Thursday, February 26, 2009

Despite Slowdown, Productivity, Wages Are Rising

This is the Age of the Incredible Shrinking Everything. Home prices, the stock market, G.D.P., corporate profits, employment: they’re all a fraction of what they once were. Yet amid this carnage there is one thing that, surprisingly, has continued to grow: the paycheck of the average worker. Companies are slashing payrolls: 3.6 million people have lost their jobs since the recession started, with half of those getting laid off in just the past three months. Yet average hourly wages jumped almost four per cent in the past year. It’s harder and harder to find and keep a job, but if you’ve got one you may well be making more than you did twelve months ago.

Today’s sticky wages aren’t just the result of custom, though. They’ve also stayed high because of the most unusual aspect of this recession: even as the economy has cratered, American workers have become more productive, not less. Productivity—how much output workers produce per hour of work—is the key to a healthy economy. Historically, productivity has been “procyclical”: it rose during booms and fell during recessions. But not this time. Even as the economy did a cliff dive in the last quarter, productivity rose an impressive 3.1 per cent. And since, in theory, workers get paid more the more productive they are, their increased productivity has helped them avoid pay cuts.


From James Surowiecki's article in The Atlantic, "Nice Work If You Can Get It"


8 Comments:

At 2/26/2009 10:22 AM, Anonymous Anonymous said...

And since, in theory, workers get paid more the more productive they are,...

This does not apply to government workers. And in the age of Obama, we are going to have more and more government workers.

 
At 2/26/2009 11:50 AM, Anonymous Machiavelli999 said...

And since, in theory, workers get paid more the more productive they are,...

This was not true in practice. Wage gains have not kept up with productivity gains the last 30 years. These things don't really matter now since we are headed into the Second Great Depression, but its important to note how screwed up the economy was even during the "good years".

 
At 2/26/2009 12:30 PM, Anonymous poor boomer said...

There is no inherent reason for wages to rise with productivity.

Minimum wage workers can become more productive without any increase in wages.

Where a labor surplus exists, productivity gains will not be matched by wage gains.

 
At 2/26/2009 2:12 PM, Blogger 1 said...

"This was not true in practice. Wage gains have not kept up with productivity gains the last 30 years"...

Oh I think it is true, the problem was and still is depending on the union involved, wages are far out in front of productivity those wages actually pay for...

"Minimum wage workers can become more productive without any increase in wages"...

No, minimum wage workers can never achieve the productivity that law forces employers to pay to less than adequate employees...

 
At 2/26/2009 4:24 PM, Anonymous Anonymous said...

There was no increase in nominal or real average wages from January to September 2009. Real weekly earnings actually declined.

BLS data here.

When the CPI fell off a cliff starting in October, the temporary "sticky wages" stuck. Wages are not sticky anymore.

Productivity is such a heavily revised metric, the initial readings are not worth talking about.

 
At 2/28/2009 2:18 PM, Blogger 1 said...

"There was no increase in nominal or real average wages from January to September 2009. Real weekly earnings actually declined"...

Hmmm, market forces at work regardless of what liberals and the clueless want...

 
At 3/01/2009 5:52 PM, Anonymous Anonymous said...

Productivity is such a heavily revised metric, the initial readings are not worth talking about

Cue it up; there was no productivity, period, in Q4.

 
At 3/01/2009 7:57 PM, Blogger OBloodyHell said...

> This does not apply to government workers. And in the age of Obama, we are going to have more and more government workers.

LOL --

What makes you think "productivity" in government work is actually a net positive? Sure you COULD cut back on the number of government workers employed, but that's not the way bureacracies work -- especially ones whose funding isn't actually tied to producing some form of actual wealth. No, you either find MORE things to take control over (i.e., expand government) or you get more absolute and officious about the work you do have (increase the amount of bullshit detailed paperwork that must be filled out and checked by the worker and, much worse, by the "controlled").

So, yeah, they're possibly "more productive", but that means that either more people are being controlled (and hence less productive) or the ones who are controlled are having THEIR productivity lowered even more by additional reams of paperwork permissions, inspections, licenses, and assorted other time-wasting CRAP.

 

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