ECONOMIC

production workers, and it is sensitive to the occupational composition of thework force within industries, which tends to be related to age and sex.From 1972 to 1973 the adjusted earnings index rose 6.2 percent, essentiallythe same increase as from 1971 to 1972. Although last v year's increasewas less than that of 1971, the index has shown a good measure of stabilityduring the past 6 years (Table 13). Monthly data suggest some step-up inthe rate of increase in the second half of 1973, although within the year thefigures tend to be rather erratic. However, compensation per man-hourin the private nonfarm sector increased by 7.6 percent in 1973, the largestincrease in more than 20 years. This acceleration was attributable mainlyto a large rise in what is labeled benefits in Table 13, the major partof which in 1973 came from the increase in employers' social security taxesin the first quarter.TABLE 13.—Components of percent change in compensation per man-hour in the privatesector, 1965-73nonfarm[Percent]PeriodHourlyearnings 1Production workersOvertime inmanufacturingIndustryshiftsEmployeesother thanproductionworkersBenefits, allemployeesCompensationper man-hour,allemployeesChange from precedingyear:19651966...1967....196819693.74.04.66.66.60.1.3-.3.2-.10.0.2-.4-.5.2-0.4!9.9-.30.2.6.0.3.33.65.85.67.56.7197019711972197326.77.06.36.2-.2-.1.3.1-.6-.4-.2.3.9-.3.0.1.4.8.4.97.27.06.87.61 Adjusted for overtime in manufacturing and interindustry shifts.2 Preliminary.Source: Department of Labor, Bureau of Labor Statistics.From 1972 to 1973 labor costs per unit of output (unit labor costs) roseby 4.4 percent, or much more than the 2.6 percent rise in 1972. The accelerationin the increase of unit labor costs resulted partly from rising hourlylabor costs and partly from a reduced rate of increase in productivity.Nonfinancial CorporationsTable 14 brings together for nonfinancial corporations the componentsof annual price change over the past few years. Although it constitutes aconvenient set of accounts for examining prices, it does not permit one todraw inferences regarding causation. However, the previous remarks aboutfactors underlying changes in productivity and hourly compensation wouldalso be applicable here. The reader should keep in mind that the pricedeflators are not the equivalent of prices charged by corporations. The deflatorsapply only to the value added in production by nonfinancial corporationsand not to the cost of goods and services purchased by corporations.70