Falling worker productivity statistics after 18 months of gains could possibly be a positive development for job creation and economic recovery. Companies have liked 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. Companies could have to start hiring to maintain growth and revive economic recovery if that turns out to be true. Article resource – Decline in worker productivity may be good for economic recovery by Personal Money Store.
A new meaning for falling worker productivity
After posting large gains in 2009, the Labor Department said that worker productiveness declined at an annual rate of .9 percent within the second quarter. The Associated Press reports that United States of America worker efficiency is the key ingredient to boosting living standards. It allows corporations to pay workers more because of increased production without raising the cost of goods . In most cases a slip in productivity would be a troubling sign for the United States of America economy. However, many economists think that high unemployment rate will eventually hurt businesses that have prospered by laying off workers. Increased hiring will create the jobs consumers need to increase spending, which accounts for 70 percent of the U.S. economy. And that would ultimately lead to more demand for those companies’ products.
Companies profit from overworked employees
For corporations banking that output would continue to climb without hiring new workers, CNN reports the new Labor Department report is a wake-up call. During the worst of the recession, and businesses learned how to get more with less. But within the latest Labor Department report, the amount of hours worked rose at a faster pace than actual economic output. Companies probably “overdid it” with layoffs during the recession, said Nariman Behravesh of IHS Global Insight in Lexington, Mass. Within the CNN article. He said that if for no other reason than keeping employee morale up, businesses may have to hire more to avoid worker burnout.
Job creation critical to keep away from deflation
For the next few months, Behravesh said, job generation will probably remain low. However, he’s optimistic that more than 100,000 jobs a month could start materializing in the private sector by the end of the year and possibly 150,000 jobs monthly mid-2011. But ABC News reports that weak productivity is in line with other signs that U.S. economic recovery is losing momentum. The overall economy grew at only a 2.4 percent annual rate within 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 chance to push wages down for many who still 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
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