The Job Hunt: With fewer hours at work, productivity rises as unemployment hits 7.6%
byFeb 8th 2009 1:30PM
For all the workers being laid off and all of the work furloughs being instated at companies across the nation, it looks like companies are getting their money's worth, according to productivity data released this week by the Bureau of Labor Statistics.
Productivity -- measured by output per hour -- rose 2.8% in the nonfarm business sector in 2008. It was the largest productivity increase since a similar gain in 2004, and was due more to the declines in hours than in the small gains in output, according to the preliminary productivity data. All this on a day when unemployment rose again, now at 7.6%, and job losses were reported across all major industries.
In other words, fewer hours worked by fewer workers is equating to more productivity. Somehow, the work is getting done by fewer people.
For example, some of my former colleagues at a newspaper I worked at before being laid off last summer were asked last week to take one week off without pay by the end of March. The work furlough was a way to save the company money and to hopefully avoid more layoffs.
But managers discovered after four days of this that its already short-staffed copy desk couldn't keep up with the workload while some people were off on unpaid leave, so it shortened the furlough by two days for some workers. Productivity rose for a few days because there were fewer workers, but it suffered so much that some had to be brought back from furlough.
Nationally, output increased 1% in 2008 and hours decreased 1.8%. Things were better in 2007, when all three factors increased, with productivity up 1.4%, output up 2% and hours rose by 0.5%. For unemployment figures to stop taking a dive, hours worked need to increase.
The layoffs and decrease in hours, including having full-time workers seeing their weekly hours drop to 30, were especially effective for businesses in the fourth quarter of 2008, when productivity increased 3.1% in the business sector while hours decreased 8.1%.
The businesses are getting a lot more productivity for their money because they have fewer workers and less hours to pay for. But my question is if that productivity comes at a price for the consumer. Are the things people are buying just as good as they were before, when workers weren't as rushed to do their jobs? With the same amount of work but less hours to do it in, something's got to give.
I expect the rising productivity and falling hours to continue into this year, as unemployment figures are only getting worse. On Friday the Bureau of Labor Statistics reported that the national unemployment rate rose to 7.6% in January with 11.6 million unemployed people.
Half of the 3.6 million loss in payroll employment since the recession started in December 2007 happened in the past three months, the BLS reported Friday. Over the past 12 months, the number of unemployed people has increased by 4.1 million and the unemployment rate has risen by 2.7%.
With those numbers only getting worse, you can bet more companies are planning more layoffs and furloughs in the months ahead as they seek to cut costs and increase productivity.
Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.AaronCrowe.net