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Is Job Generation A Side Effect Of Declining Worker Productivity?
Falling worker efficiency statistics after 18 months of gains could possibly be an optimistic development for job generation and economic recovery. Companies that slashed payrolls during the recession are raking in profits by getting more output from less workers. But the work force may be reaching its limit depending on the latest Labor Department report. If that is the case, United States corporations will have to engage in job generation to maintain growth and boost the flagging economic recovery.
When declining worker productivity is good news
Worker productivity declined at an annual rate of .9 percent in the April-to-June quarter after posting large gains throughout 2009, the Labor Department said Tuesday. According to the Associated Press, worker productiveness is a key driver for improved living standards. It allows companies to pay workers more because of increased production without raising the cost of goods . Declining productivity would be a negative for the United States of America economy in normal times. But in this economy, some analysts say that companies profiting from job cuts will eventually be hurt by the high unemployment rate. Increased hiring will create the jobs consumers have to increase spending, which accounts for 70 percent of the U.S. economy. Those businesses benefit from more demand for their products.
Corporations profit from overworked employees
The latest worker efficiency numbers are a rude awakening, CNN reports, for companies that may have believed the United States had entered a period where output could keep climbing without bringing people back to work. Companies did more with less during the worst of the recession. However, the amount of hours worked rose faster than output within the Labor Department report. Businesses probably “overdid it” with layoffs during the recession, said Nariman Behravesh of IHS Global Insight in Lexington, Mass. In the CNN article. Corporations may have to hire more to stay away from worker burnout, he said, if for no other reason than keeping employee morale up.
Deflation fears underscore need for job creation
For the next few months, Behravesh said, job creation will probably remain low. But he’s optimistic that that the private sector may be adding over 100,000 jobs a month by the end of this year and 150,000 jobs a month by the middle of 2011. But ABC News reports that weak productivity is in line with other signs that Americas economic recovery is losing momentum. The overall economy grew at only a 2.4 percent annual rate in the second quarter, down from a 3.7 percent rate within the first quarter. with the unemployment rate mired at 9.5 percent, officials at the Federal Reserve are concerned that companies will see the high unemployment rate as an chance to push wages down for individuals who still have jobs, which could start a debilitating cycle of deflation.
Find more information on this subject
google.com/hostednews/ap/article/ALeqM5gNiyJ905Ho0Ur96V2TQhsBX19lGwD9HGMHAO0
CNN
money.cnn.com/2010/08/10/markets/thebuzz/
ABC News
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