House of Eratosthenes

A strong March job-growth number — at a time when the economy is growing at only a middling pace — would suggest that the productivity boom has largely run its course. Regardless, the question of what caused the burst in workers’ efficiency is one of the great unanswered questions of the expansion and has huge stakes for the economy over the coming year.

“It is an episode that we’re going to — we, economists in general — are going to want to understand better and look at for a long time,” Federal Reserve Chairman Ben S. Bernanke said at a hearing last week in which he described the productivity gains as “extraordinary” and acknowledged he had not foreseen them.

Businesses have certainly not been investing in new equipment that might enable workers to be more efficient — capital expenditures plummeted during the recession and are rebounding slowly. And the structural shifts occurring in the economy are so profound that one would expect productivity to be lower, rather than higher, as people need new training to work in parts of the economy that are growing, such as exports and the clean-energy sector.

So what’s happening? As best as anyone can guess, the crisis that began in 2007 and deepened in 2008 caused both businesses and workers to panic. Companies cut even more staff than the decrease in demand for their products would warrant. They were hoarding cash, fearful that they wouldn’t have access to capital down the road.

When demand for their products leveled off in the middle of last year, the companies could have stopped cutting jobs or even hired people back. But they didn’t — payrolls have continued declining.

Instead companies squeezed more work out of remaining employees, accounting for a 3.8 percent boost in worker productivity in 2009, the best in seven years. Which raises the question: Why couldn’t companies have achieved those gains back when the economy was in better shape? The answer to that may lie on the other side of the equation — employees.

Workers were in a panic of their own in 2009. Fearful of losing their jobs, people seem to have become more willing to stretch themselves to the limit to get more done in any given hour of work. And they have been tolerant of furloughs and cutbacks in hours, which in better times would drive them to find a new employer. This has given companies the leeway to cut back without the fear of losing valuable employees for good.

It’s even worse than you think. Have been on the street for too long now, and have been interviewing for positions thatI’m more than qualified for. The trouble is, I’m more qualified than the hiring director for their position, and I’ve gotten feedback that they are afraid that I’ll take THEIR job.

And I agree with your posting. People are literally working themselves to death. At some point, they will simply not be able to keep up this crushing pace. What then? Will they crumble in a heap of health problems, or go postal?

And I can’t blame the employers either. THEY’RE running scared, due to slumping sales, and with the *spit* 0bama *spit* ‘health care’ mandates costing hundreds of millions of dollars, they are probably going to need to reevaluate their business models and lay off MORE people.

We are well and truly in the shit, baby.
- HoundOfDoom | 03/31/2010 @ 08:35
I’ll use small words, so Mr Bernanke can understand what I’m saying.

We terminated about 15% of our workforce starting in late 2008 and into 2009. A few of those people were slackers who should have been let go earlier, but you can maintain them during good times. A few of those people were skilled workers, who had considerable experience. This was muscle, not fat that we were cutting.

Fast forward to late 2009, and our sales volume, which had been on life support earlier, picks up geometrically. Material that our customers had put off ordering or not needed is now in demand. Couple a sudden increase in orders with a reduced workforce, and what do you get? Unlimited overtime, or productivity, as Helicopter Ben would call it. Less people doing more, which will continue for the foreseeable future because the same idiots who are prolonging the recession are still in charge, have just passed a complete boondoggle which will do something (probably none of it good, although no one can tell you exactly what it will do) to one-sixth of our economy, and will undoubtedly continue their assault on American small businesses. We’re hiring a few people, but they can’t replace the ones who left in critical areas, because training their replacements takes a great deal of time.

So we’re working harder, not smarter, although I doubt that anyone is on death’s door. It certainly beats not working. BTW, if people can’t understand that workers perform better when motivated by fear of being sacked, then they need to find a new line of work. In good times, when the pool of potential employees is shallow, finding someone to replace an underperformer is not worth the effort.
- chunt31854 | 04/01/2010 @ 06:43

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“Holding Back Job Growth? Workers’ Awesome Output”Wednesday, March 31st, 2010

“Holding Back Job Growth? Workers’ Awesome Output”
Wednesday, March 31st, 2010