❗Let's close the gap: We still need your help to raise $40,000 by April 1. Donate now

American worker productivity gets revised up

Jeff Horwich Dec 5, 2012
HTML EMBED:
COPY

American worker productivity gets revised up

Jeff Horwich Dec 5, 2012
HTML EMBED:
COPY

American workers were doing more and making more in the past few months. U.S. productivity growth has been revised up for the latest quarter, to an annual rate of almost 3 percent.

But productivity can cut both ways: the more productive we are, the less incentive for employers to hire more people.

“The number was very strong from the business standpoint,” says Gus Faucher, senior economist at the PNC Financial Services Group. “Workers were producing a lot more — what that means is that businesses don’t need to hire as much in the short run because they can get greater output from their workers.”

Over the long run, though, that productivity growth also allows for a higher standard of living, Faucher points out.

So what does this number mean for the labor market in the new year?

“It’s a double-edged sword,” according to Faucher. Strong productivity growth is strong, which could mean that firms don’t need to hire as much. However, wage growth is very slow right now, which Faucher says makes labor relatively less expensive.

“I think in 2013, that side of the equation is going to push firms to hire more,” he adds.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.