Thursday, August 20, 2009

Labor costs fall as productivity increases slightly

Humboldt Beacon
Posted: 08/20/2009

According to the latest the Bureau of Labor Statistics, worker productivity increased at an annual rate of 6.4 percent in the second quarter of 2009. This is the biggest quarterly gain since a 9.7 percent increase in the third quarter of 2003.
As worker productivity increased, unit labor costs fell by 5.8 percent, indicating employees are doing more work with less pay. Economists are concerned that instead of hiring more people, businesses are holding on to profits earned from increased productivity and lower labor costs.

In additon, the recession eased up in the second quarter. The gross domestic product (GDP) fell at a lower pace than economists expected, according to a recent government report. The GDP fell by 1 percent in the second quarter of 2009 after falling at an annual rate of 6.4 percent in the first quarter, the Commerce Department reported. Key factors in bettering GDP performance included fewer spending cuts by businesses, increased spending by federal and local governments, and improved trade, the report showed. However, consumers are still held back on spending due to rising unemployment, decreased retirement savings, and falling home values.

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