Newsweek: "Creating new jobs might end up hurting productivity growth"

[Bush_Eats_Beef]

SO...it's come to THIS.

:grr:

End of the Miracle?
Demand for new workers would create jobs, but might end up hurting American productivity growth.
By Karen Lowry Miller
Newsweek

http://www.msnbc.msn.com/id/12223560/site/newsweek/

April 17, 2006 issue - Aside from baseball's homerun record, there may be no statistic as hotly debated as productivity growth rates. There is general agreement that U.S. productivity growth surged in the late 1990s, jumping from its long-term trend of about 2 percent to above 3 percent, because the tech revolution was making companies more efficient. There is less agreement on whether or not this "miracle" is spent and just what drives it in the long term. Some say spending on information technology has reached a saturation point; others demur. Still others say the key is not just buying new computers and software, but learning how to use it, and that these lessons are only beginning to affect productivity. "Nobody has got a clear-cut answer whether this is a change of regime or not," says Catherine Guillemineau, senior economist at the Conference Board.

Whatever the big picture, there is a clearer shift going on in the shorter term. Productivity normally rises and falls with the business cycle. Coming out of recession, companies make do for as long as possible with the staff they have on hand. In the current upturn, corporate America has exercised unprecedented hiring restraint in order to make up for excesses of the bubble years, says Morgan Stanley chief U.S. economist Richard Berner. The upside of the "jobless recovery" was that by producing more with fewer workers, companies drove up productivity. Inflation stayed low. U.S. growth continued to outpace our major rivals, Europe and Japan, by a huge margin.

But now pent-up demand for workers looks ready to bust out. Growth in job openings is outrunning growth in the number of people with jobs. That could lead to a surge in employment—and slow the rise in output per worker. Berner is predicting that the U.S. productivity growth rate will slip back to about 2 percent this year and next.

Why should we care? Productivity growth is economic magic. It effectively sets the speed limit for inflation-free growth, because the more each worker produces, the faster companies can grow without raising prices. So a productivity slowdown would signal an end to the harmonic convergence of high growth and negligible inflation that America has enjoyed virtually uninterrupted for nearly a decade. On March 28 new Federal Reserve chairman Ben Bernanke noted that "as yet," productivity gains had helped restrain labor costs, but further gains could be thwarted by a spike in hiring and rising energy prices. In other words, the trade-off for an end to the jobless recovery is likely to be a productivity slowdown. No wonder they call economics the dismal science.

[derby378]

1. OK, here's how it works...

The more American citizens who have jobs, the better off our nation is. Pure and simple.

[DBoon]

2. No one paid their rent with "productivity"

It takes a real job.

In the real economy, jobs matter

[hedda_foil]

3. F**k productivity. It's about working longer and harder -- not smarter!

Back in the 90's, we were assured that productivity gains would make the US more competitive and that workers wouldn't have to work harder -- just smarter. Remember that? So now our vaunted "productivity" comes at the price of Americans working even longer hours than the Japanese, with less time for family and far more time spent working -- all for the same pay or less -- unless, of course, their jobs have been outsourced because people that make 10 cents an hour are more "productive."

[Neil Lisst]

4. Uh, she's nuts.

We've had a recovery for those at the top, but not those in the middle or the bottom.

I loved that line about how there's more jobs than workers to fill them. In which universe is this? Not this one.

[wurzel]

5. "Productivity " can be increased as "production" falls.

Productivity is the relation between wages and products. So a corporation can increase productivity even if it actually decreases production, if wages fall at an even greater rate at the same time. Or productivity can be increased by holding wages down while increasing production. Bush boasting about our famous "productivity" is the same as boasting about our low wages. It just sounds better.

[liberal N proud]

6. Make more with less, the corporate way of American companies

Downsize, downsize, downsize + Produce more, produce more = higher productivity

It is the absurd corporate view today.

[izzybeans]

7. That's newspeak for "the proportional thinning of corporate fleeces".

Productivity? She means wealth. Profits will not grow as fast but they will grow at a greater rate of return. More people, more money, more consumers, more money, more distribution, more production. The margins will decrease but the real value of profit will rise.

She conflates worker output with profit by assuming more workers reduces worker output. More workers increase transaction costs, which have nothing to do with statistics of the production of units and how they are counted. They must be kept distinct (cost of production and what is produced). The costs of production will increase, but more hands equals more work. It's simple math that can't be done when you don't know how to distinguish between human capital and money capital.

[Nicholas D Wolfwood]

8. That's exactly what I was thinking

Newspeak at its finest.