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Marketplace Scratch Pad

Damned if you do

Scott Jagow Aug 11, 2009

Is it good news that worker productivity is way up? Should we be happy that companies are squeezing more out of their smaller staffs?

The Labor Department says non-farm productivity climbed 6.4% in the second quarter. That’s the biggest gain in six years. From USA Today:

The productivity number shows that companies have taken advantage of their slimmed-down workforces by wringing more out of each employee. That’s bad news for the jobless but should better position employers to hire again when demand returns, economists say.

So, this could be an encouraging sign that the drastic job-cutting is over, that companies are getting their strength back and will need to hire when demand returns. On the other hand, if you’re out of a job right now, it reads — they’re doing just fine with who they have.

Damned if you don’t

More bad news for the unemployed. There’ve been several stories lately about companies doing credit checks as part of the hiring process. From the New York Times:

…job counselors worry that the practice of shunning those with poor credit may be unfair and trap the unemployed — who may be battling foreclosure, living off credit cards and confronting personal bankruptcy — in a financial death spiral: the worse their debts, the harder it is to get a job to pay them off.

“How do you get out from under it?” asked Matthew W. Finkin, a law professor at the University of Illinois, who fears that the unemployed and debt-ridden could form a luckless class. “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.”

Here’s how companies defend the practice, which is getting some attention in Congress:

“If I see too many negative things coming up on a credit check, it’s one of those things that raises a flag with me,” said Anita Orozco, director of human resources at Sonneborn, a petrochemical company based in Mahwah, N.J. She added that while bad credit alone would not be a reason to deny someone a job, it might reveal poor judgment.

“If you see a history of bad decision-making, you don’t want that decision-making overflowing into your organization,” she said.

NPR also has an interview today on this subject.

You might look at all of this and say there’s a weeding-out process going on in the workforce. I read a comment from one employer who said he cut 2 people from an 8 person staff and his numbers are up across the board. He figures those two people were dead weight.

At the same time, there are plenty of talented, hard-working people who can’t get back into the job market and might find it harder to do so with each passing day. I suppose the ethic of saving for a rainy day never sounded better.

Your thoughts?

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