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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

r
r

-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

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

Communications...............................
Electricity, gas, and sanitary services
Farm..................................................
Manufacturing..................................
M ining...............................................
Trade.................................................
Transportation..................................

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

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

United States............................. ........
Canada ....................................... ........
France........................................ ........
Germany.................................... ........
Japan ..................................................
United Kingdom.................................

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

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

United States............................. ..........
Canada....................................... ..........
France..................................................
Germany.................................... ..........
Japan ....................................................
United Kingdom...................................

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.

t
/

Source:
Bureau of Labor Statistics




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


44


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,

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.
Work and nonw orklife expectancy at birth
(percent of total life expectancy)

Period

1900
Men:
W o rk life .....................................
Outside labor fo r c e ................
Women:
W o rk life ....................................
Outside labor fo r c e ................

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


56


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

58



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


74


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


78


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

15

Federally-funded

Other R&D

12

Company-funded
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

1985 (projected)

Farm workers
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

Most recent
recession
-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 .......................................................................................

Average of previous

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

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

Average annual
percent change

Percent change'

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

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

Canada

United
States1

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)

(Average annual percent change)
Unit labor costs

Year

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

18 .

Unit profits

1950.................................................................................................
1951.................................................................................................
1952.................................................................................................
1953.................................................................................................
1954.................................................................................................
1955.................................................................................................
1956.................................................................................................
1957.................................................................................................
1958.................................................................................................
1959.................................................................................................

Table

Output per
employee-hour

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

1963.................................................................................................
1964.................................................................................................
1965
...............................................
1966
..........................................................
..................................................................
1967
1968
...................................................
1969
.................................................

174.4
180.1
185.6
189.2
182.8
186.5

1 0 0 .0

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

183.8
187.9
192.2
195 7
192.8
1938

100 0

1 9 5 1 ........................................................................................................................................

139 6
143.6
148.7
152.6
158.7
162.3
168.8
173.4
179 0
181.7

Average weekly hours

1 9 6 0 .......................................................................................................................................

131.3
135.6
141.0
146.4
153.0
158 1
163.3
167.4
172.7
173.1

GDP per capita

1 9 5 0 ........................................................................................................................................

1960.................................................................................................
1961.................................................................................................

Year

1 4 4 .4

930

94 7

1972
1973
1974
1975


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100
Federal Reserve Bank of St. Louis

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

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

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

9 2 .7

1 5 1 .7

9 2 .3

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

Table

1 4 9 .2

1 9 6 9 .......................................................................................................................................

1 9 7 0 ........................................................................................................................................

1970
1971

1 9 6 8 ........................................................................................................................................

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

Output per employee-hour, 1960-74
(average anhual percent change)

Capital Investment 1960-73
(average percent of output) 1
Total economy

United States2.............................
Belgium ......................................
Canada2 .....................................
France ..........................................
Germany.......................................
Italy..............................................
Japan...........................................
Netherlands.................................
Sweden........................................
United Kingdom...........................

2.8
7.0
4.2
5.9
5.8
6.3
10.2
7.3
6.9
4.0

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)
Country

Construction

Producers'
durables

France..................................................................
Germany...............................................................
Japan....................................................................
Italy.......................................................................
United Kingdom...................................................

Table

Total gross capital
formation
1235
134.8
123.6
605
681

130.9
1445
1263
81.8
71.6

100 0
102.1
95.7
39.8
600

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

(Index, 1950 = 100)

0.4
0.5
1.6
2.0

n.a.
n.a.
n.a
2.5

n.a.
(’ )
(’ )
(’ )

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

33 .

0.7
1.5
2.6
3.8

1960............................................
1961............................................
1962............................................
1963............................................
1964............................................
1965............................................
1966............................................
1967............................................
1968............................................
1969............................................

Output per unit of energy input, 1950-75




Electronic
computers
in use
(in thousands)

Year

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

Steel output produced In basic
oxygen furnaces
(percent of total)

1965
United States..............................................
Canada.........................................................
France..........................................................
Germany.......................................................
Italy...............................................................
Japan............................................................
United Kingdom...........................................

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

1960.......................................................................................................................
1965.......................................................................................................................
1970.......................................................................................................................
1975 estimate.......................................................................................................

272
298
272
238

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

United
States

France

Germany

Japan

United
Kingdom

1961......................................................................
1962......................................................................
1063......................................................................
1964......................................................................
1965......................................................................
1966......................................................................
1967 ......................................................................
1968......................................................................
1969......................................................................
1970......................................................................
1971......................................................................
1972 ......................................................................
1973......................................................................
1974......................................................................

2 08
2.07
1.85
1.66

Total

Year

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

Industrial

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

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)
Year

4 years of high
school

1956............................................
1961............................................
1967 ............................................
1972 ............................................

Table

8 years of elementary
school
$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)
Occupational group

1974

1985
(projected)

Farm workers.........................................................................................................
Service workers.....................................................................................................
Blue-collar workers...............................................................................................
White-collar workers.............................................................................................

Table

1960
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
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