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U.S. worker productivity increases as hourly compensation drops

June 05, 2013|By Alejandro Lazo

American workers increased their productivity in the first quarter as hourly compensation fell.

The Bureau of Labor Statistics reported a productivity increase of 0.5% at an annual rate during the first quarter of 2013. The increase reflects a 2.1% increase in output and a 1.6% increase in hours worked.

Compared with the first quarter of 2012, productivity was up 0.9%. That compares with an average annual gain of 2.3% in the 11 years that ended in 2011, according to Bloomberg News.

Meanwhile hourly compensation fell 3.8% in the first quarter. That decline was the largest in the series, kept since 1947.

Patrick Newport, an economist with IHS Global Insight, said the drop in compensation was not worrisome but the weak productivity was.

“Hourly compensation jumped in the fourth quarter of 2012, in part because of bonuses granted earlier than planned (to avoid higher anticipated tax rates),” he wrote in an email analysis. “The first quarter drop was payback for the previous quarter’s windfall. “

The weak growth in productivity should be worrisome because it is linked to research and development, Newport noted, and it is the best gauge of a nation’s long-term success.

Employers have been getting more out of their workers during the years of the recession.

A Los Angeles Times series earlier this year explored how employers are using technology that creates a harsher work environment. According to the series, employers now: “read emails and monitor keystrokes, measure which employees spend the most time on social networking websites and track their movements inside and outside the office. They can see who works fastest and who talks the most on the phone. They can monitor how much time people spend talking to coworkers — and how much time they spend in the bathroom.”

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