U.S. Worker Productivity Up Just 1.6 % in Second Quarter

worker productivity

WASHINGTON -- U.S. companies got slightly more out of their workers this spring after scaling back on hiring. The modest 1.6 percent annualized gain in productivity from April through June signals employers may need to hire more if demand picks up.

The Labor Department said Wednesday that the increase followed a 0.5 percent decline in the January-March quarter, less than first estimated.

Productivity is the amount of output per hour worked. Rising productivity can slow job creation because it means companies are getting more from their current staff and don't need to add workers. Still, there are limits to how much companies can get from their existing work forces.

Productivity is increasing at a relatively weak pace. It is up only 1.1 percent compared to a year ago. Since 1947, productivity gains have averaged 2.2 percent a year. So companies may need to hire more workers if they can't produce enough goods to meet demand.

Modest productivity growth "isn't great for corporate profits, but it helps employment," said Paul Ashworth, an economist at Capital Economics.

Labor costs rose 1.7 percent. That's below the first quarter's 5.6 percent increase, a much bigger gain than first estimated. In the past year, however, labor costs rose only 0.8 percent. That's a sign employees aren't getting big raises and indicates inflation will likely remain tame.

One reason productivity improved is that hiring slowed in the second quarter. Employers added an average of only 75,000 jobs a month from April through June. That's down from an average of 226,000 a month in the first quarter.

The total amount of time U.S. workers spent on the job rose only 0.4 percent. That's down from 3.2 percent in the first quarter.

At the same time, total output rose 2 percent. When output grows faster than hours worked, productivity rises.

U.S. employers added 163,000 jobs in July, the Labor Department said last week. The unemployment rate edged up to 8.3 percent. Hiring probably won't accelerate from that level unless growth picks up or productivity slows, economists say.

Higher productivity boosts corporate profits, but can slow hiring in the short run. In the longer run, higher productivity also raises living standards for workers. It allows companies to increase workers' pay without pushing up inflation.

Productivity grew only 0.7 percent last year after rising sharply in 2010. The main reason productivity soared in 2010 was that it followed the worst recession in decades, when employers laid off millions of workers.

Economists said the trend is typical during and after a recession. Companies tend to shed workers in the face of falling demand and increase output from a smaller work force. Once the economy starts to grow, demand rises and companies eventually must add workers if they want to keep up.

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Why is Mitt running?
I deferred military service for bicycling in France.
I lived in a 5bedroom house while there, with a chef/ housekeeper and houseboy.
I claimed I lived like poor people then.
I spent the duration of the Vietnam War, proselytizing and converting people to my faith.

At Bain when I became the CEO; I turned the company from venture capital into a corporate raider.
I drove many companies bankrupt after stripping them of their assets and selling them.
I acquired Damon Corps medical labs and while there the company defrauded Medicare to the tune of 100s of millions. When I left the company was bankrupt and 1000 people lost their jobs.
I oversaw the second biggest Medicare fraud in History; just behind my friend Rick Scott’s who is trying to steal Florida for me.
I lay off more than 10’s thousand living, breathing people, solely to line my own pocket.
I enjoy firing people.
Of the companies I didn’t completely bankrupt, I drove 10,000s of people with livable wages into accepting minimum wage and told every single one, if they don’t like it they could leave.
At the same time I gave top management huge pay raises.
I created 10,000s of jobs on foreign shores and people who worked for me there, earned a couple dollars a day, See Global tech. China and Haier Electricals China.
I retired...
I pay 13%; in taxes on unhidden money which until it became illegal in 2011 I hid in tax havens.
I had the third lowest employment rate in any state in America as governor.
While I was governor, I used the Heritage Foundation’s Healthcare plan and created Romneycare’.
It lowered the insurance costs for Massachusetts by 1/3 since introduction.
I was proud when President Obama decided to use the plan, as I thought it would help my chances of becoming President but it was vilified by my party on purely political grounds, so backed away from it.
I cost the state $200000 when I left by replacing all of the states government computers to hide my record.

I think corporations are people but if you look at my history, you’ll find I don’t think people are worth telling the truth.

I have made $1/4billion by destroying thousands of lives.
I don’t care about any of those lives, and as you can see, I have no intentions of being honest with them.
I spent $200.000.000 to beat the weakest and most bizarre field ever in rightwing politics.
Those candidates warned you about me,

August 10 2012 at 10:49 PM Report abuse +1 rate up rate down Reply
Big John

There will be no hiring until after the election and gas will continue to rise until after the election. Put your thinking caps on and do you best to figure out why. Could it be big business and oil companies want a republican back in the White House? I wonder why they do?

August 09 2012 at 5:33 PM Report abuse +2 rate up rate down Reply

New Study: Bush Policies, Not Obama, Responsible for US Deficit
Romney repeatedly accuses the president of “runaway spending” and of “creating a prairie fire of debt.” While one in depth study shows that spending under Obama never happened, a new study reveals that Bush-era policies are primarily responsible for our burgeoning deficit.

This past Thursday, the Center on Budget and Policy Priorities (CBPP) analysis revealed that the Bush tax cuts, the wars in Afghanistan and Iraq, and Bush’s Great Recession account for virtually the entire federal budget deficit.


August 09 2012 at 3:46 PM Report abuse +1 rate up rate down Reply
1 reply to chris1011's comment
Big John

If you think the facts have anything to do with why people want the same crowd back in control who got us in this mess you are sadly mistaken. Facts and truth are their worst enemy.

August 09 2012 at 5:35 PM Report abuse +2 rate up rate down Reply

Please google AgelessDate. Thanks.

August 09 2012 at 5:22 AM Report abuse -1 rate up rate down Reply

And the remaining workers are working harder and longer.

Welcome to the Obama economy.

August 09 2012 at 1:33 AM Report abuse -1 rate up rate down Reply

We give too much as it is.

August 09 2012 at 12:30 AM Report abuse rate up rate down Reply

Managers and CEO's are sweating like a teenager asking a girl out on a first date from her parents.

August 08 2012 at 10:28 PM Report abuse +1 rate up rate down Reply

I'm told that the moderate mormon with all the money from massachusetts mitt RomneyCare has all the answers. You know the multi-millionaire elitest with the dressage horse, swiss bank accounts and off shore TAX havens has all the answers for who looks like the elite 1%, corporations and special interests.The republican debates were very revealing about how many feel about RomneyCare. They don't like him. He bought his nomination so more crony capitalism. Listen to what Santorum and Gingrich had to say about him about Bain Capital and while one term governor of Massachusetts but people will vote for him because of the (r) next to his name. What did Ron Paul say "he's not conservative" when asked about Romney. Oh listen to Perry also.

August 08 2012 at 3:26 PM Report abuse rate up rate down Reply

The notion that the president is in charge of the world economy or even the u.s. economy is nonsense. Some people just refuse to put any responsibilty and/or blame on Wall Street, banks and corporations. Over 800,000 became unemployed January 2009 and Obama is totally fix everything and put everyone back to work not realistic.

August 08 2012 at 3:16 PM Report abuse -1 rate up rate down Reply

Start of QTR 4, 2012... will be fewer workers as Obama care TAX INCREASE felt.

Huffy.... think this may warrant an act of journalism or will you stick to propping up the current failure???

August 08 2012 at 2:57 PM Report abuse rate up rate down Reply