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February 1999, Vol. 122, No. 2

Labor month in review

The February Review
Work stoppages idle more
Factory unit labor cost trends differ

The February Review

In their recap of employment and unemployment developments in the pen-ultimate year of the 20th century, William C. Goodman and Timothy D. Consedine find an employment-to-population ratio higher than the average for any year since the Current Population Survey began the series shortly after World War II. On the unemployment side, they note that the jobless rate "reached its lowest level in nearly three decades." Amidst the generally upbeat conditions, however, they found a job market characterized by contrasts. Some industries accelerated their expansion, while some ceased to expand and still others laid workers off.

The rest of this issue is devoted to issues in productivity measurement, particularly the devilish issues of measuring service outputs and taking account of changing prices. As Edwin R. Dean notes at the outset of his article, "The Bureau of Labor Statistics has made sustained efforts to improve its productivity measures. … The BLS clearly recognizes that despite the beneficial results of its program, there is room for further improvement." He concludes, after reviewing the difficult issues in productivity measurement, especially conceptualizing output in the service sector and estimating aggregate prices, with a catalog of promising efforts to merge academic and government research in the service of steady progress toward more precise measures of productivity.

Lucy P. Eldridge conducts a "what if" exercise. "What if the recent report of the Advisory Commission on the Consumer Price Index [Boskin Commission] were entirely correct in its findings? What would the impact be on productivity estimates?" She finds that because CPI data are used in calculating about 57 percent of measured output of the business sector, the potential biases in the price index will affect the accuracy of measured growth in output and productivity.

William Gullickson and Michael J. Harper lay the groundwork for understanding the potential biases that specific "hard-to-measure" industries may impart to aggregate productivity measures. They too ask a "what if" question: "What if productivity growth in certain industries was actually zero rather than a negative number?" They reason that negative productivity growth over a long period is not likely, so answering this question draws a conservative picture of the potential impact of some forms of measurement bias. They find that even this conservative experiment indicates that negative productivity growth in five specific industries is significant enough to lower the business sector productivity trend noticeably.

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Work stoppages idle more

All measures of major work stoppage activity rose in 1998. Although low by historical standards, the number of work stoppages that began in 1998 was slightly higher than the total reported in 1997. The 34 stoppages idled 387,000 workers and resulted in 5.1 million days of idleness. Thirty stoppages occurred in the private sector, with an equal split between manufacturing and nonmanufacturing industries

The 1998 work stoppage involving the most workers (152,000) was between General Motor Corporation (GM) and the United Automobile Workers union (UAW); most of the employees were out for more than 4 weeks. Other large stoppages included Bell Atlantic Corporation and the Communications Workers of America (73,000 workers out 3 days), U.S. West Corporation and the Communication Workers (34,000 workers out 15 days), and Northwest Airlines and the Airline Pilots Association (about 34,000 workers out 13 days).

Almost four-fifths of the year’s 5.1 million days of stoppage-related idleness stemmed from those four disputes: GM/UAW (3.3 million days), U.S. West Corporation/ Communications Workers of America (340,000 days), Northwest Airlines/ Airline Pilots Association (215,000 days), and Bell Atlantic/ Communications Workers (146,000 days). Additional information is available from news release USDL 99–33, "Major Work Stoppages, 1998." Major work stoppages are defined as strikes or lockouts that idle 1,000 or more workers and last at least one shift.

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Factory unit labor cost trends differ

Labor costs per unit of output in manufacturing rose 0.2 percent in 1998, the first increase in unit labor costs since 1993. The increase was the result of a slowing of the rate of productivity growth in manufacturing, coupled with a moderate increase in the growth rate of hourly compensation. The hourly compensation of manufacturing workers rose 4.5 percent in 1998, and their productivity increased 4.3 percent.

During the past few years, the durable and nondurable goods components of manufacturing have experienced sharply differing labor cost trends. Unit labor costs in durable goods manufacturing fell 2.5 percent in 1998, the seventh consecutive drop in unit labor costs in this sector. In contrast, unit labor costs in nondurable goods have increased every year since 1992. In 1998, these costs rose 3.8 percent.

Additional information is available from news release USDL 99–32,  "Productivity and Costs: Preliminary Fourth-Quarter Measures and Annual Averages, 1998."

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Communications regarding the Monthly Labor Review may be sent to the Editor-in-Chief at 2 Massachusetts Avenue NE, Room 2850, Washington, DC, 20212, or faxed to (202) 606–5899.

News releases discussed above are available at: http://www.bls.gov/bls/newsrels.htm

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