Productivity up 6.6 percent in 2Q, most in 6 years

AP through Yahoo.com ^ | september 2, 2009 | Martin Crutsinger

[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.

[muawiyah]

This is the sort of thing that creates DEFLATION.

Given the size of our workforce ~ still huge ~ this is an amount sufficient to negate the stimulus funds several times over.

If Obama had a monitarist policy in mind, he should have abadoned it about 2 seconds after this story came out.

And you guys into "Inflation will gobble us all up" ~ well, it certainly will, but not just yet. We continue to face improved productivity, lowered employment, weak central government (yeah, with idiots in charge it's a classical case of "weak"), and all the other problems we already had.

Onliest good news is we still got a 15% overhang in housing ~ and all things considered, that ain't bad.

[visualops]

Worker productivity is up because many of us are doing our job plus the job of the person that got laid off.

[Wiseghy]

Yes, the few left working are working much harder.

They are also burned out and afraid. It’s scary what they don’t see in these numbers.

[RobRoy]

>>And you guys into “Inflation will gobble us all up” ~ well, it certainly will, but not just yet.<<

That is my take. That is, inflation will “gobble us all up”, but not just yet.

[Iron Munro]

These numbers are close to meaningless in today’s environment.

Productivity up?

What is the relative effect on the economy of producing slightly more per manhour as opposed to the effect of more than 16% unemployed?

[muawiyah]

That's how it's done. FIrst you have two employees. Then you invest in labor saving equipment. Now you have one employee So you invest in automation.

At that point it's just between you and your creditors.

[LS]

That’s what my investment advisor says too. Inflation is coming, but not for a while.

[muawiyah]

You miss the first point ~ DEFLATION ~ the AP writer has no idea what it is of course but the editor at Yahoo.com knows ~ he's just ignoring it.

I know what it is too.

Now, for you folks who hate the federal bureaucracy, a couple more quarters of productivity improvement and Obama will be cutting federal worker pay!

HISTORY NOTE: Somewhere around here I have the pen Franklin Roosevelt used to sign the first, last and only payraise he ever gave federal government employees.

[LS]

Well, obviously if you have massive unemployment, incremental, even solid, gains in productivity won't help immediately. What it says is that some of the bankruptcies and the collapse of GM have, as markets predict they would, had an effect: those who have jobs are doing them better.

And it's not just a case of you doing "your job and the guy who got fired," because that results in lowered productivity through burnout. America is STILL a phenomenally productive place, potentially.

[Truth is a Weapon]

Yep. If you have 10 employees, fire one and still do the same amount of business you will have around a 10% gain in productivity (the around is because I don’t know how the arithmetic works).

Productivity increases like this are good for the economy only if that fired worker goes out and gets another job right away. It is only good for that worker, if he finds a better job.

[earlJam]

Worker productivity is up because many of us are doing our job plus the job of the person that got laid off.

Exactly.

Eight people now doing the work of ten.

[Zeddicus]

Yes, the few left working are working much harder. They are also burned out and afraid. It’s scary what they don’t see in these numbers.

My sentiments exactly! Yeah we're productive - those left with jobs are doing the work of 3 others and are petrified of losing their own job.

My job has become pure hell. I hate every minute of it and I loathe my boss, who cares only about my output and extracting as many hours of work as possible out of me (I'm a salary slave).

I've had it. We're in the process of downsizing and as soon as humanly possible, I'm quitting. I'd rather flip burgers if necessary and live a simple life than chase this crap anymore.

[vekzen]

Bet my company is typical. Revenues and profits are down. We’re struggling to meet sales quotas and financial goals. Most people are working harder and longer than ever before just to hold onto their jobs. Eveyone is spending less and saving what they can, knowing their job could be gone in a few months and higher taxes and inflation are coming. This is the Obama economy.

[Carley]

We can’t have inflation until too many people are chasing after too few products.

For now, people are saving, not spending.

Going to be a long time before people feel comfortable enough to buy buy buy.

[thefrankbaum]

I agree completely. We’re still in a deflationary cycle, since the assets were valued far beyond what the market could sustain. Once we reach a form of equilibrium and velocity picks back up - hellllllllllllllllo Zimbabwe.

[Centurion2000]

They are also burned out and afraid. It’s scary what they don’t see in these numbers.

That's because a lot of MBA's nowadays are IDIOTS and fail to consider the intangibles inside a company.

[Bean Counter]

My wife’s “productivity” doubled Monday morning when her employer cut their Administrative Staff by half. What took six people to accomplish just last Friday is now spread among three people.

At the same time, here are the July 2009 Unemployment numbers from several Counties here in Southwest Washington that represent most of the population in the region. Mind you, the Washington State’s unemployment rate was heralded as “dropping” to “only” 9.1% in July...

Clark County: 13.7%

Skamania County: 11.2%

Cowlitz County: 12.9%

Lewis County: 12.3%

Wahkiakum County: 11.8%

Pacific County: 10.8%

Gray’s Harbor County: 12.2%

[oscars300]

Labor productivity usually tends to improve during a recession, for rather obvious reasons: The least productive workers get fired first. This increases productivity per worker.

As for living standards, improved labor productivity only raises living standards assuming constant employment. Obviously, if the reason for improved productivity is reduced employment, well...

After all, the most efficient way of raising labour productivity is to fire all but the most efficient worker in the economy. Sure, the economy will have stopped dead, but labor productivity per worker will be hugely impressive*.

*Well, not really, as society will have collapsed. But firing the 90% “least” productive workers would have this effect even in practice.

[muawiyah]

Notice, however, Zimbabwe is not now nor has it ever been distracted by real deflation.

It's not just a monetary problem ~ with goods/services on one side and specie on the other. It's a productivity problem with vast improvements distorting the "normal market" everyone expects. Deflation does not necessarily drive up the value of money (so that not all prices change ~ vegetables, for instance, are still going up compared to historic levels) which means it's not strictly a monetary phenomenon like the Jimmy Carter Stagflation proved to be.

At the same time productivity improvement is selective regarding the products/services which are going to see prices slashed, or profits increased.

Zimbabweans can only hope and pray for some deflation of either kind ~ monetarist theory or productivity theory.

[ex-snook]

Productivity increases another name for layoffs. Sales increases would be more meaningful.

If workers are not buying, business is not making money.
If business in not making money, business is laying off.
If business is laying off, workers are not buying.

If workers can’t get work, they vote for more government.
When government can’t provide enough work, they get in a war.