Comments on: Productivity and Layoffs

By: Sherry Jarrell

Sherry Jarrell — Fri, 13 Nov 2009 05:54:19 +0000

Eagle — So true. Happened to me twice. And I went to grad school with Brad and was simply adding my opinion and questioning some of his facts. My comment was deleted within an hour, all three times. Bizarre.

By: kyriakos

kyriakos — Wed, 11 Nov 2009 13:49:58 +0000

De Long has absolutely no ethics when it comes to filtering comments. He doesn’t just delete what he dislikes. Once he modified my comment and left my name under it. I’ve only left a few comments on his blog in posts dealing with world politics and he censored them all although I simply mentioned undisputable facts or quoted opinions he disagreed with, always from credible and respected sources.

Much as I respect him as an economist he is simply too sensitive to contradiction to be a good blogger.

By: winstongator

winstongator — Tue, 10 Nov 2009 21:38:39 +0000

Govt had no desire to do a good job of regulation, so they did a bad job. It’s amazing how your real goal affects your outcome.

NASA is a govt agency and they send men to the f-ing moon, launch satellites, operate a space station. If we can do these things, relatively speaking well, we can measure productivity or regulate banks.

By: Observer

Observer — Tue, 10 Nov 2009 20:08:30 +0000

winstongator – both the Businessweek article and the NYT article get at the same issue. The government cannot accurately measure what products and services are produced/provided by US workers, so instead it captures productivity gains from jobs that have been offshored. Instead of making the American worker feel good about how much he/she is producing the productivity statistics really are a huge, red flag signalling an ever increasing US business strategy of outsourcing more and more types of jobs. And with so many more service related jobs going offshore…accounting, banking back office, IT, HR, research, etc. added to the manufacturing jobs that were offshored in the past, the statistics only become more and more inaccurate. Here are 2 paragraphs from the NYT article that show the appallingly inaccurate state of US prductivity statistics.

“But the statistical system is not yet up to the task of sorting out which components are made here, which are made overseas and the resulting impact on employment. As Lori G. Kletzer, an economist at the University of California, Santa Cruz, put it, “We don’t know what jobs have been offshored.”

“The same holds for services. An accounting firm in New York with 50 employees outsources some of its functions to less expensive accountants in India: the paperwork on an income tax return, for example. That work comes back to New York by computer transmission and is billed at New York rates, as if it were value added in this country.”

By: winstongator

winstongator — Tue, 10 Nov 2009 17:46:40 +0000

There is also the R&D hit. R&D expenses don’t directly show up today on the output side, but expenses generally show up today. While I thought of this a while back regarding outsourcing, Michael Mandel hits it with a more trained fist:
http://www.businessweek.com/the_thread/economicsunbound/archives/2009/11/_financial_cris.html

By: lambert strether

lambert strether — Tue, 10 Nov 2009 15:33:52 +0000

For what's going to happen to those "highly qualified" people absent single payer, see Ellen's story here.

By: Observer

Observer — Tue, 10 Nov 2009 07:20:58 +0000

Per the NYTimes article….official government measures of productivity are very inaccurate. http://www.nytimes.com/2009/11/09/business/economy/09econ.html?bl

I know it’s hard to believe that the government would not be able to accurately measure productivity after the scintillating performance they’ve turned in with regulating large banks, financial firms, credit rating agencies, etc.

By: Bayard

Bayard — Tue, 10 Nov 2009 05:24:54 +0000

Actually, I believe that there is a really interesting reason for the rise in productivity. It relies on the idea that most employers believe that this downturn is going to be long-lived, AND that they will have a substantial number of highly qualified people to employ on either a temporary or contract basis at substantial reductions in the cost of full time staff. So, the are all working in the MARGINS. That would be very smart, since the likelihood of having a really strong economy is at least four to ten years away, and, as long as it is weak, they can keep the marginal employment cheap by not hiring full time permanent staff.

I am sure that many of the full time permanent employees are also accepting stagnant or even lower income in exchange for keeping their jobs, and hoping to make up the difference later.

None of this is surprising at all.

By: Craig

Craig — Tue, 10 Nov 2009 03:36:08 +0000

All sounds too complex for me. Marx talked about the competition between workers and how capitalists exploit that fact. Greenspan paraphrases Marx , talking about the inability of workers to win wage increases “exasperated by the global economy.”Kalecki was around when industry was labor intense , now we’ve
innovated our way into a capital intense manufacturing country where most new jobs are in low wage service sector jobs where there isn’t much productivity improvement since they are not making things.Productivity in the capital intense manufacturing sector may be going up but we would have to reward the robots for much of that.

By: Patrick

Patrick — Tue, 10 Nov 2009 01:22:15 +0000

Productivity is a simple measure. Like most economic aggegates it is approximate, unfair, and over-general.

Unfortunately, most views of complex systems are limited by the fact that even very smart humans are very stupid by any sort of objective measure. (Size of short term memory, speed of computation, errors per unit time or quantity, systematic perceptual and judgment errors etc…) So if we’re going to understand something complex we need to break it down into pieces that stupid apes can digest.

Following this guideline, productivity is no different. GDP/hours worked

By: Fed Up

Fed Up — Tue, 10 Nov 2009 00:24:28 +0000

“However, repeated layoffs don’t work as a long-term strategy, and at some point you reach a point where you can’t sustain output with fewer people, and companies start hiring again. So in the long term, productivity growth relies on things like improvements in technology and business processes.But in the short term it’s often just noise.”

Are you sure about that? What if layoffs lead to less demand? Then the company cuts output.

By: Michael

Michael — Mon, 09 Nov 2009 23:52:13 +0000

On the micro level, during a recession each industry and each business cuts whichever costs they can as revenue declines, and many businesses and industries are labor-intensive and can have large fluctuations over the business cycle, while others don’t. So, we get fluctuations in the aggregate productivity readings. On the macro level, we have seen a secular shift over the last thirty years (which Greenspan famously used to “explain” why inflation has been low by 1970′s standards) to the accelerated use of technology in place of human labor, which has produced a long-term rise in average “productivity” across multiple cycles. This is very good for real profits, which have skyrocketed during this thirty-year period; real wages have actually declined, as average employment was maintained for a while by more jobs have been created in service than in manufacturing industries. Not surprising that profits did better than wages, since “productivity” means more product to sell with fewer person-hours to pay for. You don’t have to project this secular trend very far to see the flaw in the theoretical assumption (stated as economic law, as usual) that “increasing productivity is the means to attain increasing standards of living”. As long as “standards of living” are measured such that vastly increased wealth from profits derived from “productivity” gains drag up the arithmetical mean of average income and average consumption includes purchases made by the hourly-wage workers loading up with debt, we can expect this “miracle of productivity” to continue on paper. The image of everybody being a two-fisted entrepreneur or coupon-cutting capitalist, while machines do all the actual production (and provide the actual services) is not just unrealistic, it’s absolutely perverse in its fantasy of a “disappearing” working class.

By: TStockmann

TStockmann — Mon, 09 Nov 2009 22:21:39 +0000

A complementary explanation to the “exploitation” of current workers is the other side of the coin: the potential productivity gains over the past 15 years were much higher than we knew, and, absent an economic shock, employment stickiness due to a number of factors (including manager agency cost) would have continued to leave them on the table.

By: Uncle Billy Cunctator

Uncle Billy Cunctator — Mon, 09 Nov 2009 21:36:29 +0000

Possibly, but if he let’s *my* comments through, the filter can’t be set too terribly high.

By: eflotsam

eflotsam — Mon, 09 Nov 2009 19:17:08 +0000

I’m seeing it first-hand.

Last year, we didn’t have any layoffs but in the middle of this year, we lost 6 (out of 70). When a co-worker left a few weeks ago, she wasn’t replaced and her workload was distributed amongst everyone else.

Last month, I worked 50+ hours overtime. How much of that was personal greed and how much was it fear of being replaced if I didn’t work overtime? I can’t say. I don’t believe in self-reporting as a tool.

I do know that rumors abounded about how the people “laid off” were not pulling their weight, ergo, “goodbye.” I also know that when my co-worker left, we thought they’d get at least one person back from being laid off. That didn’t happen. They simply expected us to increase productivity.