Labor productivity in the retail trade industry, 1987-99: faced with fierce competition, consolidation, and increased demand, the industry experienced strong growth in labor productivity over the period, partially due to increased investments in information technologies

Monthly Labor Review, Dec, 2001 by Mark Sieling, Brian Friedman, Mark Dumas

Previously, benchmark and annual industry deflators were derived from the detailed price index series of the Consumer Price Index for All Urban Consumers (CPI-U). (2) NOW, the benchmark and annual deflators are derived using the recently constructed CPI research series using current methods (CPI-U-RS). (3) When methodological changes are made to the official CPI-U, they are carried forward in time, but the CPI-U is not revised historically. The CPI-U-RS, on the other hand, incorporates all methodological changes made to the CPI-U and extends these changes back to 1978. The CPI-U-RS was developed by BLS to provide government statistical agencies and researchers a consistent time series of price change--exactly what is needed for developing the deflated output measures for productivity series.

The detailed CPI-U-RS series are available at the product group level for the 1978-87 period, and at the more detailed product level for 1987 to the present. For the 24 industry labor productivity series of retail trade that extend back prior to 1987, revisions using the CPI-U-RS series were made beginning with 1978. The analysis that follows measures the effects of using the CPI-U-RS on labor productivity growth rates, and it breaks the 1978-97 period into 5-year subperiods corresponding to the quinquennial censuses: 1977-82, 1982-87, 1987-92, and 1992-97.

In some cases, the price index used to deflate a value of merchandise-line sales is a directly matched CPI-U-RS. In other cases, the deflator is a weighted average of CPI-U-RS price indexes that have been combined using the relative-importance weights assigned to each CPI. In still other cases (those prior to 1987), deflators or combined deflators based on the CPI-U are adjusted to CPI-U-RS levels using the ratio of the CPI-U-RS to the CPI-U at the product group level and applying these ratios to the appropriate CPI-U detailed price indexes. In cases in which there is not an exact match of price indexes with merchandise line sales, a price index or combination of price indexes closely associated with the merchandise line sales is used.

For the 1977-82 period, 88 separate deflators based on the CPI-U-RS are used for the various merchandise lines for all retail industries. Of these deflators, 23 are direct matches between the merchandise line and a specific price index, 22 are combinations of CPI-U-RS indexes, and 43 are price indexes or combinations that are adjusted to CPI-U-RS levels using the ratio of product group CPI-U-RS to CPI-U. For the 1982-87 period, 113 deflators are used--24 directly priced, 24 weighted averages of CPI-U-RS indexes, and 65 deflators adjusted using product group index ratios. After 1987, much more product detail is available for the CPI-U-RS. For the 1987-92 period, 122 deflators are used, with 75 directly matched to merchandise lines and 47 weighted averages of individual CPI-U-RS indexes. For 1992 forward, 128 deflators are used with 79 directly matched to merchandise lines and 49 weighted averages of CPI-U-RS indexes.