U.S. workers’ productivity drops again

David Gura Sep 1, 2011

U.S. workers’ productivity drops again

David Gura Sep 1, 2011

Kai Ryssdal: We learned this morning worker productivity is down. The number of widgets we produced per hour had its biggest drop since 2008.

Kind of an interesting number, ’cause for a good long while, companies haven’t had to hire because workers have been so productive — able to do as much or more with less.

Are the labor times a changin’? From Washington, Marketplace’s David Gura reports.

David Gura: Here’s how the Labor Department defines “productivity”: It’s how much output — how much of something you’re able to make — for every hour of work.

Josh Shapiro is chief U.S. economist at MFR, an economic consulting firm. Last quarter, output was up, but not by very much — just over 1 percent.

Josh Shapiro: With output growth, very sluggish companies have really cut their labor force and hours worked, and it’s very hard to squeeze any additional productivity gains out of the labor force at this stage.

Shapiro says businesses have been trying to do all they can with what they’ve got.

Shapiro: Companies haven’t hired people because they haven’t needed to. They’ve been able to produce what was necessary with their existing labor force.

So maybe the labor force has been maxed out. I asked Josh Shapiro if that could encourage companies to hire.

Shapiro: I don’t think that running out and hiring people in a period where demand is weakening is a very likely scenario.

If anything, some companies may have too many workers. Lawrence Mishel heads the Economic Policy Institute.

Lawrence Mishel: We’ve had much slower growth than employers thought there would be and therefore employment was higher than needed to produce what they could sell.

With all this bad news — slow growth, sluggish demand — executives have a lot to think about besides hiring. Pat Newport is with IHS Global Insight.

Pat Newport: So companies are being more careful about how they spend their money.

They’re focusing on how to cut costs. And even when companies do start to hire, they’ll have to spend time and money on something that’s not going to boost productivity: training those new employees.

In Washington, I’m David Gura for Marketplace.

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