A Statistical Analysis Of Productivity In Selected Service Industries In The United States, 1939–1963

This paper examines differentials in output, employment and productivity across seventeen service industries in the United States from 1939 to 1963. Included are 9 retail trades and 8 services mostly from the personal service group. The industries chosen were those for which it was possible to obtain from available data reasonably comparable measures of output and input for selected years since 1939. Also, they are industries for which it is possible to calculate a measure of real output that is not based on labor input. Sixteen of the industries show positive rates of change of real output per man. Thus there appears to be no basis for assuming that productivity cannot or does not increase in industries providing services. However, the rate of increase for the group as a whole was not as rapid as in manufacturing or in goods production as a whole. The data for the seventeen industries give strong support to the hypothesis of a positive correlation between industry rates of growth and rates of change of productivity. The correlations are of the same order of magnitude as those found by other investigators in studies of manufacturing industries. The coefficient of correlation between growth of output per man and growth of output is .93; between growth of output per man and growth of employment it is .54 for 1939–1963. The comparable coefficients for the 1948–1963 period are .70 and .13. The results also parallel those reported for manufacturing in one other respect, namely, the absence of any correlation between changes in output per man and changes in compensation per man. The paper concludes with a discussion of the problems encountered in measuring changes in real output in these industries and presents some alternative estimates based on different concepts and different sources.