Productivity Surges In Second Quarter

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The Labor Department said Tuesday that U.S. productivity surged this past spring, rising at a 6.4 percent annual rate during the second quarter. That was the biggest leap in output per hour worked in years. Corporate profits rise when companies can produce with fewer workers. But the data suggest that companies have been very aggressive in cutting jobs and workers' hours.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block in Washington.

MADELEINE BRAND, host:

And I'm Madeleine Brand in California.

First this hour, if you feel like you're working more these days, some new economic numbers back you up. Businesses have been squeezing more labor out of fewer workers. That's one conclusion from the government's latest productivity report. The government found that productivity rose at the fastest pace since 2003 - up more than 6 percent between April and June.

NPR's Frank Langfitt has our story.

FRANK LANGFITT: Today's productivity figures are a good-news-bad-news story. First the good news: This spring, businesses became much more efficient. They cut workers hours by more than seven percent according to the government but output fell by less than two percent. The hope is this: As businesses become leaner and more profitable, they'll be poised to begin hiring when consumers start buying again. Andrew Stettner is deputy Director of the National Employment Law Project, which looks out for the rights of low-wage workers.

Mr. ANDREW STETTNER (Deputy Director, National Employment Law Project): As we think about how the economy is going to recover and share wealth more effectively, we have to have strong productivity growth and so it's heartening to see that these numbers are there.

LANGFITT: Now the bad news.

Mr. STETTNER; You know, it does indicate that workers are being, you know, squeezed.

LANGFITT: Workers like Pernell Holland(ph). Holland is 48 years old and drives a truck for a package delivery service. I met him this afternoon as he was picking up printer cartridges in Washington, D.C.,. Holland says his company is pushing him a lot harder these days.

(Soundbite of vehicle)

Mr. PERNELL HOLLAND: They cut back our drivers and they give us extra work.

LANGFITT: Holland says in recent months the distribution center where he works laid off six drivers, and management increased his daily load by 25 percent.

Mr. HOLLAND: And when I get home I'm exhausted. I mean, I just enough time to eat and then go to sleep and do it over the next day. I just can't till five.

LANGFITT: Holland has worked as a driver for 14 years. He says he's complained to management about his load and been given some overtime. But he says workers with less seniority keep their mouths shut.

Mr. HOLLAND: (Unintelligible) their job. They may be the next one in line to be cut back.

LANGFITT: John Silvia says his businesses have cut workers. The survivors in all sectors have had to pick up the slack. Silvia is chief economist with Wells Fargo Securities.

Mr. JOHN SILVIA (Chief Economist, Wells Fargo Securities): You may lose somebody who is, let's say, the receptionist on a floor. You may lose somebody in technology support and all of a sudden you find out that, you know, you have to answer the phone a little bit more and/or you have to, you know, solve your own software problems.

LANGFITT: Silvia says he sees it in his own office. Following a merger with his old firm Wachovia, the same size staff now handles twice as many customers.

Mr. SILVIA: Most of my staff is here by seven in the morning and they don't leave until 6:30 in the evening. You know, there is no, you know, group lunch - let's go out for pizza for two hours kind of thing.

LANGFITT: Sylvia says the rise in productivity is a good sign for corporate profits, but it's probably not enough to spark a hiring spree at most businesses.

Mr. SILVIA: Okay, the company is in good shape, but we still need demand. We still need final sales for that company to grow. And that, I think, is one of the biggest challenges we see out there when you're looking at the demand from the consumer. It just doesn't seem to be all that much.

LANGFITT: Consumer spending makes up about 70 percent of the nation's gross domestic product. John Silvia says it's hard to see how the economy really improves, and hiring picks up, without people really starting to spend again.

Frank Langfitt, NPR News, Washington.

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