News 4 Buzz – Learn hints and techniques.

    Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    What's Hot

    5 Best Fantasy Cricket Apps in India to Earn Real Cash

    April 20, 2023

    How to Play Poker Like a Pro: Tips and Strategies for Winning Big

    April 4, 2023

    Comfort and Style: The Perfect Bean Bag Chairs for Kids!

    March 3, 2023
    Facebook Twitter Instagram
    • Locate Us
    Facebook Twitter Instagram YouTube
    News 4 Buzz – Learn hints and techniques.
    Demo
    • Home
    • Automotive
    • Business
    • CBD
    • Crypto
    • Education
    • Fashion
    • Finance
    • Health
    • More
      • Home Improvement
      • Entertainment
      • Law \ Legal
      • News
      • Shopping
      • Sports
      • Technology
      • Travel
    News 4 Buzz – Learn hints and techniques.
    Home»Business»Is The Job Market Hot For Wrong Reason? US Workers Are Less Productive
    Business

    Is The Job Market Hot For Wrong Reason? US Workers Are Less Productive

    By No Comments4 Mins Read
    Facebook Twitter Pinterest Reddit LinkedIn Tumblr Email
    Share
    Facebook Twitter Pinterest Reddit Email

    [ad_1]

    The hot U.S. labor market has been the bright spot of a cooling economy in recent months. Employers keep hiring more people, as evidenced by robust payroll reports.

    For instance, payrolls rose by 315,000 in August and 5.8 million for the past 12 months. And that brings overall employment now standing 240,000 higher than its pre-pandemic level in February 2020.

    Strong payrolls have resulted in fewer jobless claims, which now stand at 215,000, according to a U.S. Department of Labor report released this morning. Meanwhile, unemployment—the percentage of the labor force without a job looking for work— hovers at multi-year low levels, even as the nation’s output, measured by GDP, has declined for two consecutive quarters—a situation which some observers would call a recession.

    “The U.S. is in a period of historic levels of inflation, a technical recession with two-quarters of negative GDP growth, and yet there is a very tight labor market,” Michael Gibbs, CEO of Go Cloud Careers, told International Business Times in an email.

    So, what’s behind this disconnect between the labor market and the rest of the economy? A couple of factors.

    First, employment and unemployment are lagging indicators. Companies do not rush to hire and fire employees whenever their output needs change. They have to wait to ensure that the change in production is permanent rather than temporary. And they have to be concerned with hiring costs like recruitment fees paid to headhunters and severance payments.

    “Companies are typically hesitant to hire and fire based on short-term data. Jeremy Babener explained in an email to IBT. “This is because the cost of training employees is too high. If you’re too pessimistic, you’ll let someone go and then need to train their replacement. If you’re too optimistic, you’ll hire someone, invest in their training, and then let them go. There’s too much ‘friction’ for companies to act on short-term data.”

    Second, employment has been rising when labor productivity—the output the average worker produces—is declining. For instance, in the second quarter of 2022, labor productivity dropped at an annual rate of 4.1%. That’s due to a 2.7% increase in the working hours as output decreased by 2.1%. Compared to the second quarter of 2021, labor productivity dropped 2.4%, the highest decline since the first quarter of 1948.

    The rise in working hours at a time output declines suggests that employers need to hire more people to produce a specific output.

    That’s the wrong reason for employment to rise, as it leads to higher Unit Labor Costs (ULC), or ‘producers’ inflation. For instance, the latest ULC rose 12.7% in Q2 2022, well above consumer inflation, meaning higher labor costs are beginning to take a bite from corporate profitability.

    What’s behind the decline in labor productivity? Babener sees multiple reasons, depending on the company. In some cases, it’s the shifting of work from the company to home, where workers are less focused on doing what they are supposed to do. In other cases, workers are less motivated to do the job.

    “This can lead to the wrong kind of hiring for businesses – hiring more people to maintain the same level of work,” he said. “The right businesses will find ways to incentivize employees to lean in, show initiative, and feel a sense of pride in what they contribute.”

    In addition, businesses will also find ways to cut labor costs through automation and layoffs, which could lead to a recession.

    “Unfortunately, we are starting to see organizations begin to lay off nonessential personnel and invest in automation technologies to reduce the need for employees,” adds Gibbs. “With the current Fed policy of aggressive monetary tightening, we see a significant recession on the horizon



    [ad_2]

    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Reddit Email
    Previous ArticleFit-again Washington Sundar, T Natarajan to return to action with Syed Mushtaq Ali Trophy
    Next Article Why Adobe Paid $20 Billion To Acquire Design Startup Figma

    Related Posts

    Russian Soldier Says Frontline Is A ‘Meat Grinder’; Ukraine Is ‘Pummelling Us Non-Stop’

    February 1, 2023

    Russian Soldiers Suffer From ‘Dangerous Infections’ Due To Unsanitary Conditions: Ukraine Intel

    February 1, 2023

    Issuance Expanded Over Cancer Concerns

    February 1, 2023

    Tesla In Trouble? DOJ Requests Info On Musk’s Self-Driving Cars

    January 31, 2023

    Husband Kills Self While On Video Call With Wife Over ‘Tremendous Mental Pressure’

    January 31, 2023

    Bill Gates Admits He Regrets Meeting, Having Dinner With Sex Offender Jeffrey Epstein

    January 31, 2023
    Add A Comment

    Comments are closed.

    Editors Picks

    5 Best Fantasy Cricket Apps in India to Earn Real Cash

    April 20, 2023

    How to Play Poker Like a Pro: Tips and Strategies for Winning Big

    April 4, 2023

    Comfort and Style: The Perfect Bean Bag Chairs for Kids!

    March 3, 2023

    Concert picks: Feb. 1 – 7

    February 1, 2023
    Recent Posts
    • 5 Best Fantasy Cricket Apps in India to Earn Real Cash
    • How to Play Poker Like a Pro: Tips and Strategies for Winning Big
    • Comfort and Style: The Perfect Bean Bag Chairs for Kids!
    • Concert picks: Feb. 1 – 7
    • Azam Khan And Naseem Shah Involved In A Massive Fight In Bangladesh Premier League
    Archives
    • April 2023
    • March 2023
    • February 2023
    • January 2023
    • December 2022
    • November 2022
    • October 2022
    • September 2022
    • August 2022
    • July 2022
    • June 2022
    • July 2021
    Facebook Twitter Instagram Pinterest
    • Locate Us
    © 2022 - News 4 Buzz - All Rights Reserved.

    Type above and press Enter to search. Press Esc to cancel.