Labor Input and Capital Services: BLS contribution to KLEMS production accounts for the United States

1. Labor Input and Capital Services: BLS contribution to KLEMS production accounts for the United States Susan Fleck, Division Chief Fleck.susan@bls.gov Division of Major Sector Productivity Office of Productivity and Technology Bureau of Labor Statistics Presented at World KLEMS Conference August 19-20, 2010

2. Production accounts The Bureau of Labor Statistics (BLS) has published multifactor productivity (MFP) measures since 1983 BLS is collaborating with the Bureau of Economic Analysis (BEA) BLS recently provided measures of labor input and capital services for a production account prototype

3. BLS productivity measures published in news releases Labor productivity (>50 years in time series) Business and nonfarm business, manufacturing subsectors, numerous 4- and 5- digit industries, nonfinancial corporations Multifactor productivity (23 years in time series) Private business and nonfarm business, manufacturing sectors and subsectors, and select 4- and 5- digit manufacturing industries

4. BLS productivity measures available periodically or upon request Labor productivity Total economy Labor hours Multifactor productivity Nonmanufacturing sectors and subsectors Total economy Capital services

5. KLEMS inputs measurement work K � capital services Detailed asset types weighted using rental prices Inclusion of IT capital as a separate category showed the high tech effect on productivity speed up

6. KLEMS inputs measurement work L � Labor input Apply concept of hours worked using hours worked/hours paid ratios Count all hours worked per job Account for supervisory hours Moved to Jorgensen-Ho-Stiroh method of calculating labor composition with actual wages

7. KLEMS inputs measurement work M - Materials Recent study shows that shifts to imported intermediate inputs account for 0.92 of the 3.96 percent per year growth in manufacturing labor productivity (See Eldridge and Harper, �Effects of imported intermediate inputs on productivity�, Monthly Labor Review, June 2010, pp. 3-15)

8. KLEMS inputs measurement work S � Services Added the �S� to KLEMS in 1987 (see Gullickson and Harper, �Multifactor productivity in U.S. manufacturing, 1949�83,� Monthly Labor Review, October 1987, pp. 18-28) Expanded and improved the measurement of service sector productivity (see Harper, Khandrika, Kinoshita, and Rosenthal �Nonmanufacturing industry contributions to multifactor productivity 1987-2006�, Monthly Labor Review, June 2010, pp. 16-31)

9. Developing labor and capital data for production accounts BLS objective Collaboration with BEA Labor composition for industries Consistency across all BLS productivity measures

10. Collaboration with BEA "Integrated GDP-Productivity Accounts,� by Michael J. Harper, Brent R. Moulton, Steven Rosenthal, and David B. Wasshausen Recently provided labor and capital services data for prototype industry account

11. Labor composition Regularly publish and update labor composition for private business sector Investigate industry level measures of labor composition Exploratory research with Jorgensen and associates to see if we can replicate results

12. Consistency Improve internal consistency of concepts, sources, and methods with BLS industry and major sector productivity datasets Create a comprehensive dataset of labor and capital input that complements output data from detailed industries to total economy

13. Consistency Hours Detailed industry concept of hours paid Major sector and subsector concept of hours worked Project Investigate methods using existing data that provide reliable hours worked measures for detailed industries

14. Consistency Labor composition MFP measures for private business and nonfarm business are published, but not for other sectors or industries Project Research different methodologies with more data sources to expand labor composition measures to industry level

15. Consistency Capital services Detailed industry data are limited to manufacturing by National Accounts coverage Government has no returns to government capital in National Accounts Project Investigate methods using existing data to improve capital services for detailed industry and total economy

16. Consistency Output Concern over measurement of output in services Project Maintain BLS production and publication of output based on a quantity rather than price measure

17. Additional projects Research impact of newly published CES data on all employee hours paid compared to existing methodology Create dataset of capital inputs that includes nonprofit sector to improve consistency with BEA industry coverage

18. Conclusion Plenty of work remains to improve data sources and methods for comprehensive labor and capital inputs in a production account framework