U.S. productivity revised up to 4.7%
Unit labor costs fall 1% in third quarter
By Rex Nutting, MarketWatch
Last Update: 8:53 AM ET Dec. 6, 2005
The fresh numbers are a revision to month-old numbers that showed productivity rose at a 4.1% pace. Read the full report.
Unit labor costs – a gauge of wage-push inflationary pressures – fell at a 1% annual pace in the quarter, revised down from a 0.5% decrease. Unit labor costs are the costs paid to workers to produce one “unit” of output.
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Higher productivity can mean higher profits, wages and living standards and can keep inflationary pressures at bay. But the concept is difficult to measure, especially in financial services where the concept of a “unit” of output is murky.
Higher profits, sure, but wages and living standards? If unit labour costs are down doesn’t that suggest people are being paid less to produce more, for instance, working not for the companies directly but for the temp agencies contracted by the company? At least in my neighbourhood they’ve lost a job that paid several dollars more an hour and provided the usual laundry list of benefits such as paid vacation, holiday pay, silly things like life and health insurance, a 401K plan. Then they are expected to work side-by-side with regular employees, doing the same job as they do, for a lesser wage and no benefits. Living standards? If they were to be asked how life is treating them lately it wouldn’t be pretty.
I can’t count on one hand the number of factories that have closed in my region these past five years, an ongoing process, and those still operating no longer hire off the street. I’d also like to know in what sectors this increased production is occurring, in my area, it’s the ammunition plant and the can company. The new jobs will last so long as the war machine keeps grinding out the casualties and the workers conscripted by temp agencies to do them should be added to a domestic list. Since I know nothing about economic indicators or their significance I could be wrong about this but these numbers seem to be as relevant to real time as the “good” news that November job numbers increased so that means job recovery has found its groove. Don’t job numbers always go up in the holiday season? That groove will look like a rut come February and the living standard will be eviscerated once winter heating bills and credit card bills start rolling in.