U.S. workers in recent years have been pressed to produce more, although often for modest wage increases that have helped keep their employers'...
U.S. workers in recent years have been pressed to produce more, although often for modest wage increases that have helped keep their employers’ costs down.
Data released Thursday showed this worker-productivity trend gaining in the third quarter, helping explain why the economy and corporate profits are growing solidly even as many workers feel uneasy.
U.S. business productivity — measuring worker output per hour — surged at an annual rate of 4.1 percent in the July-September period, the Labor Department reported. It was the strongest increase in more than a year and far surpassed expectations.
Meanwhile, unit labor costs — what it costs businesses to produce a given output for a set amount of labor — declined at an annual rate of 0.5 percent in the quarter, the department said. It was the first drop in this key indicator since the second quarter of 2004.
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The results were “a remarkable achievement and a testimony to the flexibility of resources in the economy,” said Brian Bethune, an economist for Global Insight, a research firm in Lexington, Mass.
Although the “stunning” numbers are unlikely to be repeated in the current quarter, “The strong underlying productivity trends in the economy are expected to continue,” he said.
For many firms, boosting productivity while managing labor costs — often through technology, workplace changes or outsourcing — is needed to compete against lower-cost foreign and U.S. rivals.
Strong productivity gains normally could support higher pay. But although growth in overall compensation — wages and benefits together — have surpassed inflation, wage boosts alone have not. That may help explain why surveys show workers are unsettled about the economy, even though it is growing at an above-average pace.