Falling worker productivity statistics after 18 months of gains could possibly be a positive development for job creation and economic recovery. Corporations have loved fat balance sheets by getting more from less after slashing payrolls during the recession. But the work force may be reaching its limit based on the latest Labor Department report. Businesses may have to start hiring to maintain growth and revive economic recovery if that turns out to be true.
Decline in worker productivity gets new meaning
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. The Associated Press reports that Americas worker efficiency is the key ingredient to boosting living standards. The increased production resulting from higher productivity allows businesses to increase wages without increasing prices . In most cases a slip in productivity would be a troubling sign for the United States of America economy. But in this economy, some analysts say that companies profiting from job cuts will eventually be hurt by the high unemployment rate. Because consumer spending accounts for 70 percent of the economy, hiring will create the jobs families have to go purchasing. Those corporations benefit from more demand for their products.
Workers with jobs working harder
For companies banking that output would continue to climb without hiring new workers, CNN reports that the new Labor Department report is a wake-up call. Companies did more with less during the worst of the recession. But economic output was outstripped by hours worked within the report from the Labor Department. Corporations probably “overdid it” with layoffs during the recession, said Nariman Behravesh of IHS Global Insight in Lexington, Mass. In the CNN article. Businesses may have to hire more to keep away from worker burnout, he said, if for no other reason than keeping employee morale up.
Deflation fears underscore need for job creation
Job creation is likely to remain weak for the next few months, Behravesh told CNN. He expressed longer-term optimism, nevertheless, saying the private sector could start adding 100,000 jobs a month by year-end and maybe 150,000 by mid-2011. A report from ABC news disagrees, saying that weak productiveness, along with other indicators, shows the economic recovery is losing steam. The overall economy grew at only a 2.4 percent annual rate in the second quarter, down from a 3.7 percent rate in 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 opportunity to push wages down for those who nevertheless have jobs, which could start a debilitating cycle of deflation.
google.com/hostednews/ap/article/ALeqM5gNiyJ905Ho0Ur96V2TQhsBX19lGwD9HGMHAO0
CNN
money.cnn.com/2010/08/10/markets/thebuzz/
ABC News
