Productivity Costs By Industry 2022 Highlights

Labor productivity rose in 15 of 30 selected service-providing industries in 2022, the U.S. Bureau of Labor Statistics reported today. This was fewer industries compared to 2021, when labor productivity increased in 23 out of 30 industries. Output rose in 18 industries in 2022 while hours worked increased in 22 industries.

Chart 1 presents the changes in output and hours worked for industries with the largest changes in productivity. Four of the six industries with the largest gains in productivity achieved output growth at a faster rate than growth in hours worked. This was the case in amusement parks and arcades which had the highest productivity growth (+16.3 percent). Four out of the six industries with the greatest declines in productivity had growth in hours worked while at the same time output declined. This was the case in dry-cleaning and laundry services which had the largest drop in productivity (−13.6 percent).

Trends in Labor Productivity in 2022
• Labor productivity rose in half of the 30 selected service-providing industries in 2022. (See chart 2.)
• There were three industries where productivity rose more than 10 percent: amusement parks and arcades (+16.3 percent), travel arrangement and reservation services (+15.5 percent), and air transportation (+13.9 percent). In all three of those industries, output grew more than 25 percent and hours worked rose by more than 9 percent.
• The three industries with the greatest productivity and output gains in 2022 also saw the largest productivity increases in 2021. In 2021, these three industries all had growth in productivity of over 48 percent, following similarly large declines in 2020.
• Hours worked rose in each of the four industries that recorded declines in productivity greater than 6 percent. Two of these industries had double-digit growth in hours worked: warehousing and storage (+12.6 percent) and dry-cleaning and laundry services (+12.3 percent).

Unit labor costs increased in 22 industries in 2022. (See chart 3.) In 11 of these industries, productivity increased as well. Hourly compensation increased more than productivity in all 11 industries with both rising productivity and unit labor costs. Unit labor costs reflect the total labor costs required to produce a unit of output. Unit labor costs increase when hourly compensation growth exceeds productivity growth. Changes in labor productivity counter the impact of changes in hourly compensation on unit labor costs facing employers.

Trends in Unit Labor Costs in 2022
• The largest declines in unit labor costs were in air transportation (−9.2 percent), wireless telecommunications carriers (−8.8 percent), and newspaper publishers (−8.1 percent).
• Productivity rose by more than six percent in each of these industries.
• Four industries had growth in unit labor costs greater than 15 percent: gambling industries (+33.1 percent), drycleaning and laundry services (+22.6 percent), warehousing and storage (+19.9 percent), and full-service restaurants (+15.2 percent). All four industries also had gains in hours worked and hourly compensation.
• Hourly compensation rose in 22 of the 30 industries measured.

2019 to 2022 Trends
Labor productivity increased in 23 out of 30 selected service-providing industries from 2019 to 2022. (See table 3.) Note that the percent changes for periods of more than one year in this section and the following section are annual percent changes. The two industries with the highest productivity gains during that period were travel arrangement and reservation services (+11.6 percent per year) and radio and television broadcasting (+9.8 percent). The largest annual decline in productivity from 2019 to 2022 occurred in warehousing and storage (−9.4 percent).

Output increased in 22 out of 30 selected service-providing industries from 2019 to 2022. The two industries with the highest increases during that period were software publishers (+12.4 percent per year) and medical and diagnostic laboratories (+6.7 percent). The steepest annual declines in output during this period were newspaper publishers (−5.3 percent) and dry-cleaning and laundry services (−4.7 percent).

Hours worked decreased in 16 of the 30 selected service-providing industries from 2019 to 2022. The two industries with the largest decreases in hours worked over the 3 years were newspaper publishers (−10.6 percent per year) and travel arrangement and reservation services (−7.9 percent). The industry with the largest increase in hours worked during this period was warehousing and storage (+15.2 percent).

Trends in Long-Term Productivity Through 2021
Long-term productivity rose in 48 out of 58 service-providing industries. (See table 2.) For most industries studied, this period extends from 1987 to 2021, the latest year for which data are available for all 58 selected service-providing industries published on the BLS website. Measures for some industries begin in years later than 1987, however none of the rates in this section incorporate data for 2022. Chart 4 displays the number of industries with increases in productivity, output, and hours worked for selected time periods through 2021.
• Median long-term productivity growth for all 58 industries was approximately 1.8 percent per year, ranging from −2.4 percent per year in couriers and messengers to 11.5 percent in wireless telecommunications carriers.
• Output increased over the long-term in 45 industries while hours worked increased in 33 industries.
• Productivity increased in 40 of the 58 industries over the business cycle preceding the pandemic: 2007 to 2019. During this period, 39 industries had increases in output and 31 experienced growth in hours worked.