Americans – at least the ones who have jobs – are working hard. Workforce productivity rose at a faster rate last year than it did in the previous eight years, according to data released today by the U.S. Bureau of Labor Statistics (BLS).
Meanwhile, for the first time in about 50 years, labor costs fell for a second straight year, which suggests we are working harder for less money.
Economists say the two-year surge in productivity is winding down as companies exhaust their ability to squeeze more output out of depleted workforces; they foresee an increase in hiring this year, NPR reported today.
The BLS reports that non-farm business sector labor productivity increased at a 2.6 percent annual rate during the fourth quarter of 2010 and 1.7 percent over the last four quarters. Quarterly measures provide information on business cycles, while annual measures reflect long-term trends. The gain in fourth-quarter productivity shows increases of 4.5 percent in output and 1.8 percent in hours worked (seasonally adjusted annual rates.) Productivity, the amount of output per hour of work, rose 3.6 percent in 2010 after a 3.5 percent gain in 2009.
Labor productivity is calculated by dividing an index of real output by an index of the combined hours worked of all persons, including employees, proprietors, and unpaid family workers.
Unit labor costs in non-farm businesses declined 0.6 percent in the fourth quarter of 2010, as the increase in productivity (2.6 percent) outpaced the increase in hourly compensation (1.9 percent). BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them. Over the last four quarters, unit labor costs declined 0.2 percent, as hourly compensation and productivity increased 1.5 percent and 1.7 percent, respectively. Annual average unit labor costs fell 1.5 percent from 2009 to 2010.
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