BryanMD

We're making more stuff with many fewer workers

The biggest economic news this week isn't that the unemployment rate rose from 9.8 percent to 10.2 percent in October, or that the economy lost another 190,000 jobs, according to the Labor Department. It's that labor productivity for the third quarter rose at an eye-popping 9.5 percent annual rate, according to another report.


Of course both reports paint different parts of the same picture, but the productivity figures are remarkable for what they say about the divergence of hiring and economic output. The government previously reported that GDP rose at a healthy clip in the third quarter. The productivity figures show that was accomplished with even fewer workers than economists had expected. We're making more stuff with A LOT fewer workers, and that's contributing to the high unemployment rate and continuing job losses.



In the long run productivity growth is great. When workers can produce more per hour of labor, their incomes rise, corporate profits rise, standards of living rise etc. Productivity growth kills inflation. Technology-enabled productivity growth essentially explains why Americans are rich and cavemen were poor. A hundred cavemen working for one hour could catch a bison, if they were lucky. A hundred Americans working for an hour can produce a Toyota. (I'm simplifying here and leaving out non-labor inputs like investment and natural resources, but you get the idea.)



But in recent decades corporate profits have grabbed a huge share of the gains from greater productivity, at the expense of workers. In theory profits from productivity growth are supposed to be shared with a company's work force or redeployed in other areas of the economy to employ displaced workers. But it's not happening so far in this recession.
Brad DeLong was shocked at the 3rd quarter productivity numbers and explains why what's going is prompting a rethinking of conventional wisdom.




DeLong:

Back in the 1930s there was a Polish Marxist economist, Michel Kalecki, who argued that recessions were functional for the ruling class and for capitalism because they created excess supply of labor, forced workers to work harder to keep their jobs, and so produced a rise in the rate of relative surplus-value.


For thirty years, ever since I got into this business, I have been mocking Michel Kalecki. I have been pointing out that recessions see a much sharper fall in profits than in wages. I have been saying that the pace of work slows in recessions--that employers are more concerned with keeping valuable employees in their value chains than using a temporary high level of unemployment to squeeze greater work effort out of their workers.


I don't think that I can mock Michel Kalecki any more, ever again.

__________________
Engineering. Where the noble semiskilled laborers execute the vision of those who think and dream. Hello, Oompa-Loompas of science. -Sheldon

Power Tech

I noticed from the first day there was the men getting the job done and those that either were dragged along grab asses distracting the rest.

I had a situation where the bosses son got into it with another worker saying, "I don't need to work, you think my dad is going to fire me?"

The other JW looked at him and said, "If you're not going to work I am not going to work.

The next JW said, If you guys aren't going to work I'm not.

I was the only one that finished the day with a clear conscience.

1 man can ruin a team.

I see on TV the Chinese running up hills with wheelbarrows. When one falls another stops and helps him, and continues running.

My point; Cutting dead wood that was only a distraction to begin with raises productivity.

bobelectric

Asphalt Stations are closing this week. A lot of truckers signing up this week.