Labor productivity growth in wholesale trade, 1990-2000

Monthly Labor Review

Volumn 125, Issue 12, 2002, Pages 3-14

  Kask, Christopher ^a   Kiernan, David ^a   Friedman, Brian ^a  

^a BUREAU OF LABOR STATISTICS   (United States)

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EID: 11244315614     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (33)

1. U.S. Industry and Trade Outlook, 2000, (The McGraw-Hill Companies and the U.S. Department of Commerce), Chapter 41, Wholesale Trade.
2. Unpublished BLS data show that real capital services per hour of labor input (the capital-to-labor ratio) was substantially higher in the wholesale trade sector than in the retail trade sector during the period studied. In addition, the capital-to-labor ratio grew nearly three times as rapidly from 1990 to 2000 in wholesale trade as in retail trade (a 7.6-percent annual rate in wholesale vs. 2.6 percent in retail) and twice as rapidly over the long-term period from 1970 though 2000 (a 6-percent annual rate in wholesale vs. 3 percent in retail).
3. Jack E. Triplett and Barry P. Bosworth, "Productivity in the Services Sector." Paper prepared for American Economic Association, session on Productivity in Services, Boston, MA, January 9, 2000, p.6; McKinsey Global Institute, U.S. Productivity Growth. 1995-2000, section on Wholesale Trade, on the Internet at: http:/ /www.mckinsey.com/knowledge/mgi/feature/index.asp. Data on investment in high-tech equipment by industry can be found in Belinda Bonds and Tim Aylor, "Investment in New Structures and Equipment in 1992 by Using Industries," Survey of Current Business (Bureau of Economic Analysis, December 1998), pp. 26-51.
4. Jack E. Triplett and Barry P. Bosworth, "Productivity in the Services Sector." Paper prepared for American Economic Association, session on Productivity in Services, Boston, MA, January 9, 2000, p.6; McKinsey Global Institute, U.S. Productivity Growth. 1995-2000, section on Wholesale Trade, on the Internet at: http:/ /www.mckinsey.com/knowledge/mgi/feature/index.asp. Data on investment in high-tech equipment by industry can be found in Belinda Bonds and Tim Aylor, "Investment in New Structures and Equipment in 1992 by Using Industries," Survey of Current Business (Bureau of Economic Analysis, December 1998), pp. 26-51.
5. Jack E. Triplett and Barry P. Bosworth, "Productivity in the Services Sector." Paper prepared for American Economic Association, session on Productivity in Services, Boston, MA, January 9, 2000, p.6; McKinsey Global Institute, U.S. Productivity Growth. 1995-2000, section on Wholesale Trade, on the Internet at: http:/ /www.mckinsey.com/knowledge/mgi/feature/index.asp. Data on investment in high-tech equipment by industry can be found in Belinda Bonds and Tim Aylor, "Investment in New Structures and Equipment in 1992 by Using Industries," Survey of Current Business (Bureau of Economic Analysis, December 1998), pp. 26-51.
6. See William Gullickson and Michael J. Harper, "Bias in aggregate productivity trends revisited," Monthly Labor Review, March 2002, pp. 32-40. Data supporting this article show that the wholesale trade sector contributed significantly to the growth in multifactor productivity for the private business sector.
7. BLS Releases New Series on Productivity and Costs in Wholesale Trade Industries, 1990-2000, USDL 02-347 (U.S. Department of Labor), June 20, 2002.
8. The industry productivity data in this article are based on the Standard Industrial Classification (SIC) system. Beginning with the next annual update in 2003, which will incorporate 2001 data, the industry series will be based on the North American Industry Classification System (NAICS).
9. Don E. Sherman, "The Role of the Wholesaler Distributor," IBM Wholesale Distribution Reference Room, January 12, 1998, on the Internet at: http://wholesaledistribution.services.ibm.com/ WDRefRoom.nsf/WhitePapers.
10. Stephen Brown, Revolution at the Checkout Counter (Harvard University Press, 1997). See the Introduction by John T. Dunlop and Jan Rivkin, pages 11-13. The comments describe effects in retail trade, but in many cases, they apply equally well to the wholesale trade sector.
11. See, for example, McKinsey Global Institute, U.S. Productivity Growth, 1995-2000.
12. 2000 E-commerce Multi-sector Report (U.S. Department of Commerce, Census Bureau), March 18, 2002, available through the E-stats information page, on the Internet at: http://www.census.gov/eos/ www/ebusiness614.htm.
13. Buddy Bradford, "The Route Delivery Problem," IBM Wholesale Distribution Reference Room, December 6, 1999, on the Internet at: http://wholesaledistribution.services.ibm.com/ WDRefRoom.nsf/WhitePapers.
14. Rick Bushnell, " Typical Distributor Inventory Before and After Electronic Commerce," IBM Wholesale Distribution Reference Room, December 6, 1999.
15. See W. Erwin Diewert and Ann Marie Smith, "Productivity Measurement for a Distribution Firm," National Bureau of Economic Research, NBER Working Paper Series, Working Paper no. 4812, July 1994. Using data from a distribution firm and an accounting framework designed to track products as they are purchased, held in inventory, and finally sold, the authors demonstrate that such a firm can realize substantial productivity gains through careful management of inventories. They conclude that such "productivity gains are made possible by the computer revolution which allows a firm to track accurately its purchases and sales of inventory items and to use the latest software to minimize inventory holding costs."
16. Adam J. Fein, Michael J. Skinner, and James Solodar, "The Promise and Peril of Online Exchanges," Modern Distribution Management, Vol. 29, No. 3, December 10, 1999, on the Internet at: http://www.pembrokeconsulting.com/pdfs/PromisePeril.pdf.
17. 2000 E-commerce Multi-sector Report (U.S. Department of Commerce, Census Bureau), March 18, 2002, available through the E-stats information page, on the Internet at: http:// www.census.gov/eos/www/ebusiness614.htm. According to the report, which covers only merchant wholesalers, 7.7 percent of merchant wholesalers' sales in overall wholesale trade in 2000 were made using electronic channels. Nearly 90 percent of these electonic sales were made over EDI systems. The start-up costs of installing EDI systems are substantial. In the wholesale sector, where small firms predominate, it may be the case that only the largest firms (those with the widest geographic reach) would benefit enough from installing such a system to justify the cost.
18. Adam J. Fein, "Understanding Consolidation: What are the Triggers?" Just-In-Time (Industrial Distribution Association, September/October 1997).
19. Results of this study are discussed in the U.S. Industry and Trade Outlook, 2000. The study, by the Distribution Research and Education Foundation of the National Association of Wholesaler-Distributors, is titled Consolidation in Wholesale Distribution: Understanding Industry Change.
20. Results of this study are discussed in the U.S. Industry and Trade Outlook, 2000. The study, by the Distribution Research and Education Foundation of the National Association of Wholesaler-Distributors, is titled Consolidation in Wholesale Distribution: Understanding Industry Change.
21. In his discussion of the wholesale trade industry in the U.S. Industry and Trade Outlook, Adam J. Fein notes: "To some extent, the low level of concentration reflects the fact that competition among wholesaler-distributors typically occurs in geographically distinct markets. A wholesaler-distributor can dominate one region of the country yet account for a very small proportion of national sales." U.S. Industry and Trade Outlook, 2000.
22. Robert L. Steiner, "A dual-stage view of the consumer goods economy," Journal of Economic Issues, March 2001.
23. Greg Girard, "The e-Changing Face of Wholesale Distribution," Supply Chain Management Review, Fall 1999, pp. 17-20.
24. U.S. Industry and Trade Outlook, 2000.
25. Robert L. Steiner, "The 'Own-Brand Marketer' Debuts in the 1997 Census," Review of Industrial Organization, Volume 12, Issues 5-6 (Kluwer Academic Publishers, December 1997), pp. 809-816.
26. The industry contributions to productivity growth in the wholesale trade sector are calculated as the exponential of the difference between the year-to-year weighted changes in the logarithms of the industry output indexes and the year-to-year weighted changes in the logarithms of the industry hours indexes. The weights used for the industry output indexes are the average industry share (over the 2 years for which the change in output is derived) of the total sales for the wholesale trade sector. The weights used for the industry hours indexes are the average industry share (over the 2 years for which the change in hours is derived) of the total hours for the wholesale trade sector. Average industry contributions over various time periods are derived by chaining together the year-to-year contributions to form an index. The average annual percent change in this index over a given period represents the average industry contribution over the period.
27. 2000 E-commerce Multi-sector Report (U.S. Department of Commerce, Census Bureau).
28. See Susan Helper, "Complimentarity and Cost Reduction: Evidence from the Auto Supply Industry," NBER Working Paper No. 6033. The author describes how U.S. automakers adopted the Japanese idea that their suppliers ought to be a source of continuous incremental cost reductions.
29. Adam J. Fein, "Understanding evolutionary processes in nonmanufacturing industries."
30. 2000 E-commerce Multi-sector Report (U.S. Department of Commerce, Census Bureau).
31. Adam J. Fein, "Understanding evolutionary processes in nonmanufacturing industries."
32. See Konstanze Kinne, "Efficiencies in Merger Analysis," Intereconomics, November-December 1999 (1999/06), Hamburg Institute of International Economics (HWWA), on the Internet at: http://www.hwwa.de/Publikationen/Intereconomics/1999/ ie_docs1999/ie9906-kinne.htm.
33. McKinsey Global Institute, U.S. Productivity Growth, 1995-2000.