Technology in Services Policies for Growth, Trade, and Employment (1988) / Chapter Skim
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Measuring Productivity in Services Industries
Measuring Productivity in Services Industries
Pages 139-159
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From page 139... ...
productivity growth have stimulated interest in productivity measures for this sector of the economy. As a result, the Bureau of Labor Statistics (BLS)
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From page 140... ...
Productivity measures are those that relate physical output to physical input. As such, they encompass a family of measures including single-factor input productivity measures, such as output per unit of labor or output per unit of capital input, as well as multifactor productivity measures, such as output per unit of labor and capital combined.
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From page 141... ...
As a result, almost all BLS services industries productivity measures developed are of this type and the ones on which this chapter concentrates. Work has been undertaken to develop multifactor productivity measures including capital, materials, and purchased services inputs, as well as labor for telephone communications and for electric, gas, and sanitary services, but these measures are not yet available.
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From page 142... ...
In this way, the output measures for developing labor productivity measures differ from the more traditional production measures which are based on total price or value-added weighting of the components.2 When there are quality changes within a service, adjustments must be made in the output measure to account for the fact that the service is no longer the same homogeneous unit. However, the meaning of quality change for labor productivity measurement differs from the usual concept of quality change associated with consumer price measurement in that it reflects differences in producers' labor requirements or labor costs rather than differences in consumer utility.
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From page 143... ...
As mentioned earlier with regard to direct quantity measurement, this adjustment to the price measure should also be made on a cost basis.3 In actual practice, the BLS output measures for its services industries productivity measures are mixtures. Some, such as those for transportation and public utilities industries, are based on quantity data.
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From page 144... ...
However, to the extent that there are changes in the composition of the work force with respect to education and experience, which result in skill differences, it may be desirable to adjust the labor input measure for these changes, which otherwise would be reflected in the productivity measure. To address this problem, previous studies have usually taken the position that relative wage or income level differentials associated with specific worker characteristics reflect marginal productivity of these attributes.
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From page 145... ...
Productivity measures for the federal government are also published with separate detail for the common functions provided by federal agencies, such as recordkeeping, library services, buildings and grounds maintenance, and loans and grants.
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From page 146... ...
The following sections describe the procedures utilized and some of the problems present in developing the particular measures. Because the methods and the sources used for deriving the labor input measures are the same for each of the separate industries, this discussion focuses on the output measures developed for the productivity indices.
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From page 147... ...
The BLS has been cooperating with other government agencies to ensure that adequate statistics for transportation industries remain available. Communications The BLS productivity index for telephone communications covers about four-fifths of the employment of the communications sector.
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From page 148... ...
This method can yield good measures of real output if adequate price indices reflecting the price movements of the various commodities sold by the establishments can be developed. The recent improvements that have been made in the BLS price index program have enabled it to develop output and productivity indices for more components of retail trade.
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From page 149... ...
Physical quantity data are available to develop output measures for these industries. The quantity data for disaggregate commodities will be combined with fixed period labor input weights reflecting the services provided by the wholesalers to retailers and other users.
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From page 150... ...
In addition, in some instances a regional wholesaler distributes commodities to local wholesalers. This creates a problem of duplicate counting in the overall industry output measure.
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Lending services provided by banks are also measured in terms of units. As in the case of deposit activity and trust department activity, the BLS does not use banks' financial data to arrive at component output measures.
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To the extent possible, data in sufficient detail are sought on these indicators to take account of shifts in the mix of services provided. State and Local Government More recently, the BLS has begun to explore the possibility of computing productivity indices for state and local government.
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From page 153... ...
The techniques are similar to those described above in that the changes in revenues for specific services are divided by appropriate price indices and these output measures are then aggregated with employment weights to derive the industry output index. As mentioned above, the BLS is currently developing a measure of productivity of hospitals.
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From page 154... ...
As with all BLS industry productivity measures when they are being developed, the hospital measure is currently being reviewed by industry and 'suer represen~arAves. Sudanese reviews provide insights into problems not anticipated and suggestions for improving the measures that are being developed.
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From page 155... ...
AlEASURl\G PRODUCTIVITY IN SERVICES INDUSTRIES 155 TABLE 1 Productivity in Services Industries for which BLS Productivity Measures Are Available 1965- 1973- 1973- 1981 Industry 1973 9~ it': Nisi Transportation Railroads 4.2 4.6 2.3 10.8 Bus carriers —1.5 - 1.0a —1.4 - 0.3b Intercity trucking 2.7 0.4 0.5 0.6 Postal services 1.3c 1.3 1.4 1.0 Airlines 5.3 3.9 3.5 6.8 Petroleum pipelines 7.9 0.1 - 0.7 5.6 Communications Telephone communications 4.7 6.2 6.7 5 Public utilities Gas and electric utilities 4.9 - 0.5 0.3 - 0.6 Electric utilities 5.4 0.2 0.8 0.8 Gas utilities 3.9 - 2.1 - 0.4 - 4.4 Trade Retail food stores 2.2 - 1.0 - 1.1 - 0.5 Franchised new car dealers 2.6 1.2 0.6 3.3 Gasoline service stations 4.9 3.2 3.2 4.2 Apparel and accessory stores 2.8C 3.9 3.0 5.3 Men's and boys' clothing stores 3.3c 2.3 1.4 3.4 Women's ready-to-wear stores 4.6c 6.0 4.5 6.4 Family clothing stores 5.9C 3.6 1.7 4.1 Shoe stores _0.4C 2.1 2.5 2.9 Furniture and appliance stores 4.3c 2.7 2.5 3.4 Furniture and furnishing stores 4.3c 1.2 1.2 2.6 Appliance stores 4.4c 4.8 4.6 4.7 Eating and drinking places 1.1 - 0.7 - 0.5 - 1.1 Drug and proprietary stores 6.2 0.9 1.5 - 1.6 Liquor stores N.A. 0.3 0.1 - 1.0 Finance, insurance, and real estate Commercial banking 2.1c o.6a 0.2 5.4' Services Hotels, motels, and tourist courts 1.8 0.4 0.7 2 Laundry and cleaning services 1.7 - 1.1 - 1.1 0.1 Beauty and barber shops N.A.
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From page 156... ...
Other services industnes, such as men's clothing stores and shoe stores, also had much higher growth rates than the business sector as a whole but were more in line with manufacturing industries, which averaged 2.4 percent per year over the period. Some services industries, such as gas and electric utilities or laundry and cleaning services, showed very small growth rates and in some cases actual declines in productivity after 1973.
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From page 157... ...
The BLS and other government statistical agencies have undertaken initiatives to expand the coverage in the services area, and the results of these efforts should lead to data suitable for deriving more services industries productivity measures. For example, more services industries price measures are being collected, expanded hours-worked data will provide more disaggregate i~formation, and continued BLS work on public sector productivity measurement will result in more productivity measures for this important sector.
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From page 158... ...
2. In the case of multifactor productivity measures, the appropriate weight would be the sum of the factor costs and would be closer to the traditional value-added weight.
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From page 159... ...
1985. Diagnosis-related Groups Using Data from the National Hospital Discharge Survey, United States, 1982.
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