Clay refractories'................................... Intercity trucking.................................... Hotels and m otels'.................................. Glass containers'................................... Gray iron foundries'................................. Paints and allied products'...................... Steel....................................................... Primary aluminum.................................... Copper rolling and drawing'...................... Ready-mixed concrete'............................. Soft d rinks'............................................. Metal c a n s '............................................. Iron mining, usable ore............................. Primary copper, lead, and z in c '................ Steel foundries'....................................... Cigarettes, chewing and smoking tobacco' Bituminous coal and lignite mining........... Footwear'................................................ Copper mining, recoverable metal............. Average annual percent change 92 7.1 68 6.7 6.7 5.7 5.4 5.1 5.1 5.0 4.9 4.9 4.3 4.3 4.0 39 38 38 3.7 3.6 34 35 33 32 32 3.1 31 2.9 29 2.7 26 25 25 2.4 22 22 2.1 2.1 2.0 1.9 1.9 1.8 13 12 11 03 01 ' 1960-74. 2 1963-74. 3 1960-73. 95 Table 10 . Table Real gross domestic product (GDP) per employed civilian in selected countries, 1950-75 12 . (Index, 1950 = 100) Year 1950....................................... 1955....................................... 1960....................................... 1965....................................... 1967....................................... 1970....................................... 1971....................................... 1972....................................... 1973....................................... 1974....................................... 1975....................................... Levels1 of output per employee-hour in the iron and steel industry, selected countries, 1964-74 (Index, United States = 100) United States Canada France Germany Japan United Kingdom Year Japan France Germany United Kingdom 100.0 116.3 123 6 143.5 149.3 150 8 154 2 157.9 161.0 155 3 154 2 100.0 1198 131.0 150.2 1548 1653 170.7 175.2 178.2 175.6 172.6 100.0 122.1 156.7 200.5 2189 2532 2646 276.9 288 8 2972 2953 100 0 138 0 179 4 224.6 237 6 286.0 2934 304.4 318 9 326.9 3249 100 0 136 7 186 0 281.5 334 5 447.9 478 1 520 4 5579 5560 5702 100.0 111.5 1255 140.8 148.8 160 4 167.4 170.4 1762 176 6 173 9 1964................................................................................... 1965................................................................................... 1966................................................................................... 1967................................................................................... 1968................................................................................... 1969................................................................................... 1970................................................................................... 1971................................................................................... 1972................................................................................... 1973................................................................................... 1974c................................................................................. 43-54 43-54 51-63 63-79 68-85 83-104 97-121 94-117 103-128 122-151 126-156 48-51 48-52 50-54 55-59 59-63 65-70 68-73 65-70 67-72 64-68 66-70 54-63 52-61 53-61 59-69 65-76 71-83 72-84 69-81 72-85 72-84 77-90 46-50 47-51 45-48 46-50 48-52 50-54 51-56 48-52 49-54 47-51 43-47 p = preliminary ' Range of estimates. Table Output per employee-hour in manufacturing in selected countries, 1950-75 11 . Table 13 . (Index, 1950 = 100) Year United States1 Canada Japan France Germany United Kingdom 1950....................................... 1951....................................... 1952....................................... 1953....................................... 1954....................................... 1955....................................... 1956....................................... 1957....................................... 1958....................................... 1959............................. ......... 100.0 103 2 105.1 106 9 108 6 114.0 113.3 115 6 115.0 120 3 100 0 105.2 106.9 110.6 115.2 122.9 1281 1289 133.3 140 7 100.0 125.2 131.8 1495 160.3 1682 179.4 195.8 183 2 2131 100 0 105.2 1087 1144 117.5 123.5 131.4 133.5 138 7 1488 100 0 103.0 1126 1208 1257 133 6 137.2 149 2 156.8 169 4 1000 101.0 968 101.3 104.7 108 1 1081 110.7 112 6 117.1 1960....................................... 1961....................................... 1962....................................... 1963....................................... 1964....................................... 1965....................................... 1966....................................... 1967....................................... 1968....................................... 1969....................................... 121.4 1244 130.2 139 3 146.7 151.3 153.6 154.1 159.6 161.6 145.5 153 4 161.7 167.8 175.1 181.9 187.3 1927 2067 2183 2458 277.1 2893 313.6 3547 3696 407.0 467.3 5262 607.5 156.5 163.8 171.3 181.6 190.7 201 6 2157 227 8 2538 262.9 181.4 191.3 2033 2142 2309 2470 2568 2732 2940 310.9 124.1 125 0 1281 135.1 144.9 149.3 154.6 161.6 1727 175.1 1970....................................... 1971....................................... 1972....................................... 1973....................................... 1974....................................... 1975 p .................................... 1610 170 0 1787 181.8 174.6 1733 222.0 217.5 244.5 252.6 2524 2563 684.6 708.9 765.9 861.2 876.2 8500 276 1 290.4 309.6 3239 332 8 318.2 3186 3347 356.0 378 7 397 8 4109 176.3 1847 1958 2066 2053 202 6 p = preliminary. ' Output per hour ol all persons http://fraser.stlouisfed.org/ 96 Federal Reserve Bank of St. Louis ' Output per hour of all persons and labor costs in the private business sector, 1950-75 (Percent change) Year Output per hour ol all persons Unit labor costs Compensation per hour 1950............................................................. 1951'............................................................. 1952............................................................. 1953............................................................. 1954............................................................. 1955............................................................. 1956............................................................. 1957............................................................. 1958............................................................. 1959............................................................. 8.1 2.6 3.0 3.8 1.7 4.0 1.2 27 3.3 3.7 - 0 .9 7.0 3.3 2.7 1.6 -1 4 5.4 3.9 1.3 0.9 7.1 98 6.4 6.6 34 2.6 6.7 6.7 4.7 4.6 1960............................................................. 1961............................................................. 1962............................................................. 1963............................................................. 1964............................................................. 1965............................................................. 1966............................................................. 1967............................................................. 1968............................................................. 1969............................................................. 1.5 33 4.0 38 45 3.4 33 2.5 3.2 0.2 26 0.7 0.7 0.0 09 0.5 3.7 31 4.3 67 4.2 4.0 4.7 3.9 54 3.9 7.0 5.6 7.6 7.0 1970............................................................. 1971............................................................. 1972............................................................. 1973............................................................. 1974............................................................. 1975............................................................. 0.8 3.3 3.1 1.9 - 3 .4 2.1 6.4 3.2 25 6.2 13 2 7.5 7.2 6.6 5.7 8.2 9.3 9.7 Table 14 . Output per hour of all persons and labor costs in the private business sector, 1968-75 Table 15 . Unit labor costs in the private business sector during the most recent and previous recessions (Percent change at annual rate) Year and quarter 1968 I................................................................ II............................................................... Ill.............................................................. IV............................................................. 1969 I............................................................... II............................................................... Ill.............................................................. IV............................................................. 1970 I............................................................... II............................................................... Ill.............................................................. IV............................................................. 1971 I............................................................... II.............................................................. Ill.............................................................. IV............................................................. 1972 1................................................................ II............................................................... Ill.............................................................. IV............................................................. 1973 I................................................................ II............................................................... Ill.............................................................. IV............................................................. 1974 I............................................................... II............................................................... Ill.............................................................. IV............................................................. 1975 1................................................................ II............................................................... Ill.............................................................. IV............................................................. Output per hour of all persons (Percent change at annual rate) Unit labor costs Quarter before ( - ) or after ( + ) trough Compensation per hour Most recent recession Average of previous recessions’ 156 17.1 155 14 5 (1975 1) 11.3 -5 .1 - 3 .0 10.1 3.2 3.2 2.2 17 20 0.6 - 1 .0 -1 1 0.5 2.1 48 29 37 -0 4 70 4.3 43 8.1 12.1 7.3 8.1 7.7 03 -1 3 -0 .9 -1 3 4.5 86 9.6 7.0 48 7.1 86 5.6 Trough Trough Trough Trough Trough Trough Trough Trough Trough 0.8 2.2 71 -1 .9 9.1 2.9 1.7 58 9.9 5.2 9.0 3.8 ’ The previous recessions and their respective troughs included in the calculations were designated by the National Bureau ot Economic Research as follows: For the 1969-70 period, 4th quarter of 1970; for 1960-61, 1st quarter of 1961; for 1958, 2nd quarter; for 1954, 3rd quarter; and for 1948-49, 4th quarter of 1949. 7.6 - 0 .9 6.7 -0 3 05 6.7 1.1 2.4 81 5.8 7.9 21 3.3 48 16 7.0 4.8 0.4 2.4 0.8 83 5.3 4.1 79 44 - 3 .9 -1 9 0.3 8.5 104 89 8.1 13.2 6.1 68 8.4 -6 6 - 3 .8 - 2 .6 -4 0 156 17 1 15.5 14.5 8.0 12 7 126 9.9 16 12 7 85 -1 6 11.3 -5 .1 - 3 .0 10.1 131 69 5.2 8.3 Table 16 . - 4 3 2 1 + + + + 1 2 3 4 ...................................................................................... ...................................................................................... ...................................................................................... ...................................................................................... ..................................................................................... ...................................................................................... ...................................................................................... ...................................................................................... ...................................................................................... Composition of price changes in the private business sector, 1950-75 (Percent change) Point contribution to percent change Unit nonlabor payments Year Implicit price deflator Unit labor costs Profits' Other1 2 1950.................................................................... 1951.................................................................... 1952.................................................................... 1953.................................................................... 1954.................................................................... 1955.................................................................... 1956.................................................................... 1957.................................................................... 1958.................................................................... 1959.................................................................... 1.4 7.5 1.5 0.5 1.0 1.6 3.3 3.5 1.3 17 - 0 .7 4.5 2.1 1.8 11 -0 8 34 27 0.9 0.6 2.7 2.2 - 1 .7 - 1 .6 - 0 .8 22 -1 .1 - 0 .4 - 0 .7 1.3 - 0 .6 0.8 1.0 0.3 0.6 0.2 1.0 1.1 1.1 -0 1 1960.................................................................. 1961.................................................................... 1962.................................................................... 1963.................................................................... 1964.................................................................... 1965.................................................................... 1966.................................................................... 1967.................................................................... 1968.................................................................... 1969.................................................................... 1.6 0.6 1.4 1.1 0.9 2.0 31 2.8 4.1 4.7 1.7 06 04 0.0 0.7 0.3 2.4 2.0 28 44 -1 .1 - 0 .5 0.4 0.5 0.2 1.4 03 -0 4 0.1 - 1 .2 1.0 0.5 0.6 0.6 0.1 0.3 0.5 1.1 1.1 1.6 1970.................................................................... 1971.................................................................... 1972.................................................................... 1973.................................................................... 1974.................................................................... 1975.................................................................... 4.8 4.3 3.4 5.8 10.3 10.0 4.3 2.2 18 4.1 8.8 5.6 - 2 .0 10 1.4 1.6 -1 6 0.7 2.4 1.2 0.3 0.1 3.1 3.7 1 Unit profits include corporate profits, estimated profits of unincorporated enterprises, and net rental earnings of owner-occupied dwellings 2 Other unit nonlabor costs include depreciation, interest, and indirect taxes 97 Table 17 Output per employee-hour and unit profits in the nonfinancial corporate sector, 1950-75 Table 19 . Output per employee-hour and labor costs in manufacturing, selected countries, 1967-751 (Percent change) Table 18 . (Average annual percent change) Unit labor costs Year Output per employee-hour Unit profits 1950................................................................................................. 1951................................................................................................. 1952................................................................................................. 1953................................................................................................. 1954................................................................................................. 1955................................................................................................. 1956................................................................................................. 1957................................................................................................. 1958................................................................................................. 1959................................................................................................. 7.4 2.7 0.5 3.2 2.7 6.0 0.6 2.4 - 0 .1 4.4 142 3.4 — 10 8 - 7 .2 - 1 .4 20.2 - 8 .1 -4 .5 -9 .9 19.0 1960................................................................................................. 1961................................................................................................. 1962................................................................................................. 1963................................................................................................. 1964................................................................................................. 1965................................................................................................. 1966................................................................................................. 1967................................................................................................. 1968................................................................................................. 1969................................................................................................. 2.3 3.3 4.9 4.3 4.2 3.1 2.3 1.4 3.9 1.0 - 8 .6 - 2 .1 9.9 4.8 5.9 7.3 - 0 .1 - 7 .8 0.6 — 11.8 1970................................................................................................. 1 9 7 1 ................................................................................................. 1972................................................................................................. 1973................................................................................................. 1974................................................................................................. 1975................................................................................................. 0.4 4.0 35 2.4 -3 .0 2.9 - 2 1 .4 10.3 13.1 -1 .7 -1 9 .1 25.7 Output per employee-hour and labor costs in manufacturing, selected countries, 1950-67 (Average annual percent change) Unit labor costs Country United S ta te s'........................................ Canada'................................................. France................................................... Germany................................................. Italy..................................................... Japan..................................................... Netherlands............................................ Sweden.................................................. United Kingdom...................................... 1 Output per hour pf all persons. http://fraser.stlouisfed.org/ 98 Federal Reserve Bank of St. Louis Output per employee-hour National currency U.S. dollars Compensation per hour 2.7 4.1 4.9 6.2 5.9 8.6 5.0 4.9 3.0 1.8 0.8 3.6 2.5 2.3 1.0 3.6 3.2 3.4 1.8 0.4 0.8 3.0 2.3 1.0 4.1 3.2 3.3 4.5 4.9 8.7 8.9 8.3 9.6 8.8 82 6.5 Country United States2....................................... Canada2 ................................................. France ................................................... Germany................................................ Italy3...................................................... Japan.................................................... Netherlands3.......................................... Sweden.................................................. United Kingdom...................................... Output per employee-hour National currency U.S. dollars Compensation per hour 1.8 3.6 4.6 5.2 5.8 8.2 8.1 5.7 3.2 5.3 4.7 8.0 7.0 11.9 10.2 6.1 6.3 10.5 5.3 6.0 9.9 14.7 11.7 14.2 11.0 9.5 9.0 7.2 8.5 12.9 126 18.3 19.2 147 124 14.0 ' 1975 estimates based on part-year data except for the United States and Canada 2 Output per hour of all persons 2 1970-74 Table 20. Output per hour of all persons, prices, and labor costs in major sectors, 1968-74 (Average annual percent change) Sector Communications..................................... Farm...................................................... Transportation........................................ Manufacturing........................................ Trade..................................................... Electric, gas, and sanitary services................................ Mining................................................... Compensation per hour Unit labor costs 4.6 4.2 2.7 2.4 1.9 9.6 7.2 8.5 6.9 6.8 4.7 2.9 5.7 4.4 4.8 2.7 13.1 5.6 3.4 5.3 0.7 - 0 .7 7.6 8.2 6.9 9.0 6.2 8.9 Output per hour of all persons Prices Table Table Output per employee-hour and prices in selected industries, 1960-74 21 . 22 . Output per employee-hour and compensation per hour in selected industries, 1960-73 (Average annual percent change) (Average annual percent change) Industry Output per employee-hour Prices Industry Output per employee-hour Compensation per hour Canning and preserving'................................................................................... Flour and other grain mill products.................................................................... Bakery products............................................................................................... Sugar............................................................................................................... Candy and other confectionery........................................................................... Malt liquors...................................................................................................... Soft drinks....................................................................................................... Cigarettes, chewing and smoking tobacco......................................................... Cigars.............................................................................................................. Hosiery............................................................................................................ Paper, paperboard, and pulp m ills...................................................................... Corrugated and solid fiber boxes....................................................................... Synthetic fibers................................................................................................ Pharmaceuticals2............................................................................................. Paints and allied products................................................................................. Petroleum refining............................................................................................ Tires and inner tubes........................................................................................ Footwear.......................................................................................................... Glass containers.............................................................................................. Hydraulic cement.............................................................................................. Clay construction products................................................................................ Clay refractories............................................................................................... Concrete products'.......................................................................................... Ready-mixed concrete'..................................................................................... Steel............................................................................................................... Gray iron foundries........................................................................................... Steel foundries................................................................................................. Primary copper, lead, and z in c .......................................................................... Primary aluminum............................................................................................. Copper rolling and drawing................................................................................ Aluminum rolling and drawing............................................................................ Metal can s....................................................................................................... Major household appliances.............................................................................. Radio and TV se ts............................................................................................ Motor vehicles and equipment........................................................................... Telephone communications............................................................................... Gas stations..................................................................................................... Hotels and motels............................................................................................. 3.2 3.6 2.9 3.1 4.0 6.8 2.0 1.2 3.1 7.1 4.3 3.8 6.7 5.4 24 5.0 3.5 0.3 2.5 3.7 3.3 2.9 3.9 2.1 2.5 2.5 1.3 1.8 2.2 2.1 5.7 1.9 4.9 4.3 3.2 5.1 3.9 2.6 24 3.7 3.5 5.3 3.1 1.4 3.9 3.0 1.0 - 1 .0 2.3 2.6 - 0 .9 0.4 2.7 3.7 1.9 3.6 3.4 3.0 2.4 3.4 2.1 2.5 3.3 3.6 3.3 5.6 1.6 5.8 0.9 3.7 0.9 - 1 .6 2.0 1.0 2.9 4.3 Canning and preserving.................................................................................... Flour and other grain mill products.................................................................... Bakery products............................................................................................... Sugar.............................................................................................................. Candy and other confectionery.......................................................................... Malt liquors................................................................................................... Soft drinks....................................................................................................... Cigarettes, chewing and smoking tobacco......................................................... Cigars............................................................................................................. Hosiery............................................................................................................ Paper, paperboard, and pulp m ills..................................................................... Corrugated and solid fiber boxes....................................................................... Synthetic fibers................................................................................................ Pharmaceuticals'............................................................................................. Paints and allied products................................................................................ Petroleum refining............................................................................................ Tires and inner tubes........................................................................................ Footwear......................................................................................................... Glass containers.............................................................................................. Hydraulic cement............................................................................................. Clay construction products............................................................................... Clay refractories............................................................................................... Concrete products............................................................................................ Ready-mixed concrete...................................................................................... Steel............................................................................................................... Gray iron foundries........................................................................................... Steel foundries................................................................................................ Primary copper, lead, and zin c.......................................................................... Primary aluminum............................................................................................. Copper rolling and drawing............................................................................... Aluminum rolling and drawing........................................................................... Metal can s...................................................................................................... Major household appliances.............................................................................. Radio and TV se ts............................................................................................ Motor vehicles and equipment.......................................................................... 3.2 4.0 3.0 3.4 4.0 6.6 1.9 1.3 3.4 7.1 4.4 3.9 6.6 5.5 2.4 5.2 3.6 0.4 2.5 4.2 3.5 2.9 3.9 2.1 2.5 2.5 1.3 1.9 23 2.5 5.7 18 5.2 4.7 3.3 5.2 5.1 5.4 49 5.1 5.3 5.6 6.2 4.1 5.1 5.4 4.9 4.4 5.8 4.2 5.1 4.5 4.5 5.2 5.8 44 4.1 5.8 5.1 4.1 5.3 4.0 4.9 4.7 4.2 4.9 4.5 40 4.2 5.2 ' 1963-73 1960-73 1963-74 99 Table 23 . Output per hour of all persons and real compensation per hour in the private business sector, 1950-75 Table 24 . Gross domestic product (GDP) per capita and average weekly hours per person engaged in production in the private economy, 1950-75 (Index, 1950 = 100) (index, 1950 = 100) Year Output per hour of all persons Real compensation per hour 1950................................................................................................. 1951................................................................................................. 1952 ................................................................................................. 1953................................................................................................. 1954................................................................................................. 1955................................................................................................. 1956................................................................................................. 1957................................................................................................. 1958................................................................................................. 1959 ................................................................................................. 100 0 1026 105.7 109.7 111.6 116.1 117.5 1207 124.6 129.3 100.0 101.7 105.9 112.0 1153 1187 124.8 128 7 131.1 136 1 1960................................................................................................. 1961................................................................................................. 1963................................................................................................. 1964................................................................................................. 1965 ............................................... 1966 .......................................................... .................................................................. 1967 1968 ................................................... 1969 ................................................. 1970 1971 1972 1973 1974 1975 http://fraser.stlouisfed.org/ 100 Federal Reserve Bank of St. Louis ......................................................... .................................. .................................................................... .............................................................. ................................................................ ................................................................ 131.3 135.6 141.0 146.4 153.0 158 1 163.3 167.4 172.7 173.1 139 6 143.6 148.7 152.6 158.7 162.3 168.8 173.4 179 0 181.7 174.4 180.1 185.6 189.2 182.8 186.5 183.8 187.9 192.2 195 7 192.8 1938 Table Year GDP per capita Average weekly hours 1 9 5 0 ........................................................................................................................................ 100 0 1 0 0 .0 1 9 5 1 ........................................................................................................................................ 1 0 6 .3 999 1 9 5 2 ........................................................................................................................................ 1085 9 9 .5 1 9 5 3 ....................................................................................................................................... 1 1 0 .8 9 9 .0 1 9 5 4 ....................................................................................................................................... 1074 9 8 .0 1 9 5 5 ....................................................................................................................................... 1126 984 1 9 5 6 ....................................................................................................................................... 1 1 3 .0 97 6 1 9 5 7 ....................................................................................................................................... 112 9 9 6 .3 1 9 5 8 ....................................................................................................................................... 1 0 8 .3 95 4 1 9 5 9 ....................................................................................................................................... 1 1 5 .5 9 6 .0 1 9 6 0 ....................................................................................................................................... 1 1 6 .3 9 5 .6 1 9 6 1 ....................................................................................................................................... 1 1 7 .1 948 1 9 6 2 ........................................................................................................................................ 1 2 2 .0 9 5 .0 1 9 6 3 ........................................................................................................................................ 1 2 5 .0 9 4 .9 1964 .............................................................................................. 129 7 9 4 .4 1 9 6 5 ........................................................................................................................................ 1 3 5 .6 1 9 6 6 ........................................................................................................................................ 1 4 2 .2 9 4 .0 1 9 6 7 ........................................................................................................................................ 1 4 4 .4 930 94 7 1 9 6 8 ........................................................................................................................................ 1 4 9 .2 9 2 .7 1 9 6 9 ....................................................................................................................................... 1 5 1 .7 9 2 .3 1 9 7 0 ........................................................................................................................................ 1 4 9 .6 9 1 .1 1 9 7 1 ........................................................................................................................................ 1 5 2 .2 9 0 .7 1 9 7 2 ....................................................................................................................................... 159 7 90 0 1 9 7 3 ........................................................................................................................................ 1 6 6 .9 9 0 .7 1 9 7 4 ....................................................................................................................................... 162 7 8 9 .7 1 9 7 5 ........................................................................................................................................ 1584 8 8 .8 Working life and life expectancy, by sex, 1900, 1950, and 1970 25 . Years of life Year Working years expectancy at birth Years outside the labor force M en: 1 9 0 0 ...................................................................................... 4 8 .2 32 1 161 1 9 5 0 ...................................................................................... 6 5 .5 4 1 .5 2 4 .0 1 9 7 0 ...................................................................................... 6 7 .1 401 2 7 .0 W om en: 444 1 9 0 0 ...................................................................................... 5 0 .7 1 9 5 0 ...................................................................................... 7 1 .0 15 .1 559 1 9 7 0 ...................................................................................... 748 229 5 1 .9 6 .3 Table 26 . Output per employee-hour and employment in selected countries, 1960-75 Table 27 . (Average annual percent change) Industry Air transportation................................................................ Aluminum rolling and drawing'.......................................... Bakery products'................................................................. Bituminous coal and lignite mining.................................... Candy and other confectionery'......................................... Canning and preserving2 .................................................... Cigarettes, chewing and smoking tobacco'..................... Cigars' ................................................................................. Clay construction products'............................................... Clay refractories'................................................................ Concrete products2............................................................. Copper mining, recoverable metal..................................... Copper rolling and draw ing'............................................... Corrugated and solid fiber boxes'..................................... Flour and other grain mill products'.................................. Footwear'............................................................................ Gas and electric utilities.................................................... Gas stations........................................................................ Glass containers'............................................................... Gray iron foundries'............................................................ Hosiery’ ............................................................................... Hotels and m otels'............................................................. Hydraulic cem ent'.............................................................. Intercity trucking................................................................. Iron mining, usable ore....................................................... Major household appliances'............................................. Malt liquors'........................................................................ Metal c a n s '......................................................................... Motor vehicles and equipment........................................... Nonmetallic minerals.......................................................... Paints and allied products'................................................ Paper, paperboard, and pulp m ills '.................................... Petroleum refining3............................................................. Pharmaceuticals'................................................................ Pipelines.............................................................................. Primary aluminum'.............................................................. Primary copper, lead, and z in c '......................................... Radio and TV s e ts '............................................................ Railroads, revenue traffic................................................... Ready-mixed concrete2...................................................... Soft drin ks'......................................................................... Steel.................................................................................... Steel foundries'.................................................................. Sugar'.................................................................................. Synthetic fib e rs '................................................................. Telephone communications................................................ Tires and inner tube s'........................................................ Output and hours in selected industries with similar productivity growth, 1960-75 (Average annual percent change) Output per employee-hour Employment Industry Output per employee-hour Output Hours 6.7 5.7 29 11 4.0 3.2 1.2 3.1 3.3 29 3.9 0.1 2.1 38 36 03 5.1 38 2.5 2.5 7.1 2.6 3.7 2.7 19 4.9 68 1.9 3.2 34 2.4 43 5.0 5.4 9.2 22 1.8 4.3 4.9 2.1 2.0 2.2 1.3 3.1 6.7 5.1 35 5.1 2.0 -2 .1 1.3 - 0 .5 1.2 0.5 - 4 .9 - 3 .5 -0 .8 1.8 2.7 -0 .2 2.5 - 3 .4 - 2 .4 1.2 12 18 18 - 1 .7 2.7 -1 9 3.0 - 1 .4 0.1 - 2 .4 2.5 1.6 - 0 .5 1.5 01 -1 9 3.3 -2 4 4.2 0.2 1.1 - 2 .7 19 1.7 - 0 .5 1.5 -0 8 3.6 3.0 2.2 Telephone communications......................................................... Railroads (revenue traffic]............................................................ Gas and electric utilities.............................................................. 5.1 4.9 5.1 8.2 2.1 6.4 2.8 - 2 .7 13 Table Three estimates of the factors affecting productivity 28 . (Percent distribution) Economist Denison................................................................. Kendrick............................................................... Christensen and Jorgenson................................ Labor quality Capital All other factors“technology” 18 10 14 20 18 42 62 72 44 1960-74 1960-73 1963-74 101 Table 29 . Table Total capital stock, capital equipment, and capital structures per hour of all persons in the private business sector,11950-74 30 . (Index, 1950 = 100) Output per hour of all persons in the private business sector, and the capital/labor and output/capital ratios, 1950-74 (Index, 1950 = 100) Output per hour Capital/labor ratio Output/capital ratio 1950.............................................................................................. 1951.............................................................................................. 1952.............................................................................................. 1953.............................................................................................. 1954.............................................................................................. 1955.............................................................................................. 1956.............................................................................................. 1957.............................................................................................. 1958.............................................................................................. 1959.............................................................................................. 100 0 102.6 105.7 109.7 111.6 116.1 117.5 1207 124 6 129 3 100 0 101.1 104.7 1076 115.2 115 2 117 8 123 9 133 2 131.9 100.0 101.5 101.0 101.9 96 9 100 8 998 97.4 936 980 1960.............................................................................................. 1961.............................................................................................. 1962.............................................................................................. 1963.............................................................................................. 1964.............................................................................................. 1965.............................................................................................. 1966.............................................................................................. 1967............................................................................................... 1968.............................................................................................. 1969.............................................................................................. 131.3 135 6 141.0 146.4 1530 158 1 1633 167.4 172.7 173.1 135.5 141.5 1435 1472 150 2 1523 156 5 164.0 168 6 172 0 96.9 958 98.3 995 101.9 1039 104.4 102.1 102.4 100.6 1970............................................................................................... 1971.............................................................................................. 1972.............................................................................................. 1973.............................................................................................. 1974.............................................................................................. 174.4 1801 185 6 189.2 1828 181.9 189 2 189.6 190.4 197.2 958 95.2 979 993 92.7 Capital stock2 per hour Year Year Total Capital equipment Capital structures 1950..................................................................... 1951...................................................................... 1952..................................................................... 1953..................................................................... 1954..................................................................... 1955..................................................................... 1956...................................................................... 1957...................................................................... 1958...................................................................... 1959...................................................................... 100 0 101.1 104.7 107.6 115.2 115.2 1178 1239 133 2 131.9 100 0 104 4 1108 1166 126 3 127.6 131.4 139.1 1491 147.8 100 0 99.0 100.6 101.8 107.8 107.1 1089 114.1 1228 121.6 1960...................................................................... 1961...................................................................... 1962...................................................................... 1963...................................................................... 1964...................................................................... 1965...................................................................... 1966...................................................................... 1967...................................................................... 1968...................................................................... 1969...................................................................... 135.5 141.5 1435 1472 150.2 152.3 156.5 164 0 1686 172.0 151.6 157.5 1591 1631 166 9 170 0 176 2 1858 1926 198 4 125.0 131.0 133 3 136 8 139.2 140.7 1436 1498 1529 154.8 1970...................................................................... 1971...................................................................... 1972 ...................................................................... 1973...................................................................... 1974..................................................................... 181.9 1892 189.6 190.4 197.2 211.0 2204 222 3 2259 2360 1629 168.8 168.2 167.3 171.9 ' Net of government enterprises. ' Net ot government enterprises 2 Gross fixed nonresidential capital stock http://fraser.stlouisfed.org/ 102 Federal Reserve Bank of St. Louis Table 31 . Output per employee-hour in manufacturing, 1960-74, and capital investment, 1960-73, selected countries Country United States2............................. Belgium ...................................... Canada2 ..................................... France .......................................... Germany....................................... Italy.............................................. Japan........................................... Netherlands................................. Sweden........................................ United Kingdom........................... Output per employee-hour, 1960-74 (average anhual percent change) 2.8 7.0 4.2 5.9 5.8 6.3 10.2 7.3 6.9 4.0 Capital Investment 1960-73 (average percent of output) 1 Total economy Manufacturing 148 17 8 197 197 222 16.3 289 21.9 19.1 167 312.4 191 146 n.a. n.a. n.a 291 n.a. 165 131 ' Capital investment, excluding residential dwellings, as percent of gross domestic product at factor cost, in current prices. 2 Output per hour of all persons. 3 Based on investment figures issued prior to the January 1976 revision of the national income accounts, n.a = not available. Table Table Gross capital formation per capita in selected countries, 1970 Use of some key technological innovations, 1956-75 34 . 32 . (Index, U.S. = 100) Table Country Total gross capital formation Construction Producers' durables France.................................................................. Germany............................................................... Japan.................................................................... Italy....................................................................... United Kingdom................................................... 1235 134.8 123.6 605 681 130.9 1445 1263 81.8 71.6 100 0 102.1 95.7 39.8 600 Output per unit of energy input, 1950-75 33 . (Index, 1950 = 100) Electronic computers in use (in thousands) Year Steel output Value of shipments produced In of numerically Electricity basic oxygen controlled machine generated furnaces by nuclear power tools (percent of total) (percent of total) (percent of total) 1956............................................ 1957............................................ 1958............................................ 1959............................................ 0.7 1.5 2.6 3.8 0.4 0.5 1.6 2.0 n.a. n.a. n.a 2.5 n.a. (’ ) (’ ) (’ ) 1960............................................ 1961............................................ 1962............................................ 1963............................................ 1964............................................ 1965............................................ 1966............................................ 1967............................................ 1968............................................ 1969............................................ 5.4 7.6 9.9 129 18 2 232 31.1 37.0 465 56.8 3.4 4.0 5.6 7.8 122 174 25.3 32 6 37.1 426 45 63 74 86 8.7 10.9 14.5 15.2 201 17.1 (') 0.2 .3 3 3 4 5 6 9 1.0 1970............................................ 1971............................................ 1972............................................ 1973............................................ 1974............................................ 1975............................................ 683 83.2 104.0 1333 1650 2210.0 482 53.1 560 552 56.0 n.a. 13 2 14.5 142 14.6 17.7 n.a. 14 2.3 3.1 4.5 61 n.a. ' Less than 01 percent. 2 Estimated n.a = not available Table Use of two key technological innovations in selected countries 35 . Electronic digital computers In use Country United States.............................................. Canada......................................................... France.......................................................... Germany....................................................... Italy............................................................... Japan............................................................ United Kingdom........................................... Steel output produced In basic oxygen furnaces (percent of total) 1965 1974 1960 1974 23.200 750 1,500 '996 '500 1.445 1.850 165,040 6.158 16.107 18.843 7,675 26.069 14.424 3.4 n.a. .7 2.5 0 11.9 5 561 540 58 4 688 43.8 800 481 ' 1963 n.a. = not available 103 Table 36 . Funds for research and development (R&D) as a percent of GNP, selected years, and R&D expenditures in selected industries, 1973 Table Research and development in selected countries 38 . R&D expenditures as a percent of GNP R&D funds (Percent of GNP) Year Total Industrial 1960....................................................................................................................... 1965....................................................................................................................... 1970....................................................................................................................... 1975 estimate....................................................................................................... 272 298 272 238 2 08 2.07 1.85 1.66 Total Companyfunded 3.5 .7 1.8 15 1.2 7.1 3.8 3.3 13.5 5.6 3.1 .7 1.6 15 1.1 3.6 3.2 2.7 2.9 4.4 R&D expenditures (Percent of net sales) Industry Chemicals and allied products............................................................................. Petroleum refining and extracting........................................................................ Rubber.................................................................................................................... Stone, clay, and glass........................................................................................... Fabricated metal products.................................................................................... Electrical equipment and communications.......................................................... Machinery............................................................................................................... Motor vehicles and other transportation equipment........................................... Aircraft and m issiles............................................................................................. Professional and scientific instruments.............................................................. Federally funded 0.4 Year United States France Germany Japan United Kingdom 1961...................................................................... 1962...................................................................... 1063...................................................................... 1964...................................................................... 1965...................................................................... 1966...................................................................... 1967 ...................................................................... 1968...................................................................... 1969...................................................................... 1970...................................................................... 1971...................................................................... 1972 ...................................................................... 1973...................................................................... 1974...................................................................... 275 2.75 290 299 293 292 292 286 2.76 266 2 53 2.45 235 229 1.38 1.43 1.53 1.78 1.99 207 2 16 2 11 1.96 1 88 1.87 1.82 1 73 na 1.08 1.23 1 38 1.54 1.70 1.78 1.94 1.93 1 99 2.12 229 2.37 236 241 n.a n.a 1.25 n.a n.a n.a. 1.34 n.a 1.50 n.a. 1.65 1.89 1.92 n.a. 269 n.a. n.a. 2.62 n.a. 2.79 275 2 70 2.73 n.a. n.a. n.a n.a. n.a n.a. = not available — .2 - Scientists and engineers engaged in R&D per 10,000 population .1 3.5 6 .6 10.6 1.2 Country 1963 United States.................................................................................................................................. France .............................................................................................................................................. Japan ............................................................................................................................................... Table 37 . 2 Table Industry 1960 1974 Chemicals and allied products........................................................................................................ Petroleum refining and extracting................................................................................................... Rubber............................................................................................................................................... Stone, clay, and glass................................................................ ................................................. Primary m etals................................................................................................................................. Fabricated metal products.............................................................................................................. Electrical equipment and communications.................................................................................... Machinery......................................................................................................................................... Motor vehicles and other transportation equipment..................................................................... Aircraft and m issiles........................................................................................................................ Professional and scientific instruments........................................................................................ 361 92 5.3 n.a. 6.9 7.4 72.1 321 178 72.4 10.0 421 8.3 5.7 4.2 57 6.9 94.7 458 284 69.7 16.7 n.a. = not available http://fraser.stlouisfed.org/ 104 Federal Reserve Bank of St. Louis 24.9 211.1 178 218.9 1 1964 1971. Scientists and engineers engaged in research and development in selected industries, 1960 and 1974 (Thousands employed) ’ 24.7 6.7 '5 7 12.0 1973 39 . Educational attainment of the civilian labor force, 1960,1975, and projected 1985 (Percent distribution) Highest level of schooling completed 1960 1975 1985 (protected) Elementary: 0 through 8 years........................................................................... High school: 1 through 4 years........................................................................... College: 1 year or more................................................................................. 308 498 19.3 11.7 57.2 31.1 7.5 562 363 Table Estimated lifetime income for men by educational attainment, selected years 40. (1972 dollars) Table Year 8 years of elementary school 4 years of high school 1956............................................ 1961............................................ 1967 ............................................ 1972 ............................................ $274,998 287,045 313.347 343,730 $375,628 382,677 427.331 478,873 4 years of college or more $573,298 635,989 677,838 757.923 Occupational composition of employment, 1960,1974, and projected 1985 41. (Percent distribution) Table Occupational group 1960 1974 1985 (projected) Farm workers......................................................................................................... Service workers..................................................................................................... Blue-collar workers............................................................................................... White-collar workers............................................................................................. 7.9 12.7 363 431 3.5 13.2 346 486 1.8 14.1 326 51.5 Proportion of workers rating selected job facets as very important ”, 1972-73 42. Job facet*I The work is interesting...................................................... I have enough information to get the job done................. The people I work with are friendly and helpful............... I receive enough help and equipment to get the job done. I have an opportunity to develop my own special abilities I have enough authority to do my job................................ The pay is good.................................................................. My supervisor is competent in doing (his/her) job.......... I can see the results of my work....................................... My responsibilities are clearly defined............................. The job security is good..................................................... Percent 757 71 7 695 69 4 68 7 679 64.1 639 636 63.4 61 8 105 Region I 1603 JFK Federal Building Government Center Boston, Mass. 02203 Phone: (617) 223-6761 Region II Suite 3400 1515 Broadway New York. N.Y. 10036 Phone: (212) 399-5405 Region III 3535 Market Street P.O. Box 13309 Philadelphia, Pa. 19101 Phone: (215) 506-1154 Region IV 1371 Peachtree Street, NE. Atlanta, Ga. 30309 Phone: (404) 526-5418 Region V 9th Floor Federal Office Building 230 S. Dearborn Street Chicago, III. 60604 Phone: (312) 353-1880 Region V I Second Floor 555 G riffin Square Building Dallas, Tex. 75202 Phone: (214) 749-3516 * Regions VII and VIII are serviced by Kansas City ** Regions IX and X are serviced by San Francisco Regions V II and VI I I * 911 Walnut Street Kansas City, Mo. 64106 Phone: (816) 374-2481 Regions IX and X * * 450 Golden Gate Avenue Box 36017 San Francisco, Calif. 94102 Phone: (415) 556-4678 U. S. Department of Labor Bureau of Labor Statistics Washington, D.C. 20212 Official Business Penalty for private use, $300 Postage and Fees Paid U.S. Department of Labor Third Class Mail