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Productivity rises as workers do more with less

Employee output per hour rises 8.1% in the third quarter, the largest gain since 2003. But with people working harder in hopes of keeping their jobs, employers have less incentive to hire again.

December 20, 2009|By Alana Semuels
  • Deborah Haas says she's too exhausted at the end of each work day to spend much time with her son, Morgan, 2. The family lives in Long Beach.
Deborah Haas says she's too exhausted at the end of each work day to… (Francine Orr / Los Angeles…)

When her Irvine office began laying off workers in a lousy economy, Deborah Haas did what every employee fearful of being the next one booted is doing these days: She got busy.

An executive assistant to the head of a furniture company, she became the receptionist, event planner, marketing assistant and office manager. When the catering budget got whacked, she threw on an apron and started whipping up chile lime crab cocktails and carne asada skewers for sales events.

Workers like her are fueling a surge of productivity in the U.S. economy. Employee output per hour jumped 8.1% in the third quarter this year, the largest gain since the third quarter of 2003.

But these bustling laborers are also a big reason why companies won't be rushing to hire new staffers any time soon. The brutal downturn has forced firms across the economy to do more with fewer hands; many have found they can manage just fine for the time being.

As for their workers?

"I've taken on more than I would have, and it makes me tired and stressed," said Haas, 40, of Long Beach.

The nation's unemployed aren't the only ones struggling in a sluggish economy. For those still on the job, life is no picnic either.

Many U.S. workers are being pushed to toil harder and shoulder the load once carried by colleagues who've since been laid off. That can mean long days without overtime pay or raises, less family time, and more mental and physical fatigue.

Don't like it? Walk out the door and you'll join 15 million unemployed Americans, the largest segment of whom have been idle for more than three months. Your former boss will have plenty of replacements to choose from. There are about six job seekers for every opening.

The workload for many survivors is likely to mount in coming months. As business cycles accelerate, companies get busier, but employers are typically reluctant to add staff until they're convinced the good times will last.

"In a recession, the employees that are left find there are demands placed upon them to work more efficiently, work harder and work more hours," said Ross DeVol, director of regional economics at the Milken Institute.

Haas said she's exhausted when she gets home at night and has less energy for her son, Morgan, 2. Still, her skill set has blossomed over the last year, making her even more valuable to her employer -- she hopes. She can't shake the feeling that no position is ever guaranteed.

"Even though I work for a great company, it might not be there one day," she said. "You can never be 100% sure."

Her situation is a case study of what happens to the workforce during a recession, said Nelson Lichtenstein, an economist and director of the Center for the Study of Work, Labor and Democracy at UC Santa Barbara.

"There's the phenomenon of people literally working harder, because they're fearful of losing their jobs," he said. "Rumors of layoffs are flying, so everyone works really hard."

That can have lasting effects, he said, especially among the ranks of nonunion professionals. As they begin to work longer hours for the same pay, informal norms are created, Lichtenstein said, and they become accustomed to working 10- or 12-hour days in place of eight-hour shifts.

Such workers would seem likely to welcome approaches from unions to gain bargaining power with their employers. In fact, he said, it's just the opposite. Wage and benefit rollbacks are common during recessions. This year General Motors and Chrysler, for example, were able to renegotiate many of their union obligations after they toppled into bankruptcy.

"It makes it more difficult for unions to organize because people are grateful to have any job," Lichtenstein said.

Employers said that tough times call for tough measures to ensure that enterprises survive to hire another day. Wayne Lee, the chief financial officer for Carson sporting goods company National Ventures, laid off two employees last year -- 10% of the firm's 22-member staff.

The company spread their tasks among remaining employees, some of whom learned to use software to speed order processing. All warehouse laborers were trained to use a forklift so that National Ventures could ship goods faster.

Lee admits that all his workers are hustling like never before -- he said he's squeezing as much as 20% more work out of some of them. But he said that their willingness to step up in a crisis mitigated the need for deeper job cuts. And when the economy picks up and profits rebound, he said, those that are doing more will probably get a raise.

"They're not too stressed about losing their jobs, they're just more stressed at the pace they have to accomplish their tasks," he said.

The jump in U.S. productivity is stronger than in many past recoveries, said Thomas A. Kochan, a professor of management at MIT's Sloan School of Management. That's good news for the U.S. economy, one of the most industrious in the world, since productivity is key to rising living standards.

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