Economic News Release

                                             Technical Note  

Labor Productivity: The industry labor productivity measures describe the relationship between 
industry output and the labor time involved in its production. They show the changes from period to 
period in the amount of goods and services produced per hour. Although the labor productivity measures 
relate output to hours of all persons in an industry, they do not measure the specific contribution of labor 
or any other factor of production. Rather, they reflect the joint effects of many influences, including 
changes in technology; capital investment; utilization of capacity, energy, and materials; the use of 
purchased services inputs, including contract employment services; the organization of production; 
managerial skill; and the characteristics and effort of the workforce.
      
Output: Industry output is measured as an annual-weighted index of the changes in the various products 
or services (in real terms) provided for sale outside the industry. Real industry output is derived by 
deflating nominal sales using BLS price indexes. Industry output measures are constructed primarily 
using data from the economic censuses and annual surveys of the U.S. Census Bureau, U.S. Department 
of Commerce, together with information on price changes primarily from BLS. 
      
Labor Hours: The primary source of industry employment and hours data is the BLS Current 
Employment Statistics (CES) survey. The CES provides monthly data on the number of total and 
nonsupervisory worker jobs held by wage and salary workers in nonfarm establishments, as well as data 
on the average weekly hours of nonsupervisory workers in those establishments. CES data are 
supplemented with data from the Current Population Survey (CPS) to estimate employment and hours 
of self-employed and unpaid family workers in each industry. Data from the CPS, together with the 
CES data, are also used to estimate the historical average weekly hours of supervisory workers for each 
industry. CES and CPS data are supplemented or further disaggregated for some industries using data 
from the BLS Quarterly Census of Employment and Wages (QCEW), the Census Bureau, or other 
sources. Hours of all persons in an industry are treated as homogeneous and are directly aggregated. 

Unit Labor Costs: Unit labor costs represent the cost of labor required to produce one unit of output. 
The unit labor cost indexes are computed by dividing an index of industry labor compensation by an 
index of real industry output. Unit labor costs also describe the relationship between hourly 
compensation and labor productivity (real output per hour) and are an indicator of inflationary pressures 
on producers. Increases in hourly compensation increase unit labor costs; increases in labor productivity 
offset compensation increases and lower unit labor costs. 

Compensation, defined as payroll plus supplemental payments, is a measure of the cost to the employer 
of securing the services of labor. Payroll includes salaries, wages, commissions, dismissal pay, bonuses, 
vacation and sick leave pay, and compensation in kind. Supplemental payments include legally required 
expenditures and payments for voluntary programs. The legally required portion consists primarily of 
Federal old age and survivors’ insurance, unemployment compensation, and workers’ compensation. 
Payments for voluntary programs include all programs not specifically required by legislation, such as the 
employer portion of private health insurance and pension plans.
      
Revisions: The measures in this news release incorporate preliminary data from the Census Bureau’s 
Annual Wholesale Trade Report (March 2012), Monthly Wholesale Trade Survey (May 2012), Annual 
Retail Trade Survey (March 2012), and the Annual Revision of the Monthly Retail and Food Services: 
Sales and Inventories (April 2012), as well as data from the Census Bureau’s Nonemployer Statistics 
(August 2012). The labor productivity and output series for all industries have been revised for 2010 and 
earlier years as a result. This news release also incorporates the annual benchmark revision of the BLS 
Current Employment Statistics (CES) survey published in February 2012. In addition, the unit labor cost 
measures incorporate preliminary data from the BLS Quarterly Census of Employment and Wages (June 
2012). All of the measures for 2011 in this release are preliminary and subject to revision.

Additional Information: The industries included in this release are classified according to the 2007 
NAICS. While the rates of change reported by BLS in this news release are rounded to one decimal 
place, all industry productivity percent changes are calculated using index numbers rounded to three 
decimal places.

Industry productivity and related indexes; rates of change; and levels of industry employment, hours, 
nominal value of production and labor compensation are available on the Labor Productivity and Costs 
web site at http://www.bls.gov/lpc/. Additional information can be obtained by calling the Division of 
Industry Productivity Studies (202-691-5618) or by sending a request by e-mail to dipsweb@bls.gov. 
Information in this report will be made available to sensory-impaired individuals upon request. Voice 
phone: 202-691-5618; TDD message referral phone number: 1-800-877-8339.

To subscribe to the industry productivity program’s news releases, customers can register on the BLS 
website at https://subscriptions.bls.gov/accounts/USDOLBLS/subscriber/new.