Thursday, September 2, 2010
Workers Decrease Productivity in Hard Times
The American work force has been hit hard by layoffs the over the last 2 years, companies have demanded more out of there employee's. American workers had increased there productivity at the beginning of the recession as workers were laid off, in 2009 productivity rose 3.5 percent. But with the most recent report from the labor department stated that productivity dropped at an annual rate of 1.8 percent, this means firms will need to reevaluate there strategies to increase output. Overall with the fall in productivity companies will need to restart hiring or investment to increase output.
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What do you think were the reasons for these changes in productivity? Could it be that in 2009, employees worked harder because they were afraid of losing their jobs, but since then many employees have been less motivated to work hard because even though they got to keep their jobs, their wages and/or benefits were decreased?
ReplyDeleteCould it also be that there has been a lack of investment by firms in new technologies and capital? Workers marginal product of labor grows when they are motivated and when capital provided for them to work with is also updated or increased to accommodate more workers. Firms may be lacking the financial ability to make these necessary investments, an inability that is gradually becoming more and more aggravated by the current economic recession.
ReplyDeleteI think both insights into possible explanations for this decrease in productivity are highly plausible. Although, I would submit that wages were cut from the beginning at the time when employees were first being laid off and thus I'd believe that employees would still be working their hardest in efforts to avoid being the next on the proverbial chopping block.
ReplyDeleteI agree that in this economy the fear of losing your job is enough to keep most employees motivated. However, I think the comment about marginal production of labor decreasing because firms are cutting back on investing in capitol is a great point.
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