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      12-03-2009, 09:24 AM   #1
lyndon_h
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Thumbs down Employee productivity keeps rising (up 8.1%)

At what point will it stop? I have a hard time believing that companies will begin hiring as long as their employees continue to be more productive.

I'm not an economic major so forgive me if my explanation seems simplistic; but doesn't the economy have to grow (as a whole) faster than the productivity gains for their to be widespread job growth? Do these numbers mean that employers could fire 8% of their workforce and maintain the productivity from last quarter.

I'm starting to feel like 8-9% employment will be the new accepted number, until the next dot com like boom comes around. A few companies will be hiring, but most will just learn how to make their employees be more productive.

FYI. This post wasn't started to be a political post, as i'm really interested in hearing others views of the relationship between productivity increases, the economy, and job growth. I'm sure a couple of political shots will be thrown, but i'd like to keep this from becoming a Bush vs Obama thread.
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      12-03-2009, 11:22 AM   #2
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Yes more and more companies are requiring employees to be more productive but at the same time companies are becoming more efficient through technology which will require less people for them to operate.

This is very reflective in lower paying salary jobs or low skill jobs. Call centers are a big thing for automation. If a company can automate reservation systems, support systems and any other reason you need to call them then you will need less people to man the phones.

The same goes for other areas of your business. When we go through these economic cycles companies trim head count, require other employees to pick up the slack and then invest in technology to automate and streamline the business.

It is a good time for people in the technology field and a bad time for lower/unskilled people to find jobs. Now is a good time for the people looking for a job to pick up a few new books and start learning some new skills.
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      12-03-2009, 11:55 AM   #3
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It is a good time for people in the technology field [...]
There's a surprising amount of truth in this.

I wouldn't have expected it but now that we're trying to fill positions we can't find enough decent candidates. When we do manage to find someone decent we extend an offer only to loose them at the last minute because someone throws a suitcase of cash in their direction.
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      12-03-2009, 05:00 PM   #4
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As more jobs become available and people are more secure in their jobs productivity growth will level off. American productivity has been on a steady rise since WWII because of constant technology advancements so this isn't just economy driven.
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      12-03-2009, 05:17 PM   #5
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I agree with you on all points, 335. Unskilled labor in the process being moved to Mexico or Asia and the US will be left with service jobs. People will need to learn new skills, but make no mistake, it will be a long and tough transition. Many people simply don't (never will) have the job skills they will need to succeed in a service oriented economy.
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      12-03-2009, 09:02 PM   #6
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Originally Posted by PGARP View Post
As more jobs become available and people are more secure in their jobs productivity growth will level off. American productivity has been on a steady rise since WWII because of constant technology advancements so this isn't just economy driven.
Yup. Math, science, and computer science majors are best things right now

"On workers and managers

I keep saying the sexy job in the next ten years will be statisticians.
People think I'm joking, but who would've guessed that computer engineers
would've been the sexy job of the 1990s? The ability to take data-to be able
to understand it, to process it, to extract value from it, to visualize it,
to communicate it-that's going to be a hugely important skill in the next
decades, not only at the professional level but even at the educational
level for elementary school kids, for high school kids, for college kids.
Because now we really do have essentially free and ubiquitous data. So the
complimentary scarce factor is the ability to understand that data and
extract value from it.

-Head of Google"

From http://www.mckinseyquarterly.com/Hal...llenges_manage (doesn't exist anymore, though; extracted it from an e-mail)

Technological advancement and education are the best things to make an economy grow with little to no inflationary impact, decrease unemployment, and increase the value of the dollar.
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      12-04-2009, 11:06 AM   #7
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Enough of the non political stuff.

This really gets me aggravated from Big O's speech yesterday.

At around the 3:00 minute mark he starts talking about how companies are starting to squeeze more productivity out of fewer workers. He then goes on to say that this cost cutting has become embedded in there operations and culture which may resulting in higher *profits* but is not creating new jobs. Then he says, how do we get these companies to start hiring again.

Isn't the main reason someone goes into business is to make a *profit*? If that means a reduction in head count and making people more productive isn't that a *good* thing for your business? Less people to pay means more profit for the business. Why should a business employ 10 people when it can produce the same with 8 people? Yeah it sucks those 2 people don't have a job but the main reason a business is in business is to make a PROFIT!

This is why the government can't run a *profitable* business and it never will with that mentality. Big O is essentially saying if your business is making a profit you should hire more people. The flawed thinking from Big O is that a business hirer people to *increase* profit not to use up profit.

[u2b]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/8UNTzFsLjMU&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/8UNTzFsLjMU&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>[/u2b]


You got to love Dave Ramsey. He explains it pretty good.
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      12-04-2009, 11:47 AM   #8
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I knew you couldn't hold out for too long, but i commend you for doing as well as you did

I think you're making a mountain out of a molehill. I think he's simply saying that productivity gains can prevent job creation just as we have all pretty much agreed.

As far as spending keeping jobs away, I highly disagree with that spending is what is keeping our economy down. Its a well known that best way to improve a faltering economy is by spending. Often the spending is spurred though a war (but we've can't begin another way). The only option left was to spend. Now, don't get me wrong, spending increases the likelihood that inflation will occur, but deficit in terms of percentages of the GDP is not unforeseen. The white house as well as every economist knows that the recovery will be multifaceted and spending will have to be pulled back once the economy is on track. But the spending was needed.

Ramsey seems to have forgotten that the largest contributer to the recession was lack of access to capital because the banks were failing and were too afraid to lend. So IMO, the reason companies aren't hiring is simple. Their sales aren't outpacing their ability to produce. And I presume that this wont change until companies have had a chance to build their cash reserves (which have taken a hit from the lack of access to credit). The banks seem to be doing better as they have pretty positive targets and a few of them have completely paid back their TARP money.
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      12-04-2009, 11:55 AM   #9
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Originally Posted by EK_335i View Post
Isn't the main reason someone goes into business is to make a *profit*?
Now that's just crazy talk!
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      12-04-2009, 12:01 PM   #10
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I think a simpler explanation is that the productivity increase could just be an after-effect of the layoffs too. Remaining employees at companies who have laid people off are almost forced to be more productive.

At my work (in I.T.), we're getting a considerable increase in work, but hiring hasn't gone up proportionally.
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      12-04-2009, 12:49 PM   #11
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I think a simpler explanation is that the productivity increase could just be an after-effect of the layoffs too. Remaining employees at companies who have laid people off are almost forced to be more productive.
.
And its not like you're going to raise an uproar about the increased workload when you fear that you could be on the chopping block.
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      12-08-2009, 01:37 PM   #12
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Originally Posted by lyndon_h View Post
I knew you couldn't hold out for too long, but i commend you for doing as well as you did

I think you're making a mountain out of a molehill. I think he's simply saying that productivity gains can prevent job creation just as we have all pretty much agreed.

As far as spending keeping jobs away, I highly disagree with that spending is what is keeping our economy down. Its a well known that best way to improve a faltering economy is by spending. Often the spending is spurred though a war (but we've can't begin another way). The only option left was to spend. Now, don't get me wrong, spending increases the likelihood that inflation will occur, but deficit in terms of percentages of the GDP is not unforeseen. The white house as well as every economist knows that the recovery will be multifaceted and spending will have to be pulled back once the economy is on track. But the spending was needed.

Ramsey seems to have forgotten that the largest contributer to the recession was lack of access to capital because the banks were failing and were too afraid to lend. So IMO, the reason companies aren't hiring is simple. Their sales aren't outpacing their ability to produce. And I presume that this wont change until companies have had a chance to build their cash reserves (which have taken a hit from the lack of access to credit). The banks seem to be doing better as they have pretty positive targets and a few of them have completely paid back their TARP money.
That's supposed to be you and me spending, not the government spending what doesn't exist. Government spending does nothing in an economy where banks aren't giving out any money. Which brings to mind one thing that I rarely hear being talked about; the fed raising the interest rates and banks loosening their purse strings a bit. I'm not an economist by any means; (although, I did stay at a Holiday Inn last night. )but doesn’t this get the ball rolling and put some coin in the federal government’s pockets.

The bolded statement in the 3rd paragraph holds a lot of truth.

I can't speak for all companies, but I am not hiring because of 3 reasons.

1. I have no idea what's going to happen in the near future with regards to my tax basis.

2. Not enough steady revenue to forecast any real growth in my industry

3. I feel somewhat obligated to keep my current people employed. Turning a profit, as small as it might be, keeps them employed. It would be irresponsible to hire for the sake of hiring if new hires and current employees were jobless because i "spent" the company out of business.
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      12-08-2009, 03:18 PM   #13
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I agree that its normally not the govt job to spend. But had the govt not spent, many more businesses would have failed. Consumers have pulled back on their spending and credit has dried up. We'll see how things pan out, but some of the things the govt has tried to do is relieve banks of their toxic assets so they wouldnt have an excuse not to increase their lending of credit. Apparently some banks are better shape than expected and have or will pay back off of their TARP money ahead of schedule.

Don't get me wrong, I'm not a fan of govt spending for the sake of it. But i think the govt was/is on the right track. I think they will have to tweak economic policy as the economy hits another stage, but i'm sure that that was the plan anyway.

Thanks for chiming in with your personal decisions about hiring.

BTW: That may the nicest M3 i've ever seen. Very tasteful modifications.
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