"Productivity May Fuel Recovery" (I told you so)

USA Today ^ | 7/30/2002 | Del Jones and Barbara Hanson

[LS]

Despite the recession, stock market rout and a wave of corporate accounting scandals, productivity is still growing among top U.S. companies and is poised to power an economic recovery.

That's the major finding in USA TODAY's second annual productivity study of the 100 largest U.S. corporations. The study found businesses are continuing to wring extra revenue from their workers and assets, first during a mild recession and now in the face of a bear market that seems to have no bottom.

[Alberta's Child]

That's an interesting outlook. I would caution, however, that many "productivity gains" are illusory. There was an article in the NY Times a couple of years ago that threw a lot of cold water on the whole productivity boom of the 1990s. People weren't necessarily more productive in 1999 than they had been in 1989 -- they simply did a lot more work "off the clock" (using cell phones to make calls while sitting in traffic, using a notebook computer to write reports and memos on the train, etc.) and were not compensated accordingly.

[Huck]

The company is a proponent of Six Sigma

Give some credit to Six Sigma, which, if applied properly, will increase productivity and reduce costs with or without computerization or lasers.

[alloysteel]

<<Productivity grows in spite of recession>>

Productivity grows because of recession. The corporate entity, forced to reduce costs, lays off marginal employees, becoming lean and mean. Just another definition of "productivity", put in context.

[steveegg]

More DNC Media tripe. The economy could be growing at 5% a year, and as long as a Republican is in the White House, they'll call it a "recession".

[Moonman62]

Productivity grows because of recession. The corporate entity, forced to reduce costs, lays off marginal employees, becoming lean and mean. Just another definition of "productivity", put in context.

Right. It's a very different type of productivity growth from the type we get when the economy is growing. The type we are getting now isn't sustainable in the long run.

[LS]

Well, I agree they will TRY to say that. But how do you explain that this is published in USA Today---not a conservative paper?

[LS]

Look, forget #s of employees for a minute. The plain and simple definition of productivity, no matter how you spin it, is more output per worker per hour. That can be accomplished EITHER by adding or subtracting employees, but the numbers simply don't matter. We are adding HUGE numbers of employees in some sectors; overall unemployment is down; 1st time claims for joblessness are down.

You seem to think that merely laying off workers increases productivity, which, if that was the case, would make ENRON every bit as "productive" as it once pretended to be.

[LS]

No, I've heard this argument and it is bogus. Employees have ALWAYS worked "off the clock." I know, I did it in the 1960s, 1970s, and so on. It is a LIBERAL argument by the TIMES to try to make people think that the U.S. is getting worse.

You cannot fudge productivity. That is why I like it as a stat so much. It is possible to UNDERESTIMATE it, if you don't take into account growing capital assets and intangeables such as training, but don't believe for a minute what you read in the TIMES on this.

[dtel]

You are gaining more output per employee, to produce stuff the laid off workers can't afford.
This is sure to be a long term winning strategy.

[steveegg]

USA Today is an odd duck. Other than that, I can't explain them.

[dtel]

It is all just fun with numbers.
Say GMC lays off 3000 workers out of a workforce of 12,000.
The remaining 9000 pick up the slack and keep production from dropping or even increase on paper.
But you have eliminated 3000 folks from being able to afford your product or even little more than necessary items.
How do you build an economy around this thought process?

[steve in DC]

Productivity grows because of recession. The corporate entity, forced to reduce costs, lays off marginal employees, becoming lean and mean. Just another definition of "productivity", put in context.

Right. It's a very different type of productivity growth from the type we get when the economy is growing. The type we are getting now isn't sustainable in the long run.

I have recently had a good deal of personal experience which bolsters your points.

In the downturn, I made necessary cuts in employees. The least productive were the first to go. Those who remain are the most focussed, most productive, most experienced, most cross-trained, and least prone to errors, rejects and rework.

When I go to hire back (when business pickes up) I will be hiring in people who need training (thus subtracting from the efficiencies of my current workforce). They will be more prone to errors (thus dragging down my overall productivity). And I will be requiring my supervisors and team leaders to do more supervising and team leading, subtracting from the "extra" productivity I get from them now.

For some time to come, as we hire back, Our numbers will show a significant decrease in productivity, as measured by any dispassionate yardstick.

I suspect a lot of manufacturers are going to be in the same predicament.

[dtel]

It is all just fun with numbers.
Say GMC lays off 3000 workers out of a workforce of 12,000.
The remaining 9000 pick up the slack and keep production from dropping or even increase on paper.
But you have eliminated 3000 folks from being able to afford your product or even little more than necessary items.
How do you build an economy around this thought process?

---

Conversly, if GMC started rehiring these 3000 workers, because they had designed such a swell product that they couldn't meet demand and even better, were able to EXPORT this product overseas to the masses.
Then you might have an economic recovery.
Until then, we are just treading water, no matter what numbers they or you may juggle.

[alloysteel]

Enron was in a death spiral when they were laying off personnel, and there was little hope by that time of ever recovering. Their successors, assigns and receivers will make something out of the wreckage, but for some time to come, their primary objective will be salvage.

[LS]

Sorry, but numbers are more than fun. Ultimately, they do not lie.

Your model is flawed. Say GM hires 3,000 more workers and they individually produce less. Production falls, wages fall, pay falls.

In any human endeavor, the ONLY standard of objective measurement is productivity---how many wins, how many intercetpions, how many units per hour per person.

You keep trying to get back to employment but miss the critical point: say 3,000 ARE laid off, and 9,000 do the jobs they did. First, it looks to me like those 3,000 weren't needed to begin with (which is a form of cheating and lying by the employee). Second, when they are laid off they WILL get jobs. The total number of jobs won't change. Now, will THEY be more productive on their new jobs? Some will, some won't. But when OVERALL productivity is going up, it tells any sensible person that more people are working better, and faster, than ever before DESPITE THE FACT THAT THE WORK WEEK KEEPS GETTING SHORTER.

[LS]

What the laid off workers can, or cannot afford, doesn't really matter. If they want it, they will find jobs to become productive enough to GET IT.

But why do you assume that the "laid off" worker will not be hired elsewhere. EVERY STATISTIC WE HAVE says, in large part, he is. Not every steel worker, no. But large numbers of them. Why were they laid off in the first place? Because they were "not productive." What they were charging for their labor was more than what their labor produced.

I don't know why you and others here want to whine about productivity as some sort of MORAL issue. It is no different than a defensive end on a football team being measured by his sacks. When he doesn' perform, he is sacked. People don't say, "poor defensive end." They say, "he should have sacked the QB more."

Since unemployment in this country is level or falling; and since productivity is going up; and since the work week has fallen steadily since 1950; then most Americans must be in pretty damn good shape.

[dtel]

No problem big guy, I'll just rearrange the deck chairs here a bit...

[LS]

Hey, if anyone is "rearranging deck chairs," it is people who refuse to accept the single most reliable indicator of economic activity, productivity. Show me EVIDENCE that the economy isn't strong. Evidence, not conjecture.

[dtel]

"Since unemployment in this country is level or falling; and since productivity is going up; and since the work week has fallen steadily since 1950; then most Americans must be in pretty damn good shape."

Unemployment, according to whose stats, the government?
Sure replace those 50 and 60K a year jobs with 20-30K jobs and see how much your economy expands.
Do you not see the massive layoffs in the tech sector, there are easily over 1 million unemployed, very productive 40 + 50 year olds out there who can't buy a freakin' job.
How do we replace the economic impact of these folks?
Why just trot your ass to McDonalds and get a minimum wage job, oh well, at least that will keep your precious productivity numbers up.
3 billion served and counting.