Americans working much harder – for less pay - Eye on the Economy- msnbc.com

Americans working much harder – for less pay - Eye on the Economy- msnbc.com

Productivity surged, labor costs dropped sharply in the second quarter

By John W. Schoen \ Senior producer | msnbc.com \ updated 12:45 p.m. CT, Tues., Aug 11, 2009

John W. Schoen Senior producer • Profile • E-mail

Feel like you’re working a lot harder these days, putting in longer hours for the same pay — or even less? The latest round of government data on worker productivity indicates that you probably are.

The Labor Department said Tuesday that the American work force produced, at an annual rate, 6.4 percent more of the goods they made and services they provided in the second quarter of this year compared to a year ago. At the same time, “unit labor costs” — the amount employers paid for all that extra work — fell by 5.8 percent. The jump in productivity was higher than expected; the cut in labor costs more than double expectations.

That is, despite the deep job cuts of the past year, workers who remain on the payroll are filling in and making up the work that had been done by their departed colleagues. In some cases, that extra work came with a smaller paycheck.

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“You have a very severely harmed, injured consumer in terms of income slow down, job uncertainly, job loss, wealth loss, inadequate savings, high debt levels,” said Laura Tyson, an Obama advisor who headed the Council of Economic Advisors in the Clinton administration. “The consumer, I don’t see powering us out of this recession.”

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As paychecks evaporated and work hours shrank during the recession, Americans have hunkered down and begun saving more. The personal savings rate slipped to 4.6 percent in June, after rising to 6.2 percent in May, but it was still well above the 1 percent rate in 2008.

Higher savings will help rebuild batter retirement accounts. But it also creates a headwind for a pickup in consumer spending. That's troubling when you combine it with lower incomes, which are the engine of future spending. Personal income fell 1.3 percent in June, the steepest plunge in more than four years.

FACT FILE Job recovery will take years

Though GDP data show the economy may have hit bottom, the impact of the 7.5 million jobs lost to recession will linger for years. State Est jobs lost to recession Est. date of job recovery Thousands Percent Michigan -556.6 -12.7 after 2015 Arizona -264.0 -9.9 2014 Florida -699.7 -8.7 2014 Nevada -103.3 -8.0 2013 Oregon -128.6 -7.4 2014 Ohio -392.1 -7.2 after 2015 Rhode Island -35.2 -7.1 after 2015 Idaho -45.5 -6.9 2012 California -1035.0 -6.8 2013

Note: Pre-recession job level is defined as the highest employment level reached SOURCE: IHS Global Insight