Wednesday, August 7, 2013

FWIW: Labor and NonLabor Unit Costs

From Chapter 10 of the BLS Handbook of Methods:
Unit labor and nonlabor costs
The Bureau also prepares data on labor and nonlabor costs per unit of output for the business sector and its major components. Unit labor costs relate hourly compensation of all persons to output per hour and are defined as compensation per unit of real output. Nonlabor payments are the excess of current-dollar output in an economic sector over corresponding labor compensation, and include nonlabor costs as well as corporate profits and the profit-type income of proprietors. Nonlabor costs include interest, depreciation, rent, and indirect business taxes.

So at FRED I found something on nonlabor costs:

Graph #1: Unit NonLabor Cost
This series is specific to nonfinancial corporate business. So I looked for a matching (nonfinancial corporate) series on Unit Labor Cost. In red on the next graph:

Graph #2: Unit Nonlabor Cost (blue) and Unit Labor Cost (red)
The blue line is the same here as on graph #1, but squished down by the higher red line and also by three extra lines of title above the plot area.

Okay, according to the BLS Productivity and Costs PDF ("First Quarter 2013, Revised", 13 pages, "embargoed until" date 5 June 2013; Table Footnote 7 on page 13):

Total unit costs are the sum of unit labor and nonlabor costs.

So we can add the two numbers together to get the total, and look at each as a share of the total:

Graph #3: Unit Labor Cost (red) and Unit NonLabor Cost (blue) as portions of their sum
These two seem both to run flat until around the year 2000. This seems a little odd to me. But the unit labor cost used for this post is limited to nonfinancial corporate business. That's not the ULC we were looking at for several days running. Below, Graph #4 shows the "nonfinancial corporate" ULC we're looking at today (blue) and the "nonfarm business" ULC of the previous posts (red).

Graph #4: Two Measures of Unit Labor Cost
Hm, closer than I thought, till the early 1990s. (The units are different for the two data series; I binary-guessed a multiplier value that would line up the blue with the red for the maximum period.)

Hm again. The blue line is Unit Labor Cost for nonfinancial corporate business. The red line is Unit Labor Cost for the nonfarm business sector.

The difference? Largely finance, I suspect.

No comments: