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December  2002, Vol. 125, No.12

Labor productivity growth in wholesale trade, 1990-2000 

Christopher Kask, David Kiernan, and Brian Friedman

According to the most recent economic census, there were more than 453,000 wholesale trade establishments in the United States in 1997, with total sales exceeding $4 trillion. These sales substantially exceeded total sales in the retail trade sector and also exceeded the value of all manufacturing industry shipments in the same year. BLS data show that 7.3 million workers were employed in wholesale trade industries in 2000, or about 6.5 percent of total business employment.

The wholesale trade industry provides an important link in the supply chain connecting producers with consumers in the economy. Wholesale firms act as intermediaries between goods-producers and the business customers that buy their products. These customers may be retail establishments, manufacturers, mining establishments, contractors, other wholesalers, or government agencies, among others. Wholesale establishments are characterized by the fact that they usually do not sell directly to household consumers—with few exceptions, their customers are businesses or institutions.

Wholesalers provide services both to the producers of the products that pass through their operations as well as to their customers who purchase those goods. In addition to the basic distribution function, wholesalers may be involved in marketing, sales, customer support, and market research—activities that benefit the wholesaler’s supplier. For the benefit of the customer, wholesalers provide ready access to products in appropriate quantities, information on product characteristics and availability, sales advice, credit and financing, customer service, and technical support.¹  

The rapid diffusion of information and communications technology throughout the sector and the economy has led to shifts in the nature of the wholesale business. These shifts, in some cases, may threaten the traditional structure of the industry. In addition, heightened competitive pressures can place at risk the survival of many small local and regional wholesale firms that typify the industry.

This excerpt is from an article published in the December 2002 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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Footnotes
1 U.S. Industry and Trade Outlook, 2000, (The McGraw-Hill Companies and the U.S. Department of Commerce), Chapter 41, Wholesale Trade.

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