Americans Working Much Harder for Less Pay

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.

The higher worker output and lower labor costs have been good news for companies struggling through the worst recession since World War II. So far, some 70 percent of companies in the S&P 500 have turned in better-than-expected profits for the latest quarter.

But wage cuts and lost paychecks could seriously jeopardize the recovery of a U.S. economy that still relies on consumer spending for two-thirds of its power.

“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.”

Many economists believe the current recession is on the verge of ending. And if, as many expect, the economy begins expanding again in the second half of this year, companies may begin adding more shifts and re-hiring workers as demand for their products increases.

That improving trend — a slowdown in the pace of the downturn — was confirmed in this month’s Adversity Index from msnbc.com and Moody's Economy.com, which measures the economic health of 381 metro areas and all 50 states. The index includes four components —employment, housing starts, housing prices and industrial production — and classifies each as being in recession, at risk, recovering or expanding.

So far, none of the areas is in the “recovery” stage. But according to the index, 85 metro areas are now in a "moderating recession" – up from 23 the month before.

“A lot of these places were contracting at a much faster pace in the first quarter than they are now,” said Andrew Gledhill, an economist at Moody's Economy.com, which prepares the index.

With job cuts slowing, corporate profits improving and the housing market showing signs of a bottom, many analysts are forecasting that U.S. Gross Domestic Product will turn positive again this quarter after a sharp over the past year.