Economic News Release

                                             Technical Note

Labor Productivity: The industry labor productivity measures describe the relationship between 
industry output and the labor time involved in its production. They show the changes from period to 
period in the amount of goods and services produced per hour. Although the labor productivity measures 
relate output to hours of all persons in an industry, they do not measure the specific contribution of labor 
or any other factor of production. Rather, they reflect the joint effects of many influences, including 
changes in technology; capital investment; utilization of capacity, energy, and materials; the use of 
purchased services inputs, including contract employment services; the organization of production; 
managerial skill; and the characteristics and effort of the workforce.

Output: Industry output is measured as an annual-weighted index of the changes in the various products 
(in real terms) provided for sale outside the industry. Real industry output is usually derived by deflating 
nominal sales or values of production using BLS price indexes, but for some industries it is measured by 
physical quantities of output. 

Industry output measures are constructed primarily using data from the economic censuses and annual 
surveys of the U.S. Census Bureau, U.S. Department of Commerce, together with information on price 
changes primarily from BLS. Output measures for some mining and utilities industries are based on 
physical quantity data from the Energy Information Administration, U.S. Department of Energy, while 
output measures for some transportation industries are based on physical quantity data from the Bureau 
of Transportation Statistics, U.S. Department of Transportation. Other data sources for some industries 
include the U.S. Geological Survey, U.S. Department of the Interior; the U.S. Postal Service; the Postal 
Rate Commission; and the Federal Deposit Insurance Corporation.

Labor Hours: The primary source of industry employment and hours data is the BLS Current 
Employment Statistics (CES) survey. The CES provides monthly data on the number of total and 
nonsupervisory worker jobs held by wage and salary workers in nonfarm establishments, as well as data 
on the average weekly hours of nonsupervisory workers in those establishments. CES data are 
supplemented with data from the Current Population Survey (CPS) to estimate employment and hours 
of self-employed and unpaid family workers in each industry.  Data from the CPS, together with CES 
data, are also used to estimate the historical average weekly hours of supervisory workers for each 
industry. CES and CPS data are supplemented or further disaggregated for some industries using data 
from the BLS Quarterly Census of Employment and Wages (QCEW), the Census Bureau, or other 
sources. Other sources of employment and hours data for some service industries include the Association 
of American Railroads, the U.S. Department of Transportation, and the U.S. Postal Service. Hours of all 
persons in an industry are treated as homogeneous and are directly aggregated.  

Unit Labor Costs: Unit labor costs represent the cost of labor required to produce one unit of output.  
The unit labor cost indexes are computed by dividing an index of industry labor compensation by an 
index of real industry output. Unit labor costs also describe the relationship between compensation per 
hour and real output per hour (labor productivity). Increases in hourly compensation increase unit labor 
costs; increases in labor productivity offset compensation increases and lower unit labor costs. 
      
Compensation, defined as payroll plus supplemental payments, is a measure of the cost to the employer 
of securing the services of labor. Payroll includes salaries, wages, commissions, dismissal pay, bonuses, 
vacation and sick leave pay, and compensation in kind. Supplemental payments include legally required 
expenditures and payments for voluntary programs. The legally required portion consists primarily of 
Federal old age and survivors’ insurance, unemployment compensation, and workers’ compensation. 
Payments for voluntary programs include all programs not specifically required by legislation, such as the 
employer portion of private health insurance and pension plans.

Revisions: The measures in this news release incorporate data from the 2010 Service Annual Survey 
published by the Census Bureau. The labor productivity and output series for all industries have been 
revised for 2009 and earlier years as a result. This news release also incorporates the annual benchmark 
revision of the BLS Current Employment Statistics (CES) survey published in February 2012. All of the 
measures for 2010 in this release are preliminary and subject to revision.

Additional Information: The industries included in this release are classified according to the 2007 
NAICS. While the rates of change reported by BLS in this news release are rounded to one decimal 
place, all industry productivity percent changes are calculated using index numbers rounded to three 
decimal places.

Year-to-year movements in industry productivity may be erratic, particularly in smaller industries. The 
annual measures based on sample data may differ from measures generated by a census of 
establishments in the industry. Annual changes in an industry’s output and use of labor may reflect 
cyclical changes in the economy as well as long-term trends. As a result, long-term productivity trends 
tend to be more reliable indicators of industry performance than year-to-year changes.

Industry productivity and related indexes; rates of change; and levels of industry employment, hours, 
nominal value of production and labor compensation can be accessed online by visiting the Labor 
Productivity and Costs web site at www.bls.gov/lpc. Additional information is available by calling the 
Division of Industry Productivity Studies (202-691-5618) or by sending an e-mail to dipsweb@bls.gov. 
Information in this report will be made available to sensory-impaired individuals upon request. Voice 
phone: 202-691-5618; TDD message referral phone number: 1-800-877-8339.

To subscribe to the industry productivity program’s news releases, customers can register on the BLS 
website at https://subscriptions.bls.gov/accounts/USDOLBLS/subscriber/new.