The Big Contributors

The more successful a business manager is in achieving high productivity, the more money his business pumps into the national economy. In Washington last week, Louis Paradiso, chief statistician for the Commerce Department, reported an ingenious system of ranking U.S. industries on this count. Key to Paradise's box score is the amount of value that a business adds to the economy for each worker it employs--the added value being the sum of wage outlay, company profits and interest payments to lenders. For U.S. business as a whole, the value added to the economy per worker in 1960 was $5,600. The standings of specific industries, expressed as a percentage of that average:

Industry Added Value

Petroleum and coal production 315%

Finance, insurance and real estate 240%

Autos and auto equipment 185%

Communications and public utilities 170%

Chemical and allied products 161%

Legal services 161%

Electrical machinery 120%

Printing and publishing 112%

Medical and health services 91%

Industry Added Value

Contract construction 85%

Textile mill products 80%

Retail trade 70%

Agriculture, forestry, fisheries 55%

Repair services and hand trades 50%

Hotels and lodgings 49%

Some of the industries ranking high on Paradise's box score do so primarily because they pay high wages. Though the coal industry is generally considered a fading one, the enthusiasm with which United Mine Workers Boss John L. Lewis welcomed automation has created a situation in which a few highly paid miners running vastly efficient machines turn out high-profit production. Similarly, Walter Reuther's vigorous pursuit of the good life for his autoworkers--who now enjoy wages 1.39 times the national average--helps to explain the auto industry's high money contribution to the economy.

But it is also possible for an industry to pay relatively low wages and still contribute heavily, through an abnormally high profit margin. Legal services stand high on Paradise's list because although law firms pay only 90% of the average national wage ($4,705 last year), they sock away high profits. Financial institutions, insurance companies and real estate dealers, who pay only a trifle above the average national wage, are in the same highly profitable boat.

What is the utility of the rankings? Says Paradiso: "This is the sort of thing you have to know in order to see which industries ought to improve their productivity. Not only so they can produce better wages and profits, but also so they can be aware of their relative position domestically in order to compete more effectively abroad."

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