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Productivity up 6.6 percent in 2Q, most in 6 years
AP through Yahoo.com ^ | september 2, 2009 | Martin Crutsinger

Posted on 09/02/2009 7:15:06 AM PDT by muawiyah

WASHINGTON (AP) -- Worker productivity, the single biggest factor determining living standards, grew at the fastest pace in nearly six years in the spring while labor costs fell by the most in nine years, as companies slashed costs to survive the recession.

(Excerpt) Read more at finance.yahoo.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: deflation; unemployment; up
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To: Carley

Yah. That’s pretty much what he says.


21 posted on 09/02/2009 7:43:50 AM PDT by LS ("Castles made of sand, fall in the sea . . . eventually." (Hendrix))
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To: muawiyah

hhmmmmm

Could this mean that companies have finally shed some of their 6 figure MBAs do nothing dead weight jobs?

Nah, I’m sure few Human Resources managers, Directors of Communications, Vice Presidents of Global Support Services, Vice Presidents of Community Affairs, Vice Presidents of Consulting Services, etc., etc. have been laid off.

Hell, there’s no such thing as a salesmen anymore, they are all now Buisness Development Managers

Productivity/Smucktivity


22 posted on 09/02/2009 7:46:30 AM PDT by qam1 (There's been a huge party. All plates and the bottles are empty, all that's left is the bill to pay)
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To: LS; RobRoy; muawiyah; Mase; Toddsterpatriot; Willie Green; 1rudeboy
Inflation is coming, but not for a while.

Right, soaring inflation is in our future and it will remain there indefinitely.

So right now the biggest disaster is that we're doomed to "face improved productivity" along with the "weak central government" that's been piled on the catastrophic heap of "all the other problems we already had."  I swear it's just one thing after another.  Next I'll probably get clobbered by a big pile of money, some idiot will cure cancer, it will start raining jelly beans, my alarm clock will break *** *  - --

23 posted on 09/02/2009 7:54:39 AM PDT by expat_panama
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To: visualops
Worker productivity is up because many of us are doing our job plus the job of the person that got laid off.

Exactly. Rise in worker productivity is not necessarily a sign of economic "green shoots."

24 posted on 09/02/2009 8:14:47 AM PDT by Titus Quinctius Cincinnatus (We bury Democrats face down so that when they scratch, they get closer to home.)
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To: muawiyah

My BS meter went off with the “living standards” part. How are the living standards for all those unemployed workers? Just how are standards improving for the soon to be unemployed workers who are picking up the load for companies that haven’t shut their doors yet? This economic stuff is confusing.


25 posted on 09/02/2009 8:20:31 AM PDT by pallis
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To: muawiyah
An article full of economic fallacies.

increases in productivity can help boost living standards because companies can increase wages financed by rising output.

If companies are increasing the nominal wage rates (i.e., wage rates in terms of money) from rising output then there's no net gain in productivity. In fact, rising nominal wages are the result of "too many dollars chasing too few employees", i.e., it's nothing but a sign of inflation. In the absence of inflation, the real gain from increased productivity is this: more stuff. More stuff = larger aggregate supply of goods; larger aggregate supply of goods = lower aggregate price level; lower aggregate price level = increase in one's wages in REAL (i.e., purchasing power) terms.

But during the recession, companies have been using their productivity gains to bolster their bottom lines as many struggle to stay in business.

Companies always "use their bottom lines" to stay in business, recession or no recession. That was a "filler" sentence, meant to sound ominously profound but which actually says nothing.

This cost-cutting helped many companies report better-than-expected second-quarter earnings despite falling sales.

Even in a healthy, non-inflationary economy, cutthroat competition among producers of widget X could (and often does) lead to falling sales for a particular firm. As long as the firm "uses its bottom line" to keep costs well below revenues it can have healthy earnings. Nothing new in that sentence either.

But economists worry that such aggressive cuts will make it harder to mount a sustainable recovery.

Only some economists worry that when businesses pursue their self-interest and readjust their configurations of factors of production -- land, labor, and capital -- will it be harder to "mount a sustainable recovery." Those economists would be the Keynesians, who wrongly believe that spending is the ultimate source of wages, and not saving, i.e., capital accumulation (which inflation erodes). To Causal-Realist economists -- sometimes known as the Austrian school of economics -- the "aggressive cuts" are part of the "sustainable recovery"; in fact, there can be no LONG RUN, sustainable recovery without them.

Consumer spending is critical to the recovery since it accounts for about 70 percent of total economic activity.

Spending is already occurring in the economy but it's being done in the area of higher-order goods, rather than immediate consumer goods. Unless the article is accusing people of putting their money under their mattresses, spending -- either consumption spending or capital-goods spending -- always occurs. The problem with this article -- and the problem with those economists and conservatives who agree with it -- is that it assumes that an inflationary bubble economy is the norm and that everything should be measured against the "boom." Keynesians are congenitally incapable of accepting that the "bust" phase of the business cycle is the inevitable and necessary readjustment from a period in which inflation caused malinvestment (which includes hiring people for new businesses, or expansions of existing businesses, that would not have taken place in a healthy, non-inflationary economy).

Businesses producing more with fewer employees means that unemployed Americans continue to face a dismal job market.

According to this logic, a non-dismal job market would be for the U.S. economy to adopt the methods of a poor, socialist African village: abolish all labor-saving machinery and capital that increases worker productivity and hire everyone in the village to dig ditches with teaspoons -- low productivity and full employment!

While many of the nation's big retailers have said back-to-school sales have been dismal, the government's Cash for Clunkers program did boost auto sales in August.

Econ 101: Part of the reason that back-to-school sales have been dismal is precisely because of a government subsidized "Cash for Clunkers" program. "Cash for Clunkers" may have boosted auto sales but only at the expense of shrinking the sales for goods X, Y, and Z -- those goods that people would have purchased had the money for them not been siphoned off by government to subsidize "Cash for Clunkers." Government merely redistributed sales that would have occurred elsewhere in the economy to sales for new, "efficient" automobiles. In short, it shifted sales away from items that consumers actually wanted to items that they normally would not have wanted. Additionally, "Cash for Clunkers" destroyed cars that were already bought and paid for -- debt-free cars -- and encouraged people to get back into debt (or get further into debt). It also diminished the supply of older, used cars, that would have sold on the used car market for less money than new cars -- the used car market being the main supply of cars for those with low incomes. According to this logic, why stop at cars? Why not "Cash for Old Toaster Ovens"? or "Cash for Incandescent Light Bulbs"? Or "Cash for Old Clothes"? The mind boggles at the stupidity of it all.

26 posted on 09/02/2009 8:48:05 AM PDT by GoodDay (Palin for POTUS 2012)
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To: expat_panama; LS; RobRoy; muawiyah; Mase; Toddsterpatriot; Willie Green; 1rudeboy

Actually, if companies are laying off lots of workers, it only stands to reason that productivity “per worker” would increase, when coupled with the context of “most in 6 years.

It is like saying we have seen the greatest rise in rainfall in six years, right after a six year drought.

And we had 1/1000 of an inch of rain.

I’m waiting for this headline, after the entire workforce has been laid off: “Current statistics show NO drop in employment.” Woo hoo! Great news!

There are lies, damned lies, and statistics.


27 posted on 09/02/2009 8:52:50 AM PDT by RobRoy (The US today: Revelation 18:4)
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To: visualops
Worker productivity is up because many of us are doing our job plus the job of the person that got laid off.

That would simply mean you were under-utilized and not working up to your full productivity to begin with. It would mean that the original decision to hire that second employee was an incorrect one; the firm being led to malinvest in more labor than it really needed because of inflation and artifically low interest rates.

28 posted on 09/02/2009 8:56:23 AM PDT by GoodDay (Palin for POTUS 2012)
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To: RobRoy

You are right about the rate of increase being subject to question, but the fact that productivity is rising at all (output per person per hour) doesn’t have anything to do with what happened last year.


29 posted on 09/02/2009 9:00:28 AM PDT by LS ("Castles made of sand, fall in the sea . . . eventually." (Hendrix))
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To: RobRoy
Actually, if companies are laying off lots of workers, it only stands to reason that productivity “per worker” would increase, when coupled with the context of “most in 6 years.

Actually, it means that the firm's output falls, unless the laid-off workers were merely hired as "feather-bedding." If the firm's output does not fall with laying off workers, it means that the original decision to hire them was incorrect. Why would lots of firms make similar mistakes in hiring too many people? Inflation and low interest rates.

30 posted on 09/02/2009 9:00:41 AM PDT by GoodDay (Palin for POTUS 2012)
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To: Titus Quinctius Cincinnatus

nope, it’s not the same as higher productivity from new innovations like robots and much more powerful computers. It’s just the same ordinary people working their butts off.


31 posted on 09/02/2009 9:01:11 AM PDT by ari-freedom (Shop at Whole Foods and buy-cott the boycotters!!!)
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To: GoodDay
the "bust" phase of the business cycle is the inevitable and necessary readjustment from a period in which inflation caused malinvestment (which includes hiring people for new businesses, or expansions of existing businesses, that would not have taken place in a healthy, non-inflationary economy)

You make a good point here. I've been thinking for a while that the small businesses that have gone under were probably poorly managed, and wouldn't have existed without something like an inflationary economy. A LOT of small businesses sell stuff that I can't imagine ANYONE wanting even in a fabulously wealthy country, much less in hard economic times (take a walk through your local mall, and take a look at the kiosks for a sampling of what I'm talking about).

32 posted on 09/02/2009 9:02:14 AM PDT by Hardastarboard (I long for the days when advertisers didn't constantly ask about the health of my genital organs.)
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To: GoodDay

Yes. I’ve worked at a LOT of companies in my 55 years, partly because I spent 12 of them as a consultant/contractor. There is a LOT of deadwood in EVERY company. And the bigger the company, the more deadwood there is.

When you lay off in a non-union shop, it is not that hard to get rid of the dead wood first. That act alone is going to increase productivity, and sometimes markedly so. Also, unproductive companies that shut their doors are no longer in the equation.

As the economy cleans house, I expect productivity of those that STILL HAVE JOBS to go up significantly.


33 posted on 09/02/2009 9:04:42 AM PDT by RobRoy (The US today: Revelation 18:4)
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To: Hardastarboard

Along the lines of your post, I expect the kiosks at the shopping mall that sell cell phone bling to be hardest hit. :)


34 posted on 09/02/2009 9:05:50 AM PDT by RobRoy (The US today: Revelation 18:4)
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To: pallis
The most dismal viewpoint would be that increased productivity helps everyone, so there'll be some people around who can pay the taxes to keep the unemployed poor from wandering the streets and getting in the way.

Or, better yet, any increase in productivity (whether in terms of productivity per worker, or fewer work hours per product) serves to provide the capital needed for economic expansion.

Absent capital, there can be no expansion. Without expansion you have more and more people sharing less and less.

I'm in favor of capital expansion even if it means AP goes out of business. Aren't you?

35 posted on 09/02/2009 9:25:22 AM PDT by muawiyah
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To: Hardastarboard

The dynamics of small retail enterprises are different from those which affect a large manufacturing concern. The retailer, for example, cannot imediately automate his primary business activity, and it really wouldn’t help him to relocate to another country with a lower wage rate.


36 posted on 09/02/2009 9:28:08 AM PDT by muawiyah
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To: GoodDay
That would simply mean you were under-utilized and not working up to your full productivity to begin with.

I've been in situations where I worked at "Full Productivity". It was during the tech bust in 2002-03, and the company could afford to abuse the hell out of their good people, because jobs were few and far between.

FWIW, "Full Productivity" for me at least, equated to 80-120 hours a week, 100% travel, no days off for a month or more at a time, a near divorce, ulcers, and ultimately, a new job as soon as one presented itself. I wasn't the only one in that boat, either.

It won't be happening again.

Now, if there were 6 people on staff who were working 40 hours a week, three get laid off, and the other three are still at 40 hours....that says to me that either the three laid off were useless, or the three remaining weren't working very hard. If that's what you meant, well, sure, that makes complete sense.

But, that's not always the case. I'm as pro-business as anyone, but I still recognize the fact that in an economic downturn, companies will push their workers a little harder. Partly because they need to, and partly because they can get away with it.

This, from a guy who's worked the past two weekends, Monday night and is already scheduled for this evening. I'm not complaining, though. They haven't hit 100 hours a week yet. :-)

37 posted on 09/02/2009 9:31:10 AM PDT by wbill
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To: GoodDay; RobRoy
A productivity improvement can mean a lot of things ~ laying off unproductive workers might not give you an improvement if, at the same time, you had declining demand (or sales as the retail minded put it).

If you have increased demand and you can get rid of employees, it means you are still well within the so-called "learning curve" of the process that defines your business. The typical "learning curve" eventually "bottoms out" so you have to change your modularity to keep up with your competitors. That resets the learning curve.

38 posted on 09/02/2009 9:32:08 AM PDT by muawiyah
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To: RobRoy
"...if companies are laying off lots of workers, it only stands to reason that productivity “per worker” would increase..."

No capitalist-basher could have said it better.   Anyone who's ever hired anyone in their whole life --and created a job-- knows better.  

Even if all you've ever done is say, paid a couple kids to rake you leaves, you know you demand productivity be the same whether you got two or you got one.   If productivity ever increases when you get rid of a kid, then you know they were goofing off.

39 posted on 09/02/2009 9:37:38 AM PDT by expat_panama
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To: expat_panama
You are free to imagine that the Obama Regime is a "strong" government, but it's not. History shows many governments that had "strength" in their past but ended up blowing the empire. The Swedish Empire, for instance, was just dribbled away in the 1700s like it was nothing. By 1809 they had to give Finland to the Czar. It didn't get better after that.

Sweden may be said to have had a "weak central government" in most of the 1700s. The King lost political control of much of Germany, Denmark, Poland, Lithuania, Latvia, Estonia, and Norway, and real control of Finland.

A weak Obama Regime could definitely see much of the Southwest lost to Mexico, New England to Socialist Canada, and Texas to a new independence movement. If you think current unemployment is bad, imagine the country cut into pieces by its enemies.

40 posted on 09/02/2009 9:37:47 AM PDT by muawiyah
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