Anyone care to elaborate:
Worker productivity dropped this spring for the first time in more than a year, a sign that companies may need to step up hiring if they hope to grow.
Productivity declined at an annual rate of 0.9 percent in the April-to-June quarter after posting large gains throughout 2009, the Labor Department said Tuesday. Unit labor costs edged up 0.2 percent in the second quarter, the first increase since the spring of 2009.
Output of U.S. workers is the key ingredient to boosting living standards. It allows companies to pay workers more because of the increased production without being forced to raise the cost of their goods, which sparks inflation.
In most cases a slip in productivity would be a troubling sign for the economy. But some analysts believe a short-term drop is needed to boost the recovery. That’s because it could be a signal that employers can no longer squeeze extra output out of leaner staffs.
“This could be a turning point as far as hiring goes,” said Joel Naroff, president of Naroff Economic Advisors
An uptick in hiring would be nice.
Cris
Sorry guys, that was me. Been slackin’.
Chad S
Recessions cause a major jump in productivity rates(less workers doing the same amount of work to save costs) and generally economists can determine how much the upward swing will be based on the productivity numbers. In mid 09, the productivity numbers were up dramatically(I think nearly 9% from 3rd Q 08, but don’t quote me on that) for this reason.
A decline in productivity combined with stability in output means more workers are being hired(more workers doing the same amount of work, which could mean some inflation, which we could use). The labor cost increase with this is also a great sign. It means that workers are getting more pay for for doing less work(which only happens when the economic situation is looking better and companies are afraid of losing workers).
Jason In the Peg
Doesn’t that just mean that workers are lazy and need to be more competitive if they’re to keep their jobs in the global race to the bottom?
El Tiburon
Weren’t we always turning a lot of corners in Iraq on the path to victory?
Get back to me in a Friedmann unit to discuss.
daveNYC
It’s only a good thing if demand for goods increases. Needing ten instead of nine guys to produce 100 boxes doesn’t help too much if people only want to buy 90 boxes, and are thinking of cutting back from there.
Most of the news I’ve been reading indicates that our growth is mostly due to restocking inventories, so we might be looking at another leg down soon.
Dave
Either that or IT departments across the country forgot to strip Minesweeper off their desktops…
p.a.
Hmmm. 20 years of steadily rising productivity numbers led to 20 years of steadily rising corporate profits and 20 years of stagnant wages. Obviously 1 quarter of productivity decrease requires a cut in wages to keep American corporations competitive. I believe I now qualify to teach economics at Glenn Beck University.
Michael
Lazy fucking workers – don’t they want to see their betters succeed by acquiring more stuff and money than the other betters?
Xboxershorts
A corresponding downtick in mandatory OT which I have experienced over the course of the last 9 years would be welcome. I average 400 to 450 hours of OT per year for the past decade.
No you fuckwads, you can NOT squeeze any more out of us. Fucking hire someone you greedy fucking bastards, we want our lives back too!
jacy
I’ve stopped trying to read the tea leaves and, in fact, replaced the tea with a nice quality vodka.
Of course that means my level of productivity is a leading indicator of absolutely nothing.
stevie314159
When you can’t squeeze any more blood from the stones you have, you have to get more stones
chopper
@El Tiburon:
i think we need to give this whole situation six months.
gypsy howell
No kidding!
Is there anyone here who doesn’t already know that “increased Productivity” is just a measure of how badly the corporations are screwing their workers?
Lay off workers + keep the same workload + stagnant salaries = corporate profits. Yay for us!
mikey
It’s Aggregate Demand, Stupid.
I’ll actually be surprised if falling productivity numbers turns out to be a trend. They’ll be up or flat going forward.
And as was mentioned upthread, until demand rises there won’t be any significant hiring or investment.
And nobody, even the happy-talkers, can say where that demand is supposed to come from. 15% of the people are unemployed or underemployed. Many, many mortgages are underwater. Lots and lots of consumer debt. Wages are flat, inflation is zero or negative.
Until something massive happens (trillion dollar stimulus, for example) nothing is going to change…
mikey
Cat Lady
I have two temporary staffing companies as clients, and their business has been up this year over last by quite a bit. There is more temp to hire, which means companies are shitting and getting off the pot. Leading indicators and all that.
JGabriel
Martin Crutsinger (AP):
A-heh.
A-heh-heh-heh.
A-Hee-Hee-Hee-Hee
Bwa-ha-ha-ha-ha-ha-ha-hah!
AHAHAHAHAHHAHAHAHHAHAHHAHA!
Should I assume Crustinger is an idiot, or just has an extremely dry sense of humor? Companies don’t pay workers more. Not since the last century, in the Clinton era:
BTW, that 43k figure is from 2003. given the recession/depression, it’s even worse now.
.
General Stuck
Stimulus dude, we need us more stimulus. Wring it out of Obama’s package.
fasteddie9318
I blame the immigration debate. This kind of grotesque slacking off is what you get when the American workforce thinks that there might be a downturn in the supply of cheap undocumented Mexican labor in the market. Another round of outsourcing for everyone! If these peasants aren’t prepared to work a 170 hour week in exchange for nothing but the grudging tolerance of their masters, what good are they?
Poopyman
Hey, for years I’ve been doing my part to keep the lid on productivity. Glad to see all of my non-efforts are paying off.
Brachiator
Somehow, I have this image of workers slumped at desks and machines, and a boss walking by, kicking the lumbering body aside and shouting to someone, “We need a replacement”
Or galley slaves, as in Ben-Hur.
gypsy howell
@JGabriel:
Yes, it “allows” companies to pay workers more, except they don’t.
Hugin & Munin
Well, a McMegan Baby Shower would produce some nice stimulative consumption on top of the wedding, so maybe we shoulld encourage her to spawn.
I’m gonna go cry in the shower now.
dave
Anyone have any thoughts about cutting the standard work week to 36 or 32 hours to increase employment and therefore demand?
Karmakin
They CAN technically pay workers more. What an awful lot of morons don’t realize is that they don’t have to because we’re nowhere close to full employment. Once you’re outside full employment, productivity gains make unemployment worse, NOT raise wages.
gypsy howell
Time to whip the mules harder!
cleek
@dave:
yes please
Karmakin
@dave: YES YES YES. That’s the way out, or at least one of them. You would have to have an increase in the minimum wage as well or you’re probably doing a lot of harm to lower-class workers as well.
It’s either that or you could spend trillions of dollars to create millions of jobs directly, and have upper-class people bitching because those people are not working “hard enough” in their eyes as they’re sneaking out of work for a latte break.
flukebucket
@JGabriel:
Ranks right up there with “we pass the savings on to you!”
General Stuck
You want demand, aggregate demand. Well, here is some, eat it and weep people, because that’s what it is, people.
fasteddie9318
@JGabriel:
The problem you’re having is that you assume he meant “pay workers” in the sense of monetarily compensating them. There are other ways to pay a worker for meeting its daily production quota. For example, and I can’t cite the exact figure because very few of you here are members of the Chamber of Commerce’s Platinum-Elite Committee and thus permitted to know such things, but I can tell you that several companies have been sacrificing fewer workers to Baal in recent years, and many have stopped having them “suicided” in order to collect on their dead peasants’ policies.
General Stuck
Gimme more stimulus Scotty, I need more stimulus!!
Martin
It allows? Companies pay more only because they have to pay more, not because something allowed them to. Can we please kill this supply-side magical thinking?
BombIranForChrist
Last week’s manufacturing report saw a slight uptick in hiring as well, so hopefully this is the start of something new.
Hopefully.
JGabriel
.
J.A.F. Rusty Shackleford
OT: Now I may be wrong, but if the specifics of this story were reversed and it was a person of color who was attacking and killing white people I’m pretty sure this would be the biggest story on FOX News this week.
Anoniminous
What does it mean?
Nothing, really.
The key statistic to look for is an increase in consumer discretionary income during a 5%, or so, stable rate of household savings. Something we haven’t seen in donkey’s years.
The ‘early warning’ will be a positive GDP to wage rate percentage … something else we haven’t seen in donkey’s years.
Until then, it’s all smoke blowing, glue huffing, and Magic Ponies.
fasteddie9318
@dave:
Yes, this and lowering the retirement age. But oh, wait, because of TEH DEBFICITS we must raise the retirement age. I’m sure having a bunch of 69 year olds in the workforce desperately hanging on until they can retire won’t at all affect unemployment.
Svensker
@General Stuck:
Are you saying you find Obama’s package stimulating?
JGabriel
Martin Crutsinger (AP):
What kind of sociaIist nonsense is this? Clearly the proper response is to kill health care reform: we need our workers to die off after 7 years being squeezed dry of output, in order to finance turnover from the health care savings.
Health care reform just keeps alive people who are useless parasites on society, people who tax and steal the hard-earned profits of shareholders and upper management, when their producing life span is over!
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Karmakin
Martin, that supply side magical thinking goes much further than you think. Supply side for labor affects everybody from Krugman on over. The big exception I’d give to all that would be Duncan Black, who basically AFAICT told his given profession to go fuck itself.
There’s no excuse for so many progressives to still buy into supply side labor theory however.
Bulworth
I’m pretty sure this is related to the passage of new unemployment benefits. Surely this has made all our lazy workers lazier. Either that or its a response to the massive tax increase if the Bush tax cuts — especially those for the upper 2% — are allowed to expire. Or more people are just going galt.
Martin
@dave: Honestly, that’s the only solution I can think of. 40 isn’t a magical number, and broad productivity gains have allowed demand to be met by fewer workers unless we increase labor export. Short of that, I’m convinced that the only way to justify 40/week for the defined workforce is through artificial demand bubbles.
General Stuck
@Svensker: Don’t know Svensker, why don’t you call the WH and ask, then report back to the group.
fasteddie9318
@Martin:
Hogwash. Every corporate executive out there is just desperate to give his or her employees more money, but they just can’t, because, um, liberals, and stuff.
Zandar
It just means the American worker has been stretched as stressed as much as they can take and are beginning to snap back…
…or break. Productivity declines mean we’ve gotten to the point where getting cheaper temp workers with no benefits and calling it “hiring” and driving wages down is beginning to reach a plateau, that’s all.
I expect this number to flatten out again or even rise a little bit as deflationary pressures push wages down.
Sentient Puddle
@mikey: Yeah, getting demand up seems to be a chicken/egg thing, but the argument for it going up after a drop in worker productivity is about the strongest I’ve seen in a while. If this means no more idle “capacity” in workers, then companies now have a strong case for hiring, and then it snowballs.
We’ve had enough green shoots over the last two years to last a lifetime, so it’s probably right to still be skeptical. But this is still probably the best news in a while.
gene108
I’m not worried about a 170 hour work week. There are only 168 hours in a standard 24 hour 7 day week. I’m not sure how we can squeeze in those extra two hours, unless some form of time travel is invented.
Morbo
Of course it’s time for an uptick in hiring. Someone has to go out there and replace all those inefficient lightbulbs.
fasteddie9318
@gene108:
Well I guess somebody just doesn’t want his job bad enough, eh?
Anoniminous
Forgot to say …
Look at the “Revised” figures, not the initial release. Mr. Market moves on the initial figures and by the time more accurate figures – estimates, actually – are available it’s all Old Data & Mr. Market no longer cares.
General Stuck
Good news is always bad news and bad news is always good news here in the land of hot air.
Tone in DC
@Xboxershorts:
Xboxershorts
An uptick in hiring would be nice.
A corresponding downtick in mandatory OT which I have experienced over the course of the last 9 years would be welcome. I average 400 to 450 hours of OT per year for the past decade.
No you fuckwads, you can NOT squeeze any more out of us. Fucking hire someone you greedy fucking bastards, we want our lives back too!
_______________________________________________
Amen.
General Stuck
@Anoniminous: Mr. Market got any stimulus to spare? We sure could use some.
J.A.F. Rusty Shackleford
@Martin:
Voodoo Economics – Wrong 30 years ago, wrong today.
Omnes Omnibus
@gene108: Travel west across time zones.
Anoniminous
@gene108:
Haven’t you ever heard of “giving 110%?” That means 184.8 hours/week!!!
It’s slackers like you that drag down the entire US.
scarshapedstar
Well, you’d expect workers to be less productive now that we’re a communist country. Pretty soon they’ll be buying Cadillacs with their welfare checks.
p.a.
Aaaaaannnnnnddd all together now:
This is good news for Republicans…
Omnes Omnibus
@dave: John Kenneth Galbraith talked about this kind of thing in “The Affluent Society” fifty years ago IIRC. No reason we couldn’t do it, except culture.
El Cid
@gypsy howell:
Exactly. Without some sort of pressure to share productivity gains with workers, they don’t.
I.e., bargaining strength from workers themselves. And right now I would think that there is some mix of objective and subjective (from the point of view of those running companies) factors which lead company controllers to believe that a high rate of unemployment etc. would lead to an even more compliant and desperate workforce.
I mean, it happened a lot for a long time, but not because companies liked doing it or from some sort of immutable laws of economics.
It would be a good thing if some factors from labor’s side meant that sharing productivity (as is, or increases) with employees would become more likely.
Maybe a lot of people are just burned out.
Omnes Omnibus
@scarshapedstar: Ladas and Wartburgs, you mean.
JGabriel
Martin Crutsinger (AP):
… workers have given up. They haven’t had a raise in over a decade, according to median income figures calculated by the government – in fact, their incomes have steadily gone down. “What’s the point of working harder?” they ask. “What’s the point of working at all, for an ever decreasing quality of life that serves merely to make other, greedier, more selfish people, richer?”
(I wonder how much longer before the suicide rate starts climbing.)
.
Poopyman
@stevie314159: @gene108:
No time travel required. With the magic of telecommuting you can hold down 4 40hr/week jobs and still have room for one or 2 PT jobs.
gene108
@fasteddie9318: Did I say I wasn’t worried about working a 168 hour work week? Nope. I’m just not worried about a 170 hour work week, until time travel is invented :-)
Anoniminous
@General Stuck:
No.
The easiest way to get the point across is: Mr. Market is cognitively dysfunctional. When his house is burning down his immediate and present goal is making sure the dishwasher works.
IMNSHO, what the US economy really, really, needs is a New Deal times two. We need massive investments in High Speed Rail, education, sustainable energy, sustainable agriculture, a flattening of the reimbursement (wages & etc) hierarchy, re-regulation of the FIRE industries — especially the F word, and all that Left Wing stuff. First to get us out of this hole we’re in and second to prepare for, you know, The Future.
Mr. Market is not the institution to do all that; it’s the governments job.
Poopyman
@JGabriel: “What’s the point of working harder?” they ask. “What’s the point of working at all, for an ever decreasing quality of life that serves merely to make other, greedier, more selfish people, richer?”
“What’s the point in going $100K in debt for an education I’m not going to use?”
Hammered from both ends. I do not envy kids in college these days.
Except for the sex. For that … maybe.
gene108
@Poopyman: 168 hours per week is just like 186,000 miles / second. It’s just one of those numbers we can’t get beyond.
I mean if you are working 4 40 hr/ week jobs, that’s 160 hours right there. I know it’s possible to bill multiple clients at the same time, so you can in effect have more than 168 billable hours in a week, but there’s no way to physically work more than 168 hours in a week.
Anoniminous
@Anoniminous:
Apologies for the multiple posts on the same subject, my brain hasn’t kicked-in yet.
My suggested course of action is a Two-fer.
The list is also, more-or-less, what we need to be doing to ‘deal with’ the twin problems of Global Climate Change and Peak Oil.
The Populist
@mikey:
Mikey, I’d say that figure is closer to 20% when you factor in the people who have given up looking for work.
Morbo
@gene108: Clearly you did not follow any of the Google ads featured on the sidebar of yesterday’s “Conservapedia denies Theory of Relativity” (Aka Heliocentrism is an Atheist Plot) post.
Face
Oh yeah they can. As the economy worsens (or stays weak), people become increasingly more paranoid about their job. They become more willing to do even more work just to ensure a paycheck.
El Cid
@Face: That’s certainly the way I’ve been guessing, but if this data is a real trend and continues — a big couple of “If’s” — then something else would be going on.
Michael
I’ve now gone to 6 straight weeks without bringing in a dime. Lots of promises to pay me, lots of free work done by me, appointments made to come in to pay me in the same day, and they don’t bother to show up.
My business clients are fuckers and I’m at the point where I despise them all. I already bankrupted out the good ones, and so all I’m left with are the sleaze.
Alwhite
Can’t start hiring until after the election or there is a chance the tax cut fairy may not extend the current death march inducing tax cuts.
JGabriel
Michael:
Just a minor fix. Personalizing a generally accepted truth will only make you bitter.
.
JGabriel
@Alwhite:
Speaking of death marches, isn’t it about time for a major uptick in heir apparents killing off their benefactors before the Throw Mama From The Train Tax Break expires?
.
Brachiator
@JGabriel:
We call this the Sugar Daddy/Money Momma Act of 2010. If you can marry an ailing wealthy guy or gal and love ’em to death by December 31, 2010, then you are in the money, tax free.
General Stuck
@Anoniminous: no
well, that’s what I thought but thought I’d ask.
wilfred
Even better:
Whose on first. The whole thing is a flim-flam scam.
Arclite
@p.a.:
Exactly. When I read this:
…my first reaction was WTF planet is the author living on? Exactly, only the rich have seen their salaries increase relative to inflation. The rest of us have remained flat.
CalD
Well I certainly have no trouble believing that pretty much everyone fortunate enough to be working right now might be getting a little burnt. But another possible factor could be that we’re just running out of jobs that can be shipped off to China — which the Bureau of Labor Statistics freely admits has been a factor in apparent increases we’ve been seeing in domestic productivity in the last decade or so.
Basically when a widget manufacturing company shuts down a factory in the US and starts producing off-shore, they properly should be reclassified as a trading company but they aren’t. As far as BLS statistics are concerned, the 1,000,000 widgets that it used to require 1000 workers to produce are now produced by 50 front office people — boom: a magical 20-fold increase in productivity. So anyway, it could just be that we’re running out things to outsource.
Bill Murray
@Brachiator: Douglas Adams did this the right way with Hotblack Desiato spending the year dead for tax purposes
DPirate
That sound you hear is me laughing 4000 miles away. I’ve taken the liberty to correct this passage:
To continue:
Yes. Operative word being squeeze. Much as the old need to shackle their employees to the machines similarly indicated that the workers had yet to “get their minds right”.
Look. Worker productivity is crap. All it really means is that fewer people are doing the work, meaning fewer people are earning the same old sorry paychecks they always have. Forcing more work out of a person does not increase his standard of living, no matter how one wishes to obfuscate the issue. In the end, all this mumbo-jumbo indicates nothing more than “The Bible tells me so”. Treat this religion as a science and you breed fanatics. That’s good for no one.
Brachiator
@Michael:
The government needs to pay attention to this. For many businesses, it is not only a jobless recovery, but a profitless recovery as many businesses are slowly being strangled by this recession.
Beffie
And I wonder how many companies are using unemployment to increase profits. My boss put me on part time, no benefits, no paid time off, while still demanding the same output as when i was fulltime. She now has decided that laying me off every three weeks for a week or two is her new “business model”. She knows that my industry is very depressed put together with my age means she can leave me and co-workers hanging on a string.
It was not until clients started to rebel that she relented. She is trying to figure out a way around that too by giving us impossible deadlines to meet, deadlines she herself can’t meet. (I can’t afford to pay you more than x number of weeks for this project). Meanwhile we are having the best year business-wise since we opened our doors 10 years ago, doors by the way I helped her open.
Lorne Marr
I think what this news means is that there is going to be an uptick in hiring now. And that’s because employers cannot squeeze more out of existing employees. As simple as that. In other words, if everyone slacked off more, employment would rise dramatically. How’s that for a utopia?