US productivity up 3.3 percent in spring, labor costs fall

[Omaha Steve]

Source: AP

By MARTIN CRUTSINGER

WASHINGTON (AP) — U.S. productivity in the spring rose at the fastest pace since late 2013, while labor costs declined.

Worker productivity increased at an annual rate of 3.3 percent in the April-June quarter, the Labor Department reported Wednesday. That was a rebound from the first quarter when productivity had fallen at a 1.1 percent rate and a sizeable upward revision from the government's first estimate of a 1.3 percent growth rate.

Labor costs fell at a 1.4 percent rate in the second quarter, indicating that wages are not rising even as unemployment declines.

Even with the strong gain in the second quarter, productivity over the past year has increased by just 0.7 percent, far below the long-run average of 2.2 percent. Productivity, the amount of output per hour of work, has been sluggish since the recession and economists have been at a loss to explain the reason for this weakness.

FULL story at link.



In this Friday, June 5, 2015 photo, sous chef Johnny Bacon places fried eggs on a plate while filling an order at Zak the Baker, in Miami. The Labor Department releases second-quarter productivity data on Wednesday, Sept. 2, 2015. (AP Photo/Lynne Sladky)

Read more: http://bigstory.ap.org/article/eac13f2843fa49108479365f9154d2f1/us-productivity-33-percent-spring-labor-costs-fall

[djean111]

1. That's the objective, isn't it - people work harder, get paid less.

Years ago, my son was working as a fine finish carpenter, and got a call from one of his friends who did the same sort of work, asking him to work on a job with him.
Here was the deal - his friend bid the job at a fixed price, and my son was to be paid by the hour, with no guarantee as to number of hours. My son is a fast worker. And a great, precise, fine finish carpenter. I asked his friend - so - the faster my son works, the more money you make and the less money he makes.
His friend said yes, that is what would happen.
My son said no, his friend got another guy to work for him who was slow and need to be followed up on, on a daily basis.
Friend made less money than he would have made if he had given my son a guarantee or a percentage. That's how things work now - EXCEPT the slower, less skilled carpenter's mistakes would not be fixed.

[Recursion]

9. Increased productivity is rarely about people working harder

It's generally about automation. 30 years ago I would have written a memo and walked it down to the corner office; today I send an email. Bang. I'm 33% more productive. A housekeeper used to have to wash dishes by hand, now there's a dishwasher. Etc.

[mahatmakanejeeves]

2. From the source:

Productivity rises 3.3% in 2nd quarter 2015 (annual rate); unit labor costs fall 1.4%

Productivity increased 3.3 percent in the nonfarm business sector in the second quarter of 2015; unit labor costs decreased 1.4 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 2.3 percent and unit labor costs decreased 2.2 percent.

[Recursion]

13. OK, so manufacturing wages are essentially unchanged but nonfarm wages on the whole are up?

That seems like a manufacturing wage increase of 0.05% (noise, really) but an overall nonfarm wage increase of 1.85% over the quarter.

[pediatricmedic]

3. Increased automation and efficiency, fewer workers needed

We should see this trend continue or even accelerate in the next couple decades.

[Recursion]

11. We saw it in agriculture ~100 years ago

That was a huge societal change that came from that and it caught people off guard. We need a government that is thinking about what this new economy will look like.

[jtuck004]

4. Labor is an investment, not a cost. n/t

[Recursion]

12. And they're investing more in labor now than a quarter ago

3.3% productivity rise and 1.4% unit labor cost fall means wages are 1.85% higher than last quarter.

[abelenkpe]

5. Laborers work harder, make less

Fixed title.

[Recursion]

14. Laborers are making more

That shows a 1.85% increase in wages.

[lonestarnot]

6. Faster, longer, harder for less pay.

[coyote]

7. Oh well...

40 years of offshoring. Remaining jobs pay 3rd world slave wages and now the whole system's collapsing because nobody has money to spend. It's really no more difficult to understand than that. Run for the hills, the con job is up, this sucker is coming down.

[reformist2]

8. The headline should have read "Wages Fall."

[Recursion]

10. No, wages rose, just not as much as production

The labor unit cost means cost per unit of productivity. Productivity went up 3.3%, and unit labor costs went down 1.4%. To use $100 to keep it simple:

Production was 100 units
Wages were $100

Production is now 103.3 units
Wages are now $103.3 * .986 = $101.85

So, wages went up, just not as much as productivity did.