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We're burned out: The first drop in worker productivity in 18 months may be a sign that...

We're burned out: The first drop in worker productivity in 18 months may be a sign that employees are finally stretched too thin, Paul La Monica says - meaning that companies may no longer be able to rely on cutting costs, particularly through layoffs, to juice profits.
Comments (14)
  • Morg
    , contributor
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    In a silver lining could this be a sign of future hiring as current employees are unable to complete all of the necessary work?
    10 Aug 2010, 03:22 PM Reply Like
  • rooftop
    , contributor
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    Beatings will continue until morale improves.
    10 Aug 2010, 03:30 PM Reply Like
  • coloneldebugger
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    I guess it's a good thing then that inventories are growing faster than sales so they can cut back production.
    10 Aug 2010, 03:35 PM Reply Like
  • Jeff Nielson
    , contributor
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    It is long overdue that people were finally ENLIGHTENED as to what so-called "productivity gains" REALLY represent: the falling (real) wages of Western workers.

     

    For the past 40 years, ALL "productivity gains" have represented either REPLACING workers with machines, or simply cutting their compensation. Period.

     

    Anyone with a genuine understanding of economics, and who also believes that PEOPLE are more important than CORPORATIONS should be rejecting these much-hyped "productivity gains" for what they really are: yet more economic oppression of the Western worker.
    10 Aug 2010, 03:38 PM Reply Like
  • coloneldebugger
    , contributor
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    It's the Wal-Martification of America.

     

    The only thing better than cheaper is more cheaper. Who cares if the product or service is any good.
    10 Aug 2010, 03:42 PM Reply Like
  • Morg
    , contributor
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    Jeff,

     

    Productivity can also suggest extra output per worker cost not just falling wages. As you pointed out technology (i.e. machinery) can have a big influence on productivity as well as it takes fewer workers to create each unit of production.

     

    American labor has long been overdue for a correction in wages relative to the mean of the global community. This would follow the time honored economic principal of mean reversion. How can you expect US low skilled labor to remain high relative to other locales in perpetuity.

     

    You seem to suggest that we should not consider cheaper labor abroad or more efficient technology at home in order to preserve jobs at ridiculous wages. Businesses are not in place to provide jobs, they exist to make money for their owners and thus it is in their interest to limit costs.

     

    We have to compete globally against companies whose products are created in much cheaper manufacturing environments. If our own companies do not stay competitive via cost controls and other methods they will at some point cease to exist taking our economy with it.

     

    While the level of living is dropping for our people and most other western nations they are rising in areas where people have been living in extreme poverty for centuries. This seems a natural part of economics to me and as a whole good for more people than it hurts. Your argument seems to rhyme with many others made at various parts of history where new costs cutting technologies and events occured (industrial revolution, invention of the tractor etc...)
    10 Aug 2010, 04:11 PM Reply Like
  • Morg
    , contributor
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    Colonel,

     

    I don't regard most products coming out of American union shops as exactly being high quality.

     

    I think if you looked at relevant data that there are still many people willing to fork out extra cash for percieved quality in most cases. Substitution will always occur during poor economic times such as we are living in now.

     

    I am always willing to pay extra for an item that I believe is better as long as the extra cost fits the extra utility I gain. Extra cost in order to support high wages and benefits does not add utility for me and I will go with a similar quality cheaper good produced elsewhere.

     

    I do not wish ill on American workers but it is my belief that we all are going to have to get used to a lower lifestyle as wages drop due to global competition and credit is less available. Reality is coming.
    10 Aug 2010, 04:20 PM Reply Like
  • Jeff Nielson
    , contributor
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    Morg, those are good points.

     

    From a behavioral standpoint, labour is relatively constant. While some individual employers can be more or less successful in motivating employees, generally speaking the "worker effort" component of productivity is a constant.

     

    Taking advantage of "cheaper labour" is certainly also a valid economic policy objective. However, what is important here is HOW that was done: ALL of the losses in this transition were borne by Western workers. Meanwhile, the vast majority of the PROFITS of this transition went into the pockets of large corporations (and their wealthy shareholders).

     

    Given that these corporations were BUILT through the efforts of these Western workers, it is both economically and morally "just" that LOSSES and GAINS be borne EQUALLY by Western workers and Western corporations - not the "wham, bam, thank you ma'am" that Western workers have gotten from their (former) employers.
    10 Aug 2010, 05:01 PM Reply Like
  • Origa
    , contributor
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    To deal with this economy and to let it grow again, what new ideas is there on the table that will get 41,66 Million Americans back to work.

     

    What macro economics is going to lower the number of food stamps!?

     

    Jeff is correct, when he says machines have taken jobs, and price is everything. BUT, price vs quality is equal as important, in a recession people buy high quality or cheap as it gets.

     

    In the economy price vs quality is, and has always been a key factor for job growth/loss.

     

    Price won, back in the days when vhs vs betamax were fought.

     

    The hoarding of cash leads to huge inflation or currency devaluation, history has many cases for this scenario.

     

    But nothing is like that at this time in history, and with the current state of affairs, and there is no huge comeback, or any kind that just indicate a reverse trend.

     

    Though it is not impossible to change the economy, you need a lot of unamerican game changes.
    10 Aug 2010, 05:20 PM Reply Like
  • Poor Texan
    , contributor
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    A man has an idea and creates a product or service.

     

    The product or service is perceived as good and there is more demand than the man can satisfy.

     

    The man hires and trains people to create the product or service.

     

    After a time the product or service becomes obsolete.

     

    The man stops providing the product or service and lays off the people he trained.

     

    The man is 'evil' for getting rid of the people who contributed to his success.
    10 Aug 2010, 05:29 PM Reply Like
  • Jeff Nielson
    , contributor
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    In fact, part of the answer is simply looking to history. The original "work week" was somewhere around 80 hours/week. Because technology ALWAYS eliminates jobs faster than it creates new opportunities, that work week had already been cut in half - more than 50 years ago.

     

    It will NEVER, EVER be possible to have anything close to "full employment" in our societies with a five-day work week. And since we can NEVER trust corporations to take care of their own workers, it's up to government to protect workers BEFORE selling them out with more '"free trade".

     

    The Canada/U.S. Auto Pact was a HUGE success for thirty years (until the Big Three self-destructed). It divided up production between the two countries through a fixed "formula" - and both countries prospered from it.

     

    It is pure, corporate "mythology" that the only way to make economies more efficient is through "free trade".
    10 Aug 2010, 10:57 PM Reply Like
  • youngman442002
    , contributor
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    So I guess the sweat shops of the Eastern Worker are better.....where their wages have doubled....
    10 Aug 2010, 03:46 PM Reply Like
  • Origa
    , contributor
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    A way out of this recession is for the US to give tax cut to business on machines for the assembly line.

     

    Example.
    The US is a main importer of computers etc, a way to reverse this is to create a temporary tax cut off 100% for investment in assembly line machinery/housing costs for the next 3 years.

     

    Another example, is to reduce Oil imports, is to tax oil produced plastic if it can be replaced with US home grown "green energy".
    10 Aug 2010, 03:49 PM Reply Like
  • Duude
    , contributor
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    An end in job cutting assumes that demand doesn't decline from here. Have we gotten to the point that is the case? China seems to be a pretty good indicator of American consumer demand . Now they're importing less raw materials and exports are slowing.
    10 Aug 2010, 03:58 PM Reply Like
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