Stop working so hard! You’re raising the unemployment rate

For months now, a close friend has been working 14-16 hour days at a boring job that pays less than she used to earn. But she was out of work for months and desperately needs the paycheck. So she works and work and works .

It turns out she’s not alone. Lots of hard-pressed workers are in that predicament, raising productivity for their employers and giving their employers reason not to hire other workers:

When workers become more efficient, it’s normally a good thing. But lately, it has acted as a powerful brake on job creation. And the question of whether the recent surge in productivity has run its course is the key to whether job growth is finally poised to take off.

One of the great surprises of the economic downturn that began 27 months ago is this: Businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.

That means high-level gains in productivity — which in the long run is the key to a higher standard of living but in the short run contributes to sky-high unemployment. So long as employers can squeeze dramatically higher output from every worker, they won’t need to hire again despite the growing economy. . .Businesses have certainly not been investing in new equipment that might enable workers to be more efficient — capital expenditures plummeted during the recession and are rebounding slowly. And the structural shifts occurring in the economy are so profound that one would expect productivity to be lower, rather than higher, as people need new training to work in parts of the economy that are growing, such as exports and the clean-energy sector.

So what’s happening? As best as anyone can guess, the crisis that began in 2007 and deepened in 2008 caused both businesses and workers to panic. Companies cut even more staff than the decrease in demand for their products would warrant. They were hoarding cash, fearful that they wouldn’t have access to capital down the road.

When demand for their products leveled off in the middle of last year, the companies could have stopped cutting jobs or even hired people back. But they didn’t — payrolls have continued declining.

Instead companies squeezed more work out of remaining employees, accounting for a 3.8 percent boost in worker productivity in 2009, the best in seven years. Which raises the question: Why couldn’t companies have achieved those gains back when the economy was in better shape? The answer to that may lie on the other side of the equation — employees.

Workers were in a panic of their own in 2009. Fearful of losing their jobs, people seem to have become more willing to stretch themselves to the limit to get more done in any given hour of work. And they have been tolerant of furloughs and cutbacks in hours, which in better times would drive them to find a new employer. This has given companies the leeway to cut back without the fear of losing valuable employees for good.

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145 comments Add your comment

rdh

March 31st, 2010
12:46 pm

Count me as one of those working 12 hours a day (60 hours a week at a 40 hour a week job) for fear of losing my job. I was out of work for 9 months last year. My debt is high, my savings are gone. If I lose this job, I will lose my house. If I don’t work 12 hour days, there are 5 others in line for my position. It is what it is.

I’d like to go home at 8 hours, but that is a dream for a better economy.

blutto

March 31st, 2010
12:46 pm

“That means high-level gains in productivity … in the short run contributes to sky-high unemployment.”

Hogwash. The productivity gains of the 80’s and 90’s were accompanied by low unemployment. To blame the current extended period of high unemployment on increased productivity is equivalent to blaming high food prices on increased agricultural productivity.

Jack

March 31st, 2010
12:51 pm

Tucker’s friend should start her own business & stop complaining about her job.

bajaboy

March 31st, 2010
12:59 pm

In 1907, 15 year old Mae West made $115 a week dancing in Vaudeville. Those were the days!

Angry Suitor -
Why can’t you stay here – - -like the rest of us!

Mae West -
Because I ain’t like the rest of ya’s

Jethro

March 31st, 2010
1:00 pm

Hogwash on your hogwash. My company laid off 20% of it’s workforce, cut my pay, benefits, and insurance, which I understood at the time and my “part. Two years later, my work load and hours spent to accomplish that workload has increased 45%, i’m doing 10-12 hrs/day, no raise, no benefits, and my company’s profit margin experienced a record increase. They’ve announced that wages/benefits will remain frozen, there are no plans to hire any time soon, but they are “confident that the tremendous output from you (the employee) will ensure yet another record in manufacturing productivity and profitability.”

Business has no interest in employment numbers. It’s not their problem. Make it fast, make it cheap, and if you can’t, they’ll hire someone who will. Because they’re out there. I tell you, this recession was the best thing to happen to business – from a management standpoint – in decades.

Redneck Convert (R--and proud of it)

March 31st, 2010
1:06 pm

Well, tell Tucker I’m doing my part to get people back to work. I got to admit it, I goof off every chance I get. When I’m close to a wireless area, I park the truck and blog awhile. But these people that are working so hard for so many hours are about to ruin it for the rest of us. If they don’t stop it, the boss down at the warehouse is liable to lay a couple drivers off and shift their work to the rest of us. You can’t hardly blog much if you’re having to spend all your time hauling beer into stores and bars.

So I’m saying to all you people working 10 and 12 hr. days, stop it. Get fired if you have to. It ain’t no skin off of me if you get canned and loose your house. But it would sure put a hurt on me if I wound up with 10 or 12 more places to haul beer to.

Have a good p.m. everybody.

Cosby Smith

March 31st, 2010
1:07 pm

Somebody has to work to pay the taxes of those 50% who do not. and if you do not like the hours in the private sector, go to work with the Government, they are paid considerbly higher than those in the private sector and only work a minimum of 8 hours a day plus every holiday the government can think of. The next time you see your congressman, thanks himn / her for your problem.

Betsy

March 31st, 2010
1:08 pm

You need to consider how much is employer, not employee, driven. An employer may expect a employee to work those hours. Or, if the employee slacks off, it doesn’t mean the employer will run out and hire someone else. The employee either works what the employer wants or may not have a job, then there is simply an even exchange, one unemployed person for another. Everything is not that simplistic; don’t try to make the unemployment rate the fault of those who work hard at the jobs they have. (”Yeah, let me work 4 more hours everyday and not have time to spend with my husband and children or other activities or have more time to myself, and let’s see how many poor unemployed people I can keep from working.”)

Jess

March 31st, 2010
1:09 pm

This shows just how out of touch liberals are with the real world. Unfortunately Obama and his band of academics and lawyers have not been able to do any better. Would it kill him to have one person in his cabinet who had actually worked in an environment where private sector jobs are created?

Jobs will be created when businesses feel confident they know what’s going to happen with this economy. At this point there are so many unknowns just in legislation and taxes they are in a hold pattern.

Ivan

March 31st, 2010
1:10 pm

Beaves

March 31st, 2010
1:10 pm

Even more hogwash, I am a middle class working American and Obozo care is already raising my taxes. Now that my company can’t right off the money they pay for my healthcare, they will be adding onto my base salary and taxing it. Now my company can’t right that off so their bottom line just got higher, which means it will not be hiring soon, due to Obozo care. Why does Obozo care not like my medical spending account, they are removing that also, so how come a middle class family making under 100k going to be paying more taxes, just one more Obozo lie. It seems like the liberals just don’t understand what a lie is, as long as a liberal is saying it…

Brakeman

March 31st, 2010
1:11 pm

Ms. Tucker:

Why did you post this? It has nothing to do with race that I can see.

Mickey

March 31st, 2010
1:11 pm

Be nice if Cyn actually knew something about economics and less about her liberal ideology.

AT

March 31st, 2010
1:13 pm

The purpose of a business is not to hire people, it’s to make money. According to this article, productivity went down 3% when the number of hours went down 10%. That proves that there were people that the businesses didn’t need. Unprofitable “work”. This article only makes sense to someone who thinks that people “deserve” jobs.

Vinny

March 31st, 2010
1:15 pm

Leave it to Cynthia to encourage people to be less productive.

My gosh, why the AJC keeps paying you for this dribble is beyond me.

DeKalb Conservative

March 31st, 2010
1:16 pm

Couldn’t some of this also be that the dead weight of companies has been removed?

kayaker 71

March 31st, 2010
1:19 pm

“No new taxes on those who make less than 250K/yr…… not one thin dime”.

DeKalb Conservative

March 31st, 2010
1:21 pm

In a sick way I am enjoying the unemployment rate because it has made morning / evening traffic much smoother.

Ragnar Danneskjöld

March 31st, 2010
1:24 pm

As government piles on additional costs and unfunded mandates, companies will have to find ways to reduce expenses. In a service economy that has only one meaning.

In a rational world, government would not add $1 trillion dollars to Federal spending – with assuredly no increase in deficit, meaning new taxation will cover the spending – in an area where most people are broadly satisfied, one where mere tweaks would suffice.

DeKalb Conservative

March 31st, 2010
1:26 pm

@ Ragnar

Can you the outcry on the left if Rearden metal ever becomes a reality?

joe taxpayer

March 31st, 2010
1:30 pm

productivity does not increase unenployment nor does working more hours mean that you are more productive

kayaker 71

March 31st, 2010
1:32 pm

Now it appears that “Drill, baby, drill” is a good thing. How does Bozo come up with these revelations? Seems like a guy named Bush had the same ideas but was demonized beyond belief for suggesting that we drill off the coastal US, especially in Florida. We’ll see how Florida accepts Bozo’s latest “Prolamation for the Good of America” sometime in November.

Ragnar Danneskjöld

March 31st, 2010
1:33 pm

Dear DeKalb Conservative @ 1:26, ha, that is perhaps the only element missing from today’s real world.

DawgDad

March 31st, 2010
1:33 pm

The premise of this argument is false; the argument itself is specious. Should we have armies of telephone operators? Trolley conducters? Coachmen?

Are there fewer people in IT today than 20 years ago? Fewer in manufacturing? — NO! There are armies of these people here and abroad. For one, the major corporation I work for is growing its IT department by leaps and bounds.

If you are not maximizing deployment of available resources you open yourself and your business up for someone else to capture the opportunity. The market is not 100% efficient in this regard, but it’s pretty darn good overall. Government on the other hand is almost totally inefficient in deploying resources; not subject to the same market forces.

The fact that we have idle and underutilized hands today is not a symptom of increased productivity. The universe of possibility is not finite. Would we be better off employing people to be inefficient and non-productive? In the very finite short-run some people would be better off. Beyond that, the system would be unstable and unsustainable.

Get a life, people, and shake off the indoctrination. This is all rooted in common sense.

Joel

March 31st, 2010
1:34 pm

Maybe, just maybe, the employers have gotten rid of the lazy employees. Now they have the ones that are there to actually do work.

NetBanker

March 31st, 2010
1:38 pm

I actually think there is something to the article Cynthia quotes. At my own company we were specifically told “The 40 hour workweek is a thing of the past.” The basic message is that we need to work more hours and that message is continually, subtly reinforced…”We’re lucky to have jobs” and “You can always be replaced.” Companies are using fear of losing a job in a bad economy as a way to squeeze more out of their existing workers.

My division was even promised by the CEO that if we made our numbers for last year then they’d hire people to re-invest in the business. We surpassed our numbers, the company is selling more of the products so volumne as increased, and not a single new body…we’re told NO NEW HIRES! When I asked about the promise of bodies for making numbers at a company meeting I was quickly brushed off and the topic changed. I’m surprised I still have a job because I was advised for future reference that “team players don’t ask questions that put the CEO on the spot like that.”

NetBanker

March 31st, 2010
1:43 pm

“Leave it to Cynthia to encourage people to be less productive.” Do you even understand what productivity means? Working more hours does not make one more productive. It just means you work more hours. Increasing productivity really means increasing a worker’s efficiency so that they can do more work in the same amount of time. These rises in productivity are false data because they are simply measuring volume of output by X number of workers. If you take the number of hours into consideration then the gains are pretty much wiped out. I’ll bet the numbers would be signifantly different if the figure measured volume of output by hours worked.

blutto

March 31st, 2010
1:45 pm

To believe the basis of this article is to believe that the industrial revolution, the harnessing of electricity and the amazing advances in semi-conductor technology–all of which increased productivity enormously and resulted in more jobs with higher pay–should have caused , in CT’s words, “sky-high unemployment.”

It is the kind of victim speak that bemoaned the loss of all those farrier and telephone operator jobs while overlooking the jobs and productivity that the automobile and advanced telephone technology brought us.

Joel

March 31st, 2010
1:59 pm

40 hour work weeks are for the lazy people!

Stanley

March 31st, 2010
2:00 pm

We have the head of the RNC going to voyeur clubs, we have the Dems trying to get another national holiday, we also having the Dems rounding up CEOs of major companies to argue why they are taking charge offs- I suppose Waxman will over ride the SEC and berate the CEOs for hurting their stock price by taking said write offs. The American worker is great- it just needs the powers to be to get their heads out of their……….. steak and merlot (or bustiers if your Michael Steele)

blutto

March 31st, 2010
2:04 pm

Jethro:

While your situation is painful, layoffs and cutbacks are not unique to the current economy or to your company. The fact that your company experienced “a record increase” in profit margins indicates that it is doing something right, even as many others fail.

The uncertainty caused by the current administration (”we know best and someday we’ll tell you what that is and how much in new taxes it is going to cost you”) is at least partially to blame for the unwillingness of business to take on new workers.

I wish you well.

NetBanker

March 31st, 2010
2:05 pm

To believe the basis of this article is to believe that the industrial revolution, the harnessing of electricity and the amazing advances in semi-conductor technology–all of which increased productivity enormously and resulted in more jobs with higher pay–should have caused , in CT’s words, “sky-high unemployment.”

What the industrial revolution did was to allow the each worker to produce MORE in a static amount of time…that is true productivity. Since goods could be produced faster that made them cheaper so demand increased which lead to needing more workers…etc.

If you have 5 workers putting in 40 hours a week to produce 100 widgets, then fire one worker, and expect the remaining 4 to work 50 hours each week to produce the same 100 widgets then you haven’t honestly increased productivity. In press releases and studies you could claim that productivity has increased because now you have 4 workers producing 100 widgets instead of 5, but it still takes 200 hours to make 100 widgets.

If the number of hours worked to produce a quantity of good/services was divided by 40 (which is considered 1 full time person) to determine the true number of man hours worked that would tell us how many employees it should take to produce X quantity of goods/services. Then if we compare that number to the actual number of workers I’m betting the farm that the number of employed people is lower than the number it should take to do the work….thus leading to slower recovery and the ability to claim increases in productivity.

Ever notice that productivity figures are always a measure of “Per worker”? Ever notice some of those studies that document that the number of hours Americans work is increasing? Do you not see a possible correlation between the two?

Granny Godzilla

March 31st, 2010
2:09 pm

Well, I for one have read this before and know Ms. T is correct.

Not to mention I’m working like a one legged man at a butt kicking
contest, lotsa hours…..but we are getting close to hiring….

While I’d like to slow down or work fewer hours, I really like my job, my employer and my co-workers. As a group we have managed to keep 40
fine folks working and insured since the start of this mess. We are proud of what we have accomplished. We are all truly invested in this little company….

AND…my side business is coming into it’s busy season.

Not To Worry

March 31st, 2010
2:12 pm

In November when we vote the Obama Zombies out of office, we can then start chilling all of this interefernce and overeach by Mommy Government that the left loves so much. Business can then settle down and do what it does best …… create jobs and produce. Then Barry can do what he does best … give speeches (assuming of course that his teleprompter is working properly).

Reality

March 31st, 2010
2:23 pm

ctucker is right. During times like these, employers are pushing and pushing to get more and more out of the employees to save money. And, the employees are willing to allow themselves to work more and more hours and to work harder and harder just to keep their job.

Gee, I wonder if that is how labor unions started to begin with?

Granny Godzilla

March 31st, 2010
2:25 pm

Reality

That’s what my grandad and dad have said……

Dan

March 31st, 2010
2:26 pm

Or the reality is many of those workers who lost their jobs, weren’t doing a whole lot. Many economists and business analysts opine that on average most companies could cut 5-10% of their workforce without missing a beat. Have you ever worked in a place that didn’t have a couple of slackers around?

Granny Godzilla

March 31st, 2010
2:26 pm

Joel

I can’t agree that 4o hour weeks are for lazy people.

I think forty hour weeks are great for families.
(I haven’t had one in years tho….)

blutto

March 31st, 2010
2:27 pm

NetBanker,

Sorry but I think that you just tied yourself in a knot. While I agree with your statement concerning the industrial revolution, I am not sure that you want to “bet the farm” on subsequent paragraphs that make the claim that “the number of employed people is lower than the number it should take to do the work.”

If the work is getting done with “the number of employed people” then theories or wild guesses as to “the number it should take to do the work” are meaningless.

citizen

March 31st, 2010
2:30 pm

Jack @12:51..I was thinking the same thing. Why wait for someone else to create a job for you to apply for. Be inovative and create a need for your expertise and YOU will create the job. Geez!

left wing

March 31st, 2010
2:31 pm

Ragnar @ 1:24 My friend, you’re wrong as usual. This has been going on for the past several years (even going back into the pro-business Bush administration). Businesses try to maximize their profits by “wringing” every last productive hour out of their employees. Which, by the way, is why I stopped and am now a consultant. I got tired of corporations trying to work me for 60 hours and pay me 40. Now, I get paid by the hour and am willing to stay for as long as they’re willing to pay me.

Unfortunately, we both know that most people don’t have that kind of leverage. Most middle class & lower income people are at the mercy of whatever business wants to do with them.

left wing

March 31st, 2010
2:34 pm

Gee, I wonder if that is how labor unions started to begin with? Reality Actually, it is. It used to be that corporations would work people for 14 hours/day in substandard/hazerdous working conditions. What did the company care as long as you did your job? This is exactly why people got together and collectively they had the power to “force” better pay, better working conditions, et al.

Ragnar Danneskjöld

March 31st, 2010
2:38 pm

Dear Leftwing @ 2:31, thanks for your note, but I don’t know what in my 1:24 note you are addressing. I regret that I am unable to respond.

Mickey

March 31st, 2010
2:39 pm

Is economic illiteracy a requirement for all liberals or just Tucker’s unique affliction?

left wing

March 31st, 2010
2:40 pm

Dan @ 2:26 I guarrantee you that if someone is employed at a given company, it’s because the company thinks it’s making money (getting value received) from that person. Said the other way, if a company feels that a person isn’t being productive enough (working hard enough to justify their salary) the company will get rid of that person as soon as it can. Why would the company keep them? Loyalty? Don’t make me laugh. Companies are as loyal to their employees as Tiger Woods was to his wife.

left wing

March 31st, 2010
2:41 pm

Ragnar I was referring to your comment As government piles on additional costs and unfunded mandates, companies will have to find ways to reduce expenses. In a service economy that has only one meaning.

ctucker

March 31st, 2010
2:42 pm

Mickey, would you mind telling me what, specifically, you find economically illiterate?

ctucker

March 31st, 2010
2:43 pm

s, You clearly don’t read many blogs and don’t understand the medium. I can do something about your dissatisfaction — invite you to go somewhere else.

left wing

March 31st, 2010
2:43 pm

Mickey I got my undergraduate in Economics from the University of Missouri years before I became a liberal. I actually voted for Nixon and Reagan twice (the second time was a mistake). But it’s nice to have.

Ragnar Danneskjöld

March 31st, 2010
2:48 pm

Dear leftwing @ 2:41, we agree that businesses optimize use of all resources, but in a steady state there is no pressure to make serious changes. When government reduces financial and regulatory burdens, companies are free to use their resources to attempt to expand markets. When government increases financial and regulatory burdens, companies are constrained to forego potential gains and instead focus their efforts on reducing outlays. From 2001 – 2007, we were in the former mode; since 2007 we are in the latter.