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April 2004, Vol. 127, No. 4
Alternative measures of supervisory employee hours and productivity growth
Lucy P. Eldridge, Marilyn E. Manser and Phyllis Flohr Otto
In searching for explanations for the speedup in productivity growth that began in the mid-1990s, economists have analyzed real factors, as well as possible measurement problems. Most often they scrutinize the measurement of prices and real output. However, some analysts have also suggested that the Bureau of Labor Statistics is undercounting the number of hours people are working, and thus overstating productivity growth.
To construct hours for productivity measures, BLS primarily uses establishment reports from the BLS Current Employment Statistics program (CES). The CES, however, only collects hours for production and nonsupervisory workers. Therefore, to generate measures of hours for all employees, BLS must estimate the hours for nonproduction and supervisory workers. The primary assumption underlying these estimates has been that production/nonsupervisory and nonproduction/supervisory workers work similar hours.
This study evaluates the hours series that underlie the major sector labor productivity statistics and sheds light on the direction and magnitude of any bias created by the procedures currently used to estimate nonproduction and supervisory employee hours.1 Using data from the BLS-sponsored Current Population Survey (CPS), we construct estimates of the number of nonproduction and supervisory workers and their hours worked under three alternative definitions. We find that the estimated levels of average weekly hours for these workers are quite different from the assumptions currently used to estimate these values in the productivity program, at least for the nonfarm business and nonmanu-facturing sectors. We use various criteria to select one of the three alternative definitions as preferred. Using the preferred alternative, we estimate the ratio of supervisory to nonsupervisory employee average weekly hours from the CPS and multiply this ratio by the level of nonsupervisory employee hours from the CES to estimate the level of supervisory employee hours. Nonproduction employee hours are estimated following this same approach. We find that trends in these CPS-adjusted hours series are very similar to trends in the hours series that underlie the official BLS productivity measures. One reason for this finding is that nonproduction and supervisory employees account for only 19 percent of total hours in the nonfarm business sector. Thus, the lack of data for nonproduction and supervisory workers is not resulting in biased measures of productivity trends.
This excerpt is from an article published in the April 2004 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Preliminary results using annual data and a draft paper were presented at the June 2001 meeting of the Federal Economic Statistics Advisory Committee.
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