More expected from fewer workers

Marketplace Staff Jun 25, 2010

More expected from fewer workers

Marketplace Staff Jun 25, 2010


Kai Ryssdal: There’s an economic report that we tell you about from time to time, worker productivity. The most basic definition of it is, widgets produced — whether those widgets are sales contracts signed or what have you — per hour worked. Productivity has been rising throughout the recession, as companies try to keep up, while at the same time cutting costs by cutting workers.

As the economy recovers and consumer demand rises, though, what those companies have been doing is adding hours, not people. In the manufacturing sector, overtime is up to more than four hours a week on average, that’s compared to 2.8 a year ago.

Our senior business correspondent Bob Moon reports that’s good and bad.

Bob Moon: Pam Haggerty is a regional sales manager who’s based in Maine — but she hasn’t been spending much of her time there lately. In fact, I caught up with her by phone in Kentucky, to ask what the recovery has meant for her.

Pam Haggerty: Exhaustion, I guess, is the first thing that comes to mind. I’m just so tired that the weekend isn’t enough.

She explained that she was asked to add three states to her territory when a colleague was laid off.

Haggerty: Basically, I felt that it was either accept those terms or lose my job. So I instantly said, “Oh, of course, I can do it.”

She can use the extra money now that business is picking up again. But she’s worried that her more demanding duties are here to stay — especially since she’s making it home a lot less often to see her husband, who’s out of work himself. Haggerty laments the two of them “have never felt so far apart.”

Haggerty: My husband wants to go camping this weekend. Well, I don’t land until Friday afternoon, and then it’s a two-hour drive to my house from the airport. And then to think about, you know, packing up and going camping with the kids for the weekend… Forget about it.

This is happening to workers across the country, as businesses wring out some of their best profits in years. They’re able make more money with fewer workers — for now. But Chicago-based job placement expert John Challenger says the pressure to hire again is building.

John Challenger: There will come a point when employers have no choice. There are many human resources executives today who are very worried that their very best people, the most productive up and down the company, are going to begin voting with their feet and leaving for greener pastures, because you can only add hours for so long.

But deciding when to hire again can be a tough call, especially for smaller businesses. Mike Van Horn heads The Business Group, a consulting firm in northern California. He says his clients are still worried the recession could return.

Mike Van Horn: A lot of people say, “Whoa, there’s a lot of people talking about double dip, we can’t get bank financing. It’s going to be very risky for us to be in expansion mode, just hiring people with the expectation that the work will keep flowing.

Angelique Clark: It’s a dance. You know, I don’t really look too much to economic indicators.

Angelique Clark runs an interior-decorating supply shop near San Francisco. She’s encouraged that business is picking up, and she’s been thinking seriously about hiring new help. For now, though, she’s relying on OT.

Clark: I would give my current employees overtime as kind of a little thank you, for sticking it out with me and going through it, before I really jump on hiring a new person and going through everything. Because then, if I have to lay them off, then I’ve gone though all that and then I have to pay workers’ comp.

The future may seem uncertain, but all this hiring pressure on employers actually strikes James Altucher as a good sign. He’s a hedge fund manager who blogs for the Wall Street Journal. And he sees what’s happening now as the natural cycle in every recovery since World War II.

James Altucher: The people who are making the overtime, eventually they start spending again. When they spend, that money gets cycled back into the system. There’s more demand for products, which puts even more pressure on the productivity of corporations, until finally they have to cave in and start hiring more people, and the cycle continues.

Altucher thinks we’re actually running ahead of schedule. He is known as a Wall Street bull, but he sees a big pick-up in full-time employment by the end of the year.

In Los Angeles, I’m Bob Moon for Marketplace.

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